1. finance
2. bank

29 JANUARY 2015
ISSUE 796
Financial Regulation
Weekly Bulletin
Major UK and European regulatory developments of interest to banks, insurers and reinsurers,
asset managers and other market participants
QUICK LINKS:
Selected Headlines
General
Banking and Finance
Insurance
Asset Management
Securities and Markets
Financial Crime
Enforcement
If you have any comments
or questions, contact
Elizabeth Prentice.
Slaughter and May also
produces a periodical
Insurance Newsletter. If
you would like to go on
the distribution list, please
contact Beth Dobson.
Selected Headlines
BANKING AND FINANCE
Risk data aggregation and risk reporting - Basel Committee publishes second
progress report on banks’ adoption of Principles
Revised Pillar 3 disclosure requirements - Basel Committee publishes final
standard
CRR - EBA publishes revised version of final draft RTS on prudent valuation
Dividend distribution policies and variable remuneration - ECB publishes
Recommendation and announces review
Data sharing and open data in banking - HM Treasury launches call for
evidence
PRA Supervisory Statement SS20/13: Third country equivalence aspects of the
credit risk provisions in the CRR, and recognised exchanges - updated by PRA
The draft Mortgage Credit Directive Order 2015
INSURANCE
PRA Consultation Paper CP3/15: Solvency II: transitional measures and the
treatment of participations
Retirement reforms and the ‘Guidance Guarantee’ - FCA announces
intention to make additional rules in ‘Dear CEO’ letter
The draft Financial Services and Markets Act 2000 (Regulated Activities)
(Amendments) (No.2) Order 2015
SECURITIES AND MARKETS
Non-centrally cleared OTC derivatives - IOSCO publishes final report on risk
mitigation standards
Short-selling Regulation - Delegated Regulation concerning notification of
significant net short positions in sovereign debt published in the Official Journal
CCP default management, recovery and continuity - ISDA publishes
proposed framework
7.1
7.2
9.1
10.2
11.1
12.1
14.1
15.1
16.1
17.1
20.1
22.1
25.1
FINANCIAL CRIME
MLD4 and Wire Transfer Regulation - Council, ECON and LIBE endorse final
texts
28.1
ENFORCEMENT
Serious Crime Bill 2014-2015 - new clause 37 provides civil liability
exemption for money-laundering disclosures
29.1
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
General
1.
Bank of England
1.1
New appointments - Bank of England announces two new appointments - 27 January 2015 - The Bank
of England has announced the appointment of Alex Brazier as the Bank’s Executive Director for Financial
Stability Strategy and Risk, effective from 16 March 2015. He is to be appointed to the Financial Policy
Committee of the Bank of England from 1 April 2015 as the person responsible for the analysis of threats to
financial stability.
The Bank of England has also appointed Sam Woods as Executive Director for Insurance Supervision at the
PRA, effective from 7 April 2015.
The press release is here.
2.
Financial Conduct Authority
2.1
Data Bulletin - FCA launches second issue - January 2015 - The FCA has published its second Data Bulletin
including information that it has collected from firms. The Bulletin includes information on authorisations,
approved persons, complaints about financial promotions, policy initiatives with data implications, FCA
events and useful links. The Bulletin is accompanied by a spreadsheet of underlying data.
The Data Bulletin is here.
The underlying data is here.
2.2
MoUs - FCA signs MoUs with the Advertising Standards Authority and Information Commissioner’s
Office - January 2015 - The FCA has published two further memoranda of understanding which it has
entered into:
•
one with the Advertising Standards Authority (ASA) (dated 3 December 2014), concerning the parties’
respective regulatory responsibilities under FSMA 2000, the UK Code of Non-broadcast Advertising,
the Sales Promotion and Direct Marketing (CAP Code), the UK Code of Broadcast Advertising (BCAP
Code) and other relevant legislation; and
•
the other with the Information Commissioner’s Office (ICO) (dated 29 September 2014), concerning
the parties’ respective regulatory responsibilities under FSMA 2000, the Data Protection Act 1998,
the Freedom of Information Act 2000, the Privacy and Electronic Communications (EC Directive)
Regulations 2003, the Environmental Information Regulations 2004 and the INSPIRE Regulations
2009.
The MoU with ASA is here.
