The EU Regulation on the recovery and resolution of CCPs has been published in the Official Journal of the European Union. The Regulation sets out the rules and procedures for the recovery and resolution of EU CCPs authorized under the European Market Infrastructure Regulation. The aim of the Regulation is the establishment of a framework for the orderly recovery of a CCP through implementation of recovery plans. A CCP's recovery plan will form part of its operational rules, which are agreed with its clearing members. A CCP's operating rules must also ensure the enforceability of the recovery measures outlined in the recovery plan, including to contracts or assets governed by the law of a third country or to third-country entities.

If the recovery measures do not restore the CCP's viability, the CCP's resolution authority will have the power to take action to ensure the continuity of the CCP's critical functions and, if needed, resolve the CCP. This includes setting up bridge CCPs. In the event of losses arising under a resolution, these will be borne by a CCP's owners, creditors and counterparties in line with the hierarchy of claims in insolvency. The CCP recovery and resolution framework would apply to all CCPs established in the EU. It is not proposed that the recovery and resolution framework would apply to the wider group of a CCP.

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The European Commission and High Representative of the Union for Foreign Affairs and Security Policy have published details of a new EU Cybersecurity strategy, which aims to enhance the EU's resilience to cyber threats and build a cybersecure digital transformation. The overall strategy is set out in a Communication, which is accompanied by two legislative proposals. The first legislative proposal is for a new EU Directive on the resilience of critical entities (the proposed CER Directive), which will enhance and repeal the existing 2008 European Critical Infrastructure Directive (Council Directive 2008/114/EC). The second proposal is for a new Directive on cybersecurity across the EU (NIS2), which would augment and repeal the existing NIS Directive (Directive (EU) 2016/1148). The Commission consulted earlier this year on proposals for each of these legislative proposals.

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HM Treasury has launched a call for evidence on the U.K.'s framework for cross-border financial services. HM Treasury is considering policy approaches for ensuring the U.K. framework is fit for the future given the U.K.'s exit from the EU, including consideration of how effective and proportionate regulation can support attracting investment and liquidity to the U.K. Responses to the consultation may be submitted until March 11, 2021.

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The European Commission has launched a consultation on proposals to improve securities settlement in the EU and on central securities depositories. The EU Central Securities Depositaries Regulation provides a harmonized regulatory and prudential regime for CSDs and increases the robustness and resilience of securities settlement arrangements. There is a single market for CSD services across the EU and a third-country equivalence regime for CSDs. Responses to the consultation can be submitted until February 2, 2021.

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The Financial Stability Board has issued a final report and guidance on financial resources to support CCP resolution and on the treatment of CCP equity in resolution. The FSB consulted on the guidance in 2018, stating that, in its view, further evidenced-based guidance was needed to develop the guidance, such as the practical experience of resolution planning that resolution authorities and Crisis Management Groups have gained.

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The European Securities and Markets Authority has published updated statements regarding the end of the Brexit transition period on December 31, 2020. 

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The U.K. Central Counterparties (Equivalence) Regulations 2020 (SI No. 2020/1244) have been made, granting equivalence for EEA CCPs from 10:59 pm on December 31, 2020. The decision will enable U.K. businesses and trading venues to continue using the clearing services of EEA CCPs under the U.K. European Market Infrastructure Regulation after the end of the Temporary Recognition Regime, provided that the Bank of England grants the individual CCP concerned recognition status.

The EU has granted temporary equivalence for U.K. CCPs, which is set to expire in June 2022.

View the Central Counterparties (Equivalence) Regulations 2020, SI No. 2020/1244.

View details of the temporary equivalence decision for U.K. CCPs.

