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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The Financial Stability Board has published a progress report on reforms to major interest rate benchmarks. The report provides the FSB's annual update on progress taken by the official sector and market participants to move from interbank offered rates to overnight risk-free rates by the end of 2021 in line with the FSB's 2014 recommendations. The FSB highlights that the continued reliance by global financial markets on LIBOR poses significant financial stability risks and urges all participants to continue with their efforts to transition to the alternative risk-free rates. The FSB also warns regulated firms to expect increased examination from regulators of their efforts to transition as the end of 2021 approaches.

View the report.

The European Securities and Markets Authority has published a list of the entities that are awaiting their national regulator’s approval for authorization and registration as EU benchmark administrators. Under the EU Benchmark Regulation, existing EU and third country benchmark administrators are entitled to apply for authorization to continue as administrators.

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The European Securities and Markets Authority has launched a consultation on proposed procedural rules for penalties imposed on third-country CCPs, trade repositories and credit rating agencies. Responses are invited by January 18, 2020. ESMA intends to finalize its technical advice by the end of Q1 2020.

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A new Regulation amending the European Market Infrastructure Regulation has been published in the Official Journal of the European Union, introducing changes to the procedures and authorities involved in the authorization of central counterparties and the requirements for the recognition of third-country CCPs. The Regulation, known as “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. 

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The European Commission has published a Regulation amending the EU Benchmarks Regulation in the Official Journal of the European Union. The amending Regulation aims to introduce minimum requirements for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks to improve the accuracy and integrity of those benchmarks for their users. 

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The Bank of England, U.K. Prudential Regulation Authority and U.K. Financial Conduct Authority have published a shared policy summary and consultation papers on strengthening operational resilience in the financial services sector. The consultation impacts banks, building societies, PRA-designated investment firms, firms subject to the Solvency II Directive, recognized investment exchanges, CCPs, central securities depositories, payment system operators, FCA enhanced scope SM&CR firms and entities authorized and registered under the Payment Services Regulations 2017 and Electronic Money Regulations 2011. Responses to the consultation should be submitted by April 3, 2020.

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The International Swaps and Derivatives Association has published a letter in which it responds to the Financial Stability Board's November 15, 2019 letter on pre-cessation triggers. The co-Chairs of the FSB's Official Sector Steering Group requested ISDA to include a "pre-cessation trigger" alongside the cessation trigger in its standard language in derivatives contracts, via either definitions for new contracts or in a single protocol (without embedded optionality) for outstanding contracts. The pre-cessation trigger would cause a LIBOR-based contract to fall back to an alternative reference rate in the event that the U.K. Financial Conduct Authority, as the regulator of LIBOR, deemed that LIBOR was no longer representative.

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The U.K. Financial Conduct Authority has published a statement on conduct risk during the LIBOR transition, which is due to be completed by the end of 2021. The statement is in the form of questions and answers and sets out the FCA's expectations of firms relating to governance and accountability, replacing LIBOR with alternative rates in existing contracts, offering new products with alternative rates, communicating with customers about the transition from LIBOR and best practice for firms investing on behalf of clients.

View the FCA's statement.

The Vice President of the European Commission, Valdis Dombrovskis, has given a keynote speech at the Guildhall in London covering, amongst other things, the EU’s proposals for the development of the European sustainable finance framework and a proposed extension to the temporary equivalence regime for U.K. central counterparties.

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The European Central Bank has published a report by the working group on euro risk-free rates on €STR fall-back arrangements. The EU Benchmark Regulation requires regulated entities to have put in place written plans on the steps that they would take should a benchmark used in their contracts be materially amended or ceases. The Working Group recommends that instead of selecting an alternative rate, regulated entities should take into account the ECB's regular review of €STR's methodology and the policies and procedures for the possible cessation of €STR, together with the use of contractual fallbacks.

View the report.

