The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.
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UK Financial Conduct Authority Publishes Expectations for Principals of Overseas Appointed Representatives
June 27, 2024
The Financial Conduct Authority has published guidance on the challenges and expectations for principal firms with overseas appointed representatives. The AR regime allows authorized firms to appoint representatives to conduct certain regulated activities on their behalf. The FCA updated its AR rules and expectations at the end of 2022, which included introducing a requirement for principal firms to report additional information about the business conducted by their ARs and amending its rules and guidance on its expectations of principals and their responsibilities, such as the expectation that principals manage their arrangements with ARs so that there are no conflicts of interest and enhance their monitoring of a delegated task or function, and to specify that the principals' activities should not result in undue risk of harm to consumers or market integrity. The new rules also require principals annually to assess the fitness and propriety and competency and capability of individuals at ARs.
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Council of the European Union Agrees Mandate on Proposed Regulation on Simpler Financial Reporting Requirements
June 19, 2024
The Council of the EU agreed its negotiating mandate on the proposed Regulation amending the European Systemic Risk Board (ESRB) Regulation (1092/2010), EBA Regulation (1093/2010), EIOPA Regulation (1094/2010), ESMA Regulation (1095/2010), and InvestEU Regulation ((EU) 2021/523) regarding certain reporting requirements in the fields of financial services and investment support. The proposal updates existing rules on data sharing between the European Supervisory Authorities and other financial sector authorities with the aim of reducing the administrative burden for authorities in the financial sector. Changes to the European Commission proposal highlighted by the Council include: (i) clarification that responsibility for the exchange of information should lie with the ESAs and the ESRB, which should share the information received from the national regulators with other ESAs and EU and national authorities and that it should concern only data stemming from reporting requirements under EU, not national, law; and (ii) removing the newly created AML/CTF Authority from the scope of the authorities that are allowed to issue a request for data sharing at this stage, with a reassessment of its inclusion within two years. As the European Parliament adopted its negotiating mandate on March 12, 2024, interinstitutional negotiations may now begin.Topic : Financial Services -
UK Prudential Regulator Granted Power to Disapply Rules
04/19/2024
On April 18, 2024, the Financial Services and Markets Act 2000 (Disapplication or Modification of Financial Regulator Rules in Individual Cases) Regulations 2024 were made. The Financial Services and Markets Act of 2023 (discussed in our client note, "A Boost for UK Financial Services") provides a framework for the revocation of retained EU law (now known as "assimilated law") in financial services, much of which will be replaced by rules of the U.K. regulators. Transferring the detailed rules to the U.K. regulator's rulebooks promotes a more nimble approach by the U.K.'s regulators. The FSM Act 2023 gave new delegated power to the U.K.'s regulators for detailed rulemaking, subject to enhanced oversight by Parliament and HM Treasury, and provided various mechanisms for the operation of the regulatory framework, including granting HM Treasury the power to make regulations bestowing on each of the regulators the ability to disapply or modify its rules.
The Regulations also give the Prudential Regulation Authority the ability to disapply or modify the application of any of its rules made under the Financial Services and Markets Act 2000, where appropriate, and in accordance with the procedural requirements set out in the Regulations. The power will allow the PRA to consider the circumstances and business models of individual firms, further enhancing the agile approach to regulation. The Regulations enter into force on June 30, 2024. -
UK Approach to Critical Third-Party Supplier Designation Published
03/31/2024
The Financial Services and Markets Act 2023 established a framework for the regulation of third parties who provide significant services to financial institutions, giving HM Treasury power to designate an entity as a "critical third party" if its failure would pose financial stability or confidence risk to the U.K. We discussed this in our client note, "The U.K.'s New Regime for Critical Third Party Supervision". HM Treasury published on March 21, 2024, its policy approach to designation of critical third parties.