The MoU with ICO is here.
3.
Payment Systems Regulator
3.1
PSR Consultation Paper CP15/1: PSR Competition Concurrency Guidance - 26 January 2015 - On 15
January 2015 we reported in this Bulletin that the FCA was consulting on FCA competition concurrency
guidance and related Handbook amendments (FCA CP15/1). The Payment Systems Regulator (PSR) has
02
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
now published a consultation paper (PSR CP15/1) on procedural guidance relating to its competition powers,
which it describes as ‘broadly equivalent’ to that of its parent company, the FCA. Respondents may request
a version of the PSR guidance that highlights amendments from that of the FCA (see paragraph 1.8 of PSR
CP15/1). The PSR states that it does not have a ‘Handbook’ for participants in designated payment systems,
so there is no equivalent to the FCA’s Appendix 3.
Since 1 April 2014, the PSR has had competition powers under the Enterprise Act 2002. From 1 April 2015, it
will have new competition powers under the Competition Act 1998. These are ‘concurrent powers’ with the
Competition and Markets Authority. Its new powers go wider than the payment systems it regulates. These
powers are in addition to the PSR’s powers under the Financial Services (Banking Reform) Act 2013 to pursue
its competition, innovation and service-user objectives.
The PSR is consulting on two sets of draft guidance:
•
The PSR’s concurrent competition enforcement powers in relation to participation in payment
systems: A guide to the PSR’s powers and procedures under the Competition Act 1998 (Appendix
1 to PSR CP15/1); and
•
Market reviews, market studies and market investigation references: A guide to the PSR’s powers
and procedures (Appendix 2).
The consultation period closes on 20 March 2015 (but the PSR states that if respondents wish to respond to
the FCA and PSR consultations jointly, they should do so by 13 March 2015).
The PSR intends to issue a feedback statement and final guidance as soon as possible after its operational
launch on 1 April 2015.
CP15/1 is here.
The holding page is here.
4.
Competition and Markets Authority
4.1
Unfair contract terms - CMA consults on draft guidance - 26 January 2015 - The Competition and Markets
Authority (CMA) is consulting on draft guidance on unfair contract terms to replace the unfair contract
terms guidance originally issued by the Office of Fair Trading (OFT) in 2001 (which the CMA adopted in
2014). The CMA is consulting in the light of the Consumer Rights Bill, which is expected to become law in
October 2015.
The CMA is seeking views on a series of draft guidance documents:
•
unfair contract terms guidance;
•
unfair contract terms explained (this provides a short overview for businesses);
•
unfair contract terms short guide (a two-page guide);
•
‘What’s new in unfair contract terms?’ (an interim detailed guide to the changes expected to be
introduced by the Consumer Rights Bill); and
03
QUICK LINKS:
Selected Headlines
Asset Management
•
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
communication strategy on unfair contract terms (the CMA’s intended approach to communication).
The CMA is not updating Annex A of the original OFT guidance, which contains examples of fair and unfair
terms.
The CMA states that it is not consulting on the law, but on the presentation of its guidance. It does state,
however, that respondents can mention in their response if they believe the CMA’s interpretation of the law
is wrong.
The consultation period will close on 30 March 2015.
The FCA is responsible for considering the fairness of standard terms in financial services contracts issued by
FCA-authorised firms, and has an MoU with the CMA, a series of webpages, a regulatory guide in the FCA
Handbook, and a Statement of Good Practice on the Fairness of Terms in Consumer Contracts.
The consultation document is here.
Annex A of the original OFT guidance can be found here.
The consultation webpage, which includes links to the draft guidance, is here.
The press release is here.
The FCA webpages start here.
5.
New legislation
5.1
The Financial Services and Markets Act 2000 (Regulation of Auditors and Actuaries) (PRA Specified
Powers) Order 2015 (SI 2015/61) was made on 26 January 2015 and comes into force from 20 February
2015. The Order allows the PRA to use the full range of disciplinary powers given to it under the Financial
Services Act 2012 in relation to auditors and actuaries. The explanatory notes state that the PRA will be
consulting prior to the use of these enforcement powers, and is to issue guidance on their application.
The Order is here.
The explanatory memorandum is here.
6.
Financial Ombudsman Service
6.1
Ombudsman News - FOS publishes issue 123 - January/ February 2015 - The Financial Ombudsman
Service (FOS) has published issue 123 of its newsletter. It includes articles on travel insurance (winter
sports), consumer complaints, third quarter statistics, an article on ‘making reasonable adjustments and
meeting particular needs’ under the Equality Act 2010 and Q&As.
The newsletter is here.
04
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
Banking and Finance
7.
Basel Committee on Banking Supervision
7.1
Risk data aggregation and risk reporting - Basel Committee publishes second progress report on
banks’ adoption of Principles - January 2015 - The Basel Committee on Banking Supervision has published
its second progress report on banks’ adoption of the Principles for effective risk data aggregation and risk
reporting (January 2013). Global systemically important banks (G-SIBs) are to comply with the Principles
by 2016. In addition, the Basel Committee recommends that national supervisors apply the Principles to
institutions identified as domestic systemically important banks three years after their designation as such.
Among other things, the report finds that 14 of the 31 G-SIBS participating will be unable fully to comply
with the Principles by 2016, compared with 10 in 2013.
The report is here.
The holding page is here.
The Principles can be found here.
The press release is here.
7.2
Revised Pillar 3 disclosure requirements - Basel Committee publishes final standard - 28 January 2015
- The Basel Committee on Banking Supervision has published the final standard for the revised Pillar 3
disclosure requirements, which will take effect from end-2016. The revised requirements are intended to
enable market participants to compare banks’ disclosures of risk-weighted assets, and will supersede the
existing Pillar 3 disclosure requirements first issued as part of the Basel II framework in 2004, the Basel 2.5
revisions and the enhancements in 2009.
Changes from the consultation draft include:
•
rebalancing the disclosures required quarterly, semi-annually and annually;
•
streamlining the requirements related to disclosure of credit risk exposures and credit risk mitigation
techniques; and
•
clarifying and streamlining the disclosure requirements for securitisation exposures.
The revised standards are here.
The June 2014 consultation paper can be found here.
The press release is here.
7.3
Work programme 2015-2016 - published by Basel Committee - 23 January 2015 - The Basel Committee
on Banking Supervision has published its 2015 - 2016 work programme. The work programme is structured
around the following four themes:
•
policy development (including assessing the interaction, coherence and overall calibration of the
reform policies, reviewing the existing regulatory treatment of sovereign risk, and investigating current
approaches to stress testing);
05
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
•
ensuring an adequate balance between simplicity, comparability and risk sensitivity across the
regulatory framework;
•
monitoring and assessing the implementation of the Basel framework; and
•
improving the effectiveness of supervision.
The work programme, which includes a list of publications during the year, is here.
8.
European Parliament
8.1
Interchange Fees Regulation - endorsed by ECON - 27 January 2015 - The Economic and Monetary Affairs
Committee of the European Parliament has endorsed the proposed Regulation on interchange fees for cardbased payment transactions. The proposal must now be formally approved by the European Parliament
(expected in April 2015), and by the Council of the EU. The proposed Regulation will take effect six months
after the legislation enters into force.
The press release is here.
A press release of 17 December 2014 after agreement in principle is here.
The procedure file is here.
9.
European Banking Authority
9.1
CRR - EBA publishes revised version of final draft RTS on prudent valuation - 23 January 2015 - The
European Banking Authority (EBA) has published the revised version of its final draft regulatory technical
standards (RTS) on prudent valuation under the Capital Requirements Regulation (EU/575/2013) (31
March 2014). All occurrences of ‘volatility’ in Articles 9 and 10 have been replaced with ‘variance’ for the
purposes of computing market price uncertainty and close-out costs additional valuation adjustments. The
amendment only affects institutions using the Core approach and the EBA states that it will result in the
relaxation of the calibration of the volatility test. The EBA has also suggested reassessing the calibration of
the volatility test within the first two years of the implementation of the RTS.
The revised RTS are here.
The press release is here.
10.
European Central Bank
10.1 Single supervisory mechanism - ECB publishes letter on approach to existing supervisory processes and
practices - 27 January 2015 - In response to requests for clarity on processes and practices under the single
supervisory mechanism (SSM), Danièle Nouy, Chair of the Supervisory Board of the European Central Bank,
has written a letter to the management of significant banks on the ECB’s approach to existing supervisory
processes and practices in SSM member states. In order to minimise disruption during the harmonisation
process, the letter states that existing processes and practices related to competences now assigned to the
ECB under the SSM Regulation (EU/1024/2013) will continue to apply until further notice by the ECB. The
ECB is currently assessing the merits of different approaches. The letter also provides a contact point.
The letter is here.
06
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
10.2 Dividend distribution policies and variable remuneration - ECB publishes Recommendation and
announces review - 28 January 2015 - The ECB has published a Recommendation to banks on dividend
distribution policies for the 2014 financial year. The ECB has written directly to significant banks, and asks
national supervisors to implement the Recommendation for less significant banks. The ECB has also notified
banks that their policy on variable remuneration will be thoroughly reviewed in the light of their capital
situation.
Banks that have a dividend policy that is not in line with the Recommendation are required to provide
additional information and explain their reasons for non-compliance. The ECB will assess this information
and, if necessary, take individual decisions as part of its Supervisory Review and Evaluation Process.
The Recommendation is here.
The press release is here.
11.
HM Treasury
11.1 Data sharing and open data in banking - HM Treasury launches call for evidence - 28 January 2015
- HM Treasury has launched a call for evidence on data sharing and open data in banking. It is seeking
views developing the recommendations in a report on ‘Data Sharing and Open Data for Banks,’ which was
written by the Open Data Institute and the consultancy firm, Fingleton Associates, and published at Autumn
Statement 2014. HM Treasury also seeks responses on the benefits of open data to customers and how
best to deliver an open standard for application programming interfaces (API) in UK banking. APIs allow two
pieces of software to exchange information, allowing banks and financial technology firms to devise new
ways to use bank data to benefit customers.
The call for evidence closes on 25 February 2015.
The call for evidence is here.
The ODI/Fingleton report can be found here.
The holding page is here.
The press release is here.
12.
Prudential Regulation Authority
12.1 PRA Supervisory Statement SS20/13: Third country equivalence aspects of the credit risk provisions
in the CRR, and recognised exchanges - updated by PRA - 23 January 2015 - The PRA has announced that
the part of Supervisory Statement SS20/13 dealing with the third country equivalence aspects of credit risk
provisions in the Capital Requirements Regulation (CRR) is no longer applicable from 1 January 2015, and
has been deleted. The relevant part in SS20/13 is replaced by the European Commission Implementing
Decision of 12 December 2014 on the equivalence of the supervisory and regulatory requirements of certain
third countries and territories for the purposes of the treatment of exposures under the CRR, which came
into effect 1 January 2015. SS20/13 now sets out the approach of the PRA in respect of the identification
of recognised exchanges prior to the adoption by the European Commission of a European Securities and
Markets Authority Implementing Technical Standard specifying the individual markets and exchanges that
qualify as recognised exchanges under the CRR.
07
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
The updated SS20/13 is here.
The Commission Implementing Decision is here.
The holding page is here.
13.
European Payments Council
13.1 SEPA Direct Debit Rulebooks - EPC publishes updated versions - 26 January 2015 - The European
Payments Council (EPC) has published updated versions of the Single Euro Payments Area (SEPA) Direct
Debit Core Rulebook (Version 9.0) and SEPA Direct Debit Business to Business Rulebook (Version 7.0) with
related implementation guidelines and an introductory note. The revised versions will take effect on 20
November 2016.
The EPC has announced the timetable for future amendments. It welcomes suggestions for changes to the
current versions by 31 December 2015.
The revised versions, introductory note and implementation guidelines can be found here.
The press release is here.
14.
New Legislation
14.1 The draft Mortgage Credit Directive Order 2015 has been laid before Parliament for affirmative
resolution and, if made, will come into force on various dates up to 21 March 2016. The Order will, when
made, implement in part the Mortgage Credit Directive (2014/17/EU) (MCD) by amending FSMA 2000,
the Consumer Credit Act 1974 and the FSMA 2000 (Regulated Activities) Order 2001 (SI 2001/544). A
transposition table has been published.
Among other things, the Order will:
•
provide that mortgages secured by a second or subsequent charge on land are regulated alongside
first charge mortgages, rather than as consumer credit;
•
introduce a new framework for the regulation of ‘buy-to-let’ mortgage lending to consumers; and
•
enable mortgage intermediaries to exercise their right under the MCD to engage in cross-border
activities within the EEA.
HM Treasury has also published a summary of responses to its consultation paper, ‘Implementation of
the EU Mortgage Credit Directive’ (September 2014), and a final stage impact assessment. The summary
includes the Government’s response, and an indication of the changes made to the final policy to
accommodate respondents’ views. These include clarifying transitional arrangements, amending the draft
legislation to enable firms to adopt the revised rules up to six months ahead of the implementation date of
21 March 2016, and a number of changes to the legislation implementing the new framework for buy-to-let
lending to consumers.
The FCA consulted on changes to its rules in CP14/20: Implementation of the Mortgage Credit Directive and
the new regime for second charge mortgages (September 2014), and the consultation period closed on 29
08
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
December 2014. HM Treasury states that the FCA will shortly be consulting on the implementation of the
new regime for buy-to-let.
The draft Order is here.
The explanatory memorandum is here.
The transposition table is here.
The summary of responses is here.
The consultation paper is here.
The final stage impact assessment is here.
The consultation webpage is here.
14.2 The draft Financial Services and Markets Act 2000 (Miscellaneous Provisions) Order 2015 has been laid
before Parliament for affirmative resolution. The Order, when made, will make what HM Treasury describes
as minor drafting amendments in relation to the regulation of consumer credit. It will also address issues
identified by the FCA in the course of its review of applications for authorisation relating to consumer credit
activities. The draft Order has been subject to informal consultation only.
The draft Order includes amendments:
•
to the definition of ‘relevant credit activity’ in paragraph 2G of Schedule 6 to FSMA 2000 (which is
relevant to the threshold conditions suppliers have to satisfy), to the definition of ‘payment’, and to
other provisions;
•
to exempt solicitors or other qualified legal practitioners who carry out certain consumer credit
activities in the course of carrying out or preparing for litigation or advocacy in the courts from the
need to have authorisation from the FCA (because they are already regulated by their professional
bodies); and
•
to clarify how the prohibition on financial promotion applies to certain communications by insolvency
practitioners.
The draft Order is here.
The explanatory memorandum is here.
Insurance
15.
Prudential Regulation Authority
15.1 PRA Consultation Paper CP3/15: Solvency II: transitional measures and the treatment of participations
- January 2015 - The PRA has published a consultation paper (CP3/15) containing proposed rules for the
PRA Rulebook to implement the Solvency II Directive (2009/138/EC) (Solvency II) transitional measures
for risk-free rates and technical provisions (Appendix 1), and two draft supervisory statements setting out
09
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
the PRA’s expectations regarding the calculation and application process to be used for these transitional
measures and the internal model treatment of participations (the PRA’s expectations of firms in relation to
how participations in (re)insurance firms are reflected in the Solvency Capital Requirement at the solo level)
(Appendix 2).
The consultation period closes on 20 February 2015.
The PRA intends to publish a policy statement, with final rules and supervisory statements, as part of a
wider policy statement implementing Solvency II, in March 2015.
The PRA is required to transpose Solvency II by 31 March 2015 and it will apply from 1 January 2016.
CP3/15 is here.
The holding page is here.
16.
Financial Conduct Authority
16.1 Retirement reforms and the ‘Guidance Guarantee’ - FCA announces intention to make additional
rules in ‘Dear CEO’ letter - 26 January 2015 - The FCA has published a ‘Dear CEO’ letter sent to pension
providers in which Christopher Woolard, FCA Director of Strategy and Competition, announces an intention
to ask the FCA Board to make temporary rules from 6 April 2015 in addition to those in Policy Statement
PS14/17: Retirement Reforms and the Guidance Guarantee (November 2014), which require firms to remind
customers of the availability of Pension Wise (the Government’s new pension guidance service) and how
to access it, and describe the tax implications where a customer plans to take cash from their pension pot.
These temporary rules are to be made prior to consultation and in the interests of consumer protection.
The FCA plans to introduce rules that will place the requirement on pension providers to provide what is
termed ‘Additional Protection’. Mr Woolard writes:
“When a customer contacts their pension provider to access their pension, providers will be required to
ask the consumer about key aspects of their circumstances that relate to the choice they are making.
