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Key Regulatory Topics: Weekly Update - 10 November 2017 – 16 November 2017

17 November 2017

Allen & Overy publish weekly updates on key regulatory topics affecting the financial services sector. If you would like to receive this update by email please contact


UK Finance proposes model for post-Brexit financial services under EU-UK trade agreement

On 16 November, UK Finance published a report entitled "Supporting Europe's economies and citizens: a modern approach to financial services in an EU-UK trade agreement". In the report, UK Finance proposes an alternative model for a future trade framework for banking and capital markets services between the EU and the UK. The proposed model assumes that, in the near future, the EU and the UK will have separate regulatory jurisdictions, but that they will be part of a developed regional market for banking and capital markets providing critical services for customers. It also assumes that the EU and the UK wish to remain as closely connected as is politically, economically and socially feasible. UK Finance believes that the proposed model offers a number of benefits to both the EU and the UK, including that it is balanced and pragmatic, uses trusted mechanisms, and ensures autonomy. 

Brexit – ECB article on relocation of banks

On 15 November, the ECB published an article criticising the Brexit relocation plans of UK banks currently operating in the Eurozone. In the article the ECB recognizes that progress has been made in Brexit preparations, but states that banks plans do not fully meet the ECB expectations and requirements of banks operating in the euro area. Banks do not only need to be well-capitalised and have sufficient liquidity and funding, they also need to have substance locally. In other words, there cannot be empty shells or letter box banks.

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Brexit – David Davis speech on financial services after Brexit

On 14 November, David Davis, Secretary of State for Exiting the European Union, gave a speech on the post-Brexit relationship between the UK and the EU relating to the financial services sector. Mr Davis stated that the future relationship should have the following objectives: financial stability; consumer protection; and supporting the existing co-operative system for cross-border financial services.

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Council of EU Presidency compromise proposal on proposed Regulation amending EMIR

On 16 November, the Council of the EU published a Presidency compromise proposal (8890/17, dated 15 November 2017) on the proposed Regulation amending EMIR as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories.

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ECB TARGET2 decisions and guideline published in OJ

On 14 November, the following were published in the OJ: (i) Decision (EU) 2017/2080 of the ECB of 22 September 2017 amending Decision ECB/2010/9 on access to and use of certain TARGET2 data (ECB/2017/29). The Decision enters into force on 15 November 2017 (that is, the day after publication in the OJ). It was previously published on 27 September 2017; (ii) Decision (EU) 2017/2081 of the ECB of 10 October 2017 amending Decision ECB/2007/7 concerning the terms and conditions of TARGET2-ECB (ECB/2017/30). The Decision applied from 13 November 2017. It was previously published on 30 October 2017; and (iii) Guideline (EU) 2017/2082 of the ECB of 22 September 2017 amending Guideline ECB/2012/27 on a trans-European automated real-time gross settlement express transfer system (TARGET2) (ECB/2017/28). The Guideline applied from 13 November. It was previously published on 27 September.

Decision (EU) 2017/2080

Decision (EU) 2017/2081

Guideline (EU) 2017/2082


SM&CR – Law Society response to FCA consultation on extension of regime

On 14 November, the Law Society published its response to the FCA's consultation on the extension of the SM&CR to all firms authorised under the FSMA. The Law Society’s view is that legal function should be excluded from the regime. In its response, the Law Society reiterates that including the legal function within the SM&CR raises significant risks for clients and solicitors, including: erosion of legal professional privilege; in-house lawyers being placed in positions of conflict with their employers; and the prospect of dual regulation for some lawyers. In the short term, the Law Society calls on the FCA to continue its policy of taking no enforcement action against lawyers who are included within the SM&CR until the issue of the inclusion of the legal function has been resolved. In the medium term, it invites the FCA to consult fully on the removal of the legal function from the SM&CR.

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Consumer protection co-operation: EP approves proposed Regulation on co-operation between national consumer protection authorities

On 14 November, the EP adopted a legislative Resolution at first reading approving an amended EC proposal for a Regulation of the EP and of the Council on co-operation between national authorities responsible for the enforcement of consumer protection laws. The EC adopted its proposal on 25 May 2016. The proposal aims to improve the EU-wide co-operation mechanism for consumer protection by giving more powers to national authorities to better enforce consumer rights and to enable the EC to co-ordinate common actions with national enforcement authorities. The proposal is being adopted under the ordinary legislative procedure, which means that the EP and the Council both need to adopt the same final text. The proposal will now need to be formally adopted by the Council.

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Retail financial services – EP adopts resolution on Action Plan on Retail Financial Services

On 14 November, the EP published a provisional version (P8_TA-PROV(2017)0428) of the resolution it has adopted on the Action Plan on Retail Financial Services. Generally, the Parliament recognises that the EU market in retail financial services remains rather underdeveloped and highly fragmented. As a result, urgent and efficient action is needed to facilitate innovation that is beneficial to end-users, while releasing the full potential of the single market in retail financial services. The EP believes that this would boost competitiveness, lower prices, and increase choice and diversity of products. The EP believes that EU institutions should remain ambitious as regards breaking down national barriers and curbing the existing tendencies that block innovation in retail financial services. It calls on the Council of the EU and the EC to be more ambitious in the area of cross-border retail investments under the CMU, by tackling not just the easier issues but also the most important barriers affecting the market. These include language, concerns over fraud and other crime, uncertainty about tax implications, differences in securities and corporate law, unknown redress and insolvency proceedings, and a lack of confidence in consumer protection frameworks.

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MLD5 – EP raises concerns that MLD5 trialogue negotiations have stalled

On 14 November, ECON and Civil Liberties, Justice and Home Affairs (LIBE) published a press release on the progress of the trialogue negotiations on the proposed MLD5. The committees explain that negotiations over MLD5 have stalled after the Council of the EU attended the final scheduled trialogue meeting, which was held on 14 November. Political agreement was blocked by the Council's lack of a negotiating mandate and the absence of a text as a basis for discussion. The EP regrets that the Council is not ready to undertake serious negotiations to reach an agreement. It notes that the delay in finalising MLD5 is having a knock-on effect on member states implementing the MLD4, in particular on setting up the beneficial ownership registers. The EP is concerned that member states fail to see the urgency in setting up the beneficial ownership registers despite Lux leaks, the Panama Papers and the Paradise Papers. It calls on MLD5 to be finalised and implemented as soon as possible as transparency around beneficial ownership will help to fight money laundering and tax evasion. The EP expects the Council to be constructive and willing to reach an agreement before the end of the year.

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MAR – FCA speech on effective compliance

On 14 November, the FCA published a speech by Julia Hoggett, FCA Market Oversight Director, on effective compliance with the MAR. In her speech, Ms Hoggett considers both MAR and the overall market abuse regime. Ms Hoggett emphasized that to be effective compliance should continue to evolve and not remain still and the FCA as result will also continue to evolve.

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Cryptocurrency – FCA consumer warnings on risks of investing in cryptocurrency CFDs and binary options

On 14 November, the FCA published the following consumer warnings: (i) consumer warning about the risks of investing in cryptocurrency CFDs. The FCA regulates CFDs, which means consumers benefit from protection under the FOS scheme and the FSCS. However, this protection does not compensate consumers for any trading losses; (ii) consumer warning about the risks of investing in binary options. The FCA has concerns about binary options, including because of the potential for trading losses, difficulties in making informed decisions, conflicts of interest and fraud.

Consumer warning about the risks of investing in cryptocurrency CFDs

Consumer warning about the risks of investing in binary options

ESMA statements on ICO risks for investors and firms

On 13 November, ESMA issued two statements on initial coin offerings (ICOs) triggered by an observed rapid growth in ICOs. A statement for firms (ESMA50-157-828) notes that where ICOs qualify as financial instruments, it is likely that the firms involved in ICOs will be conducting regulated investment activities, in which case they need to comply with the relevant legislation, including the: (i) Prospectus Directive; (ii) MiFID; (iii) AIFMD; and (iv) MLD4. ESMA stresses that firms involved in ICOs should give careful consideration as to whether their activities constitute regulated activities. Any failure to comply with the applicable rules will constitute a breach. A statement for investors (ESMA50-157-829) alerts them of the high risk of losing all of their invested capital as ICOs are very risky and highly speculative investments. The price of the coin or token is typically extremely volatile and investors may not be able to redeem them for a prolonged period. Another key risk stems from the fact that, depending on how they are structured, ICOs may fall outside of the scope of EU law and regulations, in which case investors cannot benefit from the protection that these laws and regulations provide. ICOs are also vulnerable to the risk of fraud or money laundering.

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CMU – EC consultation on sustainable investments

On 13 November, the EC published a consultation on institutional investors and asset managers' duties regarding sustainability. The consultation follows July HLEG interim report on sustainable finance which provided a comprehensive vision on sustainable finance. It identified two imperatives for Europe's financial system and proposed eight recommendations. One of the recommendations focussed on fiduciary duty. As a result the aim of this consultation is to clarify whether institutional investors and asset managers need to assess the materiality of sustainability risks. The deadline for comments is 22 January 2018.

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EuVECA Regulation and EuSEF Regulation published in OJ

On 10 November, the text of the Regulation amending the EuVECA and EuSEF Regulations was published in the OJ. The Regulation will enter into force on 30 November (that is, 20 days after publication in the OJ), and will apply from 1 March 2018.

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OECD revised guidelines on insurer governance

On 16 November, OECD published revised guidelines on insurer governance (2017 edition) following its consultation in July 2016. The guidelines were originally adopted in 2005 and are organised around four main sections: (i) governance structure; (ii) internal governance mechanisms; (iii) groups and conglomerates; and (iv) stakeholder protection. The guidelines have been revised for the second time to reflect evolving market practices and updates to international guidance following the financial crisis. The guidelines are non-binding and provide guidance and serve as a reference point for insurers, governmental authorities, and other relevant stakeholders in OECD and non-OECD countries. They complement the G20/OECD Principles of Corporate Governance, which were published in September 2015.

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ECON urges Commission to take into account European Parliament's recommendation to postpone IDD application date to 1 October 2018

On 16 November, ECON published a letter it has sent to the EC concerning the recommendation made by the EP that the EC adopt a legislative proposal to postpone the application date of the IDD to 1 October 2018. The EP’s recommendation accompanied its decision, on 25 October, not to object to two Commission Delegated Regulations under the IDD. In the letter, ECON: (i) urges the EC to adopt a legislative proposal "swiftly", to enhance legal certainty on the applicable provisions and to allow for the necessary organisational and technical changes needed to comply with the provisions introduced by the Delegated Regulations; and (ii) notes that, contrary to the regular proceedings where a request arises from the Commission by way of a letter, ECON decided at its own initiative to launch the procedure for the two early non-objections. ECON understands that the Council of the EU is currently preparing a letter in line with these concerns, but it has not yet received any feedback from the EC.

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Solvency II – EC Implementing Regulation on technical information for calculation of technical provisions and basic own funds for Q4 2017 reporting published in OJ

On 14 November, EC Implementing Regulation (EU) 2017/2015 laying down technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 30 September 2017 to 30 December 2017 under the Solvency II was published in the OJ. The EC adopted the Implementing Regulation on 9 November. It entered into force on 15 November (the day after publication in the OJ). It applies from 30 September (that is, the first reporting reference date to which the Implementing Regulation applies).

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Solvency II – PRA consultation on draft supervisory statement on modelling of matching adjustment

On 10 November, the PRA published a consultation paper on modelling of the matching adjustment (MA) under the Solvency II. This CP seeks feedback on a draft supervisory statement setting out the PRA proposed expectations of firms regarding the application of the Solvency II MA within the calculation of the SCR. The purpose of the proposals is to update, provide clarity and consolidate into a single draft SS the PRA’s expectations regarding the modelling of the MA in internal models 1.2. The deadline for comments is 9 March 2018.

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FX global code – GFXC to update principle 17 of FX global code

On 15 November, the Global Foreign Exchange Committee (GFXC) published a press release stating its intention to update principle 17 of the FX global code. The code defines "last look" as "a practice utilised in electronic trading activities whereby a market participant receiving a trade request has a final opportunity to accept or reject the request against its quoted price". Principle 17 provides guidance aimed at encouraging improved transparency and controls surrounding the use of last look. The press release states that the GFXC has agreed that principle 17 should: indicate that market participants should not undertake trading activity that uses the information from the client's trade request during the last look window; and clarify the conditions under which certain trading arrangements (often referred to as "cover and deal") may be distinguished from the last look guidance. The GFXC will publish the updated version of principle 17 by the end of 2017.

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MiFID II – ESMA updates Q&As on market structures and transparency

On 15 November, ESMA published updated versions of its Q&As on market structures and transparency under the MiFID II and MiFIR. ESMA last updated the Q&As in October. The updates to the Q&As on market structures include new answers on: (i) tick size regime; (ii) Direct Electronic Access (DEA); and (iii) Multilateral systems. The updates to the Q&As on transparency include new answers on: (i) pre- and post-trade transparency, and for equity and non-equity instruments; (ii) systematic internalisers; (iii) Data reporting service providers; and (iv) third country issues.

Q&AS on market structure

Q&As on transparency

UNIDROIT Guide on Intermediated Securities

On 14 November, the International Institute for the Unification of Private Law published its Legislative Guide on Intermediated Securities. The Guide implements the principles and rules of the Geneva Securities Convention, which has been open for adoption since October 2009.

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MiFID and MiFIR – ESMA updates Q&As on commodity derivatives

On 14 November, ESMA published an updated version of its Q&As on commodity derivatives topics under the MiFID II and MiFIR. The update includes new answers (dated 13 November) relating to: position limits; ancillary activities; and position reporting. 

MiFIR – ESMA updates Q&As on MiFIR data reporting

On 14 November, ESMA published an updated version of its Q&As on data reporting under MiFIR. The updated version includes new answers (in section 15: transaction reporting) relating to: transaction reporting for primary issuances; corporate events; portfolio management; and swaps related to indices.

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MiFID – ESMA updates Q&A on trading obligation for shares

On 13 November, ESMA published a press release clarifying the application of the trading obligation for shares to trade certain instruments on-venue under the MiFID II. The press release contains a Q&A about the scope of the trading obligation where there is a chain of transmission of orders. ESMA explains that Article 23(1) of MiFIR determines the scope of the trading obligation for shares admitted to trading on a regulated market or traded on a trading venue by requiring investment firms to ensure that trades that they undertake in shares take place on a regulated market, MTF, systematic internaliser, or equivalent third country venue.

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MiFID II – corrigendum to Delegated Regulation relating to passporting published in OJ

On 10 November, a corrigendum to EC Delegated Regulation ((EU) 2017/1018) supplementing the MiFID II with regard to RTS specifying information to be notified by investment firms, market operators and credit institutions was published in the OJ. The corrigendum makes the following minor change to the text of article 5(b) of the version of the Delegated Regulation published in the OJ: “For: "(b) a short description of the appropriate arrangements to be in place and the date from which these arrangements will be provided in the host Member State;" read: "(b) a short description of the arrangements and the date from which those arrangements will be provided in the host Member State;"."

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MiFID II – ESMA updates Q&As on investor protection

On 10 November, ESMA published an updated version of its Q&As on investor protection topics under the MiFID II and MiFIR. ESMA has added new Q&As covering: record keeping; post-sale reporting; and inducements.

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ECB regulations and decisions on systemically important payment systems published in OJ

On 16 November, the following were published in the OJ: (i) Regulation (EU) 2017/2094 of the ECB, of 3 November 2017, amending Regulation (EU) No 795/2014 on oversight requirements for systemically important payment systems (ECB/2017/32); (ii) Regulation (EU) 2017/2095 of the ECB, of 3 November 2017, amending Regulation (EC) No 2157/1999 on the powers of the ECB to impose sanctions (ECB/2017/34) in respect of operators of systemically important payment systems; (iii) Decision (EU) 2017/2097 of the ECB, of 3 November 2017, on the methodology for calculating sanctions for infringements of the oversight requirements for systemically important payment systems (ECB/2017/35); and (iv) Decision (EU) 2017/2098 of the ECB, of 3 November 2017, on procedural aspects concerning the imposition of corrective measures for non-compliance with Regulation (EU) No 795/2014 (ECB/2017/33). The regulations and decisions will enter into force on 6 December (that is, twenty days after their publication in the OJ).