The European Securities and Markets Authority has published two reports relevant to the EU Central Securities Depositaries Regulation. The CSDR provides a harmonized regulatory and prudential regime for CSDs and increases the robustness and resilience of securities settlement arrangements. There is a single market for CSD services across the EU and a third-country equivalence regime for CSDs. ESMA's reports, which will be considered as part of the upcoming review of CSDR by the European Commission, are on the following:
 

1. Internalized settlement, which is the regime for settlement other than through an EU CSD. In the report, ESMA notes that no significant risks have been identified. National EU regulators have identified that operational risk and custody risk are evident, in response to which, ESMA recommends improved operational processes and enhanced identification of client accounts. According to ESMA, the issues involved in the internalized settlement reporting regime are normal in terms of any new reporting requirements. Noting the limited time period that the data covers, ESMA highlights that continued monitoring of the regime is important to assess whether the area warrants regulation. ESMA considers that custodian clients should at least be informed of the risks and costs of the place of settlement.
2. Cross-border services and handling of applications. ESMA found that CSDR has had a limited impact on the provision of cross-border services in the EU by EU CSDs. ESMA states that future reports will need access to more detailed information and that they should consider whether most of the activity remains with global custodians as well as the impact of CSDR on costs and competition.

View ESMA's reports.

The U.K. Government has published a Financial Services Bill setting out a proposed regulatory framework for the financial services industry following the U.K.'s exit from the EU. The Bill is part of the U.K.'s wider initiative under the Future Regulatory Framework Review to re-frame its regulatory framework. Although Brexit has brought challenges to the financial sector, there may also be post-Brexit opportunities for the U.K. to seize. The aim of these reforms is to cement the U.K.'s position as a global financial centre of excellence. A core piece of that will be to set conditions that continue attracting business to the U.K. and to look for opportunities to cut "red tape" whilst at the same time maintaining the U.K.'s globally recognized high regulatory standards.

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The European Securities and Markets Authority has published a final report and final guidelines on the portability of information between securitization repositories under the EU Securitization Regulation. ESMA is responsible for the registration and supervision of securitization repositories. It is required under the Securitization Regulation to develop guidelines for supervisory purposes and will apply them from January 1, 2021, except for those provisions that require securitization repositories to have policies for the orderly transfer of data to other securitization repositories, which apply from June 18, 2021. The guidelines will apply to transfers of information between repositories either at the request of a reporting entity or in the event of a securitization repository's registration being withdrawn. The guidelines set out the specific procedures and the content of policies for the orderly transfer of information by securitization repositories.

View ESMA's final report and guidelines.

The European Securities and Markets Authority has announced that it has granted temporary third-country recognition to three U.K. CCPs from January 1, 2021 under the European Market Infrastructure Regulation. ESMA's announcement follows the time-limited equivalence decision for the U.K.'s legal and regulatory supervision regime of U.K. CCPs, which was published on September 21, 2020. The third-country recognition for ICE Clear Europe Limited, LCH Limited and LME Clear Limited means that EU clearing members of these three CCPs will be able to continue to access the services and that the CCPs will be able to continue to provide their services in the EU at the end of the transition period on December 31, 2020, following the U.K.'s withdrawal from the EU.

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Three Commission Delegated Regulations have been published in the Official Journal of the European Union, supplementing the revised European Market Infrastructure Regulation. The Delegated Regulations contain provisions related to the changes introduced by EMIR 2.2, the amending EU Regulation that came into force on January 1, 2020 and introduced changes to the procedures and authorities involved in the authorization of central counterparties and the requirements for the recognition of third-country CCPs. EMIR 2.2 also introduced a new tiering system for third-country CCPs, making non-systemically important (or "Tier 1") third-country CCPs subject to less stringent requirements than systemically important (or "Tier 2") third-country CCPs. The Commission Delegated Regulations all relate to third-country CCP provisions of EMIR 2.2 and will enter into force on September 22, 2020. They have been published in the form adopted by the European Commission in July 2020.

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The European Securities and Markets Authority has published a press release confirming that certain requirements under the Securitization Regulation will enter into force on September 23, 2020.

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The European Commission has published a draft Delegated Regulation designed to amend existing Delegated Regulation (EU) No 876/2013, which supplements the European Market Infrastructure Regulation with regards to changes to the composition, functioning and management of colleges for central counterparties. Under EMIR, "colleges" are supervisory bodies made up of the regulators responsible for supervision of a given CCP. From January 2020, revisions to EMIR (known as "EMIR 2.2") took effect, which introduced changes to the procedures and authorities involved in the authorization of central counterparties and the requirements for the recognition of third-country CCPs. EMIR 2.2 required ESMA to develop draft Regulatory Technical Standards on: (i) which currencies were "most relevant" for the purposes of determining which central banks should be included in a CCP's college; and (ii) details of the practical arrangements for the functioning of the college that should be agreed in writing between the members of the college.

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The Financial Stability Board has published a common template for gathering information about continuity of access to financial market infrastructures for firms in resolution. The template facilitates implementation of the FSB’s 2017 Guidance on continuity of access to FMIs for a firm in resolution. The aim of the common template is to streamline the process of gathering information, reduce the burden on FMIs who receive multiple requests for information and make more efficient the process of giving information by FMIs to participants and authorities. All FMIs are urged to complete the questions in the common template and to make those available to their participants and national resolution authorities by November/December 2020. The FSB intends, after 12 months, to assess how the common template has achieved its goals.

View the comment template.

View the FSB’s Guidance.

The European Central Bank has launched a consultation on proposals to publish compounded term rates based on the euro short-term rate (€STR). The consultation closes on September 11, 2020. The ECB is requesting feedback on specific characteristics of the compounded rate using €STR. Publication would take place on a daily basis shortly after the €STR publication. Published maturities could range from one week up to one year. A daily index, making it possible to compute compounded rates over non-standard periods, is also envisaged.
 
View the ECB's consultation paper on compounded term rates based on €STR.

The European Central Bank has published a report on the results of its industry-wide assessment of Eurozone banks’ readiness for the benchmark interest rate reforms, which affect both EONIA and EURIBOR in the euro area. The purpose of the report is to share good practices that the ECB has identified in its horizontal assessment of the preparedness of Eurozone banks supervised under the Single Supervisory Mechanism. According to the ECB, banks need to improve their preparation for the reforms and escalate their implementation of risk mitigation measures. 

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The European Securities and Markets Authority has published a final report and final guidelines on securitization repository data completeness and consistency thresholds. The guidelines will apply to EU securitization repositories that are registered with and supervised by ESMA. From January 1, 2021, ESMA will consider the guidelines in its supervision of securitization repositories.

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The European Securities and Markets Authority has published a consultation paper on proposed Guidelines on the calculation of positions in Securities Financing Transactions by trade repositories under the EU Securities Financing Transactions Regulation. The consultation closes on September 15, 2020. ESMA intends to finalize the Guidelines for publication in Q4 2020 or Q1 2021.

The proposed Guidelines aim to ensure consistency of position calculation by trade repositories to national regulators, including the time of calculations, the scope of the data used in calculations, the treatment of outliers, the recordkeeping of data and the calculation methodologies. They also aim to ensure a consistent methodology is used under SFTR and the European Market Infrastructure Regulation.

View the consultation paper.

The European Commission has launched a consultation on proposed revisions to the EU Directive on the security of network and information systems across the Union (commonly known as the NIS Directive), which is designed to protect the security of EU network and information systems. The NIS Directive sets out, among other things, the parameters of national network and information security strategies to be implemented by Member States for providers of "essential services", which include credit institutions (as defined under the EU Capital Requirements Regulation) and financial market infrastructures.

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The U.K. Financial Conduct Authority has published an updated statement on the open access regime for trading and clearing exchange-traded derivatives. The Markets in Financial Instruments Regulation provided a temporary opt-out from the open access requirements for trading venues and clearing houses in relation to ETDs. The opt-out was due to expire on July 3, 2020. However, in light of COVID-19, the EU has announced it is postponing the implementation of the open access regime for ETDs until July 3, 2021. The FCA's statement acknowledges the EU's postponement of the regime and states that the amended open access regime will form part of retained EU law that will be transposed by the U.K. post-Brexit and will continue to apply in the U.K. after the end of the transition period.

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A notice of information has been published in the Official Journal of the European Union, postponing the entry into application of open access provisions for exchange-traded derivatives under the Markets in Financial Instruments Regulation until July 3, 2021.

MiFIR requires a trading venue to provide open and non-discriminatory access to a CCP so that a CCP can clear trades in transferable securities, money market instruments and ETDs concluded on a trading venue of their choice. There is a reciprocal requirement on CCPs to provide open and non-discriminatory access to a trading venue that wishes to clear financial instruments through a particular CCP. These provisions have been in force for over-the-counter products (i.e. those not traded on a regulated market) for some time. The European Securities and Markets Authority published a statement in June 2020 setting out the circumstances in which trading venues and CCPs may refuse requests for access, acknowledging the strain placed on trading venues and CCPs by COVID-19, which may impact their ability to deal with such requests.

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The U.K. has published Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020 to onshore the new EU regime for third-country CCPs introduced by amendments to the European Market Infrastructure Regulation, known as EMIR 2.2. EMIR 2.2, which has applied since January 1, 2020, is part of the EU’s push to enhance the regulation of CCPs amid concerns regarding potential CCP failures given their increasing systemic importance and is widely regarded as a direct response to Brexit, given that three of the largest European CCPs are based in the U.K.

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The European Commission has published a draft delegated regulation on the fees charged by the European Securities and Markets Authority to central counterparties established in third-countries that are recognized by ESMA and able to provide clearing services in the EU. The draft regulation will supplement the European Market Infrastructure Regulation. EMIR was revised twice during 2019. The second revision (known as EMIR 2.2) introduced changes to the procedures and authorities involved in the authorization of CCPs and the requirements for the recognition of third-country CCPs. EMIR 2.2, is part of the EU’s push to enhance the regulation of CCPs amid concerns regarding potential CCP failures given their increasing systemic importance and is widely regarded as a direct response to Brexit, given that three of the largest European CCPs are based in the U.K. Feedback on the draft delegated regulation can be submitted until July 9, 2020.

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The European Securities and Markets Authority has published a statement on the open access provisions for exchange-traded derivatives under the Markets in Financial Instruments Regulation.

MiFIR requires a trading venue to provide open and non-discriminatory access to a CCP so that a CCP can clear trades in transferable securities, money market instruments and ETDs concluded on a trading venue of their choice, which will in turn allow the members of a trading venue to select the CCP they wish to use for clearing. There is a reciprocal requirement on CCPs to provide open and non-discriminatory access to a trading venue that wishes to clear financial instruments through a particular CCP. These provisions are controversial since they mean that valuable intellectual property and IT systems developed by exchanges effectively must be made available to competitors or new market entrants. It has been argued that the open access requirements make the EU unattractive as a location for exchange businesses due to the commercial disadvantages that result for those exchanges which have successfully invested in innovation.

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The European Commission has published two draft delegated regulations, the first is on the criteria for determining whether a third-country CCP is systemically important and the second is on the minimum elements to be assessed by the European Securities and Markets Authority when assessing third-country CCPs’ requests for comparable compliance and the modalities and conditions of that assessment. The draft regulations will supplement the European Market Infrastructure Regulation. EMIR was revised twice during 2019.  The second revision (known as EMIR 2.2) introduced changes to the procedures and authorities involved in the authorization of CCPs and the requirements for the recognition of third-country CCPs. “EMIR 2.2” is part of the EU’s push to enhance the regulation of CCPs amid concerns regarding potential CCP failures given their increasing systemic importance and is widely regarded as a direct response to Brexit, given that three of the largest European CCPs are based in the U.K. Feedback on the draft delegated regulations can be submitted until July 9, 2020.

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The European Systemic Risk Board has announced a series of further actions designed to combat the impact of COVID-19 on European financial markets. The actions relate to the five priority areas already identified by the ESRB as requiring particular focus in the context of the COVID-19 pandemic, as follows:

• Implications for the financial system of guarantee schemes and other fiscal measures to protect the economy: the ESRB has published a Recommendation introducing minimum requirements for national monitoring of the financial stability implications of the various debt moratoria and guarantee schemes introduced by Member States to support economies through COVID-19 (Recommendation A); national regulators are also advised to regularly report information on these schemes to the ESRB in accordance with reporting templates to be published by the ESRB by June 30, 2020 (Recommendation B); national regulators implicated by the Recommendation should communicate the actions they have taken, or intend to take, in response to the Recommendation A by July 31, 2020 and Recommendation B by December 31, 2020;

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The European Securities and Markets Authority has opened a consultation on draft guidelines on outsourcing to cloud service providers. The draft guidelines cover: (i) governance, documentation, systems and procedures that firms should have in place; (ii) the assessment and due diligence to be undertaken before outsourcing arrangements are entered; (iii) minimum elements that outsourcing agreements should include; (iv) exit strategies; and (v) access and audit rights. The consultation closes on September 1, 2020. ESMA expects to publish the final guidelines in Q4 2020 or Q1 2021.

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The European Securities and Markets Authority has published two opinions on the application of post-trade transparency and position limits rules to third-country trading venues.
 
The first opinion relates to post-trade transparency requirements under the Markets in Financial Instruments Regulation. Under MiFIR, EU investment firms must publish information on transactions in financial instruments traded on an EU trading venue. ESMA’s opinion states that information about transactions concluded on a third-country trading venue should also be made public in accordance with MiFIR, but it is unnecessary for EU firms to republish such information where the transparency rules of the third-country trading venue are similar to those applicable to EU trading venues under MiFIR. 

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The European Securities and Markets Authority has published its final report and technical advice on the conditions for clearing services providers’ commercial terms to be considered fair, reasonable, non-discriminatory and transparent, in accordance with changes introduced under the revised European Market Infrastructure Regulation, or EMIR Refit. EMIR Refit requires the European Commission to adopt legislation setting out these conditions by June 18, 2021. The Commission tasked ESMA with publishing technical advice on the conditions, which ESMA launched a consultation on in October 2019. ESMA’s final technical advice takes account of the responses received to the consultation. 

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The European Commission has published an adjusted 2020 Work Program to reflect the unexpected challenges arising from COVID-19. The Commission still intends to deliver on the commitments made under its original Work Program, published in January 2020, but has adjusted the timing of certain actions necessary to achieve its objectives. An update on the delivery and expected timing of the objectives under the adjusted Work Program are set out in an amended version of Annex 1 on the Commission’s website.

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The European Systemic Risk Board has established five priority areas on which it intends to take action to combat the impact of COVID-19 on the EU financial system. In determining its actions, the ESRB hopes to ensure an effective response to the pandemic across the EU that prevents individual Member State actions from negatively impacting the EU Single Market and to take advantage of flexibility in regulatory standards to support financial institutions in providing financial services and liquidity.

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The Council of the European Union has published a working paper on interoperability arrangements as a source of contagion risk and open access provisions for exchange-traded derivatives under the Markets in Financial Instruments Regulation.

Interoperability arrangements are links between CCPs that involve the cross-system execution of transactions. They are relevant where multiple CCPs service the same trading venue and allow clearing members of one CCP to centrally clear trades carried out with members of another CCP, without requiring the first counterparty to be a member of the second CCP. The European Market Infrastructure Regulation contains provisions governing CCP interoperability arrangements, including the need for non-discriminatory access, adequate risk management policies and the need for prior approval of relevant national regulators.

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The European Securities and Markets Authority has issued a public statement asking national regulators across the EU not to prioritize supervisory actions against interest rate benchmark administrators and contributors for failing to comply with the external audit requirements under the Benchmark Regulation, where those audits are carried out by September 30, 2020. The EU Benchmark Regulation requires an interest rate benchmark administrator to have an external audit conducted of its compliance with the benchmark methodology and Benchmark Regulation. Contributors to interest rate benchmarks are required to have an external audit conducted of their input data and compliance with the Benchmark Regulation. ESMA is granting the regulatory forbearance in response to the impact of COVID-19. ESMA states that administrators and contributors that anticipate a delay to the required audits should inform their nation regulator.

View ESMA's statement.

Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.

The European Securities and Markets Authority has published its final technical advice to the European Commission on procedural rules for imposing fines and penalties on third-country CCPs and trade repositories. The technical advice also covers the alignment of the rules with those applicable to EU credit rating agencies, which ESMA directly supervises. The European Commission mandated ESMA to produce the technical advice in response to changes made to the European Market Infrastructure Regulation by EMIR Refit and EMIR 2.2. EMIR Refit updated (amongst other things) the requirements applicable to trade repositories, including with respect to fines and penalties. EMIR 2.2 introduced investigatory and supervisory powers over CCPs for ESMA to ensure compliance with the new requirements, including the ability to request information from CCPs, appoint an independent investigation officer to investigate any possible infringements under EMIR 2.2 and impose fines.

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The International Organization of Securities Commissions has published a report analyzing the regulatory issues arising from the use of global stablecoins and setting out how the existing IOSCO principles would apply to a global stablecoin, depending on its structure. IOSCO states that global stablecoins, depending on how they are set up, share features with regulated securities and other regulated financial instruments and services. Using a hypothetical global stablecoin case, the report analyzes how the IOSCO Principles and Standards would apply and also considers some of the broader implications. The report also includes an analysis, jointly conducted by IOSCO and the Committee on Payment and Market Infrastructures, of the applicability of the CPMI-IOSCO Principles for Financial Market Infrastructures. The conclusion is that the PFMI will apply to global stablecoin arrangements involving the performance of systemically important payment system functions or other FMI functions.

View IOSCO's report on global stablecoin initiatives.

The Financial Stability Board is coordinating with its members to support coordinated action required to preserve global financial stability. National regulators and financial institutions are encouraged to take advantage of regulatory flexibility to protect funding for market participants and the real economy, and international standard setting bodies are working together, including with reference to financial policy responses in their respective jurisdictions, to ensure the financial system can continue to finance growth.
 
View the FSB's announcement.

The U.K. Financial Conduct Authority has published a call for input on accessing and using wholesale data. The FCA has launched the call for input to assess the use and value of data and advanced analytics in wholesale financial markets. The regulator would like to know if there are concerns about access to data and how it is priced and sold because the market may be causing harm to investors. The focus of the call for input is benchmarks, trading data and market data vendor services. However, the FCA welcomes input on whether there are other areas where data access is giving rise to issues. Responses to the call for input may be submitted until January 7, 2021 (extended in response to the impact of COVID-19). The FCA will publish a feedback statement setting out its analysis and next steps.

The Financial Stability Board has written to G20 Finance Ministers and Central Bank Governors outlining the key focus areas for the FSB’s work ahead of the next G20 summit in Saudi Arabia in November 2020. The communication builds on certain areas highlighted as priorities in the FSB’s 2020 Work Program, published in December 2019.

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The European Commission has published its 2020 Work Programme, setting out the EU’s strategic priorities for the next 12 months.

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The U.K. Financial Conduct Authority has written to the CEOs of benchmark administrators that it supervises. In the letter, the FCA sets out its supervisory strategy as well as the potential harms that benchmark administrators pose to their customers and to the financial markets. The FCA is asking all benchmark administrators to consider the harm that their firm may present and to consider how those could be mitigated. The FCA intends to focus over the next two years on the following areas to ensure that its supervision of benchmark administrators mitigates the identified risks:

• Quality of standards: the quality of an administrator's governance and controls, the information provided in their Benchmark Statement, their recalculation and cessation policies, their outsourcing arrangements and their approach to operational resilience; and
• Excessive fees and costs: the FCA is concerned that competition may not be working well in the provision of benchmarks following the feedback received to its Wholesale Sector Competition Review and Asset Management Market Study. The FCA intends to carry out a Call for Input on access to data in wholesale markets so that it can gain a better understanding of the issues and determine whether any action is needed.

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The European Securities and Markets Authority has launched a consultation on proposed guidelines on securitization repository data completeness and consistency thresholds. The proposed guidelines would apply to EU securitization repositories that are registered with and supervised by ESMA. The consultation closes on March 16, 2020.

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The European Securities and Markets Authority has published its Strategic Orientation for 2020-2022, setting out its longer-term objectives for regulating financial markets. The previous Strategic Orientation covered the period from 2016-2020 and so is coming to an end this year. Looking forward, ESMA aims to:

• develop the EU Capital Markets Union by encouraging wider retail investor participation, which would assist with the diversification of funding sources and efficiency of capital markets;
• promote sustainable finance and long-term oriented capital markets as part of the EU's commitment to meet the UN's Sustainable Development Goals by 2030;
• examine the opportunities and risks of digitalization and technology for market participants and regulators;
• guarantee the EU's voice in financial markets, aiming to maintain the openness of EU financial markets and develop EU co-operation with third-country authorities to ensure investor protection and financial stability; and
• encourage proportionality, particularly with respect to SMEs and innovative companies, where ESMA may need to tailor its initiatives to meet its objectives.

View ESMA 2020-2022 Strategic Orientation.

The European Securities and Markets Authority has published a final report on the 2018 survey it conducted on central counterparties' membership criteria and due diligence practices, together with an update to its Q&As providing guidance on the correct implementation of the European Markets Infrastructure Regulation. The survey was prompted by the default in September 2018 of an individual who was acting as a clearing member of Nasdaq Clearing AB. This triggered ESMA's investigation into CCPs' membership and due diligence practices and their compliance with participation requirements under EMIR and the joint Principles for Financial Market Infrastructures issued by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions.

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The European Securities and Markets Authority has published a working paper setting out its findings on the market impacts of “circuit breakers”, instruments used by trading venues to interrupt excessive price movements in financial instruments. The revised Markets in Financial Instruments Directive places obligations on national regulators to require a regulated market in their jurisdiction to be able to temporarily halt or constrain trading if there is significant price movement in a financial instrument on that market during a short period and, in exceptional cases, to be able to cancel, vary or correct any transaction. 

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An EU Regulation has been published amending the European Supervisory Authorities' powers under various pieces of EU legislation. The Regulation grants ESMA additional powers to monitor market data and authorize benchmark administrators under the Markets in Financial Instruments Regulation and the Benchmarks Regulation, respectively. It also amends the legislation founding the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, granting them additional powers to facilitate their supervisory duties. The Regulation will enter into force on December 30, 2019. The provisions regarding ESMA's enhanced supervisory powers over market data and benchmarks will apply from January 1, 2022. All other provisions regarding the European Supervisory Authorities' enhanced powers will apply from January 1, 2020.

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An amended temporary equivalence decision on the regulatory framework applicable to central counterparties in the U.K. and Northern Ireland has been published in the Official Journal of the European Union. The decision amends the existing EU equivalence decision, which applies from the date that the U.K. leaves the EU in the event that no withdrawal agreement has been agreed, and ends on March 30, 2020. The amended decision extends the period of equivalence to one year following a U.K. no-deal exit from the EU and will apply from December 24, 2019. It would not apply in the event that the Withdrawal Agreement is ratified by both sides.

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The European Parliament has published a resolution on relationships between the EU and third countries concerning financial services regulation and supervision. The resolution follows the publication of a report in August 2018 by the European Parliament’s Committee on Economic and Monetary Affairs setting out its proposal for the European Parliament’s resolution, which comes in the wake of the U.K.’s upcoming exit from the EU. The key factors prompting the resolution include the need to mitigate risks to financial stability arising from a possible no-deal Brexit, the need for clarification of the relationship between third-country markets and the EU’s single market in the interests of broader financial stability and the fact that existing third-country equivalence rules are not currently subject to a single framework.

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The European Securities and Markets Authority has published a follow-up report on its 2018 Thematic Report on the fees charged by credit rating agencies and trade repositories. ESMA directly supervises all CRAs and trade repositories that are established in the EU. The 2018 Thematic Report highlighted three key areas of concern in the fee charging practices of CRAs and trade repositories, namely: (i) transparency and disclosure to clients and ESMA of fees; (ii) the process of setting fees; and (iii) how interactions with other group entities may pose challenges to the principles of non-discrimination and cost-related fees to which credit rating agencies and trade repositories are expected to adhere.

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The International Swaps and Derivatives Association has launched a consultation in which it proposes to amend its standard documentation to implement fallbacks based on alternative risk-free rates for certain key Interbank Offered Rates - EUR LIBOR and EURIBOR. ISDA states that the back-ups will apply if the relevant IBOR is permanently discontinued, based on defined triggers. Responses to the consultation should be submitted to ISDA by January 21, 2020.
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