We’re only two months into 2017, and already we’ve seen regulatory game changing moves from both the US and the UK. President Trump has issued an Executive Order that requires a roll-back of financial regulation, and PM May confirmed that the UK would not seek continued membership of the Single Market. It will be interesting to see what happens in the European national elections later this spring.
Fundamentally linked to ‘what happens next?’ within the new US administration, is the forthcoming Basel Committee meeting (1-2 March), with latest press reports suggesting the Committee is not expected to reach agreement on capital requirements rules to keep lenders stable in a crisis, because approving any deal would be difficult until a new US Federal Reserve top financial supervisor has been appointed. We look at four possible scenarios that might emerge from the talks.
We discuss how much has been achieved and what more needs to be done as the Capital Markets Union (CMU) reaches the half-way point of its four-year plan to improve the functioning of European capital markets. Plus we look at the headline points from a selection of the key topics surrounding MiFID II, including the Systematic Internaliser regime, investment research and commodity derivative firms.
ESMA announcements are coming through in quick succession. We look at its opinion on Share Classes for UCITS, its extensive Supervisory Convergence Programme and its calls for overhaul of the EU 'third country' framework. We take a view on the Financial Stability Board (FSB) consultation on the resolution of central counterparties (CCPs) guidelines. And in insurance, we discuss the journey towards implementation of the Insurance Distribution Directive (IDD) and EIOPA’s Single Programming Document outlining its objective over the next few years.
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Partner and Head of Financial Services
With the Basel Committee due to meet again on 1-2 March and the Governors and Heads of Supervision in mid-March it is timely to consider possible outcomes.
Capital Markets Union (CMU) is already half way into its four-year plan to improve the functioning of European capital markets. How much has been achieved and what more needs to be done?
The amended Markets in Financial Instruments Directive (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) is currently one of the most far-reaching sets of regulation that financial services firms across Europe are facing.
ESMA has issued its final opinion on the types of share classes that may be created within any one UCITS or sub-fund of an umbrella UCITS. For the first time at European level, some types of share classes that have been permitted by certain national regulators may have to close to new investment and, eventually, convert to separate funds or sub-funds.
ESMA’s 2017 Supervisory Convergence Work Programme aims to promote sound, efficient and consistent supervision across the European Union. It commits itself and the national regulators (NCAs) to four main priorities: the implementation of MiFID II/MiFIR and MAR; improving the quality of data collected by the NCAs; investor protection issues when receiving services cross-border; and convergence in the supervision of EU central counterparties (CCPs). The programme is wide-ranging, though, and includes areas of work impacting each sector under its purview. Also, it comments on third country issues.
In a speech to the European Alliance of Liberals and Democrats, ESMA’s Chair, Steven Maijoor, called for a fundamental review of the current patchwork of third country provisions in EU legislation and stressed the need for greater supervisory convergence within the EU. He also cautioned national regulators not to compete on regulatory or supervisory treatment in order to win a greater share of business that is moving from the UK as a result of Brexit, in particular regarding the possibility for firms to delegate or outsource activities back to the UK.
The Financial Stability Board (FSB) is consulting (PDF, 380KB) on a set of guidelines for the resolution of central counterparties (CCPs). CCPs have become of greater systemic importance following the post- financial crisis reforms to mandate the central clearing of standardised OTC derivatives.
February saw a number of developments in the journey towards implementation of the Insurance Distribution Directive (IDD), which will apply from 23 February 2018.
On 30 January, EIOPA published its Single Programming Document 2017-2019, which covers its strategic objectives, work plan for 2017 and funding requirements.
‘IM regulatory insights’ is a monthly update from Julie Patterson, Head of Investment Management, Regulatory Change, Financial Services Regulatory Centre of Excellence, EMA region. Click here to read the latest edition which looks at how 2017 looks set to be the year when some existing cross-border business models are called into question as three separate debates coalesce: supervisory convergence, third-country provisions and 'Brexit'. The full series can be found here.