HM Treasury published a consultation on the implementation of the Central Securities Depositories Regulation. The CSDR introduces common standards for settlements across the EU, such as the harmonization of the rules governing central securities depositories which operate the infrastructures enabling settlement, and the timing of securities settlement in the EU. The consultation seeks views on proposed changes to domestic legislation so that provisions of domestic law which overlap with the CSDR are disapplied and changes and enforcement powers are provided for. The CSDR will apply directly across the EU from January 1, 2023 to transferable securities issued after that date and from January 1, 2025 to all transferable securities. Certain provisions will only apply from the date of entry into force of any delegated acts adopted by the Commission under the CSDR.
 
View the consultation.

The US Office of the Comptroller of the Currency issued updated guidance regarding its risk assessment system. Specifically, the updated guidance (i) clarifies the relationship between the RAS and CAMELS; (ii) revises the definition of banking risk in order to apply across all risk categories, and broadens the concept of risk to include potential impacts from losses, reduced earning, and market value of equity; (iii) expands the “quality of risk management” assessment to include a new category of “insufficient” between satisfactory and weak in order to better categorize and communicate concerns; and (iv) expands the assessment of strategic and reputation risks to include both quantity of risk and quality of risk management.

View the text of the OCC press release.

The Committee on Payments and Market Infrastructures and International Organization of Securities Commissions published a report on the implementation of the Principles for Financial Market Infrastructures. The Principles are the international standards for payment, clearing and settlement systems as well as trade repositories aiming to ensure that the infrastructure supporting global financial markets is resilient enough to endure financial shock. The Principles consist of five general responsibilities for the relevant national regulators for FMIs: (i) regulation, supervision and oversight of FMIs; (ii) regulatory, supervisory and oversight powers and resources; (iii) disclosure of policies relating to FMIs; (iv) application of the Principles for FMIs; and (v) cooperation with other regulators. The report covers the implementation of the Principles in 28 participating jurisdictions and states that most jurisdictions have achieved a high level of observance of the responsibilities: 16 jurisdictions fully observed all responsibilities for all FMI types and two jurisdictions either fully or broadly observed each of the five responsibilities for all FMI types. Annex 3 of the report sets out the findings for each jurisdiction.
 
View the report.

The Financial Stability Board published a report detailing its progress in implementing its September 2014 recommendations for reforms to Foreign Exchange benchmarks. Although the report states that progress has been made in implementing many of the recommendations, the FSB notes that there are still areas where progress has been mixed. Specifically, among other things, the report reiterates that the FSB recommendations are intended to apply to all FX benchmarks, not just the London 4pm fix benchmark. The FSB asserts that a more complete implementation of the recommendations, particularly regarding other FX benchmarks, is essential to building upon improvements already witnessed.

View the report.

The European Securities and Markets Authority published a final report and final draft Regulatory and Implementing Technical Standards on improving securities settlement in the European Union and on Central Securities Depositories requirements. This follows from ESMA’s previously published discussion paper and consultation paper which sought views on the proposed technical standards. The final report sets out the feedback received from the consultation paper and ESMA’s proposed changes to the RTS and ITS on CSD as well as the RTS and ITS on internalised settlement. The two final draft standards on CSDs cover: (i) the authorisation and identification requirements for applicant CSDs, including forms and templates for CSDs applying for authorisation; (ii) recognition of a third-country CSD; (iii) risk monitoring rules that a CSD must establish; (iv) record keeping; and (v) general requirements for cooperation arrangements between regulators in home and host member states. The two final draft standards on internalised settlement cover: (i) templates and procedures for the reporting and transmission of information on internalised settlements; and (ii) specifications for the content of reporting on internalised settlements. The RTS on settlement discipline will become available later in a separate report, as ESMA still needs to review responses received to its more recent consultation on the operation of the buy-in process. ESMA will submit the final draft RTS and ITS to the European Commission for endorsement.

View the final report and technical standards.

On September 23, 2015, the US Federal Reserve Board approved enhancements to its automated clearing house service that will require its receiving depository institutions to process same-day payments. Morning settlements will now be cleared by 1pm, and afternoon settlements by 5pm, according to the approved plan. Originating banks will be required to pay a 5.2 cent interbank fee to receiving banks for each same-day electronic payment. The enhancements become effective September 23, 2016.

View the press release.

The European Central Bank published a revised version of its Eurosystem Oversight Policy Framework which describes the role of the Eurosystem in oversight of payment systems. The Framework has been amended to remove the references to the Eurosystem location policy for CCPs. The revision follows the judgment of the General Court of March 4, 2015 on the UK Government's challenge of the Framework (as it then stood) and which annulled the Framework in so far as it set a requirement for CCPs to be located within the Eurozone. The Framework aimed to prevent CCPs in the European Union but outside the Eurozone from being able to have access to ECB Euro settlement facilities. Following that judgment, the ECB and the Bank of England announced that they had agreed to enhanced information exchange and cooperation arrangements for UK CCPs with significant euro-denominated business and that both central banks would extend the scope of their standing swap line order to aid the provision of multi-currency liquidity support by both central banks to CCPs established in the UK and the euro area. The ECB has also published Standards for the use of CCPs in Eurosystem foreign reserve management operations, which had been the subject of a separate legal challenge by the UK Government. The Standards would govern the use of CCPs for Interest Rate Swaps denominated in foreign currencies, aiming to limit the risks that would arise when these types of IRSs are cleared through a CCP.
 
View the revised Eurosystem Oversight Policy Framework.
 
View the ECB Standards for use of CCPs. 

The Financial Stability Board, together with the Basel Committee on Banking Supervision, the Committee on Payments and Markets Infrastructures and the International Organization of Securities Commissions jointly published a CCP workplan, dated April 2015.  The workplan focuses on the resilience, recovery planning and resolvability of CCPs and coordinating the roles of each organisation in achieving these goals. A progress report on such work was published simultaneously, providing an update on work that has been done so far and listing an action plan with expected dates of delivery. The progress report states amongst other things that: (i) work on stress testing policies and practices have advanced and guidance will be developed after further analysis of other resilience topics such as CCP recovery and risk management has been carried out; (ii) a report on all CCP resilience and recovery issues will be published by mid-2016 for consultation; and (iii) a report analyzing the interdependencies between CCPs and major clearing members and any resulting systemic implications on global financial stability will be published by end-2016.

View the workplan.

View the progress report.

The UK Payment Systems Regulator announced that it is conducting a survey aimed at payment service providers who access payment systems indirectly. The survey is intended to inform the PSR’s consideration of whether action is required in the context of its two market reviews, which are on: (i) the supply of indirect access to payment systems, launched in May 2015; and (ii) the ownership and competitiveness of infrastructure provision (the hardware, software, secure telecommunications network and operating environments that are used to manage and operate payment systems), first announced in November 2014. Responses to the survey are due by September 23, 2015.

View the survey form.

On August 7, 2015, the Comptroller of the Currency Thomas J. Curry gave a speech at a conference sponsored by the Federal Home Loan Bank of Chicago, entitled "Leading Toward the Future; Ideas and Insight for a New Era." In that speech, Mr. Curry discussed the ways in which innovation can benefit the financial system, the crucial role banks play in spurring such innovation, and efforts the OCC is undertaking to better comprehend the benefits and risks of innovative products and services. Mr. Curry noted that the OCC must develop a robust process in order to evaluate new approaches and encourage responsible innovation, while ensuring appropriate risk management and compliance with laws and regulations.

View the press release.

