Financial Services Regulation & Compliance - Investment Firms May 2018
Central Bank issues its Second Consultation Paper on the corporate governance requirements for investment firms and market operators
In this paper the Central Bank demonstrated its committed to strengthening corporate governance standards and practices across the financial services industry. Through its supervisory engagement with firms, the Central Bank has identified corporate governance deficiencies whereby poor corporate governance structures have resulted in firms being exposed to increased risks. These deficiencies have contributed towards undermining board effectiveness, prudent management, good culture, strong risk management and oversight, and the safety and soundness of these firms.
The Markets in Financial Instruments Bill has been referred to Committee Stage in the Seanad. Proposed amendments include provision for indictable offences for contraventions under the MiFID II Regulations, bringing greater maximum penalties. Other changes include a widening of credit institutions' credit reporting obligations under the Credit Reporting Act 2013 through an expanded definition of 'credit', as well as a broadened definition of 'long-term financial service' under the Financial Services and Pensions Ombudsman Act 2017.
Markets in Financial Instruments Bill 2018
The Markets in Financial Instruments Bill has been referred to Committee Stage in the Seanad. Proposed amendments include provision for indictable offences for contraventions under the MiFID II Regulations, brining greater maximum penalties. Other changes include a widening of credit institutions' credit reporting obligations under the Credit Reporting Act 2013 through an expanded definition of 'credit', as well as a broadened definition of 'long-term financial service' under the Financial Services and Pensions Ombudsman Act 2017.
Reporting requirements for MiFID investment firms
The Central Bank of Ireland published reporting requirement guidelines for MiFID investment firms.
MiFID II: ESMA publishes bond liquidity assessment for bonds
ESMA has launched its bond liquidity system under MiFID II. Based on an assessment of the first quarter of 2018, 220 bonds out of 71,000 were sufficiently liquid. The transparency requirements for liquid bonds will run from 16 May 2018 until 15 August 2018 i.e. until the next quarterly assessment.
ESMA launches companies' portal
The portal will provide a portal helping investors identify authorised financial service providers within the EU. The portal includes registers on MiFID Trading venues and MiFID Investment firms amongst others.
ESA calls for responses to questions relating to EMIR Clearing Obligation under the Securitisation Regulation
The ESA has invited interested parties to respond to questions asked in the Consultation Paper on the amendments to the EMIR Clearing Obligation under the Securitisation Regulation.
Commission proposes amendment to regulation of OTC derivatives
The European Commission has proposed an amendment to Regulation No 648/ 2012 (EMIR) that would impact the clearing obligation, reporting requirements, and risk mitigation techniques for over-the-counter (OTC) derivatives not cleared by a central counterparty. The proposal also includes amendments to the registration and supervision of trade repositories. The Commission believes that the amendments will provide regulators with more information about the OTC derivatives market and will help mitigate credit risk between OTC derivative counterparties.
ECB issues opinion on European Supervisory Authority
The ECB released an opinion in response to a proposed Regulation and two proposed Directives. The Council and the European Parliament have proposed a Regulation to amend Regulation EU 1095/2010, in order to establish a European Supervisory Authority. The Directives propose to amend the MiFID II Directive and the Solvency II Directive.
These requirements enable competent authorities to waive the obligation for market operators and investment firms operating a trading venue, to make public pre-trade information for non-equity instruments. Furthermore, transactions in non-equity instruments may also benefit from deferred publication. In addition, for equity instruments the Regulation introduces a tick size regime.
ESMA updates Q & A on MiFIR data reporting
The European Securities and Markets Authority (ESMA) has today updated its Q&As on data reporting under the Market in Financial Instruments Regulation (MiFIR).
The Q&As provide clarifications in relation to the requirements for submission of transaction reports and reference data under MiFIR. In particular, the Q&As relate to Complex Trades and National client identifiers for natural persons.
ESMA promotes consistent (anti-)procyclicality margin measures for CCPs
ESMA has issued final guidelines on anti-procyclicality margin measures for central counterparites (CCPS) under the European Market Infrastructure Regulation (EMIR). The guidelines seek to establish consistent, efficient and effective supervisory practices and to ensure a common, uniform and consistent application of EMIR in order to limit procyclicality of CPP margins.
ESMA publishes final Guidelines on MiFID II suitability requirements
ESMA had published its final report on Guidelines on certain aspects of the MiFID II suitability requirements.
The assessment of suitability is one of the most important requirements for investor protection in the MiFID framework. It applies to the provision of any type of investment advice, whether independent or not, and portfolio management. Investment firms providing investment advice or portfolio management must, under Article 25(2) of MiFID II and Articles 54 and 55 of the MiFID II Delegated Regulation, to provide suitable personal recommendations to their clients or have to make suitable investment decisions on behalf of their clients.
For further information please contact a member of the Financial Regulation team.
Date Published: 8 June 2018