Tag Archives: ESMA

ESMA response to EIOPA on AIFMD

ESMA has responded to some queries EIOPA raised with it on the definition of AIF and leverage in the AIFMD.  EIOPA had asked: whether AIFs that use certain borrowing arrangements and derivative instruments under the Solvency II Delegated Regulation considered leveraged for AIFMD purposes. ESMA points out that the AIFMD has no formal definition of […]

FCA updates on high-risk products and retail investors

FCA has added its own views on selling high-risk speculative investments to retail clients. It fully supports ESMA’s measures and notes that ESMA has also recognised the risks of products similar to CFDs. However, it is concerned firms will try to get around the ESMA product intervention restrictions by selling to retail investors products that […]

ESMA updates product intervention FAQs

ESMA has updated its FAQs on the use of its temporary product intervention measures in respect of CFDs and binary options.  New questions: state that turbo certificates are not within the scope of the CFD decision as they have different product features to CFDs, including that they are transferable securities for MiFID purposes and are […]

ESMA updates funds FAQs

ESMA has updated its FAQs on the UCITS Directive and the AIFMD. New questions include those addressing when UCITS invest in UCITS with different investment policies and supervision of branches of UCITS management companies or AIFMs that provide MiFID investment services.

FCA confirms that pension schemes will not need to start clearing OTC derivatives when EMIR exemption expires on 16 August 2018

On 3 July 2018, the European Securities and Markets Authority (ESMA) published a statement on the clearing obligations for pension scheme arrangements under the European Market Infrastructure Regulation (EMIR). EMIR introduced a temporary exemption for certain pension schemes from the obligation to clear their OTC derivative contracts to allow time for a suitable technical solution […]

ESMA confirms end of LEI grace period

ESMA has issued a statement confirming that the six month grace period granted to those required by MiFIR to have a Legal Entity Identifier (LEI), will end on 2 July 2017. ESMA will now work with national competent authorities to develop a supervision action plan which focuses on compliance with LEI reporting requirements.

ESMA speaks on a genuine single market

Verena Ross has spoken on progress towards a “genuine” single European financial market, focusing on the role of regulation and supervision. She commented that the EU now has a robust and integrated regulatory framework but stressed the importance of supervision. She discussed the importance of taking the time and effort required for proper implementation and […]

ESMA exercises product intervention powers

ESMA has exercised its product intervention powers under MiFIR to: ban the marketing, distribution or sale or binary options to retail investors from 2 July; and restrict the marketing of CFDs to retail investors from 1 August. The restrictions consist of leverage limits on opening positions, a margin close-out rule and a negative balance protection […]

ESMA publishes MiFID 2 suitability guidelines

ESMA has published its final guidelines on certain aspects of the MiFID 2 suitability requirements. The guidelines build on their MiFID 1 predecessor, and broaden them to address technological developments such as a the development of robo-advice and take into account supervisory experience and the results of reviews and surveys. The guidelines also include a […]

ESMA updates MiFID 2 FAQs

ESMA has updated its FAQs on investor protection and intermediaries under MiFID 2. New questions added in May focus on: best execution: a new question addresses what is meant by “other liquidity provider”; client categorisation: new questions look at when and how a firm can assess whether it can treat an individual private investor as a professional client, […]

ESMA updates UCITS FAQ

ESMA has updated its FAQs on the application of the UCITS Directive. The additions look at how to apply remuneration disclosure requirements to staff or the delegate of a UCITS management company who have been delegated investment management functions.

ESMA sets up central register portal

ESMA has created a new portal for checking the authorisation status of investment firms, trading venues and DRSPs authorised under MiFID 2, UCITS management companies and AIFMs and also funds managed or marketed in the EU.

ESMA publishes 2018 Risk Assessment Work Programme

ESMA has published its Risk Assessment Work Programme for 2018, in which it establishes priorities for assessing securities market risks. ESMA will complement ongoing market monitoring through its semi-annual Report on Trends, Risks and Vulnerabilities, and its Quarterly Risk Dashboards, by launching an annual series on EU derivatives markets (based on EMIR data) and an […]

ESMA updates MiFID 2 FAQ

ESMA has updated its Q&As on transparency and market structure issues under MiFID 2. The latest additions cover pre-trade transparency waivers.

ESMA uploads MiFID 2 lists

ESMA has published several lists of documents and information relating to MiFID 2.  It has published: a public register of derivative contracts subject to the MiFIR trading obligation a list of trading venues temporarily exempted from open access under MiFIR and a first set of position management controls for commodity derivatives. It has also decided […]

ESMA consults on draft Securitisation Regulation technical standards

The European Securities and Markets Authority has published three consultation papers on draft technical standards implementing the Securitisation Regulation that is expected to be published by the end of this year. The matters addressed by the draft technical standards include requirements for the content and format of underlying exposures and investor report templates, and operational […]

ESMA and FCA issue statements on LEIs

In advance of the implementation date for MiFID II on 3 January 2018, ESMA has issued a public statement that provides a form of 6 month transitional period for certain trading venues and certain legal persons, to support the introduction of Legal Entity Identifier (LEI) requirements.  This includes provision that trading venues whose non-EEA issuer […]

ESMA clarifies application of MAR to trading in closed periods in updated MAR Questions and Answers

The European Securities and Markets Authority has published 2 new questions relating to the prohibition on dealings by persons discharging managerial responsibilities during a closed period in its updated MAR Questions and Answers.  Please read our briefing  for more.

Regulation of crypto-currencies under negotiation

The UK government has published the answer to a written question asked of HM Treasury that reveals that they are in the process of negotiating amendments to the 4th Anti-Money Laundering Directive to bring virtual currency exchange platforms and custodian wallet providers into the AML regulatory framework, thereby bringing them within the scope of relevant […]

ESMA publishes MiFID compliance function peer review

ESMA has published the results of its peer review on the guidelines on certain aspects of the compliance function under MiFID 1.  The review covered a 2 year period and assessed the approaches of 31 NCAs. It included some on-site visits. While ESMA found some divergences in practice, it assessed 27 NCAs positively on their […]

Initial coin offerings: regulation and the risks

We’ve written a briefing on recent regulatory warnings about ICOs, and how they may fall within the UK’s regulatory perimeter.

ESMA updates MAR FAQs

ESMA has updated the FAQs on MAR. New questions address the requirements around managers’ transactions.

ESMA updates MiFID 2 FAQs

ESMA has issued: a further update to its FAQs on market structure issues under MiFID 2, including on DEA and tick sizes an update to its transparency FAQs, including new questions on a range of pre- and post-trade transparency issues and on third countries; and an update to its FAQs on MiFIR data reporting.

ESMA publishes MiFID II Q&A clarifying trading obligation for shares

ESMA has updated its MiFID II Q&As to clarify the application of the trading obligation for shares to trade certain instruments on-venue. ESMA confirms that all EU investment firms that are part of a chain of transmission should ensure that the ultimate execution of the order complies with the trading obligation requirements under article 23(1) […]

ESMA warns investors and firms on dangers of ICOs

ESMA has become the latest body to denounce initial coin offerings (ICOs), issuing statements directed at investors and firms highlighting the distinct risks involved. Echoing FCA’s previous warnings , ESMA has focused on the risks of investors to losing all their invested capital, and firms conducting ICOs potentially also carrying on regulated investment activities. Investors are […]

ESMA updates MiFID 2 FAQs

ESMA has updated its set of FAQs on MiFID 2 investor protection. New questions cover: post sale reporting – to confirm that the duty to report on depreciation of portfolios applies to professional clients, and not just to retail; record keeping – to confirm securities financing transactions are within the scope of record keeping requirements; […]

ESMA publishes MiFID II consultation responses

The European Security and Markets Authority (ESMA) has published the responses received to the Consultation on Guidelines on certain aspects of the MiFID II suitability requirements. The draft Guidelines are intended to implement enhanced provisions to ensure investor protection. The consultation was therefore of particular relevance to investment firms and credit institutions providing investment advice or discretionary portfolio management services. […]

ESMA launches financial instrument database

ESMA has announced the launch of the second phase of its Financial Instrument Reference Database (FIRDS). It provides access to reference data that will eventually allow market participants to identify instruments subject to the MAR and MiFID 2/MiFIR reference data reporting requirements.

ESMA speaks on financial markets

Steven Maijoor has spoken on the state of European financial markets. He spoke not only about Brexit, focussing on the need for a  strong supervisory culture, but also on the importance of building the CMU and improving understanding of trends, risks and vulnerabilities in the financial markets. He spoke about the continuing lack of trust […]

ESMA issues post-trading FAQs

ESMA has published a set of Q&As on post-trading issues under MiFID 2 and MiFIR. There is currently only one question, on rules for straight-through processing.

ESMA highlights importance of LEI

ESMA has published a briefing highlighting the importance of the LEI in an attempt to ensure market participants have done what they need to to comply with the LEI requirements under MiFID 2 by 3 January 2018. Its EMIR experience suggests reporting entities are likely to leave it to the last minute, which would cause […]

ESMA publishes 2018 work plan

ESMA’s 2018 work plan continues its focus on supervisory convergence and risk assessment. Unsurprisingly, it will place particular emphasis on consistent application of MiFID 2 and MiFIR by firms and regulators. Its other key work will be around its mandate for the ESA and CCP reviews.

ESMA updates funds FAQs

ESMA has updated its FAQs on the AIFMD and UCITS. The AIFMD additions look are remuneration issues, and updates to both sets of guidance look at periodic reporting under the SFTR.

ESMA updates MiFID 2 FAQs

ESMA has updated the MiFID 2 FAQs in respect of: investor protection and intermediaries. It has added 12 new questions, focusing on client categorisation, post-sale reporting, recording of calls and communications, best execution, and information on costs and charges. transparency and market structures.  On transparency, there are several new questions, particularly on non-equity transparency, the […]

ESMA finalises MiFID 2 derivatives trading obligation

ESMA has published its final draft RTS implementing the trading obligation under MiFIR. The standards, part of the move to make OTC trading in liquid derivatives take place on organised venues, covers interest rate swaps and credit default swaps. ESMA has decided to make the following products subject to the trading obligation: Fixed-to-float interest rate […]

ESMA and NCAs agree waiver and position limit plans

ESMA and the national regulators in EU member states have updated their work plan for the opinions MiFID 2 requires on pre-trade transparency waivers and position limits. Around 700 of the former and 110 of the latter opinions need to be issued, so there is a plan to ensure they can be implemented pending the […]

ESMA updates MiFID 2 FAQs

ESMA has updated its FAQs on MiFID 2 and MiFIR market structures.  The updates relate to access to CCPs and trading venues and address timings of notifications and applications for exemptions by trading venues.      

ESMA updates MAR FAQs

ESMA has updated its FAQs on MAR. The additions clarify: the scope of firms subject to the requirement to detect and support suspicious orders and transactions the scope of financial instruments subject to the market sounding regime and who is subject to the insider list requirements.

ESMA publishes opinion on asset segregation and depositary delegation

On 20 July ESMA published its opinion on asset segregation and the application of depositary delegation rules to central securities depositaries (CSDs). In the opinion, ESMA outlines its view on: the optimal approach to asset segregation under the AIFMD and the UCITS Directive frameworks; and how the depositary delegation rules should apply to CSDs. ESMA believes […]

ESMA publishes sectoral convergence opinions

ESMA has published, as promised, its set of sector-specific opinions on relocations from the UK to the EU27 following Brexit. The opinions cover investment firms, investment management and secondary markets. In each case, it looks at the risks to supervision and of regulatory arbitrage in firms seeking to relocate and then outsourcing activities back to the UK as […]

ESMA consults on MiFID 2 suitability requirements

ESMA is consulting on guidelines on certain aspects of the MiFID 2 suitability requirements. ESMA wants to build on existing guidelines to: take account of technological innovations including the move to robo-advice; consider the experiences of regulators on the current requirements; and cater for studies on behavioural finance that have been undertaken. It asks for […]

ESMA publishes guidelines on cooperation between authorities under the Central Securities Depositories Regulation

ESMA has today published guidelines (the Guidelines) to ensure that competent authorities (CAs) apply the Central Securities Depositories Regulation (CSDR) in a consistent, efficient and effective supervisory manner, which includes cooperating with each other. Under Article 14(1) of the CSDR, CAs and ESMA are expected to cooperate closely, including exchanging all relevant information applicable under the regulation.  […]

ESMA updates funds FAQs

ESMA has updated its FAQs in relation to UCITS and the AIFMD. The additions relate to: on the AIFMD, reporting requirements for loans purchased on the secondary market, conversion of total value of AUM and currency of the net asset value and on UCITS, issuer concentration and group links, independence and cooling off periods.

ESMA writes to Commission on third-country regimes

ESMA has written to the European Commission setting out how existing third-country regimes could be improved.  While not ostensibly about Brexit, the letter refers to the increased number of market infrastructures and corresponding activity that will be outside the EU post-Brexit that will be critical for EU markets. It thinks that enhancing the implementation and […]

ESMA updates Q&As on MiFID II and MiFIR investor protection and intermediaries topics

ESMA has today updated its Q&A topics on best execution and recording of telephone conversations and electronic communications. Best execution MiFID II requires investment firms to take all sufficient steps to obtain the best possible result for the client when executing orders.    It also requires trading venues to publish, without charge,  data on the quality of the […]

Examining product governance guidelines under MiFID II

The product governance guidelines under MiFID II are part of the regulatory framework aimed at protecting investors across the EEA.  ESMA published its final report on the guidelines on 2 June 2017. Bond Dickinson has produced a briefing note that looks at: the purpose of the guidelines, how the guidelines differ from ESMA’s consultation, the […]

ESMA updates MiFID 2 FAQ

ESMA has updated its set of FAQs under MiFID 2 to include new guidance on: commodity derivatives position limits and position reporting market data issues and market structure issues on multilateral trading systems, algorithmic trading and DEA, and access to CCPs and trading venues

ESMA publishes updated ancillary test opinion

ESMA has published and then updated its opinion on the ancillary test for commodity derivatives under MiFID 2. The update relates only to a typo in the original. The opinion sets out ESMA’s views on how to determine the market size figures to ensure the MiFID 2 Delegated Regulation can be properly applied.

ESMA updates MAR FAQs

ESMA has updated its FAQs on MAR to include new questions on: persons closely associated to a PDMR; blanket cancellation of orders policies; and disclosure of inside information relating to Pillar II requirements.

ESMA issues transparency calculations for non – equity instruments in readiness for MiFID2

MiFID 2 / MiFIR introduces transparency requirements for equity and non-equity instruments  and allows competent authorities to waive the obligation for market operators and investment firms operating a trading venue, to make public their pre trade information. Under RTS 2, competent authorities are to publish information on the liquidity classification of the different asset classes. The […]

ESAs answer questions on the KID requirements for PRIIPs

The ESAs have published the first set of question and answers (Q&A) related to the KID requirements for PRIIPs. The purpose of the Q&A is to promote a common supervisory approach to the implementation of the KID. Stakeholders are invited to submit new questions and the ESAs will continue to answer further questions and will […]

ESMA prepares for speculative product control

ESMA has published a statement setting out what it is doing in relation to sales of CFDs, binary options and speculative products to retail investors. It feels that its guidance and FAQs published to date have not led to as great a supervisory convergence as it would wish and, as a result, is considering using its […]

ESMA issues MiFID 2 trading halt guidelines

ESMA has published its final guidelines on trading halts under MiFID 2. The guidelines calibrate trading halts and provide guidance for regulated markets on how the calibration works and the information and reporting requirements associated with activating volatility-management mechanisms. National competent authorities now have 2 months in which to notify ESMA whether they intend to […]

FCA makes new rules

FCA made 4 new rules instruments at its June Board meeting. new fees rules taking effect from 3 July, to raise fees and levies to provide funding for the FOS and MAS to meet their statutory objectives, and to raise necessary funds for pensions guidance services and for Treasury to tackle illegal money lending; the […]

ESMA consults on MiFIR trading obligation RTS

ESMA is consulting on its draft technical standards specifying the trading obligation for derivatives under MiFIR. It has revised its previous approach, and now wants comments by 31 July on the new proposals. These include how to phase-in the trading obligation. The MiFIR trading obligation is closely linked to EMIR. Once a class of derivatives needs […]

ESMA publishes annual report

ESMA’s annual report for 2016 focusses on its activities in: assessing risks to investors, markets and stability; creating a single rulebook; promoting supervisory convergence; and supervising credit rating agencies and trade repositories. The narrative to the report looks at its work with the other ESAs, latterly on PRIIPs and work to come on transparency on […]

ESMA speaks on priorities and Brexit.

