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Key Regulatory Topics: Weekly Update 5 - 11 Mar 2021

Our weekly update on key regulatory topics affecting the financial services sector.

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Please see the Other Developments section for the MoU agreed between the ECB, FCA and BoE on post-Brexit supervisory cooperation, effective from 1 January. 


Please see the Other Developments section for the FCA’s Quarterly Consultation No 31 (CP21/5). 

FCA consults on updated mortgages tailored support guidance – Covid-19 

On 5 March, the FCA published updated draft mortgages tailored support guidance for firms, to apply from 1 April at the expiration of the current guidance. The guidance supplements the FCA’s payment deferral guidance (PDG) and applies to firms dealing with customers experiencing payment difficulties due to circumstances arising out of the Covid-19 pandemic when they are not receiving support under the PDG. From 1 April, firms can enforce repossessions, but only if they act in accordance with the guidance, and regulatory requirements which mean that repossession should only take place as a last resort if all other reasonable attempts to resolve the position have failed. Firms will also need to comply with any relevant legislative requirements which may prevent firms from enforcing repossession in certain parts of the UK. The guidance also states that firms should: (i) ensure that they have appropriate policies and procedures for the fair treatment of vulnerable customers and consider the needs of customers with protected characteristics under the Equality Act 2010; and (ii) consider whether there are any circumstances that may mean a customer, or a member of their household, is at greater risk of harm from Covid-19 if they are required to vacate the property. Where the firm is aware of such risks, repossession should not be enforced until those risks have passed or can be appropriately managed. The deadline for comments was 10 March. The FCA also reminds consumer credit and mortgage consumers that the deadline for applications for new payment deferrals under the PDG is 31 March.

FCA statement

Draft guidance


Please see the other sections for product-specific updates relating to Covid-19.

Financial crime

Please see the Prudential Regulation section for the EBA’s consultation on its guidelines on a common assessment methodology for granting authorisation as a credit institution under CRD. 

FATF and Egmont Group joint report on trade-based money laundering risk indicators

On 11 March, FATF and the Egmont Group of Financial Intelligence Units (FIUs) published a joint report on trade-based money laundering (TBML) risk indicators. A risk indicator demonstrates or suggests the likelihood of the occurrence of unusual or suspicious activity. The risk indicators are derived from a sampling of the data received by FATF and the Egmont Group of FIUs in the course of the TBML project. The risk indicators are relevant to both the public and private sectors. While several indicators identified may not appear to have a direct or exclusive connection with TBML, and may be indicative of other forms of money laundering or another illicit activity, the report notes that they may nonetheless be relevant when trying to identify TBML.

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OFSI guidance on monetary penalties for breaches of financial sanctions

On 10 March, the Office of Financial Sanctions Implementation (OFSI) published guidance describing its processes and considerations in relation to the issue of monetary penalties for breaches of financial sanctions, including: (i) the case assessment process; (ii) the penalty calculation process; and (iii) procedural rights. The guidance comes into force on 1 April.

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FCA speech on locking down market abuse

On 8 March, the FCA published a speech by Mark Steward, FCA Executive Director of Enforcement and Market Oversight, on the FCA’s recent work to tackle market abuse. Highlights include: (i) despite the Covid-19 pandemic and Brexit, the FCA saw an overall increase of 34% in transactions and transaction reports in 2020. This was largely attributable to heavier trading in the first lockdown period between March and June of last year as investors adjusted to the impact of the pandemic. The FCA also saw a reduction in suspicious transaction and order reports (STORs), however it is not concerned that total volumes for the year are lower than previous years. The FCA’s recent surveillance and investigation work has reduced trading by certain actors whose trading prompted high numbers of STORs; (ii) the FCA increased its proactive market monitoring and introduced some new initiatives, notably a new approach to short selling reporting which enables short positions to be reported on the FCA’s Electronic Submission System; (iii) the FCA introduced a new market cleanliness measure, the Potentially Anomalous Trading Ratio - this focuses on the underlying trading behaviour around specified price sensitive announcements and assesses whether the behaviour can be deemed anomalous (which is a more neutral term than suspicious though the behaviour may also be suspicious); and (iv) Mr Steward summarises some recent market abuse and insider dealing cases.

