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Key Regulatory Topics: Weekly Update 28 April - 4 May 2023

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The Council of the EU has this week published a number of four-column tables showing the positions of the European Commission, Council and European Parliament in relation to a number of files entering the trilogue process. The Council also published the texts of the proposed MiCA Regulation the recast revised WTR, with adoption by the Council anticipated on 16 May. The UK has entered a month punctuated with a series of bank holidays but the FCA this week published its consultation on reforms to the equity listing rules and a policy statement in relation to improving equity secondary markets.

Capital markets

FCA consults on equity listing rule reforms

On 3 May, the FCA began consulting on reforms to the equity listing rules, primarily replacing the ‘standard’ and ‘premium’ listing segments with a single category for equity shares in commercial companies. This would involve, by comparison to premium listing rules: (i) the removal of eligibility rules requiring a three-year financial and revenue earning track record as a condition for listing, and no longer requiring a ‘clean’ working capital statement; (ii) modified and simplified eligibility and ongoing rules requiring that a company has an independent business and has operational control over its main activities; (iii) modified rules requiring listed companies to conclude a shareholder agreement with a controlling shareholder to ensure flexibility by moving to a comply or explain and disclosure-based approach; (iv) a more permissive approach to dual class share structures; (v) the removal of compulsory shareholder votes and shareholder circulars for significant transactions; (vi) the removal of compulsory shareholder votes and shareholder circulars for related party transactions, including where a controlling shareholder is involved and a controlling shareholder agreement is not in place; (vii) the potential merger of the rules for Sovereign Controlled Commercial Companies into the single category for equity shares, subject to modifications if required; and (viii) a single set of Listing Principles and related provisions. The deadline for comments is 28 June. The FCA also sets outs its response to feedback received to its May 2022 Discussion Paper where it set out its initial proposals for the regime. The FCA intends to issue a further consultation on the wider proposed changes to its Listing Regime in autumn 2023, which will include draft rules.

Press release



Please see the Prudential Regulation section for the new FCA baseline financial resilience regulatory return and consultation on change of return’s scope.

CCD II: text of political agreement

On 2 May, the Council of the EU published the final four-column table (dated 11 April) containing the result of the political agreement reached with the EP on the proposed Directive on consumer credits, to revise and replace the Consumer Credit Directive. The text will be finalised during the legal-linguistic revision, which will also ensure consistency in the terminology.

Political agreement text

Proposed Directive on distance financial services contracts: trilogue negotiation positions

On 2 May, the Council of the EU published a provisional version of the 4-column document (dated 12 April), comparing the positions of the European Commission, Council and European Parliament in relation to the proposed Directive on financial services contracts concluded at a distance. The Council’s accompanying note explains that the European Parliament text has not yet been adopted in plenary and is therefore still subject to changes.

Comparison document


PSR policy statement on future fee allocation

On 28 April, the PSR published a policy statement on changes to its allocation of future fees. The PSR is introducing two main changes: (i) a minimum yearly fee threshold of £100 for regulated payment service providers. This will provide time and cost savings to small fee payers, and reduce administration; and (ii) a special project fee for payment system operators with a for-profit business model. The scope of the fee is narrower than the proposal consulted on however and these fees will only be charged for work the PSR carries out relating to the designation of a new regulated payment system under the Payment Services Regulations. The changes are set out in the Fees (Payment Systems Regulator) Instrument (No 1) 2023, which came into force immediately, on 28 April. In due course, the PSR expects to conduct a wider review of its fees structure, during which it may revisit the possibility of a broader special project fee mechanism, given some for-profit payment system operators do not contribute to the PSR’s fees. It will also consider any changes to its regulatory powers or remit and any market changes that may have a material impact on its annual funding requirement or the way in which it charges fees.

Policy statement

Financial crime 

Council of EU note on proposed Directive on cross-border law enforcement access to bank account registries

On 3 May, the Council of the EU published a four-column table on the proposal for a Directive amending Directive (EU) 2019/1153 as regards access of competent authorities to centralised bank account registries through the single access point, comparing the Commission proposal of 20 July 2021, the amendments adopted by the EP on 13 February, and the mandate approved by the Permanent Representative Committee on 29 March.