Steven Maijoor has spoken to the FIA on ESMA’s current work, including its preparations for MiFID 2. He stressed that there will be no further delay in implementation. He referenced ESMA’s recent and ongoing work on trading and transparency requirements, and heralded an imminent consultation on the trading obligation for derivatives. He also spoke of […]

ESMA responds on Fintech

ESMA has responded to the Commission’s consultation on Fintech. It sees Fintech as a positive evolution so long as business models continue to aim to improve the customer experience and financial inclusion. It identifies some concerns that it thinks need to be addressed, including: the risks (from a market integrity and investor protection standpoint) and costs […]

ESMA finalises product governance guidelines

ESMA has published its final report on product governance guidelines under MiFID 2. It received over 100 responses to its consultation on the guidelines, which were generally supportive. However, ESMA has made some changes to the guidelines as a result of the comments. The final guidelines will now apply from 3 January 2018 and will […]

ESMA updates MiFID 2 FAQs

ESMA has updated its set of FAQs on MiFID 2 to address issues relating to market structures, commodity derivatives and transparency. It has also published its opinion on transparency and position limit regimes for instruments traded on non-EU trading venues.

ESMA sets out principles for regulating migrating UK firms

ESMA has published a set of principles that the regulators in the “EU27” should follow when assessing applications from UK institutions seeking an EU authorisation post-Brexit.  Key principles include: that no authorisation will be automatically “grandfathered”; that no institutions should be able to operate as a “letter-box” – so all outsourcing and delegation must be […]

ESMA updates MAR Q&A

On 30 May 2017, ESMA published an updated version of its Q&A on the Market Abuse Regulation.

ESMA updates funds FAQs

ESMA has updated its FAQs on the AIFMD and the UCITS Directive. Both address the exemption for intra-group transactions for the purposes of EMIR. The AIFMD set also addresses notifications of AIFs domiciled in another Member State and on reporting to supervisors on the breakdown between retail and professional investors.

ESMA reports on fair, clear and not misleading information supervision

ESMA has published a report following up on its criticisms of how certain national regulators were supervising compliance with the MiFID rules on fair, clear and not misleading information. ESMA had identified 10 national supervisors whose practices were deficient. It has found that 6 regulators have now addressed the deficiencies, but it still has concerns […]

ESMA speaks on Regtech

ESMA has spoken on how the financial services industry has adopted Regtech. Patrick Armstrong looked at the changes in how we work that have been subject to almost constant change in the past 10 years. Yet, he said, many institutions that survived the financial crisis still have in place antiquated IT systems that are ineffective, […]

ESMA reports on fund notifications

ESMA has published a report on notification frameworks and home-host responsibilities under the UCITS and AIFMD regimes. It carried out a study looking at the cross-border management and marketing activities of UCITS and their managers. It found many examples of good practice by supervisors and firms.  A similar study looking at the mirroring activities of […]

ESMA updates funds FAQs

ESMA has updated its FAQs on AIFMD and UCITS. The additions focus on: clarifying that the AIFMD marketing passport under Article 32 AIFMD can be used only for marketing to professional investors as defined in AIFMD and cannot include any additional categories of investor that individual Member States have introduced (such as “qualifying” or “semi-professional”); and […]

ESMA looks at MiFID 2 investor protection

ESMA has added 10 new questions to its Q&As on investor protection under MiFID 2 and MiFIR.  The new questions cover: timing requirements for execution reports; how to report when orders are sent for execution to different entities within a group; inclusion of ECP transactions within data execution venues publish; how investment firms operating OTFs […]

NUMBER OF CONSUMER COMPLAINTS MADE TO REGULATORS RISES – BONDS AND OTHER DEBT SECURITIES NOW MOST COMPLAINED ABOUT

ESMA’s recent report on trends, risks and vulnerabilities (TRV) reveals that the total number of complaints reported across the EU was 7,026 in 1H16 compared to 5,152 in 2H15. The three most common causes among complaints reported directly to national regulators in 1H16 were on: execution of orders (31%); quality/lack of information (19%); and unauthorised […]

ESMA finds best execution improvements

A report from ESMA on the standard of regulatory supervision of best execution requirements under MiFID shows national regulators have improved the level of attention they pay to compliance with best execution requirements. The report covers only the 15 EU regulators identified in a previous peer report as needing to make improvements.  ESMA says many had done […]

WMA responds on product governance

WMA’s response to ESMA’s consultation on draft guidelines on product governance under MiFