1. finance
2. bank

13 NOVEMBER 2014
ISSUE 787
Financial Regulation
Weekly Bulletin
Major UK and European regulatory developments of interest to banks, insurers and reinsurers,
asset managers and other market participants
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Selected Headlines
General
Banking and Finance
Insurance
Asset Management
Securities and Markets
Financial Crime
Enforcement
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Selected Headlines
GENERAL
Effective resolution regimes for G-SIFIs - FSB submits progress report to
G20
BANKING AND FINANCE
Total loss-absorbing capacity for G-SIBs - FSB consults on proposal for a
common international standard
CRR - European Commission Delegated Regulation on RTS for determining
the overall exposure to a client or a group of connected clients published in
the Official Journal of the EU
CRR - EBA consults on draft RTS on the assessment methodology for IRB
Retail banking products - EBA consults on Guidelines on product oversight
and governance arrangements
Bank Recovery and Resolution Directive - EBA issues consultation on draft
RTS on valuation
Bank Recovery and Resolution Directive - EBA consults on draft Guidelines
on the rate of conversion of debt to equity in bail-in
Bank Recovery and Resolution Directive - EBA consults on draft Guidelines
on the treatment of shareholders in bail-in
Leverage ratio - HM Treasury launches consultation on FPC’s framework
Foreign exchange market investigation - Bank of England publishes Lord
Grabiner’s independent report
Policy Statement FCA PS14/14 and PRA PS11/14: CRD IV: data collection
on remuneration practices
PSR CP14/1: A new regulatory framework for payment systems in the UK
FCA Policy Statement PS14/16: Detailed rules for the price cap on highcost short-term credit
Plevin v Paragon Personal Finance Ltd - Supreme Court finds unfair
relationship
ASSET MANAGEMENT
Regulation of money market funds - IOSCO publishes report to G20
KIDs for PRIIPs - Council adopts Regulation
AIFMD passport and third country AIFMs - ESMA call for evidence
1.1
4.1
6.1
8.2
8.3
8.4
8.5
8.6
9.1
10.1
12.1
13.1
14.3
15.1
21.1
22.2
23.1
FINANCIAL REGULATION
13 November 2014
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
SECURITIES AND MARKETS
OTC derivatives market reforms - FSB publishes eighth progress report on
implementation
OTC derivatives - ORDG report to G20 Leaders on cross-border
implementation issues
Incentive alignment recommendations for securitisation - IOSCO
publishes report to G20
EMIR - ESMA consults on revised standards on reporting to trade repositories
FINANCIAL CRIME
Cyber resilience in financial market infrastructures - CPMI publishes report
ENFORCEMENT
Spot foreign exchange trading - FCA fines five banks £1.1 billion and
announces industry-wide remediation programme
Insider dealing - Former trader pleads guilty
Insurance
Enforcement
25.1
26.1
27.1
29.1
32.1
33.1
33.2
General
1.
Financial Stability Board
1.1
Effective resolution regimes for G-SIFIs - FSB submits progress report to G20 - 12 November 2014 - The
Financial Stability Board (FSB) has published a report to G20 leaders on the progress in reform of resolution
regimes and resolution planning for global systemically important financial institutions (G-SIFIs). The report
reviews developments in the implementation of the ‘FSB Key Attributes of Effective Resolution Regimes for
Financial Institutions’. It also includes the initial results from the FSB’s Resolvability Assessment Process.
The report is here.
The press release is here.
2.
Council of the European Union
2.1
European System of Financial Supervision - Council adopts conclusions - 7 November 2014 - The Council
of the EU has adopted conclusions on the review of the European System of Financial Supervision (ESFS)
(comprising the European Systemic Risk Board and the European Supervisory Authorities - the European
Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the
European Securities and Markets Authority (ESMA)).
The conclusions are here.
3.
Financial Conduct Authority
3.1
Conduct regulation in a recovery - speech by FCA Chairman, John Griffith-Jones - 13 November 2014 The Chairman of the FCA, John Griffith-Jones, has delivered a speech on conduct regulation in a recovery.
The theme of his speech is the direction that conduct regulation will need to take to ensure a safe and
successful financial services sector in the future. Mr Griffith-Jones spoke about: structure (in particular, twinpeaks in the UK and the work of the FSB); the need for clarity of what regulators expect of financial services
firms (and the continuing role of Principles); effectiveness of regulation (including the overall benefit of early
02
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Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
intervention and the fact that, pending cultural change, firms may need more rules and controls); and the
need for improvement by firms and regulators.
The speech is here.
3.2
FCA Handbook Notice No. 16 - November 2014 - The FCA has published Handbook Notice No. 16 outlining
changes made to the Handbook by one instrument made by the FCA Board on 25 September 2014 and two
of the three instruments made on 6 November 2014.
Handbook Notice No. 16 is here.
Recent FCA legal instruments can be found here.
Banking and Finance
4.
Financial Stability Board
4.1
Total loss-absorbing capacity for G-SIBs - FSB consults on proposal for a common international
standard - 10 November 2014 - The FSB is consulting on policy proposals for a new minimum standard
on total loss-absorbing capacity (TLAC) of global systemically important banks (G-SIBs). The proposals
were developed in consultation with the Basel Committee on Banking Supervision and consist of a set of
principles and a term sheet for TLAC.
The FSB states that it will, in early 2015, undertake comprehensive impact assessment studies to inform the
calibration of the Pillar 1 element of the TLAC requirement for all G-SIBs.
The principles and term sheet are intended to provide guidance for home and host authorities on how to
determine firm-specific Pillar 2 TLAC requirements in addition to the common Pillar 1 TLAC minimum.
The consultation period ends on 2 February 2015.
The FSB intends to finalise the proposals ahead of the G20 Leaders’ Summit in 2015.
The consultation paper is here.
The press release is here.
5.
Basel Committee on Banking Supervision
5.1
Risk-weighted assets variability and Basel III implementation - Basel Committee publishes reports November 2014 - The Basel Committee on Banking Supervision has prepared two reports ahead of the G20
Leaders’ Summit in Brisbane:
•
a report on measures to reduce excessive variability in banks’ regulatory capital ratios; and
•
an update on implementation of Basel standards.
The report on risk-weighted assets variability is here.
03
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Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
The report on Basel III implementation is here.
The press release is here.
5.2
National discretions - Basel Committee publishes findings of review - November 2014 - The Basel
Committee on Banking Supervision (BCBS) has published the findings from its review on its members’
implementation of national discretions within the Basel capital framework. It includes a list showing the use
of each national discretion by BCBS member. The BCBS will now review some of the items of discretion for
possible renewal.
The report is here.
The holding page is here.
The press release is here.
6.
Official Journal of the EU
6.1
CRR - European Commission Delegated Regulation on RTS for determining the overall exposure to a
client or a group of connected clients published in the Official Journal of the EU - 7 November 2014 European Commission Delegated Regulation (EU/1187/2014) of 2 October 2014 supplementing the Capital
Requirements Regulation (EU/575/2013) with regard to regulatory technical standards (RTS) for determining
the overall exposures to a client or a group of connected clients in respect of transactions with underlying
assets has been published in the Official Journal of the EU.
This Delegated Regulation comes into force on 27 November 2014.
The text is here.
7.
Council of the European Union
7.1
Single Resolution Mechanism and CRD IV - Council decides not to object to Delegated Regulations - 7
November 2014 - The Council, acting through the Economic and Financial Affairs Committee, has decided
not to object to:
•
the adoption by the European Commission of a Delegated Regulation under the Single Resolution
Mechanism on the contributions to cover administrative costs of the Single Resolution Board; and
•
the adoption of a Regulation supplementing the Capital Requirements Directive (2013/36/EU) (CRD
IV) with regard to the methodology for the identification of global systemically important institutions.
Both Regulations can now enter into force unless the European Parliament objects.
The meeting note is here.
The press release is here.
04
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Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
8.
European Banking Authority
8.1
CRD IV - EBA updates single rulebook Q&As - 7 November 2014 - The EBA has updated its Q&As on the
single rulebook relating to the CRD IV reforms and related technical standards and guidelines.
The updated Q&As are here.
8.2
CRR - EBA consults on draft RTS on the assessment methodology for IRB - 12 November 2014 - The EBA
is consulting on its draft regulatory technical standards (RTS) on assessment methodology for the internal
ratings based (IRB) approach under the Capital Requirements Regulation (EU/575/2013) (CRR).
The EBA is holding a public hearing on 9 February 2015.
The consultation period closes on 12 March 2015.
The consultation paper is here.
The consultation page is here.
The press release is here.
8.3 Retail banking products - EBA consults on Guidelines on product oversight and governance
arrangements - 10 November 2014 - The EBA is consulting on draft Guidelines on product oversight and
governance arrangements for retail banking products. The Guidelines are to apply both to manufacturers
and distributors of retail banking products (such as mortgages, loans, deposits, credit cards, payment
services, payment accounts and electronic money) and seek to ensure that the interests, objectives and
characteristics of consumers are taken into account.
The EBA is holding a public hearing on 15 January 2015.
The consultation period closes on 10 February 2015.
The EBA expect to publish final guidelines in Q2 2015, to apply from 1 April 2016.
The consultation paper is here.
The new webpage on Guidelines is here.
The press release is here.
8.4 Bank Recovery and Resolution Directive - EBA issues consultation on draft RTS on valuation - 7
November 2014 - The EBA has issued a consultation paper on draft RTS on valuation under the Bank
Recovery and Resolution Directive (2014/59/EU) (BRRD).
The EBA is holding a public hearing on 16 January 2015.
The consultation period closes on 6 February 2015.
The consultation paper is here.
05
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Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
The consultation page is here.
The press release is here.
8.5
Bank Recovery and Resolution Directive - EBA consults on draft Guidelines on the rate of conversion
of debt to equity in bail-in - 11 November 2014 - The EBA has published a consultation paper on draft
Guidelines on when and how different conversion rates from debt to equity should be set for different types
of liability on bail-in under the BRRD.
The EBA is holding a public hearing on 12 January 2015.
The consultation period closes on 6 February 2015.
The consultation paper is here.
The consultation page is here.
The press release is here.
8.6
Bank Recovery and Resolution Directive - EBA consults on draft Guidelines on the treatment of
shareholders in bail-in - 11 November 2014 - The EBA has published a consultation paper on draft
Guidelines for the treatment of shareholders in bail-in or the write-down and conversion of capital
instruments under the BRRD.
The EBA is holding a public hearing on 12 January 2015.
The consultation period closes on 6 February 2015.
The consultation paper is here.
The consultation page is here.
The press release is here.
8.7
Deposit Guarantee Schemes Directive - EBA consults on draft Guidelines on methods for calculating
contributions - 10 November 2014 - The EBA has issued a consultation paper on draft Guidelines on
methods for calculating contributions to Deposit Guarantee Schemes under Article 13(3) of the Deposit
Guarantee Schemes Directive (2014/49/EU).
The EBA is holding a public hearing on 8 January 2015.
The consultation period closes on 11 February 2015.
The consultation paper is here.
The consultation page is here.
The press release is here.
06
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Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
9.
HM Treasury
9.1
Leverage ratio - HM Treasury launches consultation on FPC’s framework - 7 November 2014 - HM
Treasury has launched a consultation on the leverage ratio framework, over which the Financial Policy
Committee (FPC) has recommended it be granted new powers of direction. The FPC’s recommendation was
reported in this Bulletin last week. Accompanying the consultation paper is the draft Bank of England Act
1998 (Macro-prudential Measures) (No.2) Order, to be made, subject to affirmative resolution, under section
9L of the Bank of England Act 1998 (as amended by the Financial Services Act 2012).
The draft legislation would grant the FPC powers of direction over:
•
a minimum leverage ratio that will apply to all PRA-regulated banks, building societies and
investment firms. The leverage ratio will apply to global systemically important banks (G-SIBs) and
other major domestic UK banks and building societies as soon as practicable and to all other firms in
scope from 2018;
•
a supplementary leverage ratio buffer for G-SIBs, ring-fenced banks and large building societies. The
leverage ratio buffers will be phased in with risk-weighted systemic buffers for G-SIBs from 2016 and
for ring-fenced banks and large building societies from 2019;
•
a countercyclical leverage ratio buffer that will apply to all institutions subject to the minimum
leverage ratio, from the same timescale as the minimum requirement.
The consultation does not seek views on the FPC’s proposed calibration of the leverage ratio framework.
The consultation period closes on 28 November 2014.
The consultation paper is here.
The draft legislation is here.
The holding page is here.
10.
Bank of England
10.1 Foreign exchange market investigation - Bank of England publishes Lord Grabiner’s independent report
- 12 November 2014 - The Oversight Committee of the Bank of England has published an independent report
by Lord Grabiner QC on whether, between 2005 and 2013, any Bank official was aware of, or involved in,
misconduct in the foreign exchange market. Lord Grabiner’s report found no evidence of this, but criticised
one bank official who was aware that bank traders were sharing aggregated information about client orders
for the purpose of ‘matching’, and was uncomfortable with this, but did not escalate the matter to the
appropriate person. However, the report made clear that the official was not acting in bad faith and was not
aware of specific instances of such behaviour.
Lord Grabiner has made three recommendations to improve processes and procedures at the Bank
concerning documentation, education, and clarity over systems and controls around the Bank’s market
intelligence role.
The Bank has accepted these recommendations and intends to implement them.
07
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Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
The report is here.
The press release is here.
11.
Prudential Regulation Authority
11.1 CRR - PRA gives information on extending the duration of certain waivers and permissions - 10
November 2014 - Following the European Commission Delegated Regulation on the Liquidity Coverage
Requirement, which will become the binding liquidity standard in the EU from 1 October 2015, the PRA has
announced an intention to extend until then the duration of whole-firm liquidity modifications and intragroup liquidity modifications (non-UK DLG) under Chapter 12 of the PRA Prudential Sourcebook for Banks,
Building Societies and Investment Firms (BIPRU 12), and CRR Article 8 permissions. The webpage includes
information on how and which firms should apply for an extension.
The new webpage is here.
12.
Prudential Regulation Authority and Financial Conduct Authority
12.1 Policy Statement FCA PS14/14 and PRA PS11/14: CRD IV: data collection on remuneration practices
including feedback to PRA CP17/14 and FCA CP14/19 and final rules - November 2014 - The PRA and
the FCA have published a joint policy statement, FCA PS14/14 and PRA PS11/14 (PS), setting out their
responses to feedback from the consultation paper (PRA CP 17/14 and FCA CP14/19) on data collection
and remuneration practices under CRD IV, and final rules. The PS sets out the PRA’s and FCA’s approach to
implementing the EBA Guidelines on both the High Earners Report and the Benchmarking Report.
The finalised rules are set out in Appendix 1 and 2 of the PS, and will come into force on 7 November 2014.
The rules have been incorporated into the Supervision Manual (SUP) in the FCA Handbook (SUP 16.17:
Remuneration Reporting) and into the Remuneration part of the PRA Rulebook. Firms are required to submit
data in the new format for the 2014/2015 year onwards.
The instrument ‘PRA Rulebook: CRR Firms: Remuneration reporting requirements 2014’ (PRA 2014/27) has
been published. The instrument makes changes to the PRA Rulebook by deleting SUP 16.17, SUP 16 Annex
33A, SUP 16 Annex 33B, SUP 16 Annex 34A, SUP 16 Annex 34B. The instrument came into force on 7
November 2014.
The PRA has also included PS11/14 on its updated webpage on ‘Supervisory activities - Remuneration
Code’, stating that the policy statement sets out the finalised remuneration data reporting requirements
for the PRA Rulebook. Competent authorities are required to collect information about high earners and
remuneration benchmarking. Templates for data collection are provided in the key resources section.
FCA PS14/14 / PRA PS11/14 is here.
The PRA holding page is here.
The updated PRA webpage on the Remuneration Code is here.
The FCA holding page is here.
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Selected Headlines
Asset Management
13.
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
Financial Conduct Authority and Payment Systems Regulator
13.1 PSR CP14/1: A new regulatory framework for payment systems in the UK - November 2014 - The
Payment Systems Regulator (PSR), a subsidiary of the FCA, is the new regulator consulting (in PSR CP14/1) on
proposals for a regulatory framework for payment systems in the UK provided for in the Financial Services
(Banking Reform) Act 2013, to take effect from 1 April 2015. The proposals are summarised in a consultation
factsheet. The PSR states that those requiring further detail should consult the six supporting papers on:
the PSR and the UK payments industry; payment industry strategy and areas for collaboration; ownership,
governance and control of payment systems; access to payment systems; interchange fees; and regulatory
tools. There are also a number of external reports which are accessible from the consultation webpage. The
FCA has also published the non-confidential responses to the ‘Payment Systems Regulation: Call for Inputs’
dated 5 March 2014.
The regulatory framework includes the following:
•
a new proposed approach to industry strategy development;
•
specific proposals to address key concerns relating to ownership, governance and control of, and
access to, payment systems;
•
principles that set some high-level behavioural standards for industry participants;
•
detailed proposals relating to monitoring, enforcement and dispute resolution; and
•
two market reviews (into the provision of indirect access to payment systems, and into the ownership
and competitiveness of infrastructure provision).
The consultation period ends on 12 January 2015.
The PSR intends to issue a Policy Statement in March 2015.
HM Treasury, who consulted in October 2014, is expected to designate the systems that the PSR will
regulate in good time for the 1 April 2015 start date.
PSR CP14/1 is here.
The consultation factsheet is here.
The consultation webpage is here.
The responses to the Call for Input (696 pages) is here.
The press release is here.
14.
Financial Conduct Authority
14.1 Modification by consent - FCA webpage on CAD2 waivers - 11 November 2014 - The FCA has updated its
webpage on ‘Modification by Consent - SUP 16.12.5R (Note 5), SUP 16.12.11R (Note 5), SUP 16.12.15R (Note
5), SUP 16.12.22.AR (Note 5) and SUP 16.12.25AR (Note 5)’. The modification will allow firms that have a
09
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FINANCIAL REGULATION
13 November 2014
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Enforcement
CAD2 waiver not to submit Form FSA006 where the information contained in Form FSA006 has already
been supplied to the FCA as a condition for the firms’ CAD2 waiver.
The Modification Direction for SUP 16 is here.
The FCA webpage is here.
14.2 Mortgage lending - Speech by the FCA’s Linda Woodall - 5 November 2014 - Linda Woodall, the Director
of Mortgage Lending and Consumer Lending at the FCA, has given a speech at the Council of Mortgage
Lenders Conference in London on mortgage lending in the post Mortgage Market Review world. She
expressed disappointment that some lenders were not applying the transitional provisions in the way that
the FCA had intended, and were applying strict affordability tests when the rules do not require them to do
so or failing to take into account that pension contributions were not committed expenditure. Ms Woodall
also spoke about the thematic work the FCA is undertaking to examine how firms have embedded the new
rules, and the forthcoming implementation of the Mortgage Credit Directive. She also discussed issues
around the ability of elderly people to obtain mortgages and the recent interventions by the Financial Policy
Committee to increase the mortgage interest rate stress test and apply a loan to income cap.
The speech is here.
14.3 FCA Policy Statement PS14/16: Detailed rules for the price cap on high-cost short-term credit,
including feedback on CP14/10 and final rules - November 2014 - The FCA has published a policy
statement (PS14/16) on the detailed rules for the price cap on high-cost short-term credit (including payday
loans). It includes feedback on CP14/10 (July 2014) and final rules.
The FCA price cap structure and levels are as proposed:
•
initial cost cap of 0.8% per day;
•
fixed default fees capped at £15; and
•
total cost cap of 100%.
The FCA states that it has, however, made some changes and clarifications in response to points raised in
the consultation. These are addressed in Chapter 4 of PS14/16.
The FCA states that participation in real-time data sharing is in line with its expectations, therefore it is not
proposing to consult on rules about this at this time.
The FCA’s price cap rules will come into force on 2 January 2015 and the FCA will review it in the first half of
2017.
PS14/16 is here.
The holding page is here.
The press release is here.
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15.
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
Recent Case
15.1 Plevin v Paragon Personal Finance Ltd, [2014] UKSC 61, 12 November 2014
Unfair relationship provisions in Section 140A of the Consumer Credit Act 1974 – non-disclosure of high level of
PPI commission by lender to borrower
The Supreme Court has dismissed the lender’s appeal in this case, but for reasons different from those of the
Court of Appeal.
The Supreme Court held that:
•
non-disclosure of the amount of commission in this case (71.8% of the single-premium paid for
Payment Protection Insurance in connection with a consumer credit agreement), and the identity
of the recipients, made the relationship unfair under section 140A(1)(c) of the Consumer Credit Act
1974. The Court of Appeal’s decision in Harrison and Harrison v Black Horse Ltd [2012] Lloyd’s Rep IR
521 was wrong; and
•
the failure by the lender to conduct a needs assessment did not make the relationship unfair. The
absence of a duty on the lender to conduct such an assessment under the regulator’s Insurance
Conduct of Business Rules (ICOB), and the allocation of that duty under ICOB to the insurance
intermediary, were highly relevant. The intermediary’s failure was not something done “by or on behalf
of” the lender for the purposes of Section 140A because the intermediary was not the lender’s agent.
Lord Sumption (with whom Lady Hale, Lord Clarke, Lord Carnwath and Lord Hodge agreed) said that the
ICOB rules could not be determinative of section 140A unfairness because they were doing different things.
He said, in para 17:
“The fundamental difference is that the ICOB rules impose obligations on insurers and insurance intermediaries.
Section 140A, by comparison, does not impose any obligation and is not concerned with the question whether
the creditor or anyone else is in breach of a duty. It is concerned with the question whether the creditor’s
relationship with the debtor was unfair. It may be unfair for a variety of reasons, which do not have to involve a
breach of duty”.