When designating CTPs, HM Treasury is required by the FSM Act 2023 to consider the materiality of the third party's services to the delivery of essential activities, services or operations in the financial sector as well as the number and type of licensed firms to which the services are provided. This is a process where HM Treasury carries out the designation; a "critical third party" is not a status that firms would apply for. The policy paper sets out the process for designation, including receipt of a recommendation from one of the financial regulators and assessment of the basis for making a designation decision. HM Treasury discusses how it will engage with the relevant third-party service provider and the regulators, including communicating its decision. The process for de-designating a critical third party is also described.
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UK Fifth Commencement Regulations Under the Financial Services and Markets Act 2023 Published
03/04/2024
The Fifth Commencement Regulations - the Financial Services and Markets Act 2023 (Commencement No. 5) Regulations 2024 (SI 2024/250)- under the Financial Services and Markets Act 2023 were made on February 29, 2024. One of the major reforms in the Financial Services and Markets Act 2023 related to regulatory accountability, especially of the Financial Conduct Authority and Prudential Regulation Authority. The Fifth Commencement Regulations now provide, among other things, for the coming into effect of certain provisions relating to the accountability of the Payment Systems Regulator, including:- Starting March 1, 2024, a requirement on the PSR to take certain steps in advance of taking an action where there is a material risk such action would be incompatible with the U.K.'s international trade obligations.
- Starting August 1, 2024, requirements for the PSR's consultations, requiring the PSR to keep general requirements under review, HM Treasury's powers to require the PSR to impose a requirement for a specified activity or for specific firms, detailing the cost-benefit analysis obligations and panel appointment statements of policy.
- Starting January 1, 2025, the remaining provisions on the PSR's accountability that are not already in force.
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UK Financial Conduct Authority Publishes Rule Review Framework
01/16/2024
The U.K. Financial Conduct Authority has published its Rule Review Framework, setting out how it will set, measure and monitor the outcomes of its Handbook rules. The Rule Review Framework was mandated under the Financial Services and Markets Act 2023 (discussed in our client note, A Boost for UK Financial Services). The FSM Act 2023 transferred responsibility for making detailed rules to the U.K.'s regulators, significantly increasing their powers. To ensure proper oversight of the use of those powers, the FSM Act 2023 provides for an enhanced regulatory accountability framework, which includes requiring the FCA (and the Prudential Regulation Authority, which consulted on its proposed in 2023) to keep their rules under review and publish a statement of policy on how they conduct those reviews.
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UK Government Signs Agreement with Switzerland on Mutual Recognition for Wholesale Financial Services
01/03/2024
The U.K. Government has signed the Berne Financial Services Agreement with Switzerland, confirming mutual recognition of aspects of the financial services regulatory and supervisory regimes in each jurisdiction. The Agreement permits specified financial services providers in one jurisdiction to supply specified services to wholesale or sophisticated clients in the other jurisdiction in various sectors (including asset management, banking, investment services activities and insurance) on the basis of deference, domestic law or other arrangements.
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HM Treasury Publishes Consultation Response on Financial Promotions Regime High Net Worth and Sophisticated Investors Exemptions
11/08/2023
HM Treasury has published a consultation response and draft statutory instrument on reforms to the high net worth and sophisticated investor exemptions under the financial promotions regime. The Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for UK Financial Services") made amendments to the Financial Promotion Restriction, banning authorized firms from approving the financial promotions of unauthorized firms unless they have received approval from the FCA to have the prohibition removed in whole or in part. The gateway will apply from February 7, 2024. However, the restriction does not apply where exemptions exist, such as those for high net worth or sophisticated investors.
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UK Financial Conduct Authority Publishes Policy Statement on Financial Promotions Gateway
09/20/2023
The U.K. Financial Conduct Authority published a Policy Statement on 12 September 2023 setting out how it intends to implement the new regulatory gateway for financial promotions. The Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services") amends the Financial Promotion Restriction, banning authorized firms from approving financial promotions of unauthorized firms unless they have received approval from the FCA to have the prohibition removed in whole or part. The gateway will apply from February 7, 2024, with authorized firms able to apply to the FCA for permission from November 6, 2023 until February 6, 2024. There are exemptions from the gateway, entering into force on September 27, 2023, which permit the approval of financial promotions by authorized firms, for communication by unauthorized firms, in certain circumstances.
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Revocation of the Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013 is Postponed
09/14/2023
The Financial Services and Markets Act 2023 (Commencement No. 3) (Amendment) Regulations 2023 were made on August 25, 2023, postponing the revocation of the Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013.
The Commencement No. 3 Regulations amend the Financial Services and Markets Act 2023 (Commencement No. 1) Regulations 2023, which were made on July 10, 2023 and provide for the entry into force of certain provisions of the Financial Services and Markets Act 2023 (which we discuss in our client note, A Boost for UK Financial Services: The UK Financial Services and Markets Act 2023). This included provisions revoking retained EU legislation relating to financial services, including the CITS Regulations. The CITS Regulations establish a fund vehicle for the U.K. investment management industry which makes U.K. domiciled funds for collective investment in transferable securities more competitive. The CITS Regulations will now be revoked on a day appointed by the Treasury in a later instrument. -
UK Regulatory Gateway for Financial Promotions Applies from February 2024
08/29/2023
The Financial Services and Markets Act 2023 (Commencement No. 2 and Transitional Provisions) Regulations 2023, made on August 22, 2023, bring into force certain provisions of the Financial Services and Markets Act 2023 and create a number of transitional regimes. We discuss the FSM Act in our client note, "A Boost for U.K. Financial Services: The U.K. Financial Services and Markets Act 2023."
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UK Regulators Publish Revised Complaints Scheme
08/04/2023
The U.K. Financial Conduct Authority, Prudential Regulation Authority and Bank of England have jointly published their revised Complaints Scheme, which governs how complaints against the U.K. regulators should be made and handled. The changes include:- The introduction of specific discretionary compensation bands for non-financial loss arising from the regulators' actions or inactions. The bands range from £100 for a relatively low level of stress or inconvenience, up to over £2,500 in exceptional circumstances, for example, where the consequences of the regulators' failings are particularly severe.
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UK Regulator Issues Statement on New Growth and International Competitiveness Objective
08/03/2023
The U.K. Financial Conduct Authority has published a statement setting out how its work to support the 'key drivers' of productivity will facilitate delivery of its new secondary objective and how it intends to report on progress embedding the new objective. The Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services: The U.K. Financial Services and Markets Act 2023") introduces a new secondary statutory objective, obliging the FCA and U.K. Prudential Regulation Authority in carrying out their functions to support the long-term growth and international competitiveness of the U.K.'s economy in the medium and long term. This obligation enters into force on August 29, 2023, under Commencement Regulations made on July 10, 2023. Each regulator must report at two intervals to HM Treasury setting out how it has complied with its duty to advance the new objective. The reports are due 12 and 24 months after the new objective applies (August 29, 2024 and August 29, 2025 respectively). -
First Commencement Regulations Under UK Financial Services and Markets Act 2023
08/03/2023
The Financial Services and Markets Act 2023 (Commencement No. 1) Regulations 2023 were made on July 10, 2023 and will bring into force provisions under the Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services: The U.K. Financial Services and Markets Act 2023") from either July 11, 2023, August 29, 2023 or January 1, 2024.
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UK Government Sets Out Plan for Revoking EU Financial Services Laws
08/02/2023
Following finalization of the Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services: The U.K. Financial Services and Markets Act 2023"), HM Treasury published a Delivery Plan for the Building a Smarter Financial Services Regulatory Framework for the UK. The Delivery Plan compliments the Policy Paper published as part of the Edinburgh Reforms (discussed in our client note, "UK Government Publishes Edinburgh Reforms for Financial Services").