Providers will be required to give relevant risk warnings in response to answers from the consumer.
They must also then further highlight that Pension Wise, or regulated advice, is a key part of protecting
themselves and their family when making an important and irreversible decision”.
The FCA believes it will be possible for firms to provide the proposed risk warnings without providing
regulated advice (i.e. on an execution-only basis).
The FCA intends to consult on whether to retain or modify the temporary rules as part of its wider
consultation on incorporating the ABI Retirement Code, following its review of current requirements in H1
2015.
The letter is here.
The press release is here.
PS14/17 is here.
10
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
17.
New Legislation
17.1
The draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendments) (No.2) Order
2015 has been laid before Parliament and once made will come into force on 6 April 2015. The purpose of
the draft Order is to add a new regulated activity to the Financial Services and Markets 2000 (Regulated
Activities) Order 2001 (SI 2001/544), article 53E “Advising on conversion or transfer of pension benefits”.
It is made to ensure that where someone is required to take advice by clause 48 of the Pension Schemes
Bill 2014-15, the person providing the advice is regulated by the FCA. The Order mirrors definitions in the
Pension Schemes Bill, which is expected to receive Royal Assent in February or March 2015, and for these
purposes to have commenced by 6 April 2015.
The draft Order is here.
The explanatory memorandum is here.
See also the General section above for an item on the appointment of Sam Woods as Executive Director for
Insurance Supervision at the PRA.
Asset Management
18.
HM Revenue & Customs
18.1 AIFMD - HMRC publishes new webpage on tax mechanism - 29 January 2015 - HM Revenue & Customs
has published a new webpage with legislation and guidance on the new Alternative Investment Fund
Managers Directive (AIFMD) tax mechanism, including relevant forms to elect into the mechanism and make
returns.
The new webpage is here.
19.
Alternative Investment Management Association and CAIA Association
19.1 Pension Fund Trustees - AIMA and CAIA launch series of hedge fund papers - 28 January 2015 - The
Alternative Investment Management Association (AIMA) and the CAIA Association, which specialises in
alternative investment education, have jointly published the first of a series of educational papers about
hedge funds for pension fund trustees and other fiduciaries at institutional investors. The first paper in the
series is titled ‘The Way Ahead: Helping trustees navigate the hedge fund sector,’ with other papers, on such
topics as hedge fund strategies, transparency and governance, to follow between now and 2016.
The paper can be found here.
The press release is here.
Securities and Markets
20.
International Organization of Securities Commissions
20.1 Non-centrally cleared OTC derivatives - IOSCO publishes final report on risk mitigation standards 28 January 2015 - The International Organization of Securities Commissions (IOSCO) has published a final
11
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
report on risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives, which sets
out nine standards. The risk mitigation standards were developed in consultation with the Basel Committee
on Banking Supervision and the Committee on Payments and Market Infrastructures. In September 2014,
IOSCO released the proposed standards for consultation. IOSCO has also issued a feedback statement.
The nine standards on risk mitigation concern:
•
standard 1: scope coverage;
•
standard 2: trading relationship documentation;
•
standard 3: trade confirmation;
•
standard 4: valuation with counterparties;
•
standard 5: reconciliation;
•
standard 6: portfolio compression;
•
standard 7: dispute resolution;
•
standard 8: implementation;
•
standard 9: cross-border transactions.
Possible material terms for confirmation are contained in Annex 1.
The final report is here.
The consultation report is here.
The feedback summary is here.
The consultation responses can be found here.
The press release is here.
21.
Global Legal Entity Identifier Foundation
21.1 Legal Entity Identifier - GLEIF launches new website and ROC publishes year end progress note - 26 &
28 January 2015 - The Global Legal Entity Identifier Foundation (GLEIF) has announced the launch of its new
website, which it views as a key milestone in establishing the Legal Entity Identifier (LEI). The Regulatory
Oversight Committee (ROC) of the LEI has published a year end progress note.
The new website is here.
The progress note is here.
The press release is here.
12
QUICK LINKS:
Selected Headlines
Asset Management
22.
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
Official Journal of the European Union
22.1 Short-selling Regulation - Delegated Regulation concerning notification of significant net short
positions in sovereign debt published in the Official Journal - 23 January 2015 - Commission Delegated
Regulation (EU/2015/97) of 17 October 2014 correcting Delegated Regulation (EU/918/2012) as regards the
notification of significant net short positions in sovereign debt, has been published in the Official Journal of
the European Union and comes into force on 12 February 2015.
The text is here.
23.
European Commission
23.1 Capital Markets Union - European Commission to adopt Green Paper in February - 28 January 2014 The European Commission has held a first orientation debate on the Capital Markets Union at the College of
Commissioners. The College agreed that a Green Paper should be adopted in February 2015. The European
Commission intends to publish an Action Plan in Q3 2015.
The press release from the European Commission is here.
24.
European Securities and Markets Authority
24.1 EMIR - ESMA adds Athens Exchange Clearing House to list of registered CCPs - 22 January 2015 - ESMA
has added Athens Exchange Clearing House to its list of authorised central counterparties (CCPs) under the
European Market Infrastructure Regulation (EU/648/2012) (EMIR).
The announcement is here.
25.
International Swaps and Derivatives Association
25.1 CCP default management, recovery and continuity - ISDA publishes proposed framework - January
2015 - The International Swaps and Derivatives Association (ISDA) has published a position paper on a
proposed framework for default management, recovery and continuity for central counterparties (CCPs).
ISDA states that the framework is consistent with the recommendations in the joint report by IOSCO
and the Committee on Payments and Market Infrastructures (CPMI) on the recovery of financial market
infrastructures (October 2014). ISDA published high-level principles for CCP recovery in November 2014.
The position paper and principles for CCP recovery can be found here.
The joint IOSCO/CPMI report is here.
26.
Bank of England
26.1 Fair and Effective Markets Review - speech by Andrew Hauser, Director of Markets Strategy at the Bank
of England - 29 January 2015 - The Bank of England has published a speech by Andrew Hauser, Director of
Markets Strategy at the Bank and the head of the Fair and Effective Markets Review secretariat, on realigning
private and public interests in the wholesale financial markets and the purpose of the Fair and Effective
Markets Review.
The speech is here.
13
QUICK LINKS:
Selected Headlines
Asset Management
27.
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
Financial Conduct Authority
27.1 Forex broker - FCA publishes first supervisory notice - 28 January 2015 - LQD Markets (UK) Limited, an
online forex broker, has announced on its website that, following the recent removal of the peg between
the Swiss franc and Euro, it is ceasing to carry on regulated activities and terminating existing derivatives
contracts to which it is a party. The FCA has published a first supervisory notice varying the firm’s Part 4A
permission and imposing various requirements concerning client money, including a prohibition on dealing
with or releasing client money without the FCA’s prior written consent. It has confirmed that the coming
into force of this requirement constitutes a primary pooling event for the purposes of CASS 7A.2.2R(3).
The first supervisory notice is here.
27.2 Interest Rate Hedging Products Review Scheme - FCA reminds eligible customers to join the scheme
- 29 January 2015 - The FCA has updated its webpage on the Interest Rate Hedging Product (IRHP) Review
Scheme to urge eligible customers who have purchased cap products to make a complaint as soon as
possible, and in any event by 31 March 2015.
The FCA Interest Rate Hedging Product webpage is here.
Financial Crime
28.
Council of the European Union and European Parliament
28.1 MLD4 and Wire Transfer Regulation - Council, ECON and LIBE endorse final texts - 27 January 2015 - At
a meeting of the Economic and Financial Affairs Council (ECOFIN) on 27 January 2015, the Council of the
European Union endorsed an agreement reached with the European Parliament in December 2014 on the
proposed Directive on the prevention of the use of the financial system for the purpose of money laundering
and terrorist financing (MLD4) and the proposed Regulation on information accompanying transfer of funds
(Wire Transfer Regulation).
The Council was invited by the General Secretariat to endorse MLD4 and the Wire Transfer Regulation in a
note dated 23 January 2015. The final compromise texts are set out in Addenda 1 and 2 to that document
(5116/15).
The Council and the European Commission have also decided to issue a joint statement highlighting the
need to take action against terrorist financing, following the recent terrorist attacks in Paris. This is set out
in Addendum 3 to document 5116/15. Among other things, it recommends speeding up the process of
national implementation of MLD4 and the Wire Transfer Regulation.
ECON and the Committee on Civil Liberties, Justice and Home Affairs (LIBE) of the European Parliament
have also voted in favour of the package.
The next stage is for the European Parliament formally to approve the package (expected March or April
2015), followed by the Council of the EU. Once published in the Official Journal, member states will have
two years to transpose the provisions of MLD4.
The press release from the Presidency is here.
The note from the General Secretariat is here.
14
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
Addendum 1 to document 5116/15 is here.
Addendum 2 to document 5116/15 is here.
Addendum 3 to document 5116/15 (which includes various declarations by member states, including the UK,
and the joint declaration of the Commission and the Council on terrorist financing) is here.
The ECON and LIBE press release is here.
The procedure file for MLD4 is here.
The procedure file for Wire Transfer Regulation is here.
29.
UK Parliament and Public Bill Committee
29.1 Serious Crime Bill 2014 - 2015 - new clause 37 provides civil liability exemption for money-laundering
disclosures - 23 January 2015 - The Serious Crime Bill, as amended by the Public Bill Committee, includes a
new clause 37 inserting an exemption from civil liability for money laundering disclosures in section 338(4A)
of the Proceeds of Crime Act 2002 (POCA). The exemption provides that:
“where an authorised disclosure is made in good faith, no civil liability arises in respect of the disclosure on
the part of the person by or on whose behalf it is made.”
The background to the amendment is set out in a letter to the Co-chairs of the Public Bill Committee (dated
8 January 2015) from Karen Bradley MP, Minister for Modern Slavery and Organised Crime.
The Bill completed its House of Lord stages on 5 November 2014 and is currently awaiting its Report Stage
in the House of Commons.
The Bill is here.
The letter is here.
The Parliament webpage on the Bill is here.
30.
Bank of England
30.1 Cyber resilience from a financial stability perspective - speech by Andrew Gracie, Executive Director
of Resolution, Bank of England - 23 January 2015 - The Bank of England has published a speech by Andrew
Gracie, Executive Director of Resolution at the Bank, on cyber resilience from a financial stability perspective.
The speech is here.
31.
Serious Fraud Office
31.1 Fraud, forgery, false accounting and fraudulent trading - hedge fund manager sentenced to 13 years
imprisonment - 23 January 2015 - We reported in last week’s Bulletin on the conviction of Magnus Peterson
on eight counts of fraud, forgery, false accounting and fraudulent trading. He has now been sentenced to a
total of 13 years imprisonment.
The SFO press release is here.
15
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
Enforcement
32.
Financial Conduct Authority
32.1 Card security products - FCA agrees compensation package for consumers - 27 January 2015 - The
FCA has announced that, following voluntary negotiations and without a formal FCA investigation, it has
agreement on a compensation scheme with Affinion International Limited and 11 high street banks and
credit card issuers, that will allow customers to claim compensation if they have concerns about the way
that certain card security products were sold to them. The scheme must now be voted on by creditors and
approved by the High Court. The card security products included insurance to cover fraudulent use if the
card was lost or stolen, and the FCA viewed this as unnecessary as customers were generally only liable for
unauthorised transactions in limited circumstances.
An explanatory statement about the scheme of arrangement is here.
A dedicated scheme website is here.
FCA information for product holders is here.
The FCA press release on the compensation package is here.
See also the General section above for an item on The Financial Services and Markets Act 2000 (Regulation of
Auditors and Actuaries) (PRA Specified Powers) Order 2015.
See also the Financial Crime section above for the details of a prison sentence imposed on a former hedge fund
manager.
16
QUICK LINKS:
Selected Headlines
Asset Management
General
Securities and Markets
Banking and Finance
Financial Crime
FINANCIAL REGULATION
29 january 2015
Insurance
Enforcement
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
London
T +44 (0)20 7600 1200
F +44 (0)20 7090 5000
Brussels
T +32 (0)2 737 94 00
F +32 (0)2 737 94 01
Hong Kong
T +852 2521 0551
F +852 2845 2125
Published to provide general information and not as legal advice. © Slaughter and May, 2015.
For further information, please speak to your usual Slaughter and May contact.
www.slaughterandmay.com
Beijing
T +86 10 5965 0600
F +86 10 5965 0650