Financial Services Regulation and Compliance - Investment Firms Dec 2019

DOMESTIC

Central Bank of Ireland provides final Markets Update of 2019

The CBI released Issue 9 of its Markets Updates. This compiles several regulatory updates, ranging from September to December 2019 into one report. Recent articles include a speech made by Colm Kincaid, the Director of Securities and Markets Supervision, on the infrastructure and regulation of securities markets and a speech by Michael Hodson, the Director of Asset Management and Investment Banking, concerning the CBI's performance over the year. Other updates included changes brought in by the European Securities and Markets Authority, including five new consultations, and the International Organization of Securities Commissions.

EUROPEAN

EU publishes Regulation 2019/2175 on 27 December 2019

This new regulation concerns the powers, governance and funding of the European Supervisory Authorities (ESAs). This amends previous 2010 regulations establishing ESAs, a 2014 regulation concerning markets in financial instruments, a 2016 regulation on using indices as benchmarks in financial performance, and a 2015 regulation on information accompanying transfers of funds.  New articles are inserted concerning the prevention of money laundering, information exchange on the fitness of investments, and the accountability of the supervising authorities.

ESMA publishes follow-up to the Thematic Report on fees charged by Credit Rating Agencies and Trade Repositories

The objective of the follow-up report is to provide an update on the work ESMA (the European Securities and Markets Authority) has conducted since the publication of the Thematic Report in 2018. Out of the 123 issuers’ management reports, only 16 complied in full with the ESMA APM Guidelines. The follow-up report highlights good practices that have been implemented as well as areas where further improvements are needed to ensure compliance with the fees provisions of the CRAR and EMIR, for example: transparency and disclosures; costs monitoring and fee setting; and interactions with related companies.

ESMA updates Q&AS on MiFID II and MiFIR investor protection and intermediaries

ESMA has updated its questions and answers on the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR). The Q&A provides new answers on:

  • information on costs and charges
  • product intervention

ESMA updates Q&A on MiFIR data reporting

ESMA has updated its questions and answers on data reporting under the Market in Financial Instruments Regulation (MiFIR). The Q&A provides clarifications in relation to the requirements for submission of reference data and transactions under MiFIR. In particular, the Q&A relates to the reporting of reference rates not included in RTS 22 and 23, under art. 26 and art. 27 of MiFIR. The amendments to the existing Q&A on MiFIR data reporting became effective from 6 December 2019.

ESMA calls for strengthened supervision on suspicious transaction reporting

ESMA has published a peer review report on how national competent authorities (NCAs) handle suspicious transactions and order reports (STOR) under the Market Abuse Regulation (MAR). The report sees a significant increase in suspicious transaction and order reporting and finds that national supervisors can do more to ensure all financial participants play their part in combatting market abuse. ESMA also identified some areas for improvement in NCAs’ supervision and enforcement of the STOR requirements. ESMA recommends that NCAs:

  • ensure all financial players subject to the STOR requirements, including wholesale market participants such as asset managers, are complying with the STOR requirements
  • enhance their focus on suspected non-reporting/poor-reporting of STORs including, where appropriate, enforcing and sanctioning non-compliance

ESMA consults on procedural rules to impose penalties on supervised entities

ESMA has opened a public consultation on future procedural rules regarding penalties for third-country central counterparties (TC-CCPs), trade repositories (TRs) and credit rating agencies (CRAs). The consultation deals with specific aspects of the procedural rules for imposing fines and penalties to TC-CCPs, TRs and CRAs, with the aim of aligning the three sets of rules. ESMA is seeking stakeholders’ views on a future technical advice on the rules to impose penalties and fines on TC-CCPs, TRs and CRAs, which builds on the existing enforcement framework regarding TRs and CRAs as well as on ESMA’s supervisory experience gained in recent years. The consultation will run until 18 January 2020. ESMA will consider the feedback received in the finalisation of the technical advice by end of Q1-2020.

EU rules to boost European crowdfunding platforms agreed

The European Parliament negotiating team has reached a deal with the Council on EU-wide rules to help crowdfunding services function smoothly and foster cross-border business funding. The agreed text states that the uniform set of criteria will apply to all European Crowdfunding Service Providers (ECSP) up to offers of €5m (from €1m proposed by the European Commission), calculated over a period of 12 months per project owner. To enable small companies or start-ups to use the crowdfunding option, the shares of certain private limited liability companies, which are freely transferable on the capital markets, were included in the scope of the legislation. The legislation will be accompanied with additional safeguards and clarification on how investors should be informed of the consequences of their choices.

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

Date published: 13 January 2020