The European Securities and Markets Authority published its technical advice to the European Commission under the Regulation on improving securities settlement in the European Union and on central securities depositories, known as CSDR. The technical advice will be considered by the Commission in its preparation of delegated acts which it is required to pass under the CSDR. The technical advice is on penalties for settlement fails and on the substantial importance of a Central Securities Depository. Under CSDR, there is an obligation to settle instructions on the intended settlement date and a daily cash penalty applies for any failed settlement. ESMA’s technical advice is on the parameters for calculating the basic amount of the cash penalty, including the circumstances which may justify an increase or a reduction in the basic penalty amount. An EU passport is provided for under the CSDR which allows an EU-registered CSD to provide its services in any EU member state. Cooperation arrangements are required to be established between the home and host member states for the supervision of the CSD, in particular where the activities of the CSD are of “substantial importance for the functioning of the securities markets and the protection of investors” in the host member state. The Commission’s delegated act is required to set out which operations of a CSD could be considered of substantial importance.

View the technical advice.

The UK Payment Systems Regulator published an update on the work it has done to ensure that access, direct or indirect, to payment systems is fairer and also identified next steps to be taken. The PSR has introduced new access and reporting rules for operators and has imposed a disclosure obligation on the four main sponsor banks providing indirect access. The PSR will continue to work with operators and sponsor banks to help them adapt to the new regulatory requirements and will publish the findings from its review of their compliance reports later in 2015. The PSR launched a market review into the supply of indirect access to market systems and aims to publish an interim report on the review by January 2016 and a final report by May 2016.

View the report.
 

The Financial Conduct Authority published the results of its thematic review into the oversight and control of financial benchmark activities. The review assessed the extent to which firms had responded to concerns and issues highlighted in recent benchmark enforcement cases, whether firms had implemented appropriate oversight and controls to manage the risks involved in their benchmark activities and the understanding within firms of the International Organization of Securities Commissions' Principles for Financial Benchmarks. The review found that all of the 12 banks and broking firms involved in the review had taken steps to change their approach to benchmark activities but that work was still required by all the firms and includes six key messages for firms involved in benchmark activities, which are: (i) firms need to ensure that they identify all of the activities which constitute benchmark activity or could affect a benchmark; (ii) senior management in firms need to act quickly to implement improvement plans; (iii) firms need to strengthen their governance and oversight of benchmark activities; (iv) further work is required on identifying and managing conflicts of interest; (v) robust controls need to be established for in-house benchmarks; and (vi) firms exiting benchmark activities need to give due consideration to the wider impact of their actions. The report sets out good and bad practices that were observed at the firms assessed by the FCA. The FCA expects those firms that were provided feedback during the review to act to make the necessary improvements and for all firms and users of benchmarks to consider the key messages and results of the review.

View the report.

The US Department of Treasury, the Federal Reserve Board, the Federal Reserve Bank of New York, the US Securities and Exchange Commission and the US Commodity Futures Trading Commission issued a joint report analyzing the significant volatility in the US Treasury market on October 15, 2014. The joint report provides insight and detailed analysis of the market conditions and offers a number of developments which may help explain the conditions that likely contributed to the volatility. Specifically, the report finds that among other things, changes in global risk sentiment and investor positions, a decline in order book depth and changes in order flow and liquidity provision together provide important insight into the developments of that day. The report also highlights the changing structure of the US Treasury market and proposes next steps to further enhance the public and private sectors’ understanding of changes to the structure of the US Treasury market and their implications. The report recommends continued analysis of US Treasury market structure and functioning, focusing on trading and risk management practices, the availability of public data and continued efforts to strengthen monitoring and inter-agency coordination related to trading across the US Treasury cash and futures markets.
 

View the joint report.

The Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions announced that they had begun the first Level 3 assessment of the implementation of the Principles for Financial Market Infrastructures. The review aims to assess the consistency of outcomes achieved through implementation of the PFMIs and will focus on requirements for financial risk management by CCPs by considering the outcomes achieved by a number of globally and locally active CCPs clearing exchange-traded and OTC derivatives. The results of the assessment are intended to be published in 2016.

View The announcement.

