Financial Services Regulation & Compliance - Investment Firms Jan 2018

DOMESTIC:

Investment Firms - Questions and Answers - 4th Edition

The Central Bank has published the 4th edition of its investment firms questions and answers which sets out answers to queries which may arise in relation to the Central Bank Investment Firms Regulations, MiFID II and MiFIR. It is not relevant to assessing compliance with regulatory requirements.

S.I. No. 614 of 2017 European Union (Markets in Financial Instruments) (Amendment) Regulations 2017

The Department of Finance published S.I. No. 614 of 2017 European Union (Markets in Financial Instruments) (Amendment) Regulations 2017 (the Amending MiFID II Regulations) on 3 January 2018.  The Amending MiFID II Regulations do not replace the S.I. 375 of 2017, the MiFID II Regulations, and should be read in conjunction with the MiFID II Regulations.

The amendments contained in the Amending MiFID II Regulations primarily correct typographical errors or provide clarity to the language in MiFID II.

The Amending Regulations also amends Regulation 32 of the MiFID II Regulations which deals with providing information to clients. The Amending Regulations provide that an investment firm, when providing advice to a client must provide information ''before it provides investment advice''.

EUROPEAN:

European and Securities Market Authority raises concerns on fees charged by CRAs and Trade Repositories

ESMA has published a Thematic Report on fees charged by Credit Rating Agencies (CRAs) and Trade Repositories (TRs), following the conclusion of ESMA’s supervisory review of the current fee structures in the credit rating and trade repository industries. ESMA collected and analysed information from publically available resources, periodical submissions to ESMA and dedicated requests for information from supervised entities in conducting its review while also maintaining regular engagement with users of credit rating and trade repositories services who provided further information.

Based on the information analysed, the Thematic Report provides ESMA’s views on the application of the requirements that fees charged by CRAs should be non-discriminatory and cost-based, and TRs provide non-discriminatory access and charge publicly disclosed and cost-related fees. Further, it identifies the areas for improvement regarding transparency and disclosure, the fee- setting process and the interaction with entities related to CRAs and TRs. ESMA will continue to engage with both supervised entities and their clients to ensure effective application of the fee provisions. They may also provide further supervisory guidance to ensure compliance with the relevant requirements.

FAQs on MiFID II - transitional transparency calculations

ESMA have updated their FAQs on MiFID II transitional transparency calculations.

European and Securities Market Authority updates transparency calculations for MiFID II/MiFIR

ESMA has published an extended version of the MiFID II/MiFIR transitional transparency calculations (TTC) for equity and bond instruments, adding further instruments. The applicable TTC has been added for:

  • equity instruments, traded for the first time on a trading venue between 13 September 2017 and 2 January 2018 (included)
  • bond instruments (except ETCs and ETNs), traded for the first time on a trading venue between 01 November 2017 and 2 January 2018 (included)

European and Securities Market Authority issues list of trading venues temporarily exempted from open access under MiFIR

ESMA has issued a list of the trading venues for which a temporary exemption from the open access provisions under 36(5) of the Markets in Financial Instruments Regulation (MiFIR) exists. The list provides a list of those trading venues that have notified ESMA of the intention to temporarily opt-out from the access provisions for exchange-traded derivatives (ETDs).

European and Securities Market Authority publishes register of derivatives to be traded on-venue under MiFIR

ESMA has published a public register of those derivative contracts that are subject to the trading obligation under the Markets in Financial Instruments Regulation. The register provides clarity to market participants on the application of the trading obligation under MiFIR and in particular on:

  • the classes of derivatives subject to the trading obligation
  • the trading venues on which those derivatives can be traded
  • the dates on which the obligation takes effect per category of counterparties

European and Securities Market Authority publishes first MiFID II position management controls for commodity derivatives

ESMA has issued a first badge of position management controls under the Markets in Financial Instruments Directive (MiFID II). MFID II requires Member States to ensure that an investment firm or a market operator operating a trading venue which trades commodity derivatives apply position management controls. Investment firms or market operators operating trading venues have to inform their national competent authority (NCAs) of the details of position management controls who in turn inform ESMA, which shall publish and maintain on its website a database with summaries of the position management controls.

European and Securities Market Authority calls for evidence on CfD and binary option investor protection concerns

ESMA has issued a call for evidence on investor protection concerns arising from the sale, distribution or marketing of contracts for difference (CfDs) and binary options to retail clients. The publication follows a statement on 15 December 2017 in which ESMA set out that it is considering measures under Article 40 of MiFIR. Such measures include restricting the marketing, distribution or sale to retail clients of CfDs, and prohibiting the marketing, distribution or sale to retail clients of binary options.

Consultation Paper - draft guidelines on anti-procyclicality margin measures for central counterparties

ESMA has invited comments to its consultation on the draft guidelines on anti-procyclicality margin measures for central counterparties which is opened until 28 February. These guidelines are addressed to the competent authorities designated under Article 22 of EMIR that supervise CCPs authorised under Article 14 of the EMIR. ESMA will consider the responses received and expects to publish the final guidelines by the first half of 2018.

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

Date Published: 8 February 2018