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UK Prudential Regulation Authority Consults on Approach to Reviewing Rules
08/02/2023
The U.K. Prudential Regulation Authority opened a consultation on June 30, 2023, on its proposed approach to reviewing its rules, including a proposed statement of policy. The Financial Services and Markets Act 2023 transfers responsibility for making detailed rules to the U.K.'s regulators, significantly increasing their powers, and provides for an enhanced regulatory accountability framework, subjecting the regulators to additional oversight by Parliament and HM Treasury. One of those regulatory accountability measures requires the PRA and Financial Conduct Authority to keep their rules under review and to publish a statement of policy on how they conduct such reviews.
The PRA's consultation sets out its proposed framework for conducting rule reviews, stakeholder engagements, transparency and communicating the outcomes of reviews. Responses to the consultation may be submitted until September 29, 2023.
The FCA has also published a draft Rule Review Framework, for which feedback may be submitted until September 15, 2023. -
UK Financial Conduct Authority Seeks Comment on Draft Rule Review Framework
08/02/2023
The U.K. Financial Conduct Authority launched a consultation on July 14, 2023, on its proposed Rule Review Framework. The Financial Services and Markets Act 2023 transfers responsibility for making detailed rules to the U.K.'s regulators, significantly increasing their powers. To ensure proper oversight of the use of those powers in practice, the FSM Act provides for an enhanced regulatory accountability framework, subjecting the regulators to additional oversight by Parliament and HM Treasury. Among other things, the FCA and Prudential Regulation Authority must keep their rules under review and publish a statement of policy on how they conduct such reviews.
The FCA is proposing a draft Rule Review Framework based on the use of data to assess the effects of a rule change. The draft Framework sets out three types of review that the FCA could conduct, describing their purpose. The three types of review are an evidence assessment, a post-implementation review and an ex post impact evaluation. The FCA's draft Framework also describes the steps it could take if the data shows that a rule is not working as had been intended. Comments on the FCA's draft Rule Review Framework may be submitted until September 15, 2023.
The PRA is also consulting on its proposed approach to reviewing its rules, including a proposed statement of policy. Responses to the PRA's consultation may be submitted until September 29, 2023. -
UK Government Consults on Revised UK Short Selling Regime
08/02/2023
HM Treasury has published its response to the Short Selling Regulation Review, which sought views on the proposed U.K. short selling regime. Once the new U.K. regime for short selling is finalized, the retained EU Short Selling Regulation will be revoked under the revocation framework established by the U.K. Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services: The U.K. Financial Services and Markets Act 2023"). A draft statutory instrument for the new U.K. regime is expected to be published before the end of 2023, with the final S.I. being delivered during the course of 2024. The U.K. Financial Conduct Authority will also consult on proposed rules for the new framework in 2024.
The proposed regime is intended to represent a "lighter-touch" approach that will facilitate short selling and its benefits while managing the associated risks. The changes will: (i) increase the net short position disclosure threshold from 0.1% to 0.2%; (ii) replace the current requirement to disclose all short positions over 0.5% with a new disclosures model, whereby the FCA will publish aggregated short positions in each company's shares (removing the need to reveal the identity of individual sellers); and (iii) empower the FCA to make rules on areas such as exempt share arrangements, the market maker exemption requirements and prohibitions on uncovered short selling.
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UK Financial Services and Markets Act 2023
08/02/2023
Following rigorous debate in Parliament, the U.K.'s latest Financial Services and Markets Act (FSM Act) received royal assent on June 29, 2023. The FSM Act significantly changes the U.K.'s regulatory framework for financial services, implementing the government's post-Brexit Future Regulatory Framework Review and the Edinburgh Reforms. The existing regulatory model under the Financial Services and Markets Act 2000 has been enhanced with the introduction of a new "Designated Activities Regime" for the regulation of activities related to the financial markets, transfer to the U.K. regulators of responsibility for making and reviewing detailed firm rules, subject to enhanced oversight by Parliament and HM Treasury, and the establishment of a regulatory framework for oversight of third parties that provide critical services to financial institutions.
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UK Government and Regulators Consult on Revised UK Prospectus Regime
08/02/2023
HM Treasury has published a near-final draft statutory instrument and related Policy Note setting out its proposed reforms to the U.K. prospectus regime. The U.K. Financial Conduct Authority has also published a series of six Engagement Papers seeking views on its proposed rules under the new regime.