Lord Sumption went on to point out that the remedies, and enforcement decision makers, were also
different, as was the question to be answered, and the relevant facts and considerations.
On the level of commission, Lord Sumption said, in para 18:
“…at some point commissions may become so large that the relationship cannot be regarded as fair if the
customer is kept in ignorance. At what point is difficult to say, but wherever the tipping point may lie the
commissions paid in this case are a long way beyond it. Mrs Plevin’s evidence, as recorded by the Recorder, was
that if she had known that 71.8% of the premium would be paid out in commissions, she would have “certainly
questioned this.”… had she shopped around, she would not necessarily have got better terms… But Mrs Plevin
did not have to take PPI at all. Any reasonable person in her position… would be bound to question whether the
insurance represented value for money, and whether it was a sensible transaction to enter into”.
The judgment is here.
The press release is here.
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16.
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
13 November 2014
Insurance
Enforcement
Competition and Markets Authority
16.1 Retail banking market investigation - CMA publishes statement of issues - 12 November 2014 - In
connection with its decision to launch ‘phase 2’ of its investigation into retail banking, reported in this
Bulletin last week, the Competition and Markets Authority (CMA) has published more information, a
statement of issues and a timetable.
Initial submissions are due by 3 December 2014.
The final report is due by 5 May 2016.
The statement of issues is here.
The case timetable is here.
The group appointment letter is here.
The press release is here.
17.
Groupe Speciale Mobile Association
17.1 Mobile money - GSMA introduces Code of Conduct for providers - 6 November 2014 - The Groupe
Speciale Mobile Association (GSMA) has introduced a Code of Conduct for Mobile Money Providers,
containing eight principles concerning soundness of services, security of the mobile network and channel,
and the fair treatment of customers. GSMA has also announced the first mobile network operators that
have signed up to the Code. The GSMA has published FAQs on the Code and is working to develop further
guidance.
The Code is here.
The FAQs are here.
An article on the Code is here.
The webpage on the Code is here.
The press release is here.
Insurance
18.
Council of the EU
18.1 IMD2 - Council of the EU close to agreeing general approach - 7 November 2014 - The General Secretariat
of the Council to the EU has suggested that the Council should confirm agreement on the general approach
to the recast Insurance Mediation Directive and invite the Presidency to start negotiations with the European
Parliament with a view to reaching an agreement at first reading. France, Hungary, Luxembourg and the
UK have all made declarations in connection with the proposed general approach. The UK supports the
alignment of IMD2 with MiFID 2 but emphasises that the provisions on inducements in IMD2 are not
consistent with MiFID 2, which should be considered further in trilogue.
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13 November 2014
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Enforcement
The note to the Council is here.
The text suggested is here.
The note recording the text of Declarations made by France, Hungary, Luxembourg and the UK is here.
The procedure file for IMD2 is here.
19.
European Insurance and Occupational Pensions Authority
19.1 Solvency II - EIOPA amends consultation paper on risk free interest rate term structure - 5 November
2014 - EIOPA has published errata to its consultation paper on a technical document regarding the risk free
interest rate term structure (which was originally dated 2 November 2014).
The consultation deadline is 21 November 2014.
The consultation paper is here.
The consultation webpage is here.
20.
New Legislation
20.1 The Diffuse Mesothelioma Payment Scheme (Levy) Regulations 2014 (SI 2014/2904) were made on 3
November 2014 and come into force on 28 November 2014.
SI 2014/2904 is here.
The explanatory memorandum is here.
Asset Management
21.
International Organization of Securities Commissions
21.1 Regulation of money market funds - IOSCO publishes report to G20 - November 2014 - The International
Organization of Securities Commissions (IOSCO) has published a report to G20 leaders setting out the key
preliminary findings of its peer review of member progress in adopting legislation, regulation and policies in
relation to the money market funds.
The report is here.
22.
Council of the EU
22.1 Money Market Funds - Presidency compromise proposal - 10 November 2014 - The Presidency of the
Council of the EU has published a compromise proposal for the Regulation on Money Market Funds.
The compromise proposal is here.
The procedure file for MMF is here.
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13 November 2014
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22.2 KIDs for PRIIPs - Council adopts Regulation - 10 November 2014 - The Council of the EU has adopted
the Regulation on key information documents (KIDs) for packaged retail and insurance-based investment
products (PRIIPs).
The Regulation will come into force 20 days after being published in the Official Journal of the EU. The new
requirements will apply for two years after they come into force and a review will be carried out after four
years. Undertakings for collective investment in transferable securities (UCITS) will not be subject to the
Regulation for five years.