Regulation (EU) 2017/2094

Regulation (EU) 2017/2095

Decision (EU) 2017/2097

Decision (EU) 2017/2098

BoE commences direct delivery of CHAPS service

On 13 November, the BoE published a press release announcing that it has commenced the direct delivery of the CHAPS service. The announcement follows publication of a blueprint from the BoE in May 2017 for a renewed real-time gross settlement service, where the BoE stated that it was working on a transition. Prior to November 2017, the CHAPS service was operated by the CHAPS Clearing Company Ltd, a private entity. 

Delegated Regulation on RTS on co-operation and exchange of information for passporting under PSD2 published in OJ

On 11 November, Commission Delegated Regulation ((EU) 2017/2055) supplementing the revised Payment Services Directive ((EU) 2015/2366) with regard to RTS for the co-operation and exchange of information between competent authorities relating to the exercise of the right of establishment and the freedom to provide services of payment institutions was published in the OJ. The Delegated Regulation: (i) specifies the framework for co-operation and exchange of information between competent authorities for passporting under Article 28(5) of PSD2; (ii) stipulates, in particular, the information that national supervisors must exchange with one another and, in doing so, distinguishes the notifications related to branch establishments, engagement of agents or distributors, and free provision of services; and (iii) defines the specific features of these notifications regarding format, transmission channel and language. The Delegated Regulation enters into force on 1 December 2017 (that is, twenty days after publication in the OJ).

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DWP non- statutory guidance on personalised risk warnings for members with GARs

On 13 November, the DWP published non-statutory guidance for pension scheme trustees, administrators and providers concerning new obligations due to come into force on 6 April 2018 that will require personalised risk warnings to be issued to members who are considering giving up the benefit of guaranteed annuity rates (GARs) or other similar guarantees. The guidance sets out best practice for preparing and issuing risk warnings, and includes practical tips for complying with the obligations in the amending regulations that risk warnings must be “prominent” as well as “clear and intelligible”. In addition, the guidance explains the operation of the transitional provisions applying to members who wish to transfer safeguarded-flexible benefits in the run-up to 6 April 2018.

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CRD IV – EBA final peer review report on guidelines on criteria for identifying O-SIIs

On 15 November, the EBA published a final peer review report on its guidelines (EBA/GL/2014/10) on the criteria to determine the conditions of application of Article 131(3) of the CRD IV in relation to the assessment of O-SIIs. In the report, the EBA sets out the findings of a review of how relevant authorities (that is, NCAs or national designated authorities (NDAs), as appropriate) have implemented the guidelines. The review took the form of a self-assessment by relevant authorities, a peer review exercise and a targeted questionnaire sent to certain relevant authorities. The EBA's review panel found that the majority of relevant authorities are compliant with the guidelines. However, it also found a wide range of practices in areas that the EBA expected to have been harmonised by the guidelines, with some requirements not consistently and comprehensively applied in all jurisdictions.

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CRR – EC adopts Implementing Regulation on ITS on supervisory reporting to reflect operational risk, sovereign exposures and additional monitoring metrics for liquidity reporting

On 15 November, the EBA published a press release announcing that on 9 November, the EC adopted an Implementing Regulation amending the Implementing Regulation on supervisory reporting of institutions (Regulation 680/2014) under the CRR. The EC has published the text of the amending Implementing Regulation and its Annexes. The Amending Implementing Regulation contains amendments to the ITS relating to: sovereign exposures; operational risk; and additional monitoring metrics on liquidity (AMM). The Implementing Regulation has not yet been published in the OJ. It will apply from 1 March 2018. 

CRR – EBA final report on guidelines on treatment of connected clients

On 14 November, the EBA published its final report (EBA/GL/2017/15) setting out guidelines on the treatment of connected clients as defined in Article 4(1)(39) of the CRR. The guidelines aim to support institutions in identifying all possible connections among their clients. They cover the two types of interconnection that lead to two or more clients being regarded as a single risk (that is, control relationships and economic dependencies). In particular, the guidelines clarify that institutions should make use of their clients' consolidated financial statements when assessing the existence of control. They also provide a non-exhaustive list of indicators of control that institutions should use when assessing those clients to which EU accounting rules do not apply (that is, natural persons, central governments, and clients that prepare consolidated financial statements in accordance with third country accounting rules).

