Financial Services Regulation and Compliance - Investment Firms July 2019
DOMESTIC
Entry in to force of Market Abuse Rules and guidance on the Market Abuse Regulatory Framework
On 21 July 2019, the Central Bank (Investment Market Conduct) Rules (S.I. No. 366 of 2019) entered into force. These Rules are issued under the Companies Act 2014 and repeal the previous Market Abuse Rules set down by the CBI. On 22 July 2019, the CBI also issued, in the document, guidance on Market Abuse Regulatory Framework.
EUROPEAN
ESMA calls for evidence on investor protection topics in the context of the reports to be submitted by the Commission under Article 90 of MiFID II
On 17 July 2019, ESMA launched a call for evidence on certain investor protection topics that ESMA must report on to the European Commission under MiFID II. The call relates to the impact of the inducements disclosure requirements under MiFID II, as well as the impact of the costs and charges disclosure requirements under MiFID II. ESMA will consider all comments received by 6 September 2019.
ESMA addresses derivatives trading obligation concerns following entry into force of EMIR Refit
On 15 July 2019, ESMA published a public statement addressing the misalignment between the scope of counterparties subject to the EMIR clearing obligation and those subject to the MiFIR derivatives trading obligation. The statement addresses two areas:
- clearing and trading obligations for small financial counterparties and non-financial counterparties
- date of application of the trading obligation for financial counterparties which are in Category 3 and subject to the CO
Consultation Paper - guidelines on aspects of the MiFID II compliance function requirements
On 15 July 2019, ESMA launched a consultation on draft guidelines on certain aspects of the compliance function requirements under MiFID II. The consultation paper contains proposals which aim to:
- consider the changes to the compliance function requirements brought by MiFID II
- give relevance to the results of supervisory activities conducted by national competent authorities on the compliance function requirements
- provide additional details on some aspects that were already covered under ESMA’s 2012 guidelines
The closing date for responses from stakeholders is 15 October 2019 and ESMA aims to publish a final report and guidelines in Q2 2020.
ESMA updates its EMIR and MiFID Q&As
On 15 July 2019, ESMA updated its Q&As relating to the European Markets Infrastructure Regulation (EMIR). Following the entry into force of the EMIR Refit, ESMA has reviewed existing Q&As to align them with the new text requirements. This involved the:
- removal of references to the frontloading requirement
- removal of references relating to backloading
- identification and reporting obligations for funds, and block trades and allocations
- clarification on the applicability of reporting to intragroup transactions.
In July 2019, ESMA also updated several of its Q&As on data reporting under MiFIR, MiFID II and MiFIR investor protection and regarding market structures and transparency issues under MiFID II and MiFIR.
ESMA warns contracts for differences providers on application of product intervention measures
On 12 July 2019, ESMA published a statement addressed to firms marketing, distributing or selling contracts for differences (CFDs) to retail clients. ESMA has serious concerns about these activities and has identified undesirable practices relating to 2 areas:
- professional clients on request
- marketing, distribution or sale by third-country CFD-Providers
ESMA requests that firms ensure that they are compliant with all applicable legislative requirements and with the relevant product intervention decisions. ESMA and NCAs will continue to monitor the compliance of CFD providers with the product intervention decisions going forward.
ESMA launches consultation on cost of market data and consolidated tape
On 12 July 2019, ESMA launched a public consultation on the prices for pre and post-trade data and post-trade consolidated tape (CT) for equity instruments. MiFID II/MiFIR aims to lower the cost of market data and has established the legal framework for the provision of a CT. However, no CT has emerged and MiFID II has so far not delivered on its objective to lower the prices of market data. ESMA's review hopes to gather information on the factors behind the cost of market data and CT. The consultation closes on 6 September 2019 and ESMA will include the information collected in a final review report, which it intends to submit to the European Commission in December 2019.
MIFID II: ESMA issues latest double volume cap data
On 5 July 2019, ESMA updated its public register with the latest set of double volume cap (DVC) data under MiFID II. The update included DVC data and calculations for the period from 1 June 2018 to 31 May 2019, as well as updating already published data. There have been 56 new breaches in this period and as of 5 July; there are a total of 285 instruments currently suspended.
ESMA provides updated Q&As, XML schema and validation rules for securitisation reporting
On 19 July 2019, ESMA published several resources to assist market participants in the implementation of ESMA’s draft technical standards on disclosure requirements for the Securitisation Regulation SR). ESMA has provided:
- an updated SR Questions and Answers (Q&As) clarifying different aspects of the draft disclosure technical standards;
- a set of reporting instructions and XML schema for the templates set out in ESMA’s draft technical standards on disclosure requirements; and
- a set of validation rules which prohibit the submission of certain combinations of information that are logically incoherent.
ESMA is providing these updated Q&As, XML schema and validation rules in advance of several disclosure-related delegated acts that are due to be adopted by the European Commission.
ESMA updates its Q&As regarding Regulation (EU) No. 575/2013 (CRR)
In July 2019, ESMA updated its Q&As regarding Regulation (EU) No. 575/2013 (CRR). The Q&As provide clarity to a number of topics, including:
- the recovery rate of the foreclosure assets calculation
- the treatment of failed significant risk transfers under Traditional Securitisation
- Own funds requirements and financial information
- synthetic securitization of undrawn revolving credit facilities
For more information on this topic please contact any member of A&L Goodbody's Financial Regulation team.
Date published: 9 August 2019