The Financial Stability Board published an interim progress report on reforms to existing interest rate benchmarks and on the construction and implementation of alternative near risk-free interest rate benchmarks. This follows the FSB’s recommendations for reforms in this area, published in July 2014. The report examines the progress made towards achieving those recommendations. The FSB’s recommendations in the July 2014 report called for a strengthening in existing interest rate benchmarks, such as LIBOR, EURIBOR and TIBOR, collectively coined “IBORs,” and other reference rates based on unsecured bank funding costs by underpinning them to the greatest extent possible with transaction data. In addition, the FSB proposed steps to develop alternative near risk-free interest rate benchmarks, given that there are certain financial transactions, including many derivatives transactions, that it considers better suited to such reference rates.

Read more.

The European Securities and Markets Authority published a final report on the interoperability arrangements between EU‑based CCPs. The report is required under the European Market Infrastructure Regulation. Interoperability arrangements made between two or more CCPs enable a counterparty using one CCP to execute a trade with a counterparty that chooses to use a different CCP. The report, which describes current interoperability arrangements for different product types such as equities and government bonds recommends that the interoperability provisions in EMIR (which are currently limited to transferable securities and money‑market instruments only) are not yet extended to OTC derivatives, given the additional complexities involved in an interoperability arrangement between CCPs clearing OTC derivative contracts. The report does, however, recommend that the interoperability provisions in EMIR be extended to Exchange‑Traded Derivatives, as one interoperability arrangement already exists (between LCH.Clearnet Ltd and Oslo Clearing), as is the general framework for assessing the risk involved as a result. This proposal will next be considered by the European Commission and may prove to be controversial.

View the final report.

The European Securities and Markets Authority published proposed draft Regulatory Technical Standards on the buy‑in process, including the timeframe for delivery of financial instruments which ESMA is required to prepare under the EU Central Securities Depositories Regulation. The CSDR came into force on September 17, 2014. ESMA consulted in December 2014 on the buy‑in process, noting that there is currently no uniform approach to buy‑in by central securities depositories, CCPs and trading venues. Feedback to the consultation suggested that buy‑in should be executed by a bank or execution dealer that was not connected to the parties in the failed transaction. The current consultation therefore focuses on which entity should be responsible for operating the buy‑in process for OTC transactions that are not centrally cleared. ESMA seeks feedback on three proposed options: trading level execution, trading level with fall‑back option execution and CSD participant level execution. Responses to the proposals are due by August 6, 2015. ESMA must provide all of the final draft RTS under the CSD to the European Commission by the end of September 2015.

View the consultation paper.

The Payment Systems Regulator published the final terms of reference for its market review into the ownership and competitiveness of the UK payments system infrastructure. The review aims to ascertain whether current infrastructure services are effective for service users and able to support new developments and innovations. The review focuses in particular on interbank payment systems BACS, FPS and Link, and is based around the seven following questions: (i) whether there is effective competition in the provision of infrastructure services in interbank payments; (ii) whether current ownership arrangements of infrastructure providers affect competition; (iii) whether there are any barriers to effective competition; (iv) what the likelihood is of entry or expansion in respect of provision of infrastructure services; (v) whether there are any efficiencies resulting from the present ownership arrangements; (vi) how demand affects competition in the provision of infrastructure services; and (vii) what the benefits of greater levels of competition might be. The review will aim to address any concerns identified with a view to publishing new directions, recommendations or guidance if necessary, as well as encouraging further industry initiatives and self-regulation if needed. The PSR welcomes views on the key questions outlined in the terms of reference and aims to publish its final report in the second quarter of 2016.

View the terms of reference.

The European Securities and Markets Authority published a letter, dated June 17, 2015, from it to the European Commission that informs the Commission that ESMA will be providing the technical standards due under the Central Securities Depositories Regulation in September 2015. The original due date for delivery of the technical standards was June 18, 2015. The delay to delivery of the standards is due to the European Commission’s Legal Services undertaking an early review of the standards to ensure conformity and consistency of EU legislation. There is not expected to be a delay in adoption by the European Commission of the technical standards under CSDR. The CSDR introduces common standards for settlements across the EU, such as the harmonization of the rules governing central securities depositories which operate the infrastructures enabling settlement, and the timing of securities settlement in the EU. The CSDR will apply directly across the EU from January 1, 2023 to transferable securities issued after that date and from January 1, 2025 to all transferable securities. Certain provisions will only apply from the date of entry into force of the relevant delegated act adopted by the Commission under the CSDR.

