Tracker, Financial Services Regulation & Compliance - Investment Firms

DOMESTIC:

Central Bank publishes Markets Update - Issue 4 2017

The Markets Update advises interested parties of recent policy developments related to the way the Central Bank (CBI) supervises financial markets, investment funds and their service providers and investment firms. The Update contained information on topics such as the second edition of the Investment Firms Regulations Q&A, the Central Bank's warning on Markets in Financial Instruments Directive II (MiFID II) Unauthorised Businesses, the Consultation Paper on the Implementation of Competent Authority Options and Discretions in the European Union (Capital Requirements) Regulations 2014 and Regulation (EU) No 575/2013 and the updated Fund Administrator Guidance.

Central Bank publishes updated Questions and Answers on the Investment Firm Regulations 2017

The Q&A contains amendments to questions 1005 ('performance and quality standards'), 1006 ('key performance indicators') and 1010 (The obligation on fund administrators to notify clients in relation to proposed outsourcing agreements) and new questions 1022 ('administration services'), 1023 (Stress testing in relation to the cost of providing administration services), 1024 (Notifications in relation to outsourcing) and 1025 (The review of the check and release of each investment fund NAV).

Denise Murray, Head of Asset Management: Authorisation and Inspection Division at the Central Bank, gives a speech titled 'MiFID II – Are you Ready?'

Ms. Murray focused on the CBI's approach to MiFID II implementation and highlighted that there will be no further extensions to the 'go live' date of 3 January 2018. She also discussed the level of preparation that is occurring across the industry, indicating that the CBI have been using 'heat-maps' based on firms engagement levels, and that the expanded scope of MiFID II could capture firms that previously did not require authorization.

EUROPEAN:

European Securities and Markets Authority publishes opinion on Market Size Calculations in relation to the Ancillary Test under MiFID II

The European Securities and Markets Authorities (ESMA) opinion relates to the exemption from the scope of MiFID II for persons providing investment services which are ancillary activity to their main business where certain conditions are met. It will be necessary to determine the market size when performing this analysis and the opinion aims to provide guidance on this for both National Competent Authorities (NCAs) and market participants. ESMA collected data to use for these calculations and the opinion sets out how this data can be used in order to make market share calculations.

European Securities and Markets Authority publishes final guidelines on Trading Halts under MiFID II

Under MiFID II Member States shall have the authority to implement trading halts or in certain circumstances to cancel, vary or correct a transaction. The guidelines will apply to trading venues that allow or enable algorithmic trading on their systems and to NCAs. NCAs must notify whether they intend to comply by 6 August 2017 and the guidelines will be effective from 3 January 2018.

European Securities and Markets Authority consults on Trading Obligations for Derivatives under Markets in Financial Instruments Regulation

ESMA's consultation paper follows the publication of a discussion paper in relation to the draft technical standards specifying the trading obligations for derivatives under Markets in Financial Instruments Regulation (MiFIR). MiFIR outlines the process for determining which derivatives should be traded on-venue and moves the trading obligation on over-the-counter (OTC) trading in liquid derivatives onto organised venues. The consultation runs until 31 July 2017.

European Securities and Markets Authority publishes updated MiFID II/MIFIR Investor Protection Questions and Answers

On 6 June 2017, the ESMA published an updated version the Q&A document on the implementation of investor protection topics under MiFID II and MiFIR. The questions and answers provide clarifications on appropriateness, best execution, suitability post-sale reporting, inducements and research, information on charges and costs and underwriting and placement of a financial instrument. The updated questions and answers cover the topics of information on costs and charges, post-sale reporting and appropriateness.

European Securities and Markets Authority publishes a report on Product Intervention under MiFIR

The ESMA report was published on its own initiative and looked at product intervention measures which Member States and ESMA will be able to take under MiFIR. The report looked at legal questions, including who will be subject to intervention measures issued under MiFIR and whether national measures taken before MiFIR's introduction can be upheld, and summarised national product intervention measures.

Commission publishes Proposal to amend the European Market Infrastructure Regulation accompanied by Questions and Answers on the Proposal

Due to the importance of Central Counterparties (CCPs), and the impact that a CCP failure may have, the Commission have carried out extensive reviews of the operations of CCPs under European Market Infrastructure Regulation (EMIR). Following their reviews the Commission has published a proposal to amend the EMIR as the main supervisory decisions for CCPs are made by NCAs in Member States and the current equivalence regime has various shortcomings.

The Proposal is accompanied by Q&As focusing on the proposed to amendments. The Q&As cover the proposed introduction of a Central Counterparty (CCP) Executive Session within ESMA, the tiered framework for the recognition of third country CCPs, the enhanced supervisory role of the ECB and additional requirements for systemically important CCPs.

European Securities and Markets Authority publishes guidelines on Access by a Central Securities Depository to the Transaction Feeds of Central Counterparties and Trading Venues and guidelines on Central Securities Depository Participants' Default Rules and Procedures

The Guidelines relating to access to transaction feeds of CCPs and trading venues specify the criteria for assessing legal, financial and operational risks to be taken into account by a CCP or a trading venue when carrying out a comprehensive risk assessment following a request for access to the transaction feed of the CCP or of the trading venue.

The Guidelines on Central Securities Depository (CSD) participants' rules and procedures aim to ensure CSDs define and apply clear and effective rules and procedures to manage the default of any of their participants.

National Competent Authorities (NCAs) to which these Guidelines apply must notify ESMA whether they comply or intend to comply with the Guidelines by 8 August 2017.

European Securities and Markets Authority publishes updated Questions and Answers on the Implementation of the Central Securities Depositories Regulation on improving securities settlement in the EU and on CSDs

The Central Securities Depositories Regulation (CSDR) is implemented through a package of six legislative acts and Q&As were implemented in order to promote common supervisory approaches and practices in the application of CSDR. On 2 June 2017, new questions in relation to investment policies of CSDs, responding to access requests and the provision of services in other member states were included.

Commission publishes a draft Delegated Regulation supplementing MiFIR

The draft Delegated Regulation aims to identify the list of third country central banks that, in their performance of monetary, foreign exchange and financial stability policies, are exempt from pre-trade and post-trade transparency requirements for non-equity instruments.

Commission publishes a draft Delegated Regulation supplementing Delegated Regulation (EU) 2017/565 (MiFID II Implementing Regulation)

The draft Delegated Regulation contains one operational provision which provides further technical specification of one element of the definition of systematic internaliser as defined in MiFID II. The Commission set out that they intend for the draft Delegated Regulation to enter force promptly in order to ensure the smooth implementation of the MiFID II Implementing Regulation.

Commission Implementing Regulation (EU) 2017/953 of 6 June 2017, Commission Implementing Regulation (EU) 2017/980 of 7 June 2017, Commission Implementing Regulation (EU) 2017/981 of 7 June 2017, Commission Implementing Regulation (EU) 2017/988 of 6 June 2017, Commission Implementing Regulation (EU) 2017/1005 of 15 June 2017, Commission Delegated Regulation (EU) 2017/1018 of 29 June 2016, Commission Implementing Regulation (EU) 2017/1093 of 20 June 2017 and Commission Implementing Regulation (EU) 2017/1110 of 22 June 2017 and Commission Implementing Regulation (EU) 2017/1111 of 22 June 2017 are published in the Official Journal

  • Commission Implementing Regulation (EU) 2017/953 of 6 June 2017 laying down implementing technical standards with regard to the format and the timing of position reports by investment firms and market operators of trading venues pursuant to MiFID II was published in the official journal and entered into force on 27 June 2017. It will be effective from 3 January 2018;
  • Commission Implementing Regulation (EU) 2017/980 of 7 June 2017 laying down implementing technical standards with regard to standard forms, templates and procedures for cooperation in supervisory activities, for on-site verifications, and investigations and exchange of information between competent authorities in accordance with MiFID II was published in the official journal and entered into force on 30 June 2017. It will be effective from 3 January 2018;
  • Commission Implementing Regulation (EU) 2017/981 of 7 June 2017 laying down implementing technical standards with regard to standard forms, templates and procedures for the consultation of other competent authorities prior to granting an authorisation in accordance with MiFID II was published in the official journal and entered into force on 30 June 2017. It will be effective from 3 January 2018;
  • Commission Implementing Regulation (EU) 2017/988 of 6 June 2017 laying down implementing technical standards with regard to standard forms, templates and procedures for cooperation arrangements in respect of a trading venue whose operations are of substantial importance in a host Member State was published in the official journal and entered into force on 3 July 2017. It will be effective from 3 January 2018;
  • Commission Implementing Regulation (EU) 2017/1005 of 15 June 2017 laying down implementing technical standards with regard to the format and timing of the communications and the publication of the suspension and removal of financial instruments pursuant to MiFID II was published in the official journal and will enter into force on 6 July 2017. It will be effective from 3 January 2018;
  • Commission Delegated Regulation (EU) 2017/1018 of 29 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards specifying information to be notified by investment firms, market operators and credit institutions was published in the official journal and will enter into force on 7 July 2017. It will be effective from 3 January 2018;
  • Commission Implementing Regulation (EU) 2017/1093 of 20 June 2017 laying down implementing technical standards with regard to the format of position reports by investment firms and market operators was published in the official journal and will enter into force on 11 July 2017. It will be effective from 3 January 2018;
  • Commission Implementing Regulation (EU) 2017/1110 of 22 June 2017 laying down implementing technical standards with regard to the standard forms, templates and procedures for the authorisation of data reporting services providers and related notifications pursuant to MiFID II was published in the official journal and will enter into force on 13 July 2017. It will be effective from 3 January 2018; and
  • Commission Implementing Regulation (EU) 2017/1111 of 22 June 2017 laying down implementing technical standards with regard to procedures and forms for submitting information on sanctions and measures in accordance with MiFID II was published in the official journal and will enter into force on 13 July 2017. It will be effective from 3 January 2018.

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

Date published: 07 July 2017