Financial Services Regulation & Compliance - Investment Firms Nov 2017

DOMESTIC

Central Bank publishes document on the reporting requirements for IIA non-retail investment business firms

The Central Bank has published a document outlining the reporting requirements for IIA non-retail investment business firms. The document is broken down into two parts, the first section focusing on scheduled returns and the second focusing on ad-hoc returns. The document includes information on the types of returns, who they are applicable to, the return frequency and related guidance/comments on each return.

Central Bank publishes feedback statement on Consultation Paper 111

CP 111 outlines proposed amendments to the first edition of the Central Bank Investment Firms Regulations (the first edition) which was published by the Central Bank on 13 March 2017. The second edition will now include additional parts which will incorporate the Client Asset Regulations (part 6),  the Investor Money Regulations (part 7), both which will contain some modifications and an additional part 8 that will set out the capital requirements applied to market operators.

EUROPEAN

European and Securities Market Authority publishes report on access to public capital markets for SMEs

The Report focuses on two topics which are relevant to capital markets, SMEs growth markets and corporate bonds issued by SMEs. The Report highlights how the concept of SME growth markets has not yet been fully implemented and therefore shows that there is a need to have identifiable success parameters. The report goes on to note that the corporate bond market appears to have different regulatory frameworks and that credit risk assessment of mini-bonds is a cause for concern. The Report also raises a potential gap in SME funding.

European and Securities Market Authority report on trends, risks and vulnerabilities No. 2, 2017 

ESMA's risk assessment in Q2 remains unchanged from Q1. Market performance reflected increasing market confidence and improved expectations on the future economic outlook in EU and globally. Brexit-related uncertainties remain among the most important political sources of risk. In terms of trends, equity markets continued to gain across countries, related to the economic recovery in EU and supportive monetary policy, notwithstanding risks at EU and global level. Developments in corporate and sovereign bond yields were mixed, volumes in EA repo transactions grew and net short positions on sovereign debt increased.

European and Securities Market Authority issues consultation paper on systematic internalisers' quote rules

ESMA has published a consultation paper on Amendments to Commission Delegated Regulation (EU) 2017/587 (RTS1) explaining ESMA’s proposal for amending RTS 1. ESMA proposes to amend RTS 1 to clarify that systematic internalisers’ (SI) quotes should reflect the price increments applicable to EU trading venues. ESMA invites stakeholders to provide feedback on the proposal by 25 January 2018. The input from stakeholders should help ESMA to finalise its amendments to RTS 1. On the basis of the responses received to the consultation paper, ESMA will finalise the draft RTS amending RTS 1 and submit the final report to the European Commission for endorsement.

European and Securities Market Authority updates questions and answers on MiFID II and MiFIR investor protection and intermediaries topics

ESMA has updated its Q&A on MiFID II and MiFIR investor protection and intermediaries topics. The updates include:

  • record keeping
  • post-sale reporting
  • inducements

European and Securities Market Authority clarifies trading obligation for shares under MiFID II

ESMA has updated its Q&As regarding the implementation of MiFID II. They have included a Q&A clarifying that all EU investment firms that are part of a chain of transmission should ensure that the ultimate execution of the order complies with the trading obligation requirements under Article 23(1) of MiFIR.

European and Securities Market Authority updates questions and answers on MiFID II and MiFIR market structures topics

ESMA has updated its Q&A on MiFID II and MiFIR market structures topics. The update includes new answers regarding:

  • Direct Electronic Access (DEA) and algorithmic trading
  • the tick size regime
  • multilateral and bilateral systems

European and Securities Market Authority updates questions and answers on MiFID II and MiFIR commodity derivatives topics

ESMA has updated its Q&A on MiFID II and MiFIR commodity derivatives topics. The update includes new answers regarding:

  • position limits
  • ancillary activity
  • position reporting

European and Securities Market Authority updates questions and answers on MiFID II transparency topics

ESMA has updated its Q&A on MiFID II and MiFIR transparency topics. The update includes new answers regarding:

  • flags and details for the purpose of post-trade transparency
  • use of 'PNDG' as price when, making transactions public
  • obligation to make available data free of charge 15 minutes after publication

European and Securities Market Authority updates questions and answers on MiFIR data reporting

ESMA has updated its Q&A on MiFIR transparency topics. The update clarifies:

  • transaction reporting for primary issuances
  • corporate events 
  • portfolio management
  • swaps related to indices

Summary of Conclusions SMSG meeting on 21 September 2017

At their Securities and Markets Stakeholder Group (SMSG) only preparatory meeting before the meeting with the Board of Supervisors on 24 May 2018, the group had a brief discussion on ESA Review. SMSG members gave their preliminary assessments of the legal proposal that had been issued by the Commission. The SMSG decided to establish a working group firstly to prepare a discussion with ESMA, possibly together with the Board of Supervisors at the November meeting, and secondly to draft a short letter outlining the SMSG’s assessment on the implications of new “rights” the stakeholder groups of the ESAs will have according to the Commission’s proposal.

Advice to European and Securities Market Authority - response to ESMA's consultation paper on "Guidelines on certain aspects of the MiFID II suitability requirements"

The SMSG has responded to ESMA's consultation paper on certain aspects of the MiFID II suitability requirements. On the whole, the SMSG is of the opinion that the draft guidelines are sound and beneficial to the protection of the investor. The SMSG I particularly happy with the approach taken by ESMA to thoroughly re-examine all guidelines and add new guidance where necessary. The SMSG also provided a number of comments on the guidelines, including the difficulty, cost and time required in implementing them.

European and Securities Market Authority publishes MiFID compliance function peer review results

The Review found a high level of compliance by the majority of EEA national competent authorities NCAs with the guidelines, although significant weaknesses were identified in the supervisory approaches of Cyprus, Iceland and the Netherlands. The review also identified a number of good practices by a number of NCAs in their supervision. ESMA will follow up regarding the points of insufficient compliance and partial compliance with the relevant NCAs.

MiFID II: European and Securities Market Authority consults on systematic internalisers' quote rules

ESMA has opened a public consultation on a proposed amendment to the Regulatory Technical Standard (RTS 1) which details the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). ESMA proposes to amend RTS 1 to clarify that systematic internalisers’ (SI) quotes. ESMA proposes to amend RTS 1 to clarify that systematic internalisers’ (SI) quotes should reflect the price increments applicable to EU trading venues.

The European Commission issues a proposal for a Regulation amending Regulation (EU) No 648/2012 (EMIR)

The proposed amendments are in relation to the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories. The proposal suggests that the EU might back away from the regulatory requirement for buy-side clients to post-margin on foreign exchange forward contracts, leaving the obligation applying to inter-dealers only.

European Central Bank issues an opinion on the Commission's proposal for a regulation amending Regulation (EU) No 648/2012 (EMIR)

The opinion notes that the ECB generally supports the Commission's initiative to introduce a number of targeted modifications to EMIR (as mentioned in the previous update) with a view to simplifying the applicable rules and eliminating disproportionate burdens.

Date published: 11 December 2017