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National Crime Agency (NCA) updated guidance for AML supervisors on submitting better quality SARs

On 8 March, the NCA published updated guidance to AML supervisors, drafted in conjunction with the Office for Professional Body Anti-Money Laundering Supervision, directed at improving the quality of suspicious activity reports (SARs). The guidance covers how AML supervisors and their supervised populations should submit better quality SARs to the NCA and the criteria by which this will be assessed. Criteria include: (i) the information which gives the basis for the reporter’s knowledge or suspicion; (ii) a description of the property that the reporter knows, suspects or believes is criminal property; (iii) a description of the prohibited act in respect of which the reporter wants a defence against a principle money laundering offence (DAML); (iv) the identity of the person(s) the reporter knows or suspects is involved in money laundering; and (v) the whereabouts of the property that the reporter knows or suspects is criminal property. The NCA highlights that, when seeking a DAML, it is important to make clear what action you are being asked to perform and what you are seeking a defence against.

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ECON draft report on proposed Regulation on a DLT pilot regime for market infrastructures

On 11 March, the EP’s Committee on Economic and Monetary Affairs (ECON) published a draft report on the proposal for a Regulation on a pilot regime for market infrastructures based on DLT. The proposed Regulation aims at providing a mechanism for allowing market infrastructures to experiment with certain restricted use of DLT. ECON recommends amendments with regards to: (i) the scope of the proposed Regulation, in terms of the requirements for entities allowed to participate in the regime, the limitations on DLT transferable securities that can be admitted to trading on or recorded by DLT market infrastructures, and the (tentative) market capitalisation of issuers of DLT transferable securities; (ii) the need to ensure a level playing field, both between entities allowed to participate in the DLT Pilot Regime, and in respect of regulatory supervision across Member States; and (iii) the need to ensure proportionality by allowing adequate flexibility to supervisors, and by providing for appropriate provisions regarding transitioning out of or winding down DLT market infrastructures.

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Digital Regulation Cooperation Forum (DRCF) workplan for 2021/22

On 10 March, the DRCF published its workplan for 2021/22, which sets out a roadmap for how Ofcom, the Competition and Markets Forum (CMA) and the Information Commissioner’s Office (ICO) will greatly increase the scope and scale of cooperation through the DRCF to strengthen their ties, pool expertise and resources, and work more closely together on online regulatory matters of mutual importance. The workplan focuses on three priority areas: (i) responding strategically to industry and technological developments; (ii) developing joined-up regulatory approaches – focusing on the interrelation between data protection and competition regulation, and the Age-Appropriate Design Code and the regulation of Video-Sharing Platforms and Online Harms; and (iii) building shared skills and capabilities – for example, building cross-regulator specialist teams. The FCA has been an observer member of the DRCF since the outset and will also join as a full member from April 2021. DRCF will update its workplan and report on progress in 12 months’ time.

DRCF work plan

DRCF press release

ICO press release

Ofcom press release

ECON draft report on proposed Regulation on markets in cryptoassets (MiCA)

On 9 March, the EP’s Economic and Monetary Affairs Committee (ECON) published a draft report dated 25 February setting out the ECON’s suggested amendments to the MiCA legislative text proposed by the EC. The report includes a justification for each amendment. 

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EBA issues new supervisory reporting and disclosures framework for investment firms

On 5 March, the EBA published its final draft Implementing Technical Standards (ITS) on the supervisory reporting and disclosures of investment firms under the IFR. The ITS set out the main aspects of the new reporting framework in relation to the calculation of own funds, levels of minimum capital, concentration risk, liquidity requirements and the level of activity in respect of small and non-interconnected investment firms. The ITS propose a different set of templates to cover small and non-interconnected investment firms. In addition, the ITS include a standardised set of templates for the disclosures of own funds. The EBA is issuing a single set of standards with integrated Pillar 3 disclosures and supervisory reporting requirements and standardised formats and definitions with a view to improving consistency between reporting and disclosures requirements, which will facilitate compliance with both requirements. The draft ITS will be submitted to the EC for endorsement before being published in the OJ. The disclosure requirements will be applicable from 26 June. The first reporting reference date is September 2021 (for quarterly reports) and December 2021 (for annual reports).