The text is here.
The press release is here.
23.
European Securities and Markets Authority
23.1 AIFMD passport and third country AIFMs - ESMA call for evidence - 7 November 2014 - ESMA has called
for evidence on the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) passport and
third country alternative investment fund managers (AIFMs).
The period for responses closes on 8 January 2015.
ESMA must submit its opinion and advice to the European Commission by 22 July 2015.
The consultation paper is here.
The press release is here.
23.2 AIFMD, EuVECA and EuSEF - ESMA updates Q&As on application - 11 November 2014 - ESMA has
updated its Q&As on the application of the AIFMD, the Regulations on European Venture Capital Funds
(EU/345/2013) (EuVECA) and European Social Entrepreneurship Funds (EU/346/2013) (EuSEF).
The Q&As on AIFMD is here.
The Q&As on EuSEF and EuVECA is here.
The press release is here.
24.
Recent Case
24.1 The Connaught Income Fund, Series 1 (in liquidation) v (1) Capita Financial Managers Limited and (2)
Blue Gate Capital Limited, [2014] EWHC 3619 (Comm), 5 November 2014
Assignment of claims under section 150 (now section 138D) of the Financial Services and Markets Act 2000 to
non-‘private person’ – the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001
The Commercial Court has held that an unregulated collective investment scheme, set up as a limited
partnership, can bring claims for unlawful promotion (contrary to sections 238 and 241 of FSMA 2000) as
the assignee of investors in the fund under section 150 of FSMA (now, section 138D). Among other things,
the Court rejected a claim that the assignments were invalid as a device to circumvent the limitations on
when claims can be maintained for the benefit of persons other than private persons under Regulation 6 of
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the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001. The words “at the suit of”
in sections 150 and 138D did not remove the right of assignment.
The decision is here.
Securities and Markets
25.
Financial Stability Board
25.1 OTC derivatives market reforms - FSB publishes eighth progress report on implementation - 7
November 2014 - The FSB has published its eighth progress report on the implementation of over-thecounter (OTC) derivatives market reforms.
The report is here.
The press release is here.
26.
OTC Derivatives Regulators Group
26.1 OTC derivatives - ORDG report to G20 Leaders on cross-border implementation issues - November
2014 - The OTC Derivatives Regulators Group (ODRG) has published a report to G20 Leaders on crossborder implementation issues.
The report is here.
27.
International Organization of Securities Commissions
27.1 Incentive alignment recommendations for securitisation - IOSCO publishes report to G20 November 2014 - IOSCO has published a report to G20 leaders setting out the key preliminary findings
of its peer review of member progress in adopting legislation, regulation and policies in implementing
recommendations about incentive alignment for securitisations made in IOSCO’s report ‘Global
Developments in Securitisation Regulation’ (November 2012).
The report is here.
28.
Legal Entity Identifier Regulatory Oversight Committee
28.1 Global LEI System - ROC consults on draft list of naming conventions for business registries and other
registration authorities - 10 November 2014 - The Regulatory Oversight Committee (ROC) of the Global
Legal Entity Identifier (LEI) System is consulting on a draft list of codes to harmonise the way in which
business registries and other registration authorities are referred to in the Global LEI System.
The consultation period closes on 30 November 2014.
The consultation document is here.
The updated webpage is here.
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13 November 2014
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European Securities and Markets Authority
29.1 EMIR - ESMA consults on revised standards on reporting to trade repositories - 10 November 2014 ESMA has published a consultation paper on the revision of RTS and implementing technical standards (ITS)
concerning the obligation of counterparties and central counterparties (CCPs) to report to trade repositories
under the European Market Infrastructure Regulation (EU/648/2012) (EMIR).
The consultation period closes on 13 February 2014.
The consultation paper is here.
The press release is here.
29.2 EMIR - ESMA publishes responses to consultation on clearing obligation No.3 - 10 November 2014
- ESMA has published the responses to its consultation paper on draft regulatory technical standards on
the clearing obligation under EMIR No.3 (1 October 2014) concerning establishing a clearing obligation on
a class of foreign-exchange non-deliverable forward OTC derivatives. They include a response from the
European Systemic Risk Board.
The responses can be found here.
30.