Council of EU note

Government Fraud Strategy

On 3 May, the government published its Fraud Strategy, which aims to reduce fraud by 10% on 2019 levels by 2025. The government commitments include, to: (i)  ban cold calls on financial products so fraudsters cannot dupe people into buying fake investments – the government intends to consult on proposals by the summer; (ii) establish a new national fraud squad, which will work alongside the Serious Fraud Office and collaboratively with the wider fraud ecosystem, to ensure that complex fraud cases are investigated by the most appropriate agency; (iii) create new powers to take down fraudulent websites – through the Economic Crime and Corporate Transparency Bill currently before Parliament; (iv) change the law so that more victims of fraud will get their money back – through mandatory authorised push payment reimbursement, currently being considered by the PSR; (v) make the tech sector put in place extra protections for their customers and introduce tough penalties for those who do not – via the Online Safety Bill and its sanctions for non-compliance; and (vi) publish regular data on the volume of fraudulent content hosted on different websites and platforms to incentivise companies to root these out and better protect users – the government will launch a consultation on how best to deliver this.

Press release

Fraud Strategy webpage

Fraud Strategy


Council of EU publishes texts of the recast WTR and the MiCA Regulation

On 3 May, the Council of the EU published the texts of the proposed Regulation on markets in crypto-assets and the Regulation on information accompanying transfers of funds and certain crypto-assets (recast revised WTR). According to a provisional list of ‘A’ items (dated 28 April), the Council of the EU plans to adopt the Regulations on 16 May. The Regulations will enter into force 20 days after their publication in the OJ. MiCA will apply 18 months after the date of entry into force, while the recast revised WTR will apply from the date of publication.

MiCA Regulation

Recast Revised WTR

List of ‘A’ items

Markets and markets infrastructure 

Guidance on fallback trigger events and €STR-based fallback rates for EURIBOR for corporate lending products

On 4 May, the working group on euro risk-free rates published guidance for corporate lending products on implementing the recommendations on EURIBOR fallback trigger events and €STR-based EURIBOR fallback rates. In May 2021, the working group published recommendations for EURIBOR fallback trigger events and €STR-based EURIBOR fallback rates, however these recommendations were not generally adopted in corporate lending products. In this guidance, the working group reminds firms that robust fallbacks are a requirement of the EU Benchmarks Regulation and that now forward-looking €STR rates are available alongside the already existing backward-looking €STR, the working group believes there is no impediment to the full implementation of the May 2021 recommendations. The guidance includes: (i) a reiteration of working group recommendations for corporate lending products; (ii) guidance on conventions for corporate lending products when using compounded €STR in arrears; and (ii) information on the availability of term €STR and the use of term €STR as part of a two-level waterfall solution. The guidance is specific to corporate lending products, addressed to all parties active in EURIBOR-referencing corporate lending products, including lenders, borrowers, investors, advisers and legal firms. It does not apply to any other cash products covered by the May 2021 recommendations. On 3 May, the working group also published a comparative table of available term €STR rates. The document aims to inform market participants about the €STR-based forward-looking term structure rates which are or may become available, it is purely an overview of key features. The table includes the key attributes of the Term €STR rates provided by the benchmark administrators.


Comparative Table

FCA policy statement on improving equity secondary markets

On 3 May, the FCA published a policy statement in relation to improving equity secondary markets. The amendments relate to: (i) post-trade transparency, including the introduction of a new ‘designated reporter regime’ and removing the SI status as a requirement for determining when an investment firm is required to report transactions; (ii) pre-trade transparency waivers, including allowing UK trading venues to use reference prices from overseas venues, where those prices are robust, reliable and transparent; and (iii) the tick size regime, including removing restrictions preventing trading venues from using the same tick size used by trading venues established overseas where the overseas venues are the primary markets in a financial instrument. In response to feedback received to the consultation, the FCA has made a number of changes to the proposals including delaying the entering into force of the new post-trade transparency requirements until April 2024. The changes to waivers from pre-trade transparency and to the tick size regime will apply immediately however. Trading venues and investment firms, and APAs consolidating trade reports by them, will need to update their systems to comply with the changes to post-trade transparency. This may also impact their systems for transaction reporting. The FCA will consider how to minimise the impact on firms while ensuring that they continue to report transactions correctly. The FCA will announce further details on the notification process to register as a designated reporter in due course but firms wishing to register are advised to notify the FCA. The FCA’s future related work includes: (a) considering policy options in relation to the potential impact of the divergence between the trade reporting and transaction reporting regimes. The FCA will communicate its expectations for transaction reporting in due course; (b) consulting in the near future on the establishment of a consolidated tape (CT) to enhance market resiliency during outages, in order to develop a CT regime by 2024; (c) exploring concerns raised in relation to the UK market for retail orders and the Retail Service Provider model, to decide whether a more formal review is appropriate; and (d) establishing a task force to develop good practices for trading venues and investment firms in the event of a trading venue outage. 