View ESMA's letter.

The Financial Conduct Authority issued a call for input, asking two specific questions on digital and mobile solutions for financial services, so that it may obtain market views on: (i) specific UK or EU rules and policies that may currently restrict the development of new and innovative products; and (ii) rules and policies that should be introduced to facilitate innovation in this field. The FCA is asking for specific examples, taking into account both UK and EU perspectives. The call for input also provides a summary on the FCA’s considerations related to the digital and mobile space to date, such as the demand for the regulation of digital currencies and concerns about regulatory requirements creating lengthy customer terms and conditions that are deemed not to be appropriate for digital and mobile solutions. Responses to the Call for input are due by September 7, 2015.

View the call for input.

The Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions published the second report on Level 1 assessments of implementation monitoring of the Principles for Financial Market Infrastructures. Level 1 assessments are based on self-assessments by individual jurisdictions on how they have adopted the PFMIs through legislation, regulations and other policies. The PFMIs are international standards for payment, clearing and settlement systems and trade repositories aimed at ensuring that such
infrastructure is robust and able to withstand financial stability shocks. Level 1 assessments will next be undertaken in 2016.

View the report.

Following the announcement by the European Commission, that the transitional period for regulatory capital requirements for EU banks’ exposures to CCPs under the EU Capital Requirements Regulation would be extended from June 15, 2015 to December 15, 2015, the Implementing Regulation was published in the Official Journal of the European Union on June 9, 2015. The Implementing Regulation comes into effect on June 12, 2015. The extension is intended to allow further time for CCPs, both from the EU and from non-EU jurisdictions, to become authorized or recognized under the European Market Infrastructure Regulation. One of the requirements for recognition of a third country CCP is that the third country’s regime for supervision of CCPs is deemed to be equivalent to that of the regime under EMIR. Equivalence decisions for CCP regimes have only been given for Hong Kong, Singapore, Australia and Japan. Decisions for major jurisdictions, such as the US, are still outstanding. Authorization or recognition under EMIR will give the CCP the status of being a Qualifying CCP, which is relevant for clearing member firms to calculate their capital requirements for exposures to CCPs under the CRR. Lower capital requirements will be imposed for exposures to a QCCP than for exposures to a non-QCCP CCP.

View the Implementing Regulation.

View our client note on third country equivalence under EMIR.

The Financial Conduct Authority published a consultation paper setting out proposals for fair, reasonable and non-discriminatory access to regulated benchmarks by benchmark administrators. This is further to the policy statement published by the FCA in March 2015 on the seven new benchmarks it will be regulating and supervising. The policy statement included the FCA’s final rules amending Chapter 8 of the Market Conduct Sourcebook (MAR 8), originally designed for benchmarks determined through a submission process, such as LIBOR. The FCA’s proposals are in response to concerns raised about the unconstrained ability of administrators to set the prices of access to benchmark information and benchmark licenses. The new proposals limit the ability of benchmark administrators to exploit their market power in a way that could encourage unfair competition. The new rules would apply to existing and future pricing and licensing arrangements and would not apply retrospectively. Responses are due before August 3, 2015 and the FCA aims to publish a policy statement and final rules towards the end of 2015.

View the consultation paper.

The Bank of England published a consolidated version of its rules for Recognized Clearing Houses. RCHs are regulated by the Financial Services and Markets Act 2000 and are subject to the FSMA 2000 (Recognition Requirements) Regulations 2001, though different recognition requirements will apply under the European Market Infrastructure Regulation for RCHs that are also CCPs. RCHs that are also CCPs must comply with domestic requirements as well as EMIR. All UK RCHs must comply with the BoE rules.

View the BoE RCH rules.

The US Securities and Exchange Commission approved a proposal by the national securities exchanges and the US Financial Industry Regulatory Authority regarding a two-year pilot program widening the minimum quoting and trading increments, known as "tick sizes" for stocks of some small firms. The pilot program aims to assess whether wider tick sizes would improve the quality of small company stocks for issuers and investors.

View the the SEC press release.

The TARGET2-Securities advisory group of the European Central Bank published an impact analysis report on non-compliance with T2S harmonization standards. The standards aim to provide a single centralized platform for securities settlement in central bank funds across European securities markets. In November 2014, six jurisdictions declared that it would not be likely that they would be able to comply with some of the obligatory harmonization standards by the time their markets plan to migrate to T2S. These jurisdictions are Belgium, France, Germany, the Netherlands, Romania and Switzerland. The report states that there have been no new cases of non-compliance with T2S harmonization standards. The T2S group has assessed the impact of non-compliant T2S markets on the T2S community as a whole. For the Belgian, Dutch, French, Romanian and Swiss markets, the impact of non-compliance is deemed to be manageable and the T2S group has asked for the further monitoring of implementation plans. A decision for the German market has been postponed until the next impact analysis.

View the impact analysis.

The Council of the European Union issued a press release stating it had reached a tentative agreement with the European Parliament on a draft directive that would further the development of electronic payments in the EU market. The new directive will incorporate and repeal the existing Payment Services Directive to create a new framework for emerging and innovative payment services, including internet and mobile payments, providing a more secure and harmonized environment for payments. Once the full text is finalized, the draft directive will need to be confirmed by the Council, submitted to the European Parliament for a vote and then to the Council for adoption. Once adopted, member states will have two years to transpose the directive into national law.

View the press release.

The Financial Conduct Authority published final guidance for Multilateral Trading Facility operators on regulatory requirements for MTF rulebooks and procedures as set out in the Market Conduct Sourcebook of the FCA Handbook. The FCA consulted on its proposed guidance late in 2014 which was based on feedback received through a thematic review. The FCA expects all MTF operators to be able to demonstrate that they have considered the good practice observations included in the guidance when setting their approach to compliance with the Market Conduct requirements.

View the final guidance.

The European Central Bank and the Bank of England published a joint press release announcing that they had agreed to enhanced information exchange and cooperation arrangements for UK CCPs with significant euro-denominated business. Further, both central banks are extending the scope of their standing swap line order to aid the provision of multi-currency liquidity support by both central banks to CCPs established in the UK and the euro area. As a result of the measures, the UK Government announced that it would withdraw the two as yet undecided cases brought by the UK Government against the ECB’s CCP location policy. The announcements follow the General Court judgment on March 4, 2015, which annulled the ECB’s Eurosystem Oversight Policy Framework which had the effect of requiring CCPs with significant euro-denominated business to be located within the eurozone. The ECB has not yet made any announcement about the documents which are the subject of the two cases to be withdrawn (Decision of 11 December 2012 on the terms and conditions of TARGET2 and the ECB’s Statement of Standards published on 18 November 2011 in so far as it sets out a location policy for CCPs).

View the ECB / BoE press release.

View the UK Government’s announcement.

The US Securities and Exchange Commission proposed rule amendments to require broker- dealers trading in off-exchange venues to become members of a national securities association. The amendments would seek to heighten regulatory oversight of active proprietary trading firms. The proposed amendments to Rule 15b9-1 under the Exchange Act of 1934 would narrow the current exemption available to certain broker-dealers from membership of a national securities association if the broker-dealer is a member of a national securities exchange, carries no customer accounts and has annual gross income of no more than $1,000 that is derived from securities transactions effected otherwise than on a national securities exchange of which it is a member. The exemption was originally tailored to exchange specialists and other floor members that might need to utilize limited hedging or other off-exchange activities secondary to their floor-based business. The proposed amendments would also update the exemption that permits off-exchange transactions necessary to comply with the regulatory requirements preventing trade-throughs. The public comment period on the proposed rule amendment will last 60 days following its publication in the Federal Register.
 

View the proposed rule.

The UK Payment Systems Regulator published the regulatory framework for payment systems in the UK which sets out the PSR’s approach to regulation of payment systems and related industry, work programme regulatory tools and guiding principles. The new PSR is fully operational as of April 1, 2015. Two market reviews were announced alongside the publication of the regulatory framework. The first review is into the ownership and competitiveness of payment systems infrastructure which will look into the ownership of a small number of banks of both BACS, Faster Payments Services and LINK payment systems and the central infrastructure for those systems, VocalLink. The second review is into the supply of indirect access to payment systems which is provided only by Barclays, HSBC, Lloyds and RBS. The PSR is seeking comments on the scope of the reviews with a view to finalizing the terms of reference for each review by the end of May at which time more detailed timetables will be available.

View the regulatory framework.

The Financial Conduct Authority published a press release relating to its November 2014 consultation paper on the Payment Systems Regulator, which is the new UK regulator that will regulate the largest UK payment systems. The press release states that any of the directions mentioned in the consultation that were to come into force on April 1, 2015 will not come into force until April 30, 2015. This is so that stakeholders have more time to consider the FCA’s final directions and views that are to be published in the FCA’s PSR policy statement before the end of March 2015.

View the FCA press release

The International Organization of Securities Commissions and Committee on Payments and Market Infrastructures jointly announced that they have begun a review of CCP stress testing. The aim of the review is to identify how the Principles for Financial Market Infrastructures standards published jointly by IOSCO and the CPMI in 2012 are being implemented, and whether any further guidance is needed.

View the joint press release

The Bank of England published its annual report on the supervision of Financial Market Infrastructures which sets out the way in which the BoE has exercised its responsibilities in relation to recognized payment systems, CCPs and securities settlement systems over the past year. The report discusses the progress that has been achieved on issues including: (i) credit and liquidity risk; (ii) recovery and resolution; (iii) operational risk management; (iv) governance; and (v) disclosure. The report lists the forward-looking priorities that the bank intends to focus on in the next year, such as: (i) assessing the UK CCPs’ stress-testing practices; (ii) evaluating proposals on CCP recovery and resolution that may extend to other types of FMI; (iii) addressing the root causes of excess operational risk; and (iv) improving resilience against cyber-attacks.

View the report

HM treasury published the Banking Act 2009 (Inter-Bank Payment Systems) (Disclosure and Publication of Specified Information) (Amendment) Regulations 2015. These Regulations widen the remit of information-sharing between the Bank of England and the Payment Systems Regulator, allowing the BoE to share information that it has obtained through its oversight of interbank payment systems with the PSR. The BoE will therefore no longer be limited to only share information with the PSR that is relevant to financial stability. On the same day, HM Treasury also published the Payment Services (Amendment) Regulations 2015. These regulations amend the Payment Services Regulations 2009 and transfer the supervision and enforcement functions on access to payment systems from the Competition Markets Authority to the newly formed PSR. Both regulations enter into force on April 1, 2015, the date on which the PSR becomes fully operational.

View the Regulations and Explanatory Memoranda

View the Regulations and Explanatory Memoranda 2

View the Regulations and Explanatory Memoranda 3

View the Regulations and Explanatory Memoranda 4  

The EU General Court delivered its judgment on the UK Government’s challenge of the European Central Bank’s CCP location policy set out in the ECB’s Eurosystem Oversight Policy Framework. The EU General Court has annulled the Eurosystem Oversight Policy Framework in so far as it sets a requirement for CCPs involved in the clearing of securities to be located within the Eurozone. The policy’s aim was to prevent CCPs in the European Union but outside the Eurozone from being able to have access to ECB Euro settlement facilities. The outcome is that UK CCPs will have access to Euro settlement facilities with the ECB, as generally required under EMIR, without being forced to relocate their businesses.