Press release

Final report

IOSCO workstreams on liquidity risk management for collective investment schemes – Covid-19

On 5 March, IOSCO announced its workstreams in relation to the implementation of liquidity risk management recommendations and market participants’ responses to Covid-19 induced market stresses: (i) IOSCO is launching its thematic review of the recommendations for liquidity risk management for collective investment schemes, which were issued by IOSCO in 2018. The thematic review aims to assess the extent to which the recommendations have been implemented through members’ regulatory frameworks. It also aims to gather information about how the responsible entities have implemented them in practice. The report is expected in Autumn 2022; (ii) IOSCO and the FSB are currently conducting a joint analysis of the availability, use and impact of liquidity risk management tools for open-ended funds (OEFs). The joint analysis is examining the experience of OEFs that faced redemption pressures during the Covid-19 induced market stresses of March and April 2020; the availability, use and impact on the broader market of liquidity risk management tools and how these were linked to the liquidity of underlying assets; and (iii) to inform both the thematic review and the joint analysis, IOSCO has issued a market participants’ survey to collect information from responsible entities on: (a) their adoption and practical implementation of the recommendations; and (b) specific targeted information on their liquidity risk management practices and experiences during the March 2020 market turmoil. The deadline for comments is 16 April.

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Markets and markets infrastructure

EC consults on Delegated Regulation supplementing EMIR on FRANDT commercial terms for clearing services for OTC derivatives

On 11 March, the EC began consulting on a draft Delegated Regulation supplementing EMIR by specifying the conditions under which the commercial terms for clearing services for OTC derivatives are to be considered to be fair, reasonable, non-discriminatory and transparent (FRANDT). The draft Delegated Regulation specifies the conditions based on: (i) fairness and transparency requirements with respect to fees, prices, discount policies and other general contractual terms and conditions regarding the price list, without prejudice to the confidentiality of contractual arrangements with individual counterparties; (ii) factors that constitute reasonable commercial terms to ensure unbiased and rational contractual arrangements; (iii) requirements that facilitate clearing services on a fair and non-discriminatory basis, having regard to related costs and risks, so that any differences in prices charged are proportionate to costs, risks and benefits; and (iv) risk control criteria for the clearing member or client related to the clearing services offered. EMIR Refit introduced an obligation on clearing members and clients providing clearing services, whether directly or indirectly, to provide those services under FRANDT commercial terms. The requirement to apply FRANDT terms will apply from 18 June. The deadline for comments is 7 April.

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PRA and FCA consult on bilateral margin requirements for non-centrally cleared derivatives

On 9 March, the PRA and FCA launched a joint consultation on proposals to establish or extend exemptions for some products subject to bilateral margining requirements, and to align implementation phases and thresholds to BCBS and IOSCO standards. The PRA/FCA proposes to amend the UK bilateral margining requirements in the onshored BTS 2016/2251 by: (i) changing the implementation dates and thresholds for the phase-in of initial margin requirements; (ii) requiring the exchange of variation margin for physically settled FX forwards and swaps to specified counterparties only; and (iii) extending the temporary exemption for single-stock equity options and index options until 4 January 2024. The deadline for comments is 19 May. After considering any responses, the regulators will submit the updated BTS to HMT for approval. Assuming HMT provides approval, the regulators will make and publish the BTS for their respective firms. The changes to the BTS will be effective on publication of the final technical standards instruments, which is planned for 1 July.

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FCA annual equity transparency results

On 9 March, the FCA published the annual equity transparency calculations, as required under UK MiFIR. The calculations will take effect on 1 April and include: (i) the liquidity assessment; (ii) the determination of the most relevant market in terms of liquidity; (iii) the determination of the average daily turnover relevant for the determination of the pre-trade and post-trade large in scale thresholds; (iv) the determination of the average value of the transactions and the related standard market size (SMS); and (v) the determination of the average daily number of transactions on the most relevant market in terms of liquidity relevant to the determination of the tick-size regime. The FCA has published the SMS of equity instruments for the purposes of the pre-trade transparency regime for systematic internalisers. This differs from the approach set out in the FCA’s statement of policy because the FCA now has the capability to publish calculations. The FCA has assessed 497 shares and 341 equity-like instruments (a category that includes Exchange Traded Funds, depositary receipts and certificates) as having a liquid market.

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EC roadmap on CSDR review

On 8 March, the EC published an impact inception assessment (referred to as a roadmap) on the CSDR review. The review will assess how the EU rules on CSDs are working, especially: (i) how CSDs are able to operate in different countries across the EU; (ii) how requests to use their services are handled; and (iii) whether there are other substantive barriers to competition in this sector that need to be addressed. Depending on the findings the EC may adopt a legislative proposal, expected in Q4 2021-Q1 2022. This work will also contribute to the development of a more integrated post-trading landscape in the EU (referred to as the CSDR REFIT). CSDR REFIT will build on the conclusions of an EC report to be published in H1 2021. The aim of the initiative is to ensure that the objectives of CSDR – to promote safe, efficient and smooth settlement by laying down uniform requirements for the settlement of financial instruments in the Union and rules on the organisation and conduct of CSDs – are met in a more proportionate, effective and efficient manner. In addition, the initiative will aim at simplifying any CSDR requirements which may impose an unnecessary burden. The deadline for comments on the roadmap is 5 April. 

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FCA, IBA and ISDA on future cessation and loss of representativeness of LIBOR benchmarks

On 5 March, the FCA announced the dates that panel bank submissions for all LIBOR settings will cease, after which representative LIBOR rates will no longer be available. All LIBOR settings will either cease to be provided by any administrator or will no longer be representative on the following dates: (i) immediately after 31 December for all sterling, euro, Swiss franc and Japanese yen settings, and the one-week and two-month US dollar settings; and (ii) immediately after 30 June 2023 for the remaining USD settings. Based on undertakings received from the panel banks, the FCA does not expect that any LIBOR settings will become unrepresentative before the relevant dates. The FCA recognises that there are some existing LIBOR contracts which are particularly difficult to amend ahead of the LIBOR panels ceasing, often known as the ‘tough legacy’. The FCA will: (a) consult in Q2 on using proposed new powers that the government is legislating to grant to it under the UK BMR to require continued publication on a ‘synthetic’ basis for some sterling LIBOR settings and, for one additional year, some Japanese yen LIBOR settings; (b) continue to consider the case for using these powers for some US dollar LIBOR settings. Any ‘synthetic’ LIBOR will no longer be representative for the purposes of the BMR and is not for use in new contracts. It is intended for use in tough legacy contracts only. ICE Benchmark Administration (IBA) has also issued a feedback statement on its December 2020 consultation on its intention to cease publication of all tenors of LIBOR settings. IBA confirms that, in the absence of sufficient panel bank support and without the intervention of the FCA to compel continued panel bank contributions to LIBOR, it is not possible for IBA to publish the relevant LIBOR settings on a representative basis beyond the dates specified above. ISDA has confirmed that the FCA’s announcement constitutes an index cessation event under the IBOR Fallbacks Supplement and the ISDA 2020 IBOR Fallbacks Protocol for all 35 LIBOR settings. Consequently, the fallback spread adjustment published by Bloomberg is now fixed as of 5 March 2021 for all euro, sterling, Swiss franc, US dollar and Japanese yen LIBOR settings. ISDA has also published guidance describing how the following terms apply to the FCA’s announcement: (1) ISDA 2020 IBOR Fallbacks Protocol; (2) IBOR Fallbacks Supplement; and (3) ISDA Definitions Benchmarks Annex to the ISDA Benchmarks Supplement.