Press release

Policy statement

ESMA recognises four new third country CCPs

On 2 May, ESMA announced that it has recognised four additional third country CCPs (TC-CCPs) under Article 25 EMIR, bringing the total number of TC-CCPs recognised by ESMA to 39. The newly recognised TC-CCPs are: (i) Bursa Malaysia Derivatives Clearing Berhad (Malaysia); (ii) Taiwan Futures Exchange Corporation (Taiwan); (iii) Cámara de Riesgo Central de Contraparte de Colombia S.A. (Colombia); and (iii) Tel-Aviv Stock Exchange Clearing House Ltd (Israel). The recognition of these four TC-CCPs follows the conclusion of standard MoUs between ESMA and their respective supervisory authorities. ESMA also announces the withdrawal of recognition of six TC-CCPs established in India on 30 April. ESMA has updated its list of recognised TC-CCPs accordingly.

Press release

List of recognised TC-CCPs

ESMA annual transparency calculations for non-equity instruments, bond liquidity data and quarterly SI calculations

On 28 April, ESMA published: (i) the annual transparency calculations for non-equity instruments – the transparency requirements based on the results of the annual transparency calculations for non-equity instruments apply from 1 June 2023 until 31 May 2024; (ii) new quarterly liquidity assessment of bonds – this will apply from 16 May – 15 August 2023; and (iii) the quarterly systematic internaliser (SI) calculations – the data covers the period 1 October 2022 to 31 March 2023. SI firms must perform the SI test by 15 May.

Press release

ECB opinion on EMIR 3 package 

On 28 April, the ECB published an opinion on the legislative proposals for the EMIR 3 package. While the ECB supports the package generally, it makes some specific observations on subjects including: (i) joint supervisory teams (JSTs) – while the ECB supports the introduction of JSTs in the supervision of authorised EU CCPs, it does not consider it necessary to establish a new supervisory body for this purpose, as this may lead to greater institutional complexity. The ECB proposes to rely on existing cooperation within the college framework; (ii) supervision of recognised third-country CCPs – the ECB supports introducing more proportionality into the recognition process of third-country CCPs, but suggests further clarifying the scope of the consultation of the central bank of issue in relation to the supervisory activities and procedures regarding Tier 2 third-country CCPs; (iii) collateral requirements – the ECB emphasises that it does not support allowing uncollateralised commercial bank guarantees to be eligible collateral on a permanent basis; (iv) procedures for the authorisation and extension of services – the ECB considers extending the proposed timeline from two to ten working days for the competent authority to confirm completeness of a CCP’s application; (v) non-objection procedures for non-material changes – the ECB considers the proposed criteria in relation to the application of the new non-objection procedure for granting a request for extension of activities or services for non-material service changes are too high level and that ESMA should issue more granular guidance based on draft RTS; and (vi) the active account requirement – Among other things, the ECB considers it crucial to calibrate this requirement gradually, in terms of the proportions of exposures cleared at accounts at EU CCPs


Payment services and payment systems 

Please see the Fees/Levies section for the PSR’s policy statement on changes to its allocation of future fees.

EP response to question on push payment fraud

On 4 May, the EP published a response from the Commission to a written question regarding APP fraud, posed by an MEP. The Commission was asked whether it will take action when revising the PSD to shift the burden of proof away from the victim and make the payment service provider offer greater protections and whether the Commission could outline if Member States are free to bring in regulations that would allow victims of authorised push payment fraud to be compensated. Ms McGuinness, on behalf of the Commission, responds to the questions explaining that following consultations held in the context of PSD2, evidence suggests that the introduction of strong customer authentication, while successful in reducing the level of fraud related to unauthorised payment transactions, has been insufficient in preventing APP fraud. As such, the Commission was assessing the possibility of introducing some targeted amendments to the PSD2 liability and refund rules as part of the PSD2 review, which is scheduled for adoption in Q2. In response to the second question, Ms McGuiness explained that Member States are free to introduce such regulations at national level, a possibility that is also open to payment service providers on a voluntary basis.



