Further to our various updates on the implementation of the Prospectus Regulation (the Regulation) in the UK and the European Union (EU) (which applies across the UK and the European Union from July 21, 2019), on July 12, 2019 the European Securities and Markets Authority (ESMA) published its guidance on the Regulation in the form of significantly revised and updated questions and answers (Q&As).

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On July 15, 2019, the European Securities and Markets Authority (ESMA) published a consultation paper (the Paper) setting out draft guidelines on aspects of UK and EU investment firms’ compliance functions under MiFID II (the Draft Guidelines).

ESMA describes the compliance function as “a crucial function within firms, responsible for identifying, assessing, monitoring and reporting on the firm’s compliance risk.”


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On July 3, the UK Financial Conduct Authority (FCA) published a consultation paper (CP19/22) on prohibiting the sale, marketing and distribution to retail clients of derivatives and exchange traded notes (ETNs) referencing certain types of cryptoassets by firms acting in, or from, the UK.
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On July 1, the UK Financial Conduct Authority (FCA) published a policy statement (PS19/18) containing rules on restricting contract for difference (CFD) products and CFD-like options sold to retail clients.

The FCA consulted on the rules in December 2018 in CP18/38 (for more information, see the December 14, 2018 edition of Corporate & Financial Weekly Digest). In PS19/18, the FCA confirms that for CFDs and CFD-like options sold to retail clients, firms will be required to:
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On May 31, the UK Financial Conduct Authority (FCA) published its policy statement titled “Proposals to Promote Shareholder Engagement: Feedback to CP19/7 and Final Rules” (PS19/13), which implements aspects of the Shareholder Rights Directive II (SRD II).

PS19/13 follows the FCA’s consultation on its draft rules relating to SRD II. The FCA states that PS19/13 provides additional clarifications to aid asset managers and life insurers in interpreting the policy intent of the new rules.
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On May 24, the UK Financial Conduct Authority (FCA) published a press release confirming that it is extending the deadline for notifications for the temporary permissions regime (TPR) to October 30.

TPR would allow European Economic Area-based firms passporting into the UK to continue new and existing regulated business within the scope of their current permissions in the UK for a limited period, while they seek full FCA authorization. The TPR will go into effect upon Brexit taking effect, if there is no transition period. The TPR deadline had previously been extended from April 11 to May 30 (as reported in the April 19 edition of the Corporate & Financial Weekly Digest).
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On May 20, the UK Financial Conduct Authority (FCA) published a webpage with findings from its supervisory work on how principal firms in the investment management sector understand and comply with their regulatory responsibilities in respect of their appointed representatives (ARs).

The FCA conducted a survey of 338 principal firms, each with between one and 80 ARs. The FCA visited 15 of the principal firms for a more detailed review. The FCA was particularly interested in: business model risks; the oversight and ongoing monitoring of ARs; and financial resources.
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On May 22, the UK Financial Conduct Authority (FCA) published a statement welcoming the launch by the Cost Transparency Initiative (CTI) of finalized and industry-ready templates for the standardized disclosure of costs and charges to institutional investors in the asset management sector.
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On May 2, the UK Financial Conduct Authority (FCA) updated its webpage on the United Kingdom’s national private placement regime (NPPR) under the Alternative Investment Fund Managers Directive (AIFMD).

The NPPR allows non-European Economic Area (EEA) alternative investment funds (AIFs) that are managed by full-scope UK and EEA alternative investment fund managers (AIFMs), as well as any AIFs managed by non-EEA AIFMs, to be marketed in the United Kingdom.
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On April 23, the UK Financial Conduct Authority (FCA) published a report on payment for order flow (PFOF).

The report provides an update on the FCA’s supervisory work on conflicts of interest and PFOF, and it follows the FCA’s preliminary findings that were published in issue 56 of its Market Watch newsletter (as reported in the September 28, 2018 edition of Corporate & Financial Weekly Digest).
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