FCA Press release

FCA Statement

IBA announcement 

IBA feedback statement

ISDA statement 

ISDA guidance

FCA on approach to reporting references to LIBOR in OTC derivative contracts and securities financing transactions

On 5 March, the FCA set outs its expectations as to firms’ approach to reporting references to LIBOR in OTC derivative contracts under UK EMIR, and securities financing transactions (SFTs) under UK SFTR. The FCA considers that amending a reference rate or adding a fallback would not trigger the application of margin or clearing requirements under UK EMIR, where this amendment relates to the treatment of legacy LIBOR trades. However, under Article 9 UK EMIR/Article 4 UK SFTR, counterparties and central counterparties must report any modification of a derivative contract/an SFT they have concluded, to a registered or recognised trade repository no later than the working day following the modification of the contract. If the terms of a derivative contract/SFT say that, either immediately or at some other point in time, an alternative rate applies in the place of LIBOR, this would bring about a modification that is reportable under UK EMIR/UK SFTR. This applies to all agreed terms that result in an alternative rate applying in place of LIBOR, including: (i) fallbacks agreed on a bespoke basis; and (ii) fallbacks that take effect as a result of ISDA’s 2020 IBOR Fallbacks documents. The FCA would expect modifications to be reported at the time the alternative rate takes effect. 

SFTR webpage

EMIR webpage

FCA final policy on approach to exercising new UK BMR powers

On 5 March, the FCA set out the considerations it will take into account when exercising its powers, as proposed under the Financial Services (FS) Bill to: (i) designate an unrepresentative benchmark using new powers under proposed Article 23A; and (ii) require changes to a critical benchmark, including its methodology, using new powers under proposed Article 23D. The FCA has published Statements of Policy (SoP) and Feedback Statements (FS) in relation to each power, as well as an overview document. The FCA plans to consult in Q2 2021 on its approach to the exercise of its powers under the proposed Article 21A and Article 23C. The FCA will conduct a further consultation in 2021 in relation to any decision to exercise the proposed Article 23D power in respect of LIBOR.

Updated webpage

Overview document

SoP – Article 23A

FS – Article 23A

SoP – Article 23D

FS – Article 23D

Payment systems and payment services

EC consults on roadmap for EU-wide instant payments scheme

On 10 March, the EC began consulting on an inception impact assessment (referred to as a roadmap) on a proposal for an EU-wide instant payment scheme, as part of its 2020 Retail Payments Strategy. The objective is to foster pan-European market initiatives based on instant payments, which would ensure that anyone holding a payment account in the EU could be able to receive and send an instant credit transfer from and to any other payment account in the EU. The objective is consistent with the broader objectives of the SEPA project. The EC considers policy options including: (i) “the baseline option” - monitoring the market evolution and assessing the effects of voluntary efforts to put forward initiatives delivering on the objectives; (ii) non-legislative options -  actively promoting the voluntary participation of PSPs in relevant standardisation processes or schemes, awareness raising campaigns addressed to payments services users, and/or setting up a structured dialogue with national payments communities to coordinate national plans for promoting the uptake of instant payments; and (iii) legislative options - a mixture of possible ‘enabling’ measures, such as: (a) effective incentives for PSPs to offer instant credit transfers in euro, which could be constructed in a manner similar to that adopted in the past in the SEPA Regulation for SEPA Credit Transfers and Direct Debits; (b) targeted consumer protection measures; (c) tailored fraud prevention measures; (d) addressing the issue of charges levied on consumers for instant credit transfers; and (e) reconciling instant payments with regulatory compliance obligations, for example related to sanctions screening. The deadline for comments is 7 April. The EC’s indicative plan is to adopt a proposal for a Regulation in Q1 2022.

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CMA consults on future governance of Open Banking

On 5 March, the CMA began consulting on the future governance of Open Banking. The implementation phase of open banking is nearing completion and the CMA is now consulting on what arrangements should be put in place for its governance in the next phase of its development. UK Finance has submitted proposals that involve creating a new body, with a more broadly-based funding and governance model, to succeed the Open Banking Implementation Entity (OBIE). It is proposed that this body would take over OBIE’s functions, other than compliance monitoring, which will be handled separately. Interested stakeholders are being consulted on three main areas: (i) whether the successor organisation proposed by UK Finance proposals will be: independent and accountable, adequately funded, dedicated to serving the customer’s interests, and robust and sustainable; (ii) what compliance monitoring arrangements will it be necessary for the CMA to put in place going forward; and (iii) what transitional arrangements should be adopted and when should the process begin. The deadline for comments is 29 March.

