Tracker, Financial Services Regulation & Compliance - Cross Sectoral


Central Bank publishes Feedback Statement to Consultation Paper 95 – Funding the Cost of Financial Regulation

The aim of CP95, which was published on the 3 of July 2015, was to gather views on a move from the current approach of partial industry funding of financial regulation towards full industry funding. The feedback statement shows that the Minister of Finance and the Central Bank is responding to industry’s strong request that any move to a full funding model should be introduced on a phased basis. The outcome of CP95 is that:

  • Industry funding levy moves to 65 per cent for most regulated firms in 2017
  • Levying process for credit institutions, EEA investment firms and EEA fund service providers will change in 2017
  • Changes to levies for branches of EEA insurance companies to be phased in over two years

The Minister’s approval would be required for any further increases beyond 65% in future years.

Central Bank publishes Feedback Statement on CP108 Consultation on the New Methodology to Calculate Funding Levies for Credit Institutions, Investment Firms and Fund Services Providers and EEA insurers

CP 108 was published to gather the relevant stakeholder's thoughts on new methodologies for calculating the industry funding levy for credit institutions, investment firms, fund service providers, EEA insurance companies, EEA investment firms and EEA fund service providers. As a result of the consultation the following changes will be introduced:

  • Credit institutions - the Central Bank will proceed with the adapted ECB Methodology for calculating the industry funding levies and this will commence in 2017.
  • Investment firms and fund service providers - the proposed new levy methodology will be applied once MiFID II implementation is complete and to facilitate changes to PRISM impact scores in light of the new regulations.
  • EEA insurance companies - for category 1 branches, the levy amount will be aligned to half of the medium high insurers’ levy and it will be phased in over 2 years, commencing in 2017; for category 2 branches, the levy amount will be half of the medium low insurers’ levy and this will commence from 2017 onwards; and category 3 branches will continue to be levied as before.
  • EEA investment firms and EEA insurers - the Central Bank will proceed with introducing a fixed levy equal to the flat levy component of Irish investment firms and Irish fund service providers.

Deputy Governor Sharon Donnery gives speech on the Central bank risk management in a changing institutional and regulatory environment

The speech was given at the joint Banco de Portugal - European Central Bank Conference on Risk Management on the 26 September 2017. She focused on the impact of regulation on central bank counterparties, and hence collateral for central banks, noting that central banks need to be aware of developments in this area which could require enhancing risk measurement capabilities. Ms. Donnery also touched on the prudent management of central bank balance sheets; and risk management and the co-ordination of supervisory and monetary policy mandates.

Financial Regulation today and an insight to Asset Management Supervision - Michael Hodson, Director of Asset Management Supervision

Mr. Hodson provided a brief overview of the Asset Management Supervision directorate and he addressed a number of important topics relevant to the Irish Asset Management industry today such as MiFID II and Brexit. With regards to MiFID II he highlighted the Central Banks expectation that firms should be in the final stages of their MIFID II implementation projects, with a view to ensuring compliance by the 3 January 2018. Mr. Hodson spoke about client assets and highlighted the Central banks expectation that boards ensure the firm has effective and robust client asset oversight structures in place. In the context of Brexit, Mr. Hodson stated that existing authorised entities should be planning and considering the possible impact that Brexit will have on their business models and revenue streams.

Data Protection Commissioner publishes consultation paper on GDPR

The Data Protection Commissioner published a consultation on Topics of Transparency and International Data Transfers under the General Data Protection Regulation. Responses were requested for 13th October 2017 and will be used as part of the Irish participation in the third ‘Fablab’ in Brussels on 18th October to be attended by members of the EU Article 29 Working Party. The DPC is seeking submissions on a range of issues including, amongst others, the GDPR requires data controllers to take “appropriate measures” to provide information to data subjects; to communicate with individuals in regard to their rights under the GDPR; and to notify data subjects of data breaches and is looking to ascertain what sort of approaches might constitute “appropriate measures” for these purposes.