Financial Conduct Authority
30.1 FCA Policy Statement PS14/15: Removing the Transparency Directive’s requirements to publish interim
management statements, including feedback to CP14/12 and final rules - November 2014 - The FCA
has published a policy statement (PS14/15) containing feedback on CP14/12 on the implementation of the
Transparency Directive Amending Directive’s (2013/50/EU) removal of the requirement to publish interim
management statements and the final rules. The new rules came into force on 7 November 2014.
PS14/15 is here.
The press release is here.
31.
Intercontinental Exchange Benchmark Administration
31.1 London Bullion Market Administrator gold price - IBA to become new administrator - 7 November
2014 - The Intercontinental Exchange (ICE) Benchmark Administration (IBA) has been appointed the
new administrator of the London Bullion Market Association (LBMA) gold price. It expects to assume
responsibility in early 2015. The LBMA gold price will replace the gold fixing price.
The press release is here.
See also the Enforcement section below for items on insider dealing and spot foreign exchange trading.
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32.
Committee on Payments and Markets Infrastructures
32.1 Cyber resilience in financial market infrastructures - CPMI publishes report - November 2014 - The
Committee on Payments and Markets Infrastructures (CPMI) has published a report on cyber resilience in
financial market infrastructures (FMIs). The report analyses the relevance of cyber security issues for FMIs
within the context of the Principles for Financial Market Infrastructures.
The report is here.
The press release is here.
See also the Enforcement section below for an item on insider dealing.
Enforcement
33.
Financial Conduct Authority
33.1 Spot foreign exchange trading - FCA fines five banks £1.1 billion and announces industry-wide
remediation programme - 12 November 2014 - The FCA has fined five banks a total of £1,114,918,000
for failing to exercise adequate control over their G10 spot foreign exchange trading operations between 1
January 2008 and 15 October 2013. The FCA is also launching an ‘industry-wide remediation programme’
to ensure firms address the root causes of these failings and raise market standards. This is stated to
complement the work of the Fair and Effective Markets Review.
The FCA press release is here.
33.2 Insider dealing - Former trader pleads guilty - 7 November 2014 - The FCA has announced that Julian
Rifat, a former senior execution trader at Moore Capital Management LLC, has pleaded guilty to eight
instances of insider dealing. Mr Rifat admitted to passing inside information, obtained during the course
of his employment, to Graeme Shelley, who traded for both their benefits and realised profits exceeding
£250,000. Mr Shelley pleaded guilty to insider trading earlier this year. Mr Rifat will be sentenced in 2015.
He is the third individual to have pleaded guilty under the FCA’s insider dealing investigation, Operation
Tabernula.
The press release is here.
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This Bulletin is prepared by the Financial Regulation Group of Slaughter and May in London. The Group comprises a
team of lawyers with experience and expertise across all sectors in which financial institutions operate.
We advise on regulatory issues affecting, among others, banks, investment firms, insurance and reinsurance
companies, brokers, asset managers and funds, non-bank lenders, exchanges and clearing systems. In addition, our
leading financial regulatory investigations practice is regularly instructed by financial institutions requiring specialist
knowledge of financial services regulation together with experience in high profile and complex investigations and
contentious regulatory matters.
Most of the projects that we are involved in have an extensive international or cross-border element. We work
in seamless integrated teams with leading local counsel who have some of the most highly regarded financial
institutions lawyers in Europe, the US and Asia, as well as strong and constructive relationships with local
regulators.
Our Financial Regulation Group also produces occasional briefing papers and other client publications. The five
most recent issues of this Bulletin and our most recent briefing papers and client publications appear on the
Slaughter and May website here.
The Group’s recent work includes advising:
•
a number of international banking groups on their recovery and resolution plans;
•
Standard Life plc on the proposed acquisition by its global investment management business of Ignis Asset
Management Limited;
•
Deutsche Bank on an EC investigation and generally on investigations relating to LIBOR;
•
Banco Santander on an agreement with leading global private equity firms to boost the global growth of
Santander Asset Management;
•
Brit PLC on its initial public offering;
•
Abbey National Treasury Services on the regulatory aspects of the issue of US $2.5 billion Notes;
•
on the establishment of a number of new banks in the UK since the financial crisis.
If you would like to find out more about our Financial Regulation Group or require advice on a financial regulation
matter, please contact one of the following or your usual Slaughter and May contact:
Jan Putnis
Ben Kingsley Michael Sholem
jan.putnis@slaughterandmay.com
ben.kingsley@slaughterandmay.com
michael.sholem@slaughterandmay.com
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Published to provide general information and not as legal advice. © Slaughter and May, 2014.
For further information, please speak to your usual Slaughter and May contact.
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