Prudential regulation 

BoE speech on the challenges and opportunities ahead for the mutual sector

On 4 May, the BoE published a speech by David Bailey, Executive Director for UK Deposit Takers Supervision, on the challenges and opportunities ahead for the mutual sector. In the speech, Mr Bailey outlines why credit risk is a key priority in the PRA’s supervision of UK deposit takers in 2023; and what steps they expect regulated firms to be taking in proactively managing credit risk within their portfolios. Some good practices include: (i) using early warning indicator frameworks that highlight emerging risks in portfolios at an earlier stage than more traditional, backward-looking credit metrics; (ii) reviewing credit risk management frameworks to ensure they remain appropriate; (iii) reviewing lending criteria to ensure they remain prudent and sustainable; (iv) assessing concentration risks in their portfolio; (v) regularly analysing whether the levels of credit loss provisions are sufficient and ensuring these are recognised in a timely manner; (vi) early outreach to customers whose finances are most vulnerable in the current circumstances whilst bearing in mind relevant FCA guidance; and (vii) ensuring that customer support and collections arrangements are appropriately scaled so they can expand rapidly if need be. In his speech, Mr Bailey also addresses two important areas of policy development: Basel 3.1 and the PRA’s Strong and Simple prudential framework for domestically focused non-systemic firms. The PRA is considering what a layer of the framework for ‘mid-tier’ firms might look like, and is currently undertaking some engagement with relevant firms to understand where they see scope for simplification of the prudential regime. In relation to other priorities, the PRA plan a consultation paper later this year setting out proposals to introduce a new regulatory framework on diversity, equity and inclusion in the financial sector.


New FCA baseline financial resilience regulatory return and consultation on change of return’s scope

On 2 May, the FCA published a policy statement on a new baseline financial resilience return (FIN073). It will replace the current Financial Resilience Survey. In response to feedback, the FCA will align the quarterly reporting schedule of the return with firms’ accounting reference date. It has also made minor amendments to the return and the supplementary guidance to provide further clarity. The Handbook changes, which amend the FCA's Supervision manual, are contained in the Financial Resilience Reporting Instrument 2023. They will come into force on 1 January 2024. Firms that will be brought into scope of FIN073 will need to be prepared to submit the return when it is due, from January 2024. The FCA states that they will receive an automated reminder via RegData when the return is available for submission. The FCA has also begun consulting on changing the scope of FIN073 to include full permission consumer credit firms. These firms are currently excluded from the rules considering that they are captured under the definition of credit brokers. Limited permission consumer credit firms will remain outside of scope. The deadline for comments is 6 June. The FCA will publish its final position in relation to the scope of the return in the summer.

Policy statement


New EBA supervisory reporting signposting tool

On 2 May, the EBA launched a new signposting tool for supervisory reporting to assist banks in identifying and understanding the reporting requirements and templates that are applicable to them. The interactive tool particularly benefits small and non-complex institutions by reducing complexity and establishing a common business logic. Whilst the EBA shall make all efforts to have the tool up to date, it is meant to be used solely for orientation purposes and has no legal effect.

Press release

Signposting tool

Recovery and resolution 

EC adopts two Delegated Regulations under CCP Recovery and Resolution Regulation

On 3 May, the EC adopted two Delegated Regulations containing RTS supplementing the CCP Recovery and Resolution Regulation (CCPRRR): (i) specifying the circumstances in which a person is deemed to be independent from the resolution authority and from the central counterparty, the methodology for assessing the value of assets and liabilities of a central counterparty, the separation of the valuations, the methodology for calculating the buffer for additional losses to be included in provisional valuations, and the methodology for carrying out the valuation for the application of the "no creditor worse off" principle; and (ii) specifying the conditions under which compensation, cash equivalent of such compensation or any proceeds that are due pursuant to Article 63(1) are to be passed on to clients and indirect clients and the conditions under which passing on is to be considered proportionate. The Delegated Regulations will now be scrutinised by the Council and the EP.

Delegated Regulation (i)

Delegated Regulation (ii)

Other developments 

BoE and PRA consult on proposed changes to their enforcement policies

On 4 May, the BoE and PRA published a consultation paper setting out proposed changes to their enforcement policies and procedures, the PRA’s policies and procedures for making supervisory and non-enforcement statutory notice decisions, and to the procedures of the Enforcement Decision Making Committee. Some of the proposed amendments are designed to: (i) provide a route for early cooperation in appropriate cases, enabling investigative outcomes to be reached more efficiently and quickly and engaging increased senior manager accountability in relation to such cooperation; (ii) incentivise early admissions through the introduction of an enhanced settlement discount, in appropriate cases, of up to 50%; (iii) set out the scope of the Bank’s enforcement powers more clearly; and (iv) clarify the approach and procedures the Bank would adopt in FMI enforcement investigations and introduce a route to settlement similar to the one used in PRA enforcement investigations. The deadline for comments is 4 August. The BoE will also be holding a series of in-person roundtable discussions on the proposals, providing an additional opportunity for external stakeholders to engage and provide feedback on the proposed changes.

Consultation Paper

Press Release

EBA report on convergence of supervisory practices in 2022

On 4 May, the EBA published its annual report on convergence of supervisory practices for 2022. The conclusions include that: (i) although the goal for most of the supervisory priorities set in the EBA European Supervisory Examination Programme (ESEP) for 2022 was met, competent authorities are still in the process of building up their capacity to review the risks associated with the digital transformation and ESG; (ii) supervisors showed an ability to react to macro events that affected the financial situation of institutions under their supervision, although timely information exchange and cooperation should be enhanced; and (iii) supervisors consciously applied proportionality in their supervisory practices. In its follow up in 2023, priority will be given to the high risk and not fully covered areas of the 2022 ESEP, the EBA will also facilitate and monitor the implementation of qualitative KPIs for supervisory colleges in 2023.


Press Release

FCA whistleblowing qualitative assessment survey 2022

On 4 May, the FCA published a report of its findings from its 2022 whistleblowing qualitative assessment survey, along with a press release setting out the actions the FCA plans to take to improve the confidence of whistleblowers. Overall, respondents to the survey reported a significant dissatisfaction with their experience of whistleblowing to the FCA, explaining that they did not believe the FCA had investigated their concerns properly or taken appropriate action. The report also details the FCA’s whistleblowing practice, the value it places on whistleblowers and the challenges that come with handling intelligence from whistleblowers. Moving forward the FCA plans to: (i) provide whistleblowers with more detail on what has been done with the information provided, or reasons for taking or not taking action; (ii) improve the use of whistleblowers’ information across the FCA; (iii) enhance its webform to fully capture every whistleblower’s disclosure; and (iv) engage with the Department for Business and Trade to support a review of whistleblower legislation to enhance the wider whistleblowing system.

Press Release


PRA business plan 2023/24

On 2 May, the PRA published its 2023/24 business plan. The PRA's strategic priorities for 2023/24 are to: (i) maintain and build on the safety and soundness of the banking and insurance sectors, and ensure continuing resilience – the PRA highlights in particular the implementation of the Basel 3.1 standards this year. It also notes the publication of the results of the latest annual cyclical scenario for the major UK banks in summer; (ii) be at the forefront of identifying new and emerging risks, and developing international policy – this includes work in relation to AI/machine learning, cryptoassets and managing financial risks from climate change; (iii) support competitive and dynamic markets, alongside facilitating international competitiveness, in the sectors it regulates – the PRA highlights an upcoming consultation on its future approach to rulemaking and also its ongoing ‘strong and simple’ project for banks; and (iv) run an inclusive, efficient and modern regulator within the BoE – the PRA notes that internally, a major focus this year will be improving the operational efficiency of processing regulatory transactions, in particular in relation to senior manager approvals where the PRA considers processing to have been too slow.

Business plan  

FCA Handbook Notice No. 109

On 28 April, the FCA published Handbook Notice No. 109, reflecting the changes made to the FCA Handbook by the following: (i) Financial Resilience Reporting Instrument 2023 (FCA 2023/17). The instrument introduces a new financial resilience regulatory return for solo-regulated firms (we have covered this item in greater detail in the Prudential Regulation section above). It comes into force on 1 January 2024; (ii) Claims Management Form Guidance and Numbering Instrument 2023 (FCA 2023/18). The instrument provides additional guidance to assist firms in completing the "Relevant Connections" section of the annual claims management report form (CMC001). Consultation feedback is included in the Handbook Notice. It came into force immediately on 28 April; (iii) Technical Standards (Markets in Financial Instruments Transparency) Instrument 2023 (FCA 2023/19). The instrument amends certain provisions that impose compliance and operational costs on firms but do not deliver demonstrable benefits to end users or to the functioning of equity markets. It also makes amendments that aim to improve the quality of post-trade information and the efficiency of consolidating trade reports from multiple sources. Annex C came into force immediately on 28 April, while the rest of the instrument comes into force on 29 April 2024; and (iv) Fees (PSR) Instrument (No 1) (FCA 2023/20). The instrument introduces a minimum yearly fee threshold of £100 for payment service providers regulated by the PSR, and a special project fee for payment system operators for work specifically related to those with a for profit business model (we have covered this item in greater detail in the Fees/Levies section above). It came into force immediately on 28 April.

Handbook Notice No. 109