Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

ESMA Updates EMIR Implementation Q&As

Posted in EU Developments, Financial Markets

On February 4, the European Securities and Markets Authority (ESMA) published an updated version of its questions and answers document (Q&As) on the implementation of the European Market Infrastructure Regulation (EMIR).

The amendments include:

  • An amended question in relation to trade repositories (TRs) to confirm how counterparties should report a derivative with no maturity date;
  • An amended question to clarify the reporting of derivatives that are terminated before the reporting deadline and when these should be submitted; and
  • A new question on TRs to clarify the approach counterparties should take for reporting field “confirmation means.”

The updated Q&A is available here.

ESMA Publishes Statement on the Impact of a No-Deal Brexit on Its Databases

Posted in Brexit, EU Developments, Financial Markets

On February 5, the European Securities and Markets Authority (ESMA) issued a statement on the impact the UK’s exit from the European Union on March 29 (Exit Day) without an agreement on transitional arrangements being in place with the European Union (no-deal Brexit) would have on ESMA’s databases.

In the scenario of a no-deal Brexit, from March 30, ESMA will stop receiving data from the UK Financial Conduct Authority, which will no longer have access to ESMA’s IT applications and databases, meaning no new UK-related data will be received, processed or published on ESMA’s website. Continue Reading

ESMA Publishes Revised Draft Technical Standards and Q&A on Disclosure Requirements

Posted in EU Developments, Financial Markets

On January 31, the European Securities and Markets Authority (ESMA) published an opinion containing a revised set of draft regulatory and implementing technical standards (RTS/ITS) under the Securitization Regulation, which require certain information to be reported about securitizations by the originator, sponsor or special purpose entity. The opinion includes the format for making the required information available and reporting templates for different types of securitization.

ESMA had published a final report in August 2018, which contained the original draft RTS/ITS. The European Commission (EC) subsequently asked ESMA to make certain amendments in order to reduce the likely administrative burden on reporting entities.

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FCA and PRA Publish Direction on Reporting Private Securitizations Under Securitization Regulation

Posted in EU Developments, Financial Markets

On January 31, the UK Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) published a direction under the UK Securitization Regulations 2018 (a statutory instrument that implements the EU Securitization Regulation) setting out how relevant parties must report certain information to the FCA or PRA. Continue Reading

CFTC Issues No-Action Relief From Certain Position Aggregation Requirements

Posted in CFTC

On December 21, 2018, the Division of Market Oversight (DMO) of the Commodity Futures Trading Commission issued Letter 18-33 responding to a request for relief from compliance with certain position aggregation requirements under CFTC Regulation 150.4(b)(2)(i)(D).

CFTC Regulation 150.4(b)(2) provides an owned-entity exemption from aggregation. Any person with an ownership or equity interest in an owned entity of 10 percent or greater generally need not aggregate the accounts or positions of the owned entity with any other account or position such person is required to aggregate, provided that such person and the owned entity meet the conditions (A) through (E) of 150.4(b)(2)(i) (firewall conditions). Subparagraph (D) of the regulation prohibits the sharing of employees that control the trading decisions of either the person or the owned entity. Continue Reading

NFA Adopts Interpretive Notice Regarding CPO Internal Controls Systems

Posted in CFTC

On December 10, the National Futures Association (NFA) submitted to the Commodity Futures Trading Commission a proposed Interpretive Notice to NFA Compliance Rule 2-9, which would provide commodity pool operators with guidance on designing and implementing an adequate system of internal controls.

On January 31, the NFA issued Notice I-19-03 announcing the recent adoption of the Interpretive Notice, which will become effective on April 1.

The NFA proposal is available here.

The NFA Notice I-19-03 is available here.

Bank of England and FCA Provide Updates on Post-Brexit Market Infrastructure Transitional Arrangements and Applications

Posted in Brexit/UK Developments, Financial Markets, UK Developments

On January 24, the Bank of England updated its financial market infrastructure supervision websites with interim lists of entities and systems that will enter into the various temporary or transitional arrangements on exit day should the United Kingdom leave the European Union with no implementation period. The lists consist of:

  • Third-country central counterparties (CCPs) that will offer clearing services and activities in the UK under the temporary recognition regime of the Central Counterparties (Amendments, etc., and Transitional Provision) (EU Exit) Regulations 2018;
  • Third-country central securities depositories (CSDs) that will provide CSD services in the United Kingdom using the transitional provisions of the Central Securities Depositories (Amendment) (EU Exit) Regulations 2018; and
  • European Economic Area (EEA) systems whose operators have indicated their intention for such systems to receive settlement finality protection in the United Kingdom pursuant to the draft temporary designation regime of the Draft Financial Markets and Insolvency (Amendment and Transitional Provision) (EU Exit) Regulations 2019.

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ESMA Updates Q&As Relating to the Benchmarks Regulation

Posted in EU Developments, Financial Markets

On January 30, the European Securities and Markets Authority (ESMA) published an updated version of its questions and answers on the Benchmarks Regulation (BMR).

ESMA confirms that the scope of application is identical across both sets of legislative provisions, including the transitional provisions under the BMR.

In the new Q&A, ESMA refers to specific requirements for different types of benchmarks which are covered to differing extents by the BMR and the Commission Delegated Regulations (for example, regulated-data benchmarks, interest rate benchmarks, commodity benchmarks, significant benchmarks and non-significant benchmarks).

ESMA’s updated Q&As on the BMR are available here.

ESMA Publishes Statement on Clearing and Trading Obligations for Small Financial Counterparties

Posted in EU Developments, Financial Markets

On January 31, the European Securities and Markets Authority (ESMA) published a statement addressing issues on the forthcoming implementation of the European Market Infrastructure Regulation Regulatory Fitness and Performance program (EMIR REFIT), relating to clearing and trading obligations for small financial counterparties. ESMA’s statement also addresses the requirements for reporting of derivatives that were outstanding on or after August 16, 2012, and terminated before the EMIR reporting start date of February 12, 2014, which is a process commonly referred to as “backloading.” Continue Reading