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Final compromise text of proposed CRR IFRS 9 Regulation

On 14 November, the Council of the EU published a note (dated 13 November 2017) (13725/17) setting out the final compromise text of the proposed Regulation amending the CRR relating to the transition period for mitigating the impact on own funds of the introduction of IFRS 9 and the large exposures treatment of certain public sector exposures denominated in non-domestic currencies of member states (CRR IFRS 9 Regulation). Publication of the text follows the political agreement between the EP and the Council on the CRR IFRS 9 Regulation, which was announced on 26 October. On 15 November, the Council of the EU announced that its Permanent Representatives Committee had endorsed the proposed text.

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ECB opinion on CRR II and CRD V proposals

On 10 November, the ECB published an opinion (dated 8 November 2017) on the following two legislative proposals published by the EC: (i) a proposal for a Regulation amending the CRR (CRR II); and (ii) a proposal for a Directive amending CRD IV (CRD V). The ECB generally supports the EC’s proposals. Its opinion addresses issues of particular importance to the ECB, which have been divided into two sections: (i) Changes to the existing EU regulatory and supervisory framework; and (ii) Implementation of internationally agreed supervisory standards. Specific proposals to amend the drafting of the proposed Regulation and Directive, together with some additional proposals to amend the current texts of the CRR and CRD IV Directive are set out in a technical working document, which is attached to the opinion. 

ECB opinion on implementation of TLAC

On 10 November, the ECB published an opinion (dated 8 November 2017) on the EC's legislative proposals to implement the FSB’s TLAC standard. The ECB welcomes the proposals to implement TLAC, but sets out some areas for consideration including issues relating to: (i) implementation of the TLAC standard in the EU; (ii) amendments to the MREL; (iii) transitional arrangements for MREL; (iv) early intervention measures; (v) and pre-resolution moratorium tool. Specific proposals to amend the drafting of the proposed Regulations and Directive, together with some additional proposals to amend the current texts of the BRRD, SMR Regulation, CRR and CRD IV Directive are set out in a technical working document, which is attached to the opinion.

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European Commission consultation on minimum levels of bank capital to cover for future losses on new loans that become non-performing

On 10 November, the EC published a consultation paper on common minimum levels of capital that EU banks must set aside to cover incurred and expected losses on newly originated loans that turn non-performing. The EC is seeking views on the possible introduction of minimum coverage requirements that would restrict new non-performing loans by ensuring sufficient loan loss coverage. It also requests input on how these requirements should be designed. The consultation closes on 30 November. Further to this, the EC has called for advice from the EBA on prudential measures relating to non-performing loans. The EBA is invited to, among other things: (i) provide country-by-country estimates on additional or accelerated capital needs triggered for EU banks by the prudential backstops, taking into account, to the extent possible, expected increases in provisions as a result of the application of IFRS 9 on EU banks; and (ii) highlight any technical aspects that are of relevance to the functioning, scope, design and calibration of statutory prudential backstops. The EBA is required to produce a report by 27 November 2017.

EC consultation

EC call for advice


European Commission adopts Delegated Regulations setting out RTS on valuation under BRRD

On 14 November, the EC adopted the following Delegated Regulations setting out RTS on valuation under the BRRD: (i) Commission Delegated Regulation (EU) No …/… supplementing the BRRD with regard to RTS specifying the criteria relating to the methodology for assessing the value of assets and liabilities of institutions or entities (C(2017) 7438 final); (ii) Commission Delegated Regulation (EU) …/… supplementing the BRRD with regard to RTS specifying the criteria relating to the methodologies for valuation of difference in treatment in resolution (C(2017) 7436 final). The EBA submitted final draft RTS to the Commission in May 2017. The next step is for the Council of the EU and the European Parliament to consider the Delegated Regulations. If neither of them objects, they will enter into force twenty days after they are published in the OJ.