Once the new U.K. regime is finalized, the retained EU Prospectus Regulation will be repealed under the revocation framework established by the U.K. Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services: The U.K. Financial Services and Markets Act 2023").
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UK Government Consults on Regulatory Accountability and Transparency Metrics
05/12/2023
On May 9, 2023, the U.K. government published a Call for Proposals on which metrics the Financial Conduct Authority and the Prudential Regulation Authority should be required to publish for the new secondary growth and competitiveness objectives. The new secondary objectives, which will be brought in under the Financial Services and Markets Bill, will compel the FCA and PRA in carrying out their functions to support long-term growth and international competitiveness. For the PRA, the new growth and international competitiveness objective will operate in conjunction with its existing secondary objective to facilitate effective competition in the markets for services provided by PRA-authorized firms (banks, large investment firms, insurers and credit unions). For the FCA, the new objective will go together with the FCA's three existing operational objectives of consumer protection, market integrity and competition.
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Edinburgh Reforms: Changes to the Laws of the UK Financial Services Sector
12/09/2022
The U.K. Government has announced on a series of initiatives, billed as the Edinburgh Reforms, to reform the laws for the U.K. financial services sector. The proposals cover:- Reforms to Ring-Fencing Regime;
- Implementation of Post-Brexit Financial Regulatory Framework;
- Growth and Competitiveness Remit for U.K. Regulators;
- Reforms to Wholesale Markets;
- Faster Settlement;
- Senior Manager's and Certification Regime;
- Changes to Promote Investment and Growth in Financial Services;
- Sustainable Finance;
- FinTech and Digital Assets; and
- Consumer Credit.
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HM Treasury Publishes Final Policy Following Financial Services Future Regulatory Framework Review
07/20/2022
HM Treasury has published its final response to the Financial Services Future Regulatory Framework Review in which it sets out the government's policy approach to reforming the U.K.’s regulatory architecture post-Brexit. The response is published on the same day as the Financial Services and Markets Bill is introduced to Parliament, which will implement in legislation these significant reforms.
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UK Parliament Creates New Sub-Committee on Financial Services Regulations
06/23/2022
The House of Commons Treasury Committee has announced the creation of a new sub-committee that will scrutinize financial services regulatory proposals and has published a report setting out the approach that Parliament will take to its scrutiny role now that the U.K. has left the EU. The new sub-committee will be called the Sub-Committee on Financial Services Regulations, and its members will initially be all the members of the Treasury Committee. The sub-committee has been set up because Parliament's examination of regulatory proposals is likely to increase when existing EU regulations are moved to the rulebooks of the U.K. regulators, resulting in an assessment by the regulators as to whether those rules are appropriate for the U.K. Among other things, the new Sub-Committee on Financial Services Regulations will have powers to "send for persons, papers and records", to seek and take evidence and report on its findings.Topic : Financial Services -
UK Treasury Committee Makes Recommendation for Future Regulatory Framework Review
06/16/2022
The House of Commons Treasury Committee has published a report on the Future of Financial Services Regulation setting out its view on the priorities for regulatory change in the U.K. now that the U.K. has left the EU. The report considers some of HM Treasury's proposals in the Future Regulatory Framework Review and presents its related recommendations. It also makes specific recommendations for the Financial Conduct Authority and the Prudential Regulation Authority.
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UK Conduct Regulator Commits to Three-year Strategy of Improving Outcomes of Regulation
04/07/2022
The U.K. Financial Conduct Authority has published a three-year Strategy on improving outcomes of regulation and its 2022/23 Business Plan. In the 2022-2025 Strategy, the FCA outlines its expectations of financial services across all sectors, with a view to the overall outcomes that firms should achieve. There are three outcomes for both the wholesale and retail markets, which are fair value, access and confidence. An additional outcome of suitability and treatment applies for the retail markets, to ensure that consumers are treated well and are sold products and services that are suitable for them. The 2022/23 Business Plan sets out the detailed work that the FCA will undertake over the next year to meet the commitments made in its Strategy.