Following its consultation earlier this year, the European Securities and Markets Authority has published final reports and the final technical advice on third-country CCP tiering, comparable compliance and fees under draft revisions to the European Market Infrastructure Regulation, known as EMIR 2.2. EMIR 2.2 will change the requirements for the supervision of both EU and third-country CCPs, and includes the controversial formal EU "location policy" for CCPs. The technical advice will assist the Commission in preparing the final delegated legislation that will supplement the EMIR 2.2.

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A Commission Delegated Regulation amending the EU Auctioning Regulation has been published in the Official Journal of the European Union. The Delegated Regulation will apply directly in all EU Member States from November 28, 2019. The EU Auctioning Regulation provides for EU emission allowances to be auctioned and specifies key aspects of the auctions, including their design, timing and eligibility requirements. 

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The European Central Bank has published a report by the working group on euro risk-free rates providing high-level recommendations for fall-back provisions in contracts for cash products and derivatives transactions referencing EURIBOR. The recommendations are not legally binding and market participants can decide whether, and to the extent to which, they wish to adopt them. EURIBOR were identified as critical benchmarks for the purposes of the EU Benchmarks Regulation  and the methodology for calculating EURIBOR has been revised to be Benchmark Regulation-compliant, to be implemented by the end of 2019.

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The European Central Bank has published a report by the working group on euro risk-free rates on the financial accounting implications of the transition from EONIA to €STR and the introduction of €STR-based fallbacks for EURIBOR. 

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The Committee on Payments and Market Infrastructures has prepared a “toolkit” to assist central banks to reduce the risk of wholesale payments fraud related to endpoint security. The Financial Stability Institute at the Bank for International Settlements has also announced that it will make tutorials on wholesale payments security freely available to central banks on request.

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The Council of the European Union has adopted the amendments to EU law on CCP supervision. The adopted laws revising the European Market Infrastructure Regulation (EMIR 2.2) will change how both EU CCPs and third-country CCPs are supervised, and implement into legislation the controversial EU "location policy" for the largest third-country CCPs. According to the Council's press release, EMIR 2.2 is scheduled to be published in the Official Journal of the European Union on December 12, 2019 and would come into force 20 days later. The legislative process relevant to EMIR 2.2 has taken place with the U.K. exit from the European Union in the background and many of the changes relevant to third-country CCPs are effectively a response to the U.K.'s decision to leave the EU, given that two of the three largest European Union clearing houses are U.K.-based.

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The European Securities and Markets Authority has published a final report and final Guidelines on standardized procedures and messaging protocols for investment firms under the Central Securities Depositaries Regulation.

CSDR requires investment firms to take steps to limit settlement fails, including by ensuring that they have all the necessary transaction data on the day of the transaction. Investment firms must also have in place arrangements with their professional clients to ensure prompt communication of an allocation of securities to the transaction, confirmation of that allocation and confirmation of the acceptance or rejection of the terms in good time before the intended settlement date. The content of the messages and deadlines for sending them is contained in the Regulatory Technical Standards on settlement discipline (Commission Delegated Regulation (EU) 2018/1229). The Guidelines clarify the scope of these requirements and provide guidance on the standardized procedures and messaging standards to be used for firms to comply with the requirement.

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The European Securities and Markets Authority has published a consultation paper on aligning the trading obligation under the Markets in Financial Instruments Regulation with the recent changes made to the clearing obligation under the European Markets Infrastructure Regulation by the EMIR Refit Regulation. Responses to the consultation should be submitted by November 22, 2019. ESMA intends to submit its final report to the European Commission in early 2020, with the Commission’s report to the European Parliament and Council expected by December 18, 2020.

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The Joint Committee of the European Supervisory Authorities has published its 2020 work program, outlining revisions to the Joint Committee’s scope of work and the matters it will focus on in 2020. The Joint Committee consists of representatives from the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Securities and Markets Authority, the European Commission and the European Systemic Risk Board. 

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The European Securities and Markets Authority has published its Annual Work Programme for 2020. The Work Programme sets out ESMA’s focus areas for 2020 and provides details of expected outputs within each of the areas. In 2019, the European Council, Parliament and Commission agreed on new tasks for ESMA, meaning that ESMA will take on an enhanced role in areas including direct supervision, supervisory convergence and investor protection. The final Regulations amending the scope of the European Supervisory Authorities’ work mandates are expected to be published in the second half of 2019.