C(2017) 7438 final

C(2017) 7436 final


European Commission draft Delegated Regulation on ESMA fees for trade repositories under SFTR

On 16 November, the EC published, for consultation, a draft Delegated Regulation (Ares(2017)5597698) amending the SFTR with regard to fees charged by ESMA to trade repositories. In accordance with the SFTR, ESMA must charge trade repositories fees that are proportionate to the turnover of the trade repository and fully cover ESMA's necessary expenditure relating to the registration, recognition and supervision of trade repositories. Those fees should also cover the reimbursement of any costs that the competent authorities may incur as a result of delegation from ESMA. The EC invites feedback on the draft Delegated Regulation by 14 December. ESMA published a final report on the fees charged by ESMA to trade repositories in April 2017.

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FCA consults on regulatory fees and levies for 2018/19

On 13 November, the FCA published a consultation paper on regulatory fees and levies: policy proposals for 2018/19 (CP17/38). The FCA sets out its proposed policy changes regarding how FCA fees will be raised from 2018/19. In particular, the FCA: (i) proposes to amend the tariff data (the measure of the size of firms within a fee-block) it will use to calculate insurers' FCA periodic fees and the Financial Ombudsman Service (FOS) annual levies from 2018/19; (ii) plans changes to update the scope of its financial penalty scheme; (iii) invites views on whether and how the FCA might refine the definition of credit-related income to take account of the specific circumstances of consumer hire agreements; and (iv) seeks views on whether it should recover administration costs by charging firms that require the FCA to issue them with paper invoices through the post, instead of using an automated invoicing system. The proposed Handbook amendments are set out in draft versions of the Fees (Tariff data for insurers from 2018/19) Instrument 2018 and the Fees (Consumer Financial Education Body Levy) Instrument 2018, which are set out in Appendices 1 and 2 to CP17/38. CP17/38 closes to comments on 15 January 2018. The FCA will publish feedback, together with final rules, in its March 2018 Handbook Notice.

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ESMA speech on priorities for 2018

On 16 November, ESMA published a speech by Steven Maijoor, ESMA Chair, on ESMA's priorities for 2018. Points of interest in Mr Maijoor's speech include: (i) under a mandate from the EC in the context of the CMU, ESMA is currently analysing the impact of costs (including explicit and implicit fees and charges levied by the fund industry) and the implicit effect of inflation, on the returns of investors in EU UCITS. ESMA published its first findings in its latest trends, risks and vulnerabilities report (TRV no 2, 2017) and it expects to complete this work by late 2018. In the longer term, ESMA will extend the analysis to EU alternative investment funds (AIFs) and structured products; (ii) to complement its analysis on costs and returns in the context of the CMU, ESMA intends to carry out a more detailed analysis of the performance of active and passive funds. In this regard, ESMA anticipates it will benefit from the FCA's asset management market study, since this touched on some similar issues; (iii) ESMA will soon launch a workstream, under its supervisory convergence agenda, on performance fees. It believes it is appropriate to look closely at the performance fee structures that are currently permittted and test them against the reasonable expectations of investors as to when such a fee will be levied by the fund management company. ESMA will take this work forward in the course of 2018 with a view to promoting greater convergence in national practices and better overall outcomes for investors across the EU. In doing so, it will have due regard to the work carried out by IOSCO that led to the development of good practices on fees and expenses for collective investment schemes.

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Joint ESAs work programme 2018

On 15 November, the Joint Committee of the ESAs published its 2018 work programme (JC 2017 53). In the work programme, the committee states that, in 2018, it will: continue to focus on consumer protection issues as a priority; continue to monitor evolution of the market in the three sectors, with a view to identifying at a later stage specific cross-sectoral relevant FinTech and digitalisation issues that need addressing; continue to be an important forum for discussing key cross-sectoral trends and vulnerabilities to financial stability; continue to provide an important forum for identifying new and emerging AML and CTF risks, exchanging information and good practices in the supervision of credit and financial institutions, and assessing how national competent authorities could co-ordinate their practices on inspections and investigation; stand ready to bring forward the effective supplementary supervision of financial conglomerates, and to discuss appropriate regulatory and supervisory actions; and serve as an important body for addressing other cross-sectoral matters.

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