Regulators managed to pack in a significant number of developments in December. After years of negotiations, the MMF Regulation entered its last legislative stages when the Council published its final compromise text. The regulation will establish a comprehensive framework for all funds that seek to offer investors stability of net asset value alongside market yield. It’s expected to be published in the Official Journal in Q1 2017, with an implementation date a year later.
December also brought greater clarity for firms on MiFID II, with the FCA publishing its fourth consultation on implementing the directive. Broadly, the consultation deals with technical changes to the FCA’s Handbook that weren’t included in previous MiFID II consultations. It also covers guidance on transaction reporting and the use of approved reporting mechanisms by trading venues, as well as changes to the FCA’s perimeter guidance.
Elsewhere, investor protection was high on the FCA’s agenda amid concerns about increasing risks to investors in the retail contract for difference (CFD) market. The FCA is consulting on a range of proposals, including introducing standardised risk warnings and mandatory disclosure of profit-loss ratios on client accounts.
In the insurance sector, EIOPA revealed the challenges insurers face in the current macro-economic environment by publishing the results of its latest stress test. The exercise examined how insurers would perform under two stress scenarios. EIOPA made recommendations for national regulators, which include assessing whether insurers are taking too much risk.
Turning to banking prudential developments, the PRA published a policy statement on its approach to implementing the systemic risk capital buffer which applies to large building societies and ring-fenced banks. The PRA says it plans to determine each firm’s systemic risk buffer rate based on the FPC’s framework. It intends to announce the first rates in early 2019.
In our first feature article this month, we take a close look at the FCA’s terms of reference for its mortgage market study, which it issued in December. As part of its continuing competition agenda, the FCA is looking to improve customer outcomes in the mortgage market. We analyse what areas are likely to catch the regulator’s attention, and what steps it may take to improve competition.
The impact of Brexit continues to be front of mind for firms, and many will be making decisions over the coming months as part of their response. In our second feature article, we consider some of the factors banks will need to take into account in decisions around potential restructuring. Specifically, we look at the authorisation and approval requirements involved, including recent regulatory developments that firms should take into account, such as the EC’s proposals for CRD V.