Press release

Consultation document

Prudential regulation

EBA discussion paper on integrated reporting

On 11 March, the EBA published a discussion paper on a feasibility study of an integrated reporting system for collecting statistical, resolution, and prudential data under Article 430c of the CRR. It has also published an accompanying factsheet. The overall objective of the feasibility study is to identify the feasibility of various ways to streamline the reporting process and increase efficiencies going forward. To achieve this, the analysis and options considered so far by the EBA, described in the discussion paper and which will be further reflected in the final feasibility study, considers the needs of various stakeholders that might be impacted by the possible creation of such an integrated system. The assessment covers the four core areas: (i) the stocktake on the quantity and scope of the current data collected; (ii) the use of a common data dictionary; (iii) the feasibility and possible design of a central data collection point; and (iv) the governance and the establishment of a joint committee. The EBA has assessed the four core areas taking a holistic approach and considering the impact of integration at each step in the reporting process chain (data definition, data collection, data transformation and data exploration) along the different levels of abstraction. The deadline for comments is 11 June. 

Press release


Discussion paper

Delegated Regulation amending CRR as to alternative standardised approach for market risk published in OJ

On 11 March, Commission Delegated Regulation (EU) 2021/424 amending the CRR with regard to the alternative standardised approach (ASA) for market risk was published in the OJ. It provides the technical specifications for the ASA laid down in Chapter 1a of Title IV of Part Three of the CRR in order for it to be fully operational. The Delegated Regulation aligns the specifications with the BCBS minimum capital requirements for market risk, published in 2019. The Delegated Regulation will enter into force on 30 March (that is, 20 days after publication in the OJ) and will apply from 30 September.

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EBA consults on guidance on how to grant authorisation as credit institution under CRD IV

On 10 March, the EBA began consulting on its guidelines on a common assessment methodology for granting authorisation as a credit institution. The draft guidelines are addressed to all competent authorities across the EU in charge of granting authorisation as a credit institution, and cover the authorisation requirements set out in the EU legal framework, namely in Articles 10-14 CRD. These relate to the programme of operations, the operational structure, the capital requirements, the effective direction, the shareholders and members, and the assessment of qualifying holdings. From a methodological perspective, the guidelines: (i) are aligned with the draft RTS on information for authorisation; (ii) advocate for a risk-based approach; (iii) pursue the principle of proportionality for all relevant assessment criteria; (iv) confirm their neutrality to technology and thus apply to both traditional and innovative business models and/or delivery mechanisms; and (v) underscore the importance of consistency with the supervisory approaches applied in going concern. In the context of the assessment of the application for granting an authorisation, the draft guidelines also include guidance on ML/TF risks and highlight the importance of cooperation with the AML supervisor and other public bodies. The draft guidelines state that they will apply from 1 March 2022. The deadline for comments is 10 June. 

Press release

Consultation paper

Recovery and resolution

EBA consults on draft revised guidelines on stress tests of deposit guarantee schemes

On 11 March, the EBA began consulting on its revised guidelines on the stress tests conducted by national deposit guarantee schemes (DGSs) under the Deposit Guarantee Schemes Directive (DGSD). The proposed revisions: (i) require DGSs to stress test their ability to perform all of the interventions they are legally mandated to perform - the current guidelines only require stress testing DGSs’ ability to reimburse depositors; (ii) require DGSs to stress test their ability to have access in due time to all of their funding sources; (iii) strengthen the cooperation between DGSs and different authorities by requiring to stress test interventions where cooperation with other authorities is necessary. DGSs must also share the results of the DGS stress tests upon other authorities’ request; (iv) encourage DGSs to choose stress testing scenarios with additional business continuity challenges or external circumstances that create extra stress for the DGSs to perform their functions, such as a pandemic, ICT failures, or other such events; and (v) provide a more comprehensive, clear and harmonized template for recording and submitting the results of the stress tests to the EBA. The deadline for the DGSs to submit their next reporting template is set on 16 June 2024. The deadline for comments is 11 June. 

