Financial Services Regulation & Compliance - Cross Sectoral October 2018

DOMESTIC

Markets in Financial Instruments Act 2018 (re Credit Reporting Act 2013 amendments) signed by the President on 20 October 2018

The Bill for the above-mentioned Act was signed by the President on 29 October 2018 and has accordingly become law. The Act makes various amendments to financial legislation, including to credit institutions' credit reporting obligations under the Credit Reporting Act 2013 (CRA). The definition of 'credit' under the CRA will be expanded to capture hire purchase agreements, personal contract plans and leasing agreements where the lender remains the owner of the good financed (making them reportable). Such credit providers will have to report information about these loans to the Central Credit Register, but it is unclear at present when these reporting requirements will come into effect.

Criminal Justice (Money Laundering & Terrorist Financing) (Amendment) Bill 2018 passes all stages in the Seanad

This Bill gives effect to the Fourth Money Laundering Directive ( Directive (EU) 2015/849 (4AMLD) and proposes a range of amendments to existing anti-money laundering (AML) legislation set out in the Criminal Justice ( Money Laundering and Terrorist Financing) Acts 2010 and 2013. The Dail has gone into Committee to consider the amendments to the AML Bill, which were proposed by the Seanad a few weeks ago. The Dáil voted to accept all of the Seanad's amendments and as the Bill has now been passed by both Houses and will be formally drafted by the Bills Office before being presented to the President for signing.  

"Hubs and spokes: remarks on innovation and outsourcing" – Speech by Gerry Cross, CBI's Director of Policy and Risk

Mr Cross discussed the thinking behind the CBI's Innovation Hub and how it was set up to help achieve a number of objectives in line with the CBI's mandate to safeguard financial stability and to regulate financial firms. This ensures that they are well run, financially sound and acting in the best interests of their customers.

EUROPEAN

ESMA issues compliance table – MAR Guidelines for persons receiving market soundings

These guidelines have applied since 10 January 2017 and contain a table which lists the competent authorities that have informed ESMA that they comply, do not comply or intend to comply with the ESMA’s guidelines for persons receiving market soundings.

ESMA updates market abuse Q&As

ESMA has updated its Q&A document regarding the implementation of the Market Abuse Regulation (MAR). The purpose of the Q&A document is to promote common supervisory approaches and practices in the application of MAR and its implementing measures. This Q&A includes an update of the Q&A on delayed disclosure of inside information.

ECB issues response to the decision of the European Ombudsman

The ECB has taken note of the European Ombudsman's decision of 3 July 2018 which found that involvement of the President of the ECB and members of its decision-making bodies in the 'Group of Thirty' (G30), a private group that includes senior public officials and private sector banks, could undermine confidence in the independence of the ECB. In its response to the European Ombudsman, the ECB has maintained that members of its decision making bodies must be allowed to belong to fora which include participants such as representatives of supervised entities.

EBF issues its position on legislative proposals on covered bonds

The EBF position has stated that it welcomes the consistency of the proposed supervisory regime with a focus on covered bond public supervision and investor protection. It has stated that the approach taken is balanced and covers in its view all necessary elements for a sound covered bond product, thus achieving the objective of justifying a preferential treatment in terms of capital requirements. The EBF did, however, note that the proposal reveals some uncertainties regarding its scope (eligibility of cover assets), the definition and use of hedging derivatives and the composition of cover pools that may hamper the well-functioning and cost-efficient market of the current market.

Speech by Yves Mersch, Member of the Executive Board of the ECB: 'Monetary policy in the euro area - a brief assessment'

Mr Mersch spoke at the MNI Connect Roundtable about how the ECB expects economic expansion to continue for the foreseeable future however he highlighted potential risks relating to increased global protectionism and vulnerabilities in emerging markets that warrant continued monitoring.

EU adopts tougher rules on money laundering

The European Council has adopted the 6^th Anti-Money Laundering Directive. This directive introduces new criminal law provisions which will disrupt and block access by criminals to financial resources, including those used for terrorist activities. The new rules include the establishment of minimum rules on the definition of criminal offences and sanction relating to money laundering. It also introduces the possibility of holding legal entities liable for certain money laundering activities which can face a range of sanctions for example: exclusion from public aid, placement under judicial supervision and judicial winding up.

ESMA sees 1.9% increase in prospectus approvals across the EEA

ESMA, in its annual report on prospectus activity, has found that in 2017 the number of prospectus approvals across the European Economic Area (EEA) increased by around 1.9% compared to 2016. The growth in prospectus approvals puts an end to a decade-long decline observed since the start of the financial crisis.

Speech by Patrick Armstrong, Senior Risk Analysis Officer, ESMA: Financial technology - ESMA's approach

In his remarks Mr Armstrong presented a regulatory perspective on the opportunities and the challenges arising from financial technology and the securities sector. He also explained that the topics of technology and regulations are especially relevant, as most academic literature on the topic of financial innovation places them as the primary drivers of innovation.

SMSG issues its own Initiative Report to ESMA on Initial Coin Offerings and Crypto-Assets

This report by the Securities and Markets Stakeholder Group (SMSG) seeks to give advice to ESMA on steps it can take to contain the risks of ICO's and crypto assets, on top of existing regulation. Since there are no obvious stability risks yet in this respect this report focuses mainly on risks for Investors.

ESMA issues a compliance table in respect of Guidelines on the cooperation between authorities under Articles 17 and 23 of the Central Securities Depository Regulation

ESMA has issued a list of competent authorities that comply or intend to comply with ESMA Guidelines on cooperation between authorities. The Guidelines apply in relation to the cooperation requirements applicable to competent authorities when involved in the procedure for granting authorisation to an applicant CSD laid down in Article 17 of the CSDR and in the procedure relating to the provision of services in another Member State referred to in Article 23 of the CSDR.

"The international dimension of the ECB's asset purchase programme" Speech by Benoit Cœuré, at a conference on "Exiting Unconventional Montary Policies", organised by the Euro 50 Group, the CF40 forum and CIGI, Paris, 26 October 2018

In his remarks Mr Cœuré discussed how recent evidence suggests that the stock effect of ECB asset purchase programmes, together with increased transparency around our reaction function, has helped mitigate abrupt changes in international asset allocation in recent years.

EBA acknowledges adoption of new Implementing Regulation regarding reporting standards for resolution plans by the European Commission

The EBA has acknowledged the adoption by the European Commission of the Implementing Regulation on the procedures, standard forms and templates for the provision of information for the purposes of resolution plans for credit institutions and investment firms. The reporting requirements will apply as of 31 December 2018.

For more information please contact a member of the Financial Regulation team.

Date published: 8 November 2018