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The European Commission's Technical Expert Group has published a final report on EU climate benchmarks and benchmark Environmental, Social and Governance disclosures. The Commission set up the TEG on Sustainable Finance when it published its legislative proposal for amending the EU Benchmark Regulation as part of its action plan on Sustainable Finance. The proposed legislation will create two new categories of low carbon benchmarks: the EU Climate Transition Benchmark (EU CTB) and the EU Paris-aligned Benchmark (EU PAB). It also includes ESG disclosure requirements for all investment benchmarks. The final text of the proposal has been agreed and it is expected to be published in October/November 2019.

The TEG report provides technical advice to the Commission on: (i) the minimum ESG disclosure requirements for all benchmarks, except interest rates and currency benchmarks, and specific ESG disclosure requirements for EU CTBs and EU PABs; and (ii) the minimum technical requirements for the methodology of EU CTBs and EU PABs. In addition, the report includes recommendations on other areas of work that are connected to the benchmark ESG disclosures, such as the proposed EU Classification System of Sustainable Activities (i.e. the EU Taxonomy) and changes to the disclosure requirements in the Markets in Financial Instruments package to take into account ESG disclosures.

View the report.

Following its previous two consultations, the International Swaps and Derivatives Association has launched a consultation on the proposed final parameters that will apply to alternative risk-free rates if derivatives fall backs are triggered. Responses to the consultation should be provided by October 23, 2019. ISDA will amend the 2006 ISDA Definitions based on the feedback and also intends to publish a protocol so that market participants can include fall backs in legacy IBOR contracts, if needed. Both documents are expected to be finalized before the end of 2019, ready for implementation in 2020.

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The European Commission has published a Communication on finalizing preparations for the withdrawal of the U.K. from the EU on November 1, 2019. The Commission stresses the likelihood of a no-deal Brexit on October 31, 2019 and asks all stakeholders to take action now to finalize their plans for the situation, noting that the contingency measures that are in place can only mitigate against some of the more significant disruptions. The Commission warns that a further delay to the date that the U.K. exits the EU should not be assumed, in that a delay may not be requested by the U.K. government nor granted by the EU.

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The Financial Stability Board has published a summary of an industry workshop, held on May 21, 2019, on continuity of access to financial market infrastructures for firms in resolution. The FSB held the workshop to assist in its efforts to monitor implementation of the FSB Guidance on continuity of access to FMI for firms in resolution, published in July 2017. The Guidance provides for arrangements to allow continuity of access to FMIs for a global systemically important bank in resolution. The Guidance applies to FMIs as providers of clearing, payment, securities settlement and/or custody services, to G-SIBs and other banks that are subject to resolution (referred to here as firms) and recovery planning requirements, as well as the G-SIB resolution authorities and regulators of the FMIs.

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A Decision of the European Central Bank has been published in the Official Journal of the European Union. The Decision supplements the ECB's Regulation on the oversight of systemically important payment systems. The Decision sets out the procedures and conditions for a regulator to follow when seeking to obtain information and documents from the operator of a SIPS, requiring a SIPS operator to appoint an independent expert to carry out an investigation or review on the operation of the SIPS or conduct on-site inspections.

​The Decision enters into force on September 5, 2019 and applies to the Eurozone regulators of Eurozone SIPS.

View the ECB Decision.

Two equivalence decisions under the EU Benchmark Regulation have been published in the Official Journal of the European Union. The first decision declares as equivalent to the EU regime the legal and supervisory framework of Australia applicable to the administrators of financial benchmarks that are declared significant benchmarks by the Australian Securities and Investments Commission. The second decision declares as equivalent to the EU regime the legal and supervisory framework of Singapore applicable to the administrators of financial benchmarks that are designated as designated benchmarks by means of the Securities and Futures (Designated Benchmarks) Order 2018. Both decisions will enter into force on August 19, 2019.

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The European Money Markets Institute has announced that EONIA will be published daily at or soon after 9:15 CET, as from October 2, 2019.

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The Bank of England and Financial Services Act 2016 (Commencement No. 6 and Transitional Provisions) Regulations 2019 have been made. The Regulations bring into force, from December 9, 2019, the expanded Senior Managers and Certification Regimes for all Financial Conduct Authority solo-regulated firms authorized under the Financial Services and Markets Act 2000, which include asset managers and investment firms carrying out certain activities. These firms need to complete their initial certification assessments for existing certified staff and new hires by December 9, 2020, although they must have identified certification staff by December 9, 2019. A transitional provision states that the regime will only apply to Claims Management Companies that are authorized by the FCA by December 9, 2019 and to other CMCs on the date that they obtain their authorization.

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The European Money Markets Institute has published a Benchmark Statement on the administration of Euro Interbank Offered Rate (Euribor). Earlier in July this year, the EMMI obtained authorization as the administrator of Euribor, which is a critical benchmark under the EU Benchmark Regulation. EMMI has made reforms to Euribor in order to ensure it meets the requirements of the Regulation, including adopting a new hybrid methodology, the phased implementation of which will be completed by the end of 2019.

View EMMI's announcement and the Benchmark Statement.

Following its consultation earlier this year, the working group charged with implementing the European market's move away from EONIA, has published a recommended legal action plan for new and legacy contracts referencing EONIA. The implementation of the recommended legal measures is intended to address issues arising from the transition from EONIA to the euro short-term rate (known as €STR). €STR is a risk-free rate and, with a fixed spread, will replace EONIA as a reference rate in a variety of euro-denominated financial contracts, including derivatives, collateral remuneration for derivatives and cash products such as commercial paper, repurchase agreements and default interest payable under syndicated loans.

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The European Commission's Technical Expert Group on sustainable finance has launched a call for feedback on the taxonomy for sustainable economic activities. The TEG's Report on Taxonomy was published on June 18, 2019, alongside the Commission's Guidelines on reporting climate-related information, an interim TEG report on EU climate benchmarks and a TEG report on an EU green bond standard. The Report on Taxonomy links to the EU's proposed Regulation on the establishment of a framework to facilitate sustainable investment.

Feedback on the TEG's Report on Taxonomy should be submitted by September 13, 2019.

View the Report on Taxonomy.

View further details on the call for feedback.

View the Commission's Guidelines on reporting climate-related information.

An amending Commission Delegated Regulation to the existing Commission Delegated Regulation (Regulation 2017/565) on requirements for participants in SME growth markets has been published in the Official Journal of the European Union. Regulation 2017/565 supplements related provisions under the Markets in Financial Instruments Directive, which establishes "SME growth markets" as a new type of trading venue for small and medium sized enterprises.

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Huw van Steenis, the Bank of England financier appointed by the BoE in 2018 to review the future of the U.K. financial system, has published his "Future of Finance" report, setting out a vision for the medium-term future of the U.K. financial system and the BoE's role in supporting that. The report was based on consultations with entrepreneurs, financiers, tech firms, global investors, consumer groups, charities, policymakers and business leaders across the U.K. and overseas. In response, the BoE has published a document which sets out the actions it intends to take to deal with the challenges and opportunities identified in the report.

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The European Commission has published new, non-binding Guidelines on reporting climate-related information. The new Guidelines are supplementary to the guidelines issued by the Commission in 2017 on reporting non-financial information. The new Guidelines are intended to assist large public entities (with over 500 employees) to report climate-related information under the EU Non-Financial Reporting Directive. The new Guidelines incorporate the recommendations of the Financial Stability Board's taskforce on climate-related financial disclosures, taking into account the EU's forthcoming taxonomy on sustainable activities. The new Guidelines include guidance on reporting of climate-related information related to business models, key performance indicators, risks and their management. Further guidelines for banks and insurance companies are set out in the annex.

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The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (Amendment) Regulations 2019 have been made and will come into force on July 9, 2019.

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