Press release

Consultation paper

Sustainable finance

EP adopts report recommending Directive setting ESG supply chain due diligence obligations

On 10 March, the EP adopted a legislative initiative report setting out recommendations for a new directive on corporate due diligence and corporate accountability that would require companies to address human rights and environmental due diligence in their value chains. The proposals include: (i) requiring companies carry out due diligence to identify, address and remedy their impact on human rights (including social, trade union and labour rights), the environment (contributing to climate change or deforestation, for example), and good governance (such as corruption and bribery) throughout their value chain; (ii) sanctions for non-compliance and legal support for victims of corporations in third countries, unless companies can prove that they have acted in line with due diligence obligations and taken measures to prevent such harm; (iii) a ban on imports of products linked to severe human rights violations such as forced or child labour; and (iv) that the rules apply to companies operating in EU internal market, including those from outside the EU. The framework should apply to all large undertakings, including publicly listed SMEs and high-risk SMEs, which should receive technical assistance to comply with the requirements. The EP recommends that EU trade agreements include these aims in their trade and sustainable development chapters. The EC has announced it will present its legislative proposal later this year. 

Press release

Legislative initiative report 

Revised draft Recognised Auction Platforms (Amendment and Miscellaneous Provisions) Regulations 2021 laid before Parliament

On 9 March, a revised draft version of the Recognised Auction Platforms (Amendment and Miscellaneous Provisions) Regulations 2021 was published, together with a revised draft explanatory memorandum. The instrument is being made as part of the legislative effort to establish a UK Emissions Trading Scheme (ETS) and accompanying emission allowance market. The instrument updates existing UK provisions to reflect that the UK is no longer part of the EU ETS but has now established the UK ETS. It establishes an oversight role for the FCA in relation to the auctioning of emission allowances. It sets the rules for access to the ETS auction platform and allows the FCA to monitor and regulate the trading of UK emissions allowance. The revised draft of the Regulations contains amendments to a number of cross-references and to the territorial application of the instrument, in that, some provisions of the Regulations have extraterritorial application where they amend legislation that has effect outside the UK.

Revised draft Regulations

Revised draft explanatory memorandum 

FCA consults on regulation of bidding for emissions allowances under the UK ETS

On 8 March, the FCA began consulting on its proposals to regulate bidding for emissions allowances on the UK auction platform under the UK Emissions Trading Scheme (ETS) (CP21/6). The FCA is consulting on: (i) the UK Emission Trading Scheme Instrument 2021 which contains amendments to a number of Handbook modules. These amendments essentially take the form of reinstating provisions and definitions previously deleted as a consequence of the UK’s departure from the EU Emissions Trading Scheme at the end of the EU Transition Period. Certain changes have had to be made for the Handbook requirements to apply appropriately to the UK ETS in the place of the EU ETS; and (ii) the Technical Standards (MAR) (UK ETS) Instrument 2021, which proposes consequential changes to certain technical standards under UK MAR (UK MAR Technical Standards), which derive from HMT’s legislative amendments to UK MAR. The UK Government has announced that auctions for the UK ETS are due to commence as soon as is feasible and no later than Q2 2021. To meet this deadline, the consultation will therefore run shorter than usual, with the deadline for comments on 6 April. 

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Other developments

Caroline Wayman to step down as Chief Ombudsman & Chief Executive at the FOS

On 10 March, the FOS announced that Caroline Wayman, Chief Ombudsman & Chief Executive of the FOS is stepping down from the role on 16 April, after 22 years in the service and nearly 7 years as Chief Executive. An open process for recruiting Caroline Wayman’s successor will begin shortly.

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FCA Quarterly Consultation No 31

On 5 March, the FCA began consulting on its 31st quarterly consultation paper (CP21/5). The FCA is seeking feedback on proposed changes to: (i) the Compensation sourcebook (COMP) in relation to the FSCS – the FCA believes that a number of rules and points of guidance require amendment to ensure the intent of the provisions are clear to both firms and consumers, and to ensure consistent and efficient treatment of claims by the FSCS across different categories of claims; and (ii) the Training and Competence (TC) sourcebook and list of appropriate qualifications – to extend the scope of the notification requirements, update the appropriate qualifications table, as well as to amend the relevant rules and guidance. The deadline for comments is 2 April for the proposed amendments to the TC sourcebook and 30 April for the proposed amendments to COMP.

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