Financial Services Regulation & Compliance - Cross Sectoral February 2019

DOMESTIC

Speech by Director General, Financial Conduct Derville Rowland: 'A lack of diversity at senior levels is a leading indicator of behaviour and culture risks in financial institutions.'

Speaking at the 'Women in Leadership' conference in UCD, the CBI's Director General of Financial Conduct, Derville Rowland discussed the lack of gender diversity at senior management in the financial services industry. In particular, she noted that to the end of 2017, men had been appointed to more than nine out of ten of the most senior and influential roles in the main retails banks. She said: "Let me be very clear that the CBI considers a lack of diversity at senior management and board level to be a leading indicator of heightened behaviour and culture risks in financial institutions."

EUROPEAN

ESMA publishes Q&As to clarify prospectus and transparency rules in case of no-deal Brexit

ESMA has issued its Q&As regarding the Prospectus Directive and the Transparency Directive. The Q&As clarify the application of certain provisions of these Directives in case the UK withdraws from the European Union (EU) on 29 March 2019 with no withdrawal agreement in place. These Q&As will only apply in case of a no-deal Brexit.

The Q&As clarify that in the event of a no-deal Brexit:

  • When issuers of equity securities and non-equity securities below 1,000 EUR who currently have the UK as their PD home Member State choose a new home Member State, they should choose between the EU27 Member States / EEA EFTA States in which they have activities after 29 March 2019.
  • Issuers admitted to trading on a regulated market within EU27 / EEA EFTA who currently have the UK as their TD home Member State should choose and disclose their new home Member State without delay following 29 March 2019.
  • As the UK will be a third country, prospectuses and supplements approved by the UK FCA before 29 March 2019 cannot be used in EU27 / EEA EFTA after a no-deal Brexit.

ESMA publishes Opinion and Q&A on disclosure technical standards under the Securitisation Regulation

ESMA has published an opinion containing a revised set of draft RTS and ITS under the Securitisation Regulation. These outline the details of a securitisation to be published by the originator, sponsor and Securitisation Special Purpose Entity (SSPE). The opinion is ESMA’s response to the European Commission’s letter requesting certain amendments to the disclosure technical standards.

ESMA and EU securities regulators agree no-deal Brexit Memoranda of Understanding with FCA

ESMA and European securities regulators have agreed Memoranda of Understanding (MoUs) with the FCA of the UK. The MoUs form part of authorities’ preparations should the UK leave the EU without a withdrawal agreement, in the no-deal Brexit scenario and will only take effect in the event of a no-deal Brexit scenario. The MoUs are similar to those already concluded on the exchange of information with many third country supervisory authorities.

The first MoU between ESMA and the FCA concerns the exchange of information in relation to the supervision of credit rating agencies and trade repositories. The second is a multilateral MoU (between EU/EEA securities regulators and the FCA covering supervisory cooperation, enforcement and information exchange between individual regulators and the FCA.

Capital markets union: deal on updated rules for financial derivative products and clearing

EU institutions are simplifying rules applying to non-financial counterparties, small financial counterparties and pension funds using financial derivative products. The Romanian presidency of the Council and the European Parliament this month reached a preliminary agreement on improving the existing regulatory framework applying to the over-the-counter derivative market. The deal will now be submitted for endorsement by EU ambassadors.

Speech by Steven Maijoor, Chair of ESMA: 'Brexit –  the regulatory challenges'

In his speech, Mr Maijoor discussed how the UK's decision to leave the European Union will sadly move Europe's biggest capital market outside of the union. This major operation will require major preparations for all circumstances by all participants concerned, including for the real possibility that the UK leaves the Union without a deal. He explained that as negotiations continue, protecting investors, the stability and orderly function of the EU's financial markets remain paramount. Finally, he said that ESMA will continue to monitor closely with the associated risks and, if needed, to identify possible mitigating actions while taking to account that everyone must step up preparations for all scenarios and take responsibility for their specific situation.

ESMA supervision to focus on data, Brexit and cybersecurity in 2019

ESMA has published its 2019 Supervision Work Programme, which details the main areas of focus for the upcoming year for ESMA’s supervision of Trade Repositories, Credit Rating Agencies, and the monitoring of third-country market infrastructures such as third-country central clearing counterparties and third-country central securities depositories.

Parliaments broadly agree on next steps for economic, monetary union

The debate, which took place this month held within the yearly conference on the European Semester bringing together MEPs and national MPs, allowed participants to discuss economic governance, particularly within the Eurozone. All these lead speakers insisted on the same priorities: concluding banking union, particularly finalising the European deposit and insurance system, setting up a budget for the Eurozone to stabilise economies in difficult times, reforming the EU’s bailout fund, the European Stability Mechanism, and building more democratic accountability into the whole system. Closing the debate, the President of the European Parliament, Antonio Tajani said: “One of my main priorities as President of the European Parliament is to bring EU policies and institutions closer to our citizens. National parliaments play a key role in reaching this goal."

Capital Markets Union: Council agrees position on easier access to financial markets for SMEs

As part of the capital markets union, the EU is taking steps to help small and medium businesses access new sources of funding. EU ambassadors this month endorsed the Council's position on a proposal to give an easier access to Small Medium Enterprises (SMEs) trying to list and issue securities on financial markets, while safeguarding investor protection and market integrity. The initiative concerns specifically "SME growth markets", a recently introduced category of trading venue dedicated to small issuers. On the basis of this text, the Presidency will start negotiations with the European Parliament on 6 March.

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

Date published: 8 March 2019