The banking individual accountability regime comes into effect today. The regime applies to relevant banks, building societies, credit unions and PRA-designated investment firms, and branches of foreign banks operating in the UK. The regime is likely to impact on nearly all staff in such firms and internal HR processes will play an important role in managing the effect of the regime on all stages of the employment relationship, including recruitment, promotion and termination. [Read more]

Source: CMS Cameron McKenna

On February 29, 2016, the FCA published good practices for liquidity management for investment management firms. The good practices are an outcome of the FCA’s work with the Bank of England to assess the risks of open-ended investment funds investing in the fixed income sector, culminating in a collation of practices which the regulator has seen being used by investment firms to manage liquidity. The FCA hopes that by publishing the good practices, all investment management firms can improve their liquidity management. The good practices cover four areas: (i) good disclosure of liquidity risks to investors; (ii) good processes and tools for liquidity risk management, including continuous re-assessment and updating to keep track with market conditions; (iii) good practices for managing redemptions and costs relating to redemptions, including disclosing those practices to investors; and (iv) thorough preparation for implementation of exceptional liquidity tools and measures, such as maintaining a procedure manual for implementation of each tool and testing implementation of tools to ensure that the measures work in practice.

The good practices are available at: http://www.fca.org.uk/news/liquidity-management-for-investment-firms-goodpractice.

Source: Shearman & Sterling LLP

On February 26, the European Commission adopted a Delegated Regulation supplementing the Market Abuse Regulation (No. 596/2014) (“MAR“) laying down regulatory technical standards on accepted market practice.

MAR defines “accepted market practice” as a specific market practice that is accepted by a competent authority of a member state (Article 3(1) MAR). ESMA is required to develop draft regulatory technical standards specifying the criteria, procedure and requirements for establishing an accepted market practice and the requirements for maintaining or terminating it or modifying the conditions for its acceptance. The Delegated Regulation provides for a list of “supervised persons” for the purposes of the Delegated Regulation, and lays down requirements for establishing an accepted market practice.

The Council of the EU and European Parliament are expected to review and consider the Delegated Regulation. Provided there are no objections the Delegated Regulation will apply from July 2, 2016.

Source: Orrick, Herrington & Sutcliffe LLP

On February 26, the European Commission adopted a Delegated Regulation supplementing the Market Abuse Regulation (No. 596/2014) (“MAR“) laying down regulatory technical standards on accepted market practice. MAR defines “accepted market practice” as a specific market practice that is accepted by a competent authority of a member state (Article 3(1) MAR). ESMA is required to develop draft regulatory technical standards specifying the criteria, procedure and requirements for establishing an accepted market practice and the requirements for maintaining or terminating it or modifying the conditions for its acceptance. The Delegated Regulation provides for a list of “supervised persons” for the purposes of the Delegated Regulation, and lays down requirements for establishing an accepted market practice. [Read more]

Source: Orrick, Herrington & Sutcliffe LLP

Previous articles in our MiFID 2 series have considered the effects of MiFID 2 on, among other things, dealings with customers, advice, transparency, and compliance. This article, by Tom Harkus, looks at how MiFID 2 will affect the safeguarding of client assets With the exception of an outright ban on the use of title transfer collateral arrangements (TTCAs) for retail clients, the MiFID 2 package does not change the fundamental principles of the client assets regime laid out in the Directive it is replacing (MiFID). [Read more]

Source: Dentons

The European Commission has announced a delay to the implementation of MiFID II (the latest piece of EU legislation dealing with the regulation of investment services within Europe). MiFID II will amongst other things introduce greater regulation of certain markets where complex financial products can currently be traded with limited reporting or transparency requirements. Greater regulation of these types of trading arrangements was widely viewed as one of the key lessons learnt from the global financial crisis. [Read more]

Source: Bryan Cave

The European Parliament’s Committee on Economic and Monetary Affairs (“ECON“) has published two draft reports on the proposed directive postponing application of the MiFID II Directive, the proposed regulation amending the Markets in Financial Instruments Regulation (“MiFIR“), the Market Abuse Regulation (“MAR“) and the Regulation on improving securities settlement and regulating central securities depositories (“CSDR“) as regards certain dates.

Both reports contain an explanatory statement, which expresses disappointment that, due to the failure of ESMA and the Commission to deliver regulatory technical standards and delegated acts by the deadline set out in the legislation, and to launch the necessary procurement procedures in time, MiFID II will not be applicable as initially scheduled on January 3, 2017. The rapporteur acknowledged that the delay of the application by a year to January 2018 was sensible and justified, given the scale of the tasks yet to be completed before implementation. The reports can be found here and here. [Read more]

Source: Orrick, Herrington & Sutcliffe LLP

On February 15, 2016, the PRA and FCA jointly published a Policy Statement on the implementation of the SM&CR, Senior Insurance Managers Regime and the requirements of the PRA on regulatory references. The Policy Statement, amongst other things, sets out a first set of PRA rules on the provision of regulatory references by firms under the SM&CR and SIMR, i.e., employment references passed between firms when an individual moves roles. These PRA rules are set out in Appendix 1 of the Policy Statement and will apply from March 7, 2016. The rules are largely a continuation of the existing requirements under the Approved Persons Regime and should be read and applied together with the FCA’s equivalent requirements. The FCA’s Policy Statement was published on February 4, 2016 and sets out the feedback received on the PRA and FCA’s joint consultation on regulatory references. A second set of rules are expected to be published at a later date and will cover the areas on which feedback received by the PRA is still under consideration. The PRA and FCA’s Policy Statement is available here. The FCA’s Policy Statement is available here. [Read more]

Source: McCann Fitzgerald

The PRA and FCA have published a joint policy statement: “Strengthening accountability in … insurance: Implementation of … SIMR; and PRA requirements on regulatory references“. The policy statement includes “Regulatory reference rules – volume 2”. Volume 3 will follow later in the year. (Don’t worry; they’re mercifully short.) [Read more]

Source: Cooley

We welcome the certainty which the announcement that the MiFID II package will be delayed by one year brings for firms in the EU. Since ESMA’s request last October that parts of MiFID II be delayed, firms have had to continue their MiFID II implementation plans with the uncertainty of the delay to all or part of the package hanging over them. [Read more]

Source: PwC