Tracker, Financial Services Regulation & Compliance - Investment Firms

EUROPEAN:

European Securities and Markets Authority publishes guidelines on the management body of market operators and data reporting services providers

ESMA has issued guidelines clarifying the requirements applicable to the management body of market operators and data reporting services providers (DRSPs). The guidelines apply to national competent authorities, market operators and DRSPs.

The objective of the guidelines is to develop common standards that market operators and DRSPs need to take into account when appointing new members of the management body. These standards will also apply when assessing current members. The guidelines also aim to provide guidance on how information should be recorded by market operators and DRSPs in order to make it available to the competent authorities for the exercise of their supervisory duties.The guidelines will be effective from 3 January 2018.

Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions publish guidance on the harmonization of the Unique Product Identifier

The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have published a report which provides technical guidance on a a uniform global Unique Product Identifier (UPI) applying to over-the-counter (OTC) derivatives transactions. 

The report is called the Harmonisation of the Unique Product Identifier. The reports outlines that the objective is to have a UPI system in which a unique UPI code would be assigned to each distinct OTC derivative product, with each UPI code mapping to a set of data comprised of reference data elements with specific values that together describe the OTC derivative product. The guidance covers the technical principles applicable to the UPI; the UPI reference data elements required for each OTC derivative asset class; the identification of underlying assets and benchmarks of OTC derivative products (underliers); and the UPI code structure.

European Securities and Markets Authority publishes Practical Guidance for the Recognition of Third-Country CSDs by the European Securities and Markets Authority

ESMA has published practical guidance to provide information on the recognition by ESMA of Third- Country CSDs (TC-CSDs) under Article 25 of Regulation (EU) No 909/2014 (CSDR) and Article 46 of the Commission Delegated Regulation (EU) 2017/392 (RTS). The guidance covers communication with ESMA prior to the application, the timeframe for submission of an application, format of and information to be provided in an application.

European Securities and Markets Authority and the National Competent Authorities agree work plan on MiFID II pre-trade transparency waivers and position limits

ESMA and the NCA's have published an updated work plan for the opinions on pre-trade transparency waivers and position limits that must be issued under the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). The work plan presents an efficient approach for ensuring the implementation of the MiFID II/MiFIR waivers and position limits as of 3 January 2018 pending the issuance of the of the opinions. ESMA has acknowledged that due to the high number and complexity of pre-trade transparency waivers that need to be submitted and assessed, opinions might not be issued prior to 3 January 2018. ESMA is prioritising work on equity waivers and aims to finalise those opinions by the end of 2017.

European Securities and Markets Authority issues an opinion on the intended Accepted Market Practice on liquidity contracts notified by the Comissão do mercado de valores mobiliários

ESMA issued an opinion on 27 September 2017 relating to the intended Accepted Market Practice on liquidity contracts. The opinion is addressed to the Comissão do mercado de valores mobiliários (CMVM). Article 13 of the Market Abuse Regulations (MAR) provides that a competent authority may establish an accepted market practice (AMP), this AMP must be notified to ESMA who in turn will publish a non-binding opinion on the intended AMP. ESMA is of the opinion that the proposed AMP on liquidity contracts is compatible with Article 13(2) of MAR and with its technical standards on AMPs, and contains sufficient mechanisms to reduce the risks of market manipulation and limit the threat to market confidence.

Commission publishes Delegated Regulation amending Commission Delegated Regulation (EU) 2017/571

MiFID II provides for the possibility of establishment of a consolidated tape (CT) both for equity, as well as for non-equity financial instruments. This Regulation specifies the provisions pertaining to the scope of the CT for bonds, structured finance products, emission allowances and derivatives.

Commission publishes Delegated Regulation amending Commission Delegated Regulation (EU) No 149/2013 with regard to regulatory technical standards on indirect clearing arrangements

This delegated act aims to formulate the requirements that relate the management of the default of a client providing indirect clearing services, adapt account structures in order to justify the offering of indirect clearing services, allow indirect clearing services to be provided in chains going beyond the client of a direct client provided that appropriate and equivalent protection is ensured throughout the chain and set out consistent requirements for indirect clearing arrangements relating to both OTC and ETD derivatives.

The European Commission has published an amendment on a pending proposal for a Regulation amending Regulation (EU) No 1095/2010 and Regulation (EU) No 648/2012

These regulations concern the establishment of a European Supervisory Authority and the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs. The proposal aims at providing the Capital Markets Union with a more harmonised supervisory system for CCPs, The amendment allocates an additional task to the CCP Executive Session by inserting the following point (-a) in paragraph 1 of Article 44b: "(-a) taking decisions and actions on CCP matters with respect to Articles 17, 19, 29, 29a and 30 of this Regulation;".

European Supervisory Authority lays out procedure for ETDs access to CCPs under MiFID II

ESMA has issued a procedure under MiFIR laying out the steps for trading venues to temporarily opt-out from access provisions for exchange-traded derivatives (ETDs). The ESMA procedure is aimed at NCAs and trading venues that can benefit from the exemption in Article 36(5) of MiFIR. Trading venues should notify their intention to temporarily opt-out of the access provisions to ESMA at the very latest by the end of September 2017.

European Securities and Markets Authority updates Q&A on MiFID II implementation

ESMA has updated its Q&As on MiFID II and MiFIR market structures topics. The new Q&As relate to the following topics:

• timing and procedure of notification for temporary opt-out under Article 36(5) MiFIR;
   
• exemptions under Article 36(5) and Article 54(2) of MiFIR;
   
• timing of application for transitional arrangements under Article 54(2) of MiFIR; and
   
• limitation of access rights following exemption under Article 36(5) of MiFIR.

European Securities and Markets Authority see valuation risk at highest levels due to financial weakness and geopolitical uncertainty

ESMA’s most recent report on Trends, Risks and Vulnerabilities No. 2, 2017 (TRV) identifies high asset price valuations as the major risk for European financial markets in the second half of 2017. The report outlines that the main risk drivers are uncertainties around geo-political developments, the resilience of economic growth as well as debt sustainability. Market and credit risks were kept very high, while liquidity and contagion risks remained high.

European Securities and Markets Authority publishes transitional transparency calculations for bonds and updates calculations for two other asset classes under MiFID II

ESMA has updated its transitional transparency calculations (TTC) for non-equity instruments in relation to the implementation of the Markets in Financial Instruments Directive/ Markets in Financial Instruments Regulation (MiFID II/ MiFIR). ESMA has also issued a FAQ document on the publication of the TCC for all non-equity instruments in accordance with RTS 2 regulatory technical standards on transparency requirements in respect of bonds, structured finance products, emission allowances and derivatives under MiFIR.

European Commission publishes a report on the need to temporary exclude exchange-traded derivatives

The report is from the Commission to the European Parliament and the Council and provides an assessment on the need to temporary exclude exchange-traded derivatives from the scope of Articles 35 and 36 of the Regulation (EU) No 600/2014 on markets in financial instruments.

European Securities and Markets Authority issues an opinion on a proposed emergency measure by Comision Nacional del Mercado de Valores

ESMA has issued an opinion to CNMV on whether it considers the short selling ban imposed by CNMV to be necessary for addressing exceptional circumstances. CNMV notified ESMA of its intention to make use of its powers of intervention in exceptional circumstances and to renew the emergency measure under Article 20 of the Short Selling Regulation until 30 November 2017. ESMA considers that maintaining the short-selling ban until then is justified in light of the information publicly available on the expected timetable of the operation of the capital increase.

European Securities and Markets Authority finalises MiFID II’s derivatives trading obligation

ESMA has issued its final draft Regulatory Technical Standard (RTS) implementing the trading obligation for derivatives under MiFIR. MiFIR’s trading obligation will move over-the-counter (OTC) trading in liquid derivatives onto organised venues.

European Securities and Markets Authority publishes Annual Work Programme for 2018

ESMA's work programme outlines its objectives for 2018 in support of its aim to strengthen investor protection and promote stable and orderly financial markets. The main areas of focus for 2018 include providing guidance on MiFID II and MiFIR and ensuring its implementation is consistent by entities subject to it and by the National Competent Authorities. There is to be an increased focus on the usability and transparency of the data that ESMA collects, the implementation of Level 2 measures in relation to the updated Prospectus regime, and strengthening the impact of supervisory activities at individual credit rating agencies and trade repositories level.

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

Date published: 09 October 2017