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Financial Stability Board Publishes 2022 Work Priorities
02/17/2022
The Financial Stability Board has published a letter to G20 Finance Ministers and Central Bank Governors outlining its work priorities for 2022, which are:
- Supporting financial market adjustment to a post-COVID-19 world: the FSB observes vulnerabilities in the financial system, such as embedded leverage in some parts of the system and rising real estate and other asset valuations, which could pose risks to stability in the event of tightening financial conditions. Uneven unwinding of pandemic support measures is also a risk and the FSB will prepare an interim report in July and final report in October on policy considerations to support a more even global pandemic recovery.
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HM Treasury Proposes Reforms in Latest Financial Services Future Regulatory Framework Review Consultation
11/09/2021
HM Treasury has launched a consultation, the Financial Services Future Regulatory Framework Review: Proposals for Reform. The consultation paper presents the government's response to the feedback received to the October 2020 FRF Review consultation and numerous proposals to progress the approach. Responses to the consultation may be submitted until February 9, 2022.
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UK Financial Conduct Authority Publishes Proposals to Revamp its Decision-Making Process
07/29/2021
The U.K. Financial Conduct Authority has published a consultation paper on proposals to change its decision-making process. The objective of these proposals is to make the FCA a nimbler regulator that can make faster and more effective decisions. Responses to the consultation may be submitted until September 17, 2021. The FCA intends to publish a Policy Statement before the end of the year, likely in November, and envisages that the revised decision-making framework would start in November, too. Any cases that are being considered by the Regulatory Decisions Committee would remain with the RDC under the existing processes.
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UK Financial Services Act 2021 Published
04/29/2021
The U.K. Financial Services Bill has received Royal Assent from Her Majesty the Queen and has become an Act of Parliament, the Financial Services Act 2021. Some provisions of the Act came into force on the date of Royal Assent, with a limited number following on June 29, 2021. The majority of the Act will come into force on a date specified in regulations yet to be made by HM Treasury.
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UK Regulators Publish Dear CEO Letter for Banks and Building Societies on Deposit Aggregators
04/14/2021
The U.K. Prudential Regulation Authority and Financial Conduct Authority have published a joint Dear CEO letter addressed to CEOs of U.K. banks and building societies on the risks of accepting deposits from deposit aggregators.
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HM Treasury Published Response to Phase I of UK's Financial Services Future Regulation Framework Review
03/11/2021
HM Treasury has published its response to the call for evidence on Phase I of the U.K. Financial Services Future Regulatory Framework Review. The FRF Review was announced in March 2019 and will assess whether the U.K. financial services regulatory framework is fit for purpose, taking into account the U.K.'s exit from the EU, climate change and other global and technological challenges. The call for evidence on Phase I of the Review focussed on how the Government and regulators work together to ensure the best outcome for the financial services sector.
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Bank of England Publishes Plan for UK Financial Sector Data Collection
02/23/2021
The Bank of England has published a plan to transform its ability to collect data from the financial services sector over the next decade. Three key principles of the plan are: (i) defining and adopting common data standards that are consistent across the financial sector; (ii) modernizing reporting instructions to improve how they are written and implemented; and (iii) integrating reporting to facilitate a more efficient approach to data collection. The Transformation Plan was prompted by Huw Van Steenis' 2019 report on the "Future of Finance", which highlighted the importance of data standards and protocols and the value of harnessing data. The BoE published a response to the "Future of Finance" report, in which it undertook to deliver a world-class data strategy.
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UK Conduct Regulator Publishes Approach to International Firms
02/03/2021
The U.K. Financial Conduct Authority has published its final Approach to international firms, setting out its approach to authorization and supervision of international firms providing or seeking to provide financial services that require authorization in the U.K. The FCA has also published a feedback statement summarizing its response to the submissions received in response to its consultation last year. The Approach Document sets out the conditions against which a firm will be assessed and discusses the circumstances in which firms may present higher risks and how the risks could be mitigated. It generally proposes that U.K.-authorized firms should have a U.K. place of business, so would not result in any new regime for EU firms which are currently using the "temporary permissions regime".
The FCA's Approach Document is not relevant to firms that are operating in the U.K., but do not need authorization to do so, for example, those firms using the Overseas Persons Exclusion. It is not also not relevant for payment services firms, e-money institutions, depositaries, trustees and managers of U.K. authorized funds, international alternative investment fund managers and international benchmark administrators.
Firms that are or would be subject to dual regulation, should also consider the approach of the Prudential Regulation Authority to the supervision and authorization of firms.
View the FCA's Approach to International Firms.
View the FCA's feedback statement.
View details of the PRA's consultation on its approach to supervising international banks. -
UK Government Proposes Extending Regulatory Perimeter to Capture Stablecoins
01/07/2021
HM Treasury has opened a consultation on the proposed U.K. approach to crypto-assets and stablecoins, in particular a proposal to bring stablecoins into the U.K. regulatory perimeter. Responses to the consultation may be submitted until March 21, 2021. The government will consider the responses to the consultation and publish a response with further details on how the approach would be implemented in law. If the policy approach is followed, the regulators would consult further on rules for firms.
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UK Government Seeks Input on UK Framework for Cross-Border Financial Services
12/15/2020
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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UK Parliament Publishes Financial Services Bill for Post-Brexit Regulatory Framework
10/21/2020
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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HM Treasury Consults on Phase II of UK's Financial Services Future Regulation Framework Review
10/19/2020
HM Treasury has launched a consultation on Phase II of the U.K.'s Financial Services Future Regulatory Framework Review. Phase II focuses on how the U.K.'s financial services regulatory framework must be adapted to be fit for the future given the U.K.'s exit from the EU. The first part of Phase II, to which this consultation relates, seeks to establish a blueprint for financial services regulation. Responses to the consultation should be submitted by February 19, 2021. The second part of Phase II will constitute a final package of proposals and will be consulted on later in 2021.
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UK Government Consults on International Regulatory Cooperation Strategy
09/02/2020
The U.K. Government has launched a consultation on its future international regulatory cooperation strategy. The consultation has been prompted by a report published by the Organization for Economic Cooperation and Development. In its report, the OECD set out 25 recommendations for how the U.K. can improve its policies and practices in shaping and complying with international agreements and collaborating with international counterparts when designing and enforcing regulations. The report is intended to cover regulatory practices in general, meaning banking regulation falls within the scope of the recommendations. With the U.K. having left the EU on January 31, 2020, and the end of the U.K.'s transitional period due to end on December 31, 2020, the U.K. Government believes there is an opportunity to build new regulatory practices that support the future prosperity of the U.K.
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UK Government Launches Payments Landscape Review
07/28/2020
HM Treasury has launched a call for evidence on the U.K.'s payments landscape, which is the first stage of the Payments Landscape Review announced in June 2019. The government is seeking input on the opportunities, gaps and risks that need to be addressed to support the U.K.'s position as being at the forefront of payments technology. Responses may be submitted until October 20, 2020. The government will publish a summary of the responses it receives and set out next steps for the review.
In the call for evidence, the government sets out the steps taken to achieve the aims that were published in 2012 to support the high-level strategy of ensuring that end user consumers and businesses benefit from the U.K. payment networks. Feedback is sought on the extent to which those aims have been achieved.
HM Treasury also discusses the main incentives for new payment systems and services, covering the New Payments Architecture, Faster Payments, the impact of Open Banking on how the systems are used, trends towards new service providers and payment chains and development in cross-border payments. The call for evidence also reflects on the wider work being undertaken on crypto-assets and stablecoins.
