The securities and derivatives markets have been going through substantial changes and there is a lot more to come. Regulations such as Dodd Frank, European Market Infrastructure Reporting (EMIR) and Markets in Financial Instruments Directive (MiFID II) are already having a major impact and many firms are in the midst of big transformation programmes. Firms that are not dealing with these regulatory changes now or are not properly focussed on them leave themselves exposed to regulatory actions and could be left behind in the market.
The European Securities and Markets Authority (ESMA) communicated its views on complex investment products in two publications on 7 February 2014; Risks of investing in complex products for consumers, and Opinion – MiFID practices for firms selling complex products for firms.
The European Securities and Markets Authority (ESMA) sent a Letter on 6 August 2013 to the European Commission (EC) seeking to postpone EMIR reporting for derivatives executed on regulated markets, also known as exchange traded derivatives (ETD).
The impact of EMIR for those trading derivatives outside of the EU.
On 11 July the European Union (EU) and the Commodity Futures Trading Commission (CFTC) announced that they had agreed principles for cross-border application of their respective derivatives rules.
The EBA wants to ensure that firms which structure asset backed securities share in some of the risks.
On 13 May 2013 European Securities Markets Authority (ESMA) published a letter from the EC (dated 22 April 2013) requiring ESMA to deliver proposals on the cross border application of EMIR by 25 September 2013.
On 1 April 2013, the Commodities Futures Trading Commission (CFTC) issued a final rule which exempts swaps between certain affiliated entities within a corporate group from the clearing requirement, time-limited no-action relief recording-keeping for swap dealers (SDs) and major swap participants (MSPs). On 9 April 2013, the CFTC published no-action relief to delay swap data reporting requirements for swap counterparties that are not swap dealers (SDs) or major swap participants (MSPs) until 31 October 2013.
European Securities and Markets Authority published its guidelines setting out more detail on the notification requirements for market makers and primary dealers who are exempt from certain requirements under the Short Selling Regulation.
The Financial Conduct Authority (FCA) published guidance for recognised investment exchanges (RIEs) and firms operating multilateral trading facilities (MTFs) on 23 April 201 setting out how RIEs and MTF operators should monitor their members’ systems and controls.
International Swaps and Derivatives Association (ISDA) introduced a form of confirmation for a market agreed coupon (MAC) contract for interest rate swaps (IRS) on 24 April 2013. The confirmation features IRS standardised terms, such as start and end dates, payment dates, fixed coupons, currencies and maturities.
European Securities and Markets Authority (ESMA) published an opinion on 30 April 2013 on the emergency measure by the Greek Hellenic Capital Market Commission (HCMC) on short selling and certain aspects of CDS. According to HCMC, the difficulties in the Greek banking sector continue, required its temporary action to be extended for a further three months.
The Bank of England and Prudential Regulatory Authority published policy statements on how they intend to use their new powers to give directions over UK firms’ qualifying parent undertakings of PRA- and dual-regulated firms and recognised clearing houses.
The Financial Conduct Authority published a new EMIR webpage in April 2013, setting out the FCA’s supervisory priorities for 2013
The Financial Stability Board (FSB) published Over-The-Counter (OTC) Derivatives Markets Reforms – fifth progress report on implementation on 15 April 2013. Less than half of the 24 G20 jurisdictions have developed national legal frameworks and legislation required to implement the reforms. The jurisdictions that have developed rules (US, EU and Japan) still haven’t fully implemented them yet.
The OTC Derivatives Regulators Group (the OTC Regulators), which aims to coordinate and harmonise Over-The-Counter (OTC) reform rules between jurisdictions, published its April 2013 Report to G20 Finance Ministers and Central Bank Governors on 19 April 2013. They agreed to a common approach for treating gaps between requirements for trading and clearing obligations and a consultation process on clearing determinations, adopting a ‘stricter rule applies’ approach.
International Organisations of Securities Commissions published a consultation report on the Regulation of Retail Structured Products on 18 April 2013 in response to concerns from members about the regulatory challenges these products pose.
The Committee on Payment and Settlement Systems and International Organisations of Securities Commissions published a joint consultative report entitled Authorities’ access to trade repository data on 11 April 2013. The report provides guidance to Trade Repositories and authorities on the principles that should apply when authorities wish to access Trade Repository data.
International Swaps and Derivatives Association published Risk sensitive capital treatment for clearing member exposure to CCP default funds on 1 April 2013, outlining its proposed approach to modelling default fund risks.
Bank of England publishishes new instruments for Recognised Clearing Houses (RCHs) and Settlement System Operators on 27 March 2013.
International Organization of Securities Commissions (IOSCO) published 'Regulatory Issues Raised by Changes in Market Structure' on 21 March 2013. It considered the effect of fragmentation on equities and Exchange Traded Funds in certain IOSCO countries and is seeking comment on four regulatory recommendations.
HM Treasury laid The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 before Parliament on 7 March 2013. The rules amend FSMA, company law and other legislation to implement European Market Infrastructure Regulation from 1 April 2013.
ESMA published EMIR FAQs on 20 March 2013, setting out the approaches it has agreed with Member State regulators on certain requirements for counterparties, CCPs and TRs.
The FSA updated its European Market Infrastructure Regulation (EMIR) website in March to provide guidance on the scope of financial instruments subject to EMIR in the UK.
Includes relief for multilateral compression exercises, relief for swap partial novation and partial termination and US begins mandatory clearing.
The Global Global Legal Entity Identifier (LEI) Regulatory Oversight Committee (ROC) published its first progress report and updated information on the Local Operating Unit (LOU) prefix allocations in March 2013.
On 15 March 2013 the British Banking Association published an European Market Infrastructure Regulation classification approach to help firms.
On 8 March 2013, International Swaps and Derivatives Association published its 2013 European Market Infrastructure Regulation (EMIR) NFC Representation Protocol and FAQ, setting out standardised terms and conditions under which derivative trading entities can establish their EMIR classifications.
European Securities and Markets Authority (ESMA) published final guidelines on central counterparty (CCP) interoperability arrangements on 15 March 2013, providing feedback on responses to its December 2012 consultation and its views on legal implementation and supervisory practices.
European Securities and Markets Authority (ESMA) published guidance for the recognition of Third Country CCPs (TC-CCPs) on 12 March 2013.
The Financial Services Authority updated its European Market Infrastructure Regulation notifications and exemptions page in early March, including its forms for Non-financial counterparty notifications.
The FSA published FG13/03: the use of the group exclusion and the CREST regulated activity on 5 March 2013. FG13/03 addresses common misinterpretations of Article 67(7) of the Financial Services and Markets Act 2000 (Regulated Activities Order) regarding the ‘group exemption’ for firms sending instructions via the CREST system.