View the judgment

The European Banking Authority launched a consultation on proposed draft Regulatory Technical Standards on the prudential requirements for central securities depositories. The EBA is required to prepare the RTS under the EU Regulation on Settlement and Central Securities Depositories, which aims to increase the safety and efficiency of securities settlement and settlement infrastructures. The EBA is consulting on three proposed draft RTS which cover: (i) capital requirements for CSDs; (ii) the additional risk-based capital surcharge applicable to CSDs carrying out ancillary banking activities; and (iii) the framework and tools for monitoring, measuring, managing and reporting of the credit and liquidity risks related to any ancillary banking activities offered by a CSD. The consultation closes on April 27, 2015. The EBA must submit the draft RTS to the Commission by June 18, 2015.

View the consultation

UK legislation implementing part of the EU Regulation on Settlement and Central Securities Depositories was enacted. The Financial Markets and Insolvency (Settlement Finality) (Amendment) Regulations 2015 amend relevant UK legislation to reflect the change brought in by the EU Regulation that requires national regulators to notify the European Securities and Markets Authority of any designation of a payment or securities settlement system. In the past, such notifications were made to the European Commission. The UK designated national regulators for these purposes are the Bank of England and the Financial Conduct Authority.

View the UK legislation

UK legislation was enacted to bring additional benchmarks within the UK regulatory perimeter. The additional benchmarks are ISDAFIX, Sterling Overnight Index Average, also known as SONIA, Repurchase Overnight Index Average, also known as RONIA, WM/Reuters London 4 p.m. Closing Spot Rate, London Gold Fixing, LBMA Silver Price and ICE Brent Index. The LIBOR benchmark was already subject to regulation. Bringing the additional benchmarks within the regulatory perimeter are a result of the initial recommendations on benchmarks of the Fair and Effective Markets Review. A Policy Statement was also published by the Financial Conduct Authority on March 10, 2015, on the seven new benchmarks it will be regulating and supervising. This includes the FCA's final rules amending Chapter 8 of the Market Conduct Sourcebook (Mar 8), which was originally designed for benchmarks determined through a submission process, such as LIBOR. The rules have now been adapted to the new benchmarks being brought into regulation, and in particular to benchmarks without submitters. The new rules also introduce perimeter guidance to identify persons that carry out the regulated activity of acting as benchmark submitters. The new legislation and FCA rules enter into force on April 1, 2015.

View the legislation and FCA Policy Statement

The Global Legal Entity Identifier Foundation announced the launch of its new website. GLEIF was created by the Financial Stability Board and established the Legal Entity Identifier, a 20-digit alphanumeric code which is a common standard and a unique key made public that is to be used unambiguously to identify legal entities in the course of various activities such as financial transactions across different markets, products and regions.

View the new Website.

The US Federal Reserve issued "Strategies for Improving the US Payment System" which introduces a plan for collaborating with payment system stakeholders. The plan aims to enhance the efficiency of the US payment system and caters to large and small businesses, emerging payments firms, card networks, payment processors, consumers and financial institutions. The paper outlines the Federal Reserve’s intent to create a task force to identify a more effective approach to safer and faster payment capabilities. To further clarify the details on payment system improvement the Federal Reserve will host a webcast at 1:00 PM Eastern Time on January 29, 2015. The webcast will share views on the Federal Reserve’s vision for the future US payment system and plans for collaborating with stakeholders to achieve shared goals. In addition, a subsequent series of FedForum teleseminars on February 4 and 10 will present an overview of the strategies and a question-and-answer session.

Access to the webcast.

Registration for the FedForum events.

View the US Federal Reserve paper.

The participants of the US-EU Financial Market Regulatory Dialogue met to discuss key regulatory topics including the implementation of Basel III capital, leverage, derivatives reforms, benchmarks and developments on cross-border resolution. Amongst other issues, the Financial Stability Board’s proposals for an international minimum standard on total loss absorbing capacity were welcomed and EU participants raised concerns about the Volcker Rule’s effect on foreign funds. The participants included representatives of the European Commission, the European Securities and Markets Authority, the Securities Exchange Commission, US Treasury, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Commodity Futures Trading Commission. The next meeting will take place in Brussels, Belgium in July 2015.

View the joint US-EU Financial Market Regulatory Dialogue statement.