View the call for evidence on the U.K.'s payments landscape. -
UK Insolvency and Governance Bill Published
05/20/2020
The U.K. Government has published the U.K. Corporate Governance and Insolvency Bill. The Bill amends aspects of insolvency and company law to assist firms struggling to cope with the effects of the COVID-19 pandemic. The measures include:
- A new moratorium giving companies breathing space from creditors while they investigate rescue options;
- A prohibition on contractual termination upon insolvency clauses, preventing suppliers from refusing to supply goods while a company is going through a rescue process;
- A temporary removal of liability for wrongful trading for company directors who try to keep their businesses operating through the pandemic;
- A temporary prohibition on the filing of statutory demands and winding up petitions by creditors; and
- Temporary permission for companies to hold closed Annual General Meetings.
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Financial Services Exemptions in UK Insolvency and Governance Bill
05/14/2020
The U.K. Government intends to exempt financial services firms from certain provisions of the new U.K. Corporate Governance and Insolvency Bill. The Bill, announced on March 28, 2020, will amend aspects of the U.K. insolvency regime (as set out under the Insolvency Act 1986) in light of the financial difficulties faced by many businesses as a result of the COVID-19 pandemic. The Bill also includes provisions for companies’ annual general meetings and filing requirements during the COVID-19 crisis.
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HM Treasury Exempts Certain Bounce Back Loans From Regulatory Regime
05/01/2020
HM Treasury has published the Financial Services and Markets Act 2000 (Regulated Activities) (Coronavirus) (Amendment) Order 2020, exempting certain loans made under the U.K. Government's Bounce Back Loan Scheme from regulation under the U.K. financial regulatory regime. The Order applies to loans of £25,000 or less made under the BBLS by commercial lenders to sole traders, unincorporated associations and partnerships of four people. These loans will be classed as exempt credit agreements and will therefore largely not be subject to the provisions of the Consumer Credit Act 1974.
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Financial Stability Board COVID-19 Actions
04/02/2020
The Financial Stability Board has announced its coordinated actions with FSB members to support the real economy and maintain financial stability in the wake of COVID-19. Key actions include:- Information sharing – FSB members are sharing information on the actions taken to deal with COVID-19, which include lending and liquidity support, market functioning support and measures to support business continuity of both financial institutions and regulators;
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HM Treasury Exempts COVID Corporate Financing Facility from Regulated Activity Regime
03/20/2020
HM Treasury has published the Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2020, exempting the COVID Corporate Financing Facility from the U.K.'s regulated activity regime. The Order will come into effect from March 23, 2020. The exemption means that the COVID Corporate Financing Facility is not subject to the U.K. prohibition on conducting regulated activities in the U.K. under section 19 of the Financial Services and Markets Act 2000.
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EU Opinion on Italian Accepted Market Practice in Accordance with the Market Abuse Regulation
01/31/2020
The European Securities and Markets Authority has published an opinion supporting the Italian Commissione Nazionale per le Società e la Borsa’s (Consob) revised accepted market practice on liquidity contracts for the purposes of the Market Abuse Regulation. The Market Abuse Regulation provides certain prohibitions against market manipulation but allows “accepted market practices” (AMPs) as a defense against allegations of market manipulation. To benefit from the defense, it is necessary to establish that a relevant transaction was conducted for legitimate reasons and in accordance with a formally accepted AMP. AMPs must be established by national regulators and notified to ESMA. ESMA will then issue an opinion on the compatibility of the AMP with MAR and whether its establishment would threaten market confidence.
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European Securities and Markets Authority Publishes 2020-2022 Strategic Orientation
01/09/2020
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.
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New EU Regulation Enhances European Supervisory Authorities' Powers
12/27/2019
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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European Parliament Publishes Resolution on EU Financial Services Regulation for Third Countries
12/23/2019
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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International Organization of Securities Commissions Consults on Combating Conduct Risks in Debt Capital Raising
12/16/2019
The International Organization of Securities Commissions has launched a consultation on methods of addressing potential conflicts of interest and other conduct risks that arise from market intermediaries’ participation in the debt capital raising process. Responses should be submitted by February 16, 2020.
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