Being better informed: financial regulatory, accounting and audit bulletin: September 2015

As might be expected, August was relatively quieter for new regulatory developments as perhaps regulators and policymakers took breaks to recharge their batteries ahead of a busy last four months of the year. There’s certainly still a lot to do. We expect the European Securities and Markets Authority (ESMA) to publish its draft RTS for MiFID II (the second Markets in Financial Instruments Directive) in September at some point and that we’ll see the European Commission’s final delegated acts on other MiFID II issues. We also expect to see more UK and EU consultations and rules on implementing other MiFID II issues, UCITS V (the fifth Undertakings for Collective Investment in Transferable Securities Directive), PRIIPs (Regulation on Packaged Retail Investment and Insurance-based Products), TLAC (total loss-absorbing capacity), MREL (minimum requirement of own funds and eligible liabilities) and the BRRD (Banking Recovery and Resolution Directive). Added to this we expect Lord Hill to continue the push on CMU and firms should have their hands full analysing these issues over the coming months.

And that all sits alongside existing implementation programmes for Solvency II, MiFID II, FCA firms preparing recovery plans, firms working out how the Leverage Coverage Ratio (LCR) impacts them and developing governance maps to identify how they’re hit by the new senior manager and certification regime (SM&CR) or the new senior manager insurance regime (SIMR). So much to do even when the regulatory publications are light.

But despite a lull we did still have some interesting and important developments to focus on. ESMA published four different review papers on EMIR which will likely lead to a second version of the European Market Infrastructure Regulation (EMIR II) proposal. Certainly one to watch since EMIR is still being implemented and firms continue to struggle with the reporting elements.

The European Banking Authority (EBA) also made progress on the Mortgage Credit Directive (MCD) with finalised guidelines and official translations for passport notifications, creditworthiness assessments and arrears and foreclosures. Firms don’t have long to prepare - the MCD comes into force in 21 March 2016 and introduces an EU-wide framework of conduct rules for mortgage firms.

Our feature this month looks at SM&CR – the new senior manager and certification regime that will be hitting UK banks (and UK branches of foreign banks) in the coming months and is likely to be extended to capture asset managers in due course. We look at how the regime has changed and the difficult implementation challenges our clients face.

Previous editions: