Financial Service Regulation and Compliance - Investment Firms February 2019
EUROPEAN
ESMA publishes updates to its Q&As on MiFID II and MiFIR Market Structure and Transparency Topics
ESMA has updated its Questions and Answers regarding market structures and transparency issues under MiFID II and MiFIR. The new Q&As provide clarification on Approved Publication Arrangements reports to competent authorities and ESMA. The identification of high frequency trading techniques is also discussed in the Q&As. The purpose of these Q&As is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR.
ESMA clarifies the reporting and handling of derivatives data in case of no-deal Brexit
ESMA has issued a public statement on how derivatives data reported under the European Market Infrastructure Regulation (EMIR) should be handled in the event of the UK leaving the European Union without a withdrawal agreement, the no-deal Brexit scenario. EMIR mandates the reporting of all derivatives to ESMA supervised Trade Repositories (TRs), who centrally collect and maintain the records of all derivative contracts. EMIR requires both counterparties to a derivative contract to report its details to TRs.
ESMA updates Q&A on EMIR data reporting
ESMA has issued an update of its Q&A on practical questions regarding EMIR. The amendments to the existing TR Q&A on contracts with no maturity date confirms that counterparties may report a derivative with Action Type “P” if the derivative is included in a position on the same day that it is reported. The amendments to the existing TR Q&A further clarify when reports should be submitted with Action Type “N” and when with Action Type “P” in relation to reporting derivatives that are terminated before the reporting deadline.
Simpler EU rules for derivatives will reduce costs and regulatory burdens for market participants
The European Commission has welcomed the political agreement reached by the European Parliament and EU member states this month on the targeted reform of the EMIR. This Regulation was adopted in 2012 following the financial crisis to better manage and monitor the risks arising from derivatives markets for financial stability. This reform will provide simpler and more proportionate rules for over-the-counter derivatives, helping to reduce costs and regulatory burdens for market participants without compromising financial stability.
ECB issues working paper: 'Do reputable issuers provide better-quality securitizations?'
The ECB has issued this working paper on securitization which primarily addresses the failings of the US markets while the European markets have received very little academic research attention. To this end, this paper focuses on European mortgage backed securities issued prior to the 2007-09 financial crisis and examines the performance of these securities considering the reputation of the originator.
Investment firms: Presidency and Parliament agree on a new regulatory and supervision framework
The EU will soon have in place a dedicated regulatory framework for investment firms. The Romanian presidency of the Council and the European Parliament reached a provisional agreement on a package of measures, composed of a regulation and a directive, setting out new prudential requirements and supervisory arrangements for investment firms. The objective of the reform is to adapt the requirements to the firms' risk profiles and business models while preserving financial stability. The deal will now be submitted for endorsement by EU ambassadors.
For further information please contact a member of the Financial Regulation team.
Date published: 8 March 2019