Financial Regulation and Compliance Bulletin - Cross Sectoral March 2019

DOMESTIC

Speech by Gerry Cross, Director, Financial Regulation – Policy & Risk: 'Opportunities, risks and challenges: considering financial regulation and technological innovation'

In an address to the Funds Europe European FundTech Lab event, Gerry Cross outlined the CBI's objectives and perspectives with regards to the impact of new technologies on financial regulation. More specifically, he discussed the impact of technology on responsible selling to consumers, how data analytics will increase access to credit and how new entrants to the market are improving consumer choice and competition. Mr Cross emphasised that the CBI is openly and actively engaged with innovation.

Mr. Cross also spoke about the risks and opportunities presented by outsourcing IT functions and said that outsourcing continues to be an important area of focus for the CBI.

Speech by Deputy Governor Sharon Donnery: 'The departure of the UK from the EU - implications for the Irish economy and financial system'

Deputy Governor Sharon Donnery delivered remarks to visiting staff from other central banks and financial regulators. The dominant theme of the speech was Brexit. In particular, she outlined how the CBI is already making progress in mitigate the impact of a potential 'no deal' exit by the UK by focussing on the areas of economic and consumer risk, preparedness of regulated firms, required changes to policy, and new entrants to the market.

Speech by Director General Derville Rowland: 'Balance makes for better business'

In an address to the Euronext Women in ETFs International Women’s Day Event, Ms. Rowland outlined the critical importance of ensuring that firms in the financial services sector make gender representation a high priority. The Director General notes the recent increases in female applications for financial services roles compared to previous years and highlighted the importance the CBI place on diversity.

Finally, Ms. Rowland discussed the current ETF market, and discussed how the CBI views its responsibilities as very serious in light of the increase in industry growth to $4.9tn. In particular, she noted that the CBI is working to expand their understanding of the advantages and risks posed by ETFs and is cooperating with international regulators.

New Beneficial Ownership Regulations now in force

On 22 March, the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 came into force (save for Part 3 which is yet to be commenced). The regulations require enhanced levels of information to be collected on beneficial owners (including PPS numbers), increased penalties for non-compliance and provisions for the establishment of a Central Register, which is expected to go live on 22 June 2019. Companies must submit their beneficial ownership information to the Central Register by 22 November 2019, except for companies created after 22 June 2019 which must deliver the information within five months of incorporation.

EUROPEAN

European Council adopt new Cross-Border Payment Regulations

The EU Council has voted to adopt a regulation amending Regulation (EC) No 924/2009 as regards certain charges on cross-border payments in the Union and currency conversion charges. The new regulations will introduce an obligation to disclose charges to consumers when making card payments or withdrawing cash as a percentage mark-up of all currency conversion charges over the latest available ECB exchange rate to align these charges between Euro and non-Euro countries.

ECB announces start date for Euro Short-Term Rate

The ECB will start publishing the euro short-term rate (€STR) as of 2 October 2019, reflecting the trading activity of 1 October 2019. Additionally, the ECB announced that it is ready to further support private sector efforts in the transition away from the euro overnight index average EONIA and will provide the computation of a one-off spread between the €STR and EONIA, which was requested by the Working Group on Euro Risk-Free Rates.

The €STR, which has been calculated following two public consultations and in line with international standards, will reflect the wholesale euro unsecured overnight borrowing costs of euro area banks and will complement existing benchmark rates produced by the private sector, serving as a backstop reference rate.

ESMA publishes its Data Operational Plan under a no-deal Brexit scenario

As part of its preparations for a 'no-deal' Brexit, ESMA has issued a statement on the impact of Brexit on it's databases and IT systems. Financial Instruments Reference Data System (FIRDS), Financial Instrument Transparency System (FITRS) and Double Volume Cap System (DVCAP) transaction reporting systems and ESMA's registers and data to continue functioning without UK dates.

ESMA to recognise the Euroclear in the event of a no-deal Brexit

ESMA has announced that, in the event of a 'no deal' Brexit, the UK-based Central Securities Depository (CSD) Euroclear UK and Ireland Limited will be recognised as a third country CSD for the purposes of providing services in the EU. The adopting this recognition decision allows the UK CSD to serve Irish securities and to avoid any adverse impact on the Irish securities market.

ESMA publishes the first Q&As relating to the Prospectus Regulation

ESMA has published a Q&A document relating to Regulation (EU) 2017/1129 (the Prospectus Regulation) aimed at helping market parties manage the transition from the Prospectus Directive to the Prospectus Regulation. This document provides clarifications in relation to the scope of grandfathering of prospectuses approved under the old regime, the continued applicability of the current Level 3 guidance concerning the Prospectus Directive and the process of updating information included in registration documentation.

For more information on this topic please contact any member of A&L Goodbody's Financial Regulation team.

Date published: 16 April 2019