FATF - Guidance on Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion

The Financial Action Task Force (“FATF”) released a Mutual Valuation Report on anti-money laundering (“AML”) and counter-terrorist financing (“CTF”) measures in Ireland. This report comments on the AML / CTF measures in place in Ireland and the level of effectiveness of Ireland’s AML / CTF system. The report concludes that Ireland has a sound and substantially effective regime to tackle money laundering and terrorist financing. The report also provides recommendations on how the Irish AML / CTF system could be strengthened.

Central Bank publishes Markets Update Issue 7 2017

The Markets Update makes reference to the publication of responses to the Discussion Paper on Exchange Traded Funds (ETF), the recently issued letter to the industry in relation to a themed inspection on MiFID firms compliance with the ESMA “Guidelines on certain aspects of the MiFID suitability requirements”, the transposition of MiFID II into Irish law (S.I 375 of 2017) and confirmation that the Central Banks intends to comply with ESMA Guidelines on the Calibration of Circuit Breakers and Publication of Trading Halts.

Updates also include reference to the amendments to the Consumer Protection Code (CPC) arising from the transposition of MiFID II into Irish law, the new enhancements to the Regulated Disclosures submission process, which will affect submissions under the Prospectus, Transparency and Short Selling legislative regimes.

Central Bank publishes Intermediary Times Issue 3

The third publication of 2017 contains information and updates on important topics including the Amendments to the CPC arising from MiFID II, New Minimum Competency Code Standards, the recently published Discussion Paper: Consumer Protection Code and Digitalisation of Financial Services, the feedback received from the Anti-Money Laundering /Countering the Financing of Terrorism Inspections and information on Ghost Brokers and the potential implications they have for Retail Intermediaries.

Gerry Cross, Director of Policy and Risk gives speech on Brexit and other current issues in financial services regulation

Mr. Cross spoke about the impact of Brexit and that financial firms who sell services to the UK market will need to ensure that they have considered the implications for their business models of a loss of passporting rights on the UK’s exit. He then touched on the European developments in the context of Brexit and referred to important guidance and opinions published by the SSM, ESMA and EIOPA. He noted the Central Bank is conducting a review of ESMA’s three sector specific opinions and that their analysis is consistent with what is in those opinions.


European Banking Authority and the European Securities and Markets Authority issue guidance to assess the suitability of management body members and key function holders

EBA and ESMA have published their joint guidelines to assess the suitability of members of management bodies and key function holders. The guidelines aim to harmonise and improve suitability assessments within EU financial sectors, and to ensure sound governance arrangements in financial institutions in line with the Capital Requirements Directive (CRD IV) and the Markets in Financial Instruments Directive (MiFID II). The guidelines emphasise the need for institutions to assure themselves that candidates have the knowledge, qualification and skills necessary to safeguard proper and prudent management of the institution. The joint guidelines apply to competent authorities across the EU, as well as to institutions on an individual and consolidated basis and they will be effective as of 30 June 2018.

General Data Protection Regulation - new regulation for the protection of data

General Data Protection Regulation (GDPR) will come into force in all EU Member States on the 25 May 2018. The GDPR will regulate the processing of personal data and aims to strengthen data subjects’ data protection rights. The European Commission has also issued a proposal for a regulation of the European Parliament and of the Council concerning the respect for private life and the protection of personal data in electronic communications and repealing Directive 2002/58/EC. All matters concerning the processing of personal data not specifically addressed by the proposal are covered by the GDPR.

New Working Group on a Risk-Free Reference Rate for the Euro Area

The Belgian Financial Services and Markets Authority, ESMA, the ECB and the European Commission have announced the launch of a new working group that will identify and adopt a risk-free reference rate for the euro area. This can be used as a basis for an alternative to current benchmarks used in financial instruments and contracts in the euro area. The ECB has also announced that it will start providing an unsecured overnight interest rate.

The Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA ESAs) publishes Autumn 2017 Report on risks and vulnerabilities in the European Union's financial system

The Report highlights the risks to the stability of the European financial sector in an uncertain political and economic environment, especially due to the UK’s withdrawal from the EU. It also highlights persistent valuation risk with an uncertain outlook for yields and the low profitability of financial institutions. The report also offers regulatory and supervisory initiatives to monitor and mitigate the risks identified.

European Commission publishes proposed reforms to foster CMU and financial integration

The European Commission has published proposed reforms to foster Capital Markets Union and financial integration. A Commission communication and an impact assessment were published with these reforms. The main focus of the reforms is on stronger coordination of supervision across the EU. The proposals extend direct capital markets supervision by ESMA, improved governance and funding of the ESAs, and promote sustainable finance and FinTech.

European Central Bank publishes report on payment systems: liquidity saving mechanisms in a distributed ledger

In December 2016, the Bank of Japan (BOJ) and the ECB started a joint research project entitled “Stella” to assess the applicability of Distributed Ledger Technology (DLT) solutions in the area of financial market infrastructures. This report is the first outcome of their findings. Findings include that DLT performance is affected by network size and distance between nodes, DLT solutions have the potential to strengthen resilience and reliability and DLT-based solutions could meet the performance needs of a Real-Time Gross Settlement system.

European Commission publishes summary of contributions to the 'Public Consultation on FinTech: a more competitive and innovative European financial sector'

The purpose of the consultation was to gather views from stakeholders with the aim of enhancing the Commission's policy approach towards technological innovation in financial services. Those who responded indicated support for EU level action were a clear EU Framework for crowd- and peer-to-peer financing. Respondents also sought more clarity and harmonisation across the EU on how supervisors handle licencing, outsourcing, (there was a specific mention of cloud services) and support for innovation. Respondents also expressed the need for increased cyber security and more developed interoperability and standardisation.

European Securities and Markets Authority updates Q&As on the Benchmarks Regulation

The Q&A include four new answers regarding the scope of the Benchmark Regulations (BMR): (i) Application of the BMR to EU and third country central banks; (ii) Exemption on single reference price and definitions of the BMR: (i) “family of benchmarks”, (ii) “use of a benchmark”.

European Securities and Markets Authority updates Q&A on MAR

The update includes a new detailed answer on the obligations of the issuers in the particular case of delayed inside information that then loses its price sensitivity feature during the delay period.

The European Securities and Markets Authority has launched a consultation on Guidelines detailing the obligations which apply to non-significant benchmarks under the Benchmarks Regulation

These guidelines apply to the provision of non-significant benchmarks and the contribution to non-significant benchmarks. The Consultation Paper proposes reduced requirements for non-significant benchmarks, their administrators and their supervised contributors. It predominantly focuses on four areas. These are the procedures, characteristics and positioning of oversight functions, the appropriateness and verifiability of input data, transparency of methodology; and governance and control requirements for supervised contributors. The consultation closes on 30 November 2017.

ESAs provide guidance to prevent terrorist financing and money laundering in electronic fund transfers

The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) has published guidelines to prevent the abuse of funds transfers for terrorist financing and money laundering purposes. The guidelines detail the procedures payment service providers should put in place to manage a transfer of funds lacking the required information. The guidelines provide details of what effective procedures should detect. The guidelines will apply from six months after the date on which they were issued (22 September 2017).

Commission publishes Delegated Regulation supplementing Regulation (EU) 2016/1011

This delegated regulation specifies how the nominal amount of financial instruments other than derivatives, the notional amount of derivatives and the net asset value of investment funds are to be calculated to determine whether a benchmark would have to be recognised as critical.

European Banking Authority publishes Opinion in response to the European Commission's Call for Advice on Investment Firms

Following the EBA report on investment firms published on 15 December 2015, the EBA received a second call for advice from the Commission in June 2016 to provide further technical advice on the recommendations included in that report. This Opinion contains the EBA response which includes a detailed list of recommendations in respect of investment firms including advice on consolidated supervision, capital and liquidity requirements.

Prudential Regulation Authority (PRA) Issues SS6/17 on Compliance with the EBA Guidelines on Disclosure

SS6/17 is relevant to firms to which Part Eight of the Capital Requirements Regulation (CRR) applies. The objective of SS6/17 is to aid the PRA meet its aim of promoting the safety and soundness of firms. The ability of central banks to undertake liquidity assistance effectively is regarded as critical to financial stability. The SS6/17 seeks to reduce the risk that firms’ compliance with the EBA Guidelines could enable the use, or non-use, of liquidity assistance to be deduced.

The European Securities and Markets Authority updates MiFID II Q&As on investor protection

ESMA has published an updated version of its Q&As of its questions and answers (Q&As) on investor protection topics under the MiFID II Directive (2014/65/EU) and MiFIR. ESMA has added new Q&As covering:

  • Client categorisation
  • Post-sale reporting
  • Recording of telephone conversations and electronic communications
  • Best execution
  • Information on costs and charges

ESMA first published the Q&As in October 2016

European Securities and Markets Authority updates European Market Infrastructure Regulation (EMIR) and Central Securities Depositaries Regulation (CSDR) Q&As

ESMA has updated two of its guidelines regarding two pieces of post-trading regulation, EMIR and CSDR. In the updated version of the Q&As on EMIR, there is an amended answer to general question 1 on funds and counterparties (see pages 11 and 12). The amended answer applies from 1 November 2017. In addition, the Q&A on the definition of OTC derivatives (general 1) has been modified (see pages 15 and 16). There is also a new Q&A (CCP 22) on the ongoing monitoring of collateral requirements (see pages 67 and 68). The CSDR updates feature three new Q&As: CSD 5(c) on the protection of securities of participants and those of their clients (see pages 13 and 14); CSD 7(b) and (c) on the provision of banking-type ancillary services (see pages 15 and 16); and CSD 10(a)-(c) on requirements for CSD links (see pages 17 and 18).

European Commission adopts Delegated Regulation supplementing Benchmarks Regulation

On 3 October 2017, the European Commission adopted a Delegated Regulation (C(2017) 6474) final with regard to the establishment of the conditions to assess the impact resulting from the cessation of or change to existing benchmarks under the BMR (Regulation (EU) 2016/1011) . The Delegated Regulation is based on an optional empowerment in Article 51 of BMR. To ensure that competent authorities apply Article 51(4) of BMR in the same manner, the Delegated Regulation sets out in detail under which conditions they can conclude that the cessation or changing of an existing benchmark could result in a force majeure event, or could frustrate or otherwise breach the terms of a financial contract or financial instrument, or the rules of an investment fund, referencing an existing benchmark.

European Commission publishes proposal for legislative reforms to European System of Financial Supervision

The proposal sets out specific amendments to the ESA Regulations and includes the following:

  • Proposal for a Regulation of the European Parliament and of the Council Amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority);
  • Regulation (EU) No 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority);
  • Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority);
  • Regulation (EU) No 345/2013 on European venture capital funds;
  • Regulation (EU) No 346/2013 on European social entrepreneurship funds; Regulation (EU) No 600/2014 on markets in financial instruments;
  • Regulation (EU) 2015/760 on European long-term investment funds;
  • Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds; and
  • Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market.

European Securities and Markets Authority updates MiFID II Q&As on market structures and transparency

ESMA has added new Q&As covering:

  • Direct Electronic Access (DEA) and algorithmic trading
  • Multilateral and bilateral systems
  • Transparency requirements
  • Non-equity transparency
  • The systematic internaliser (SI) regime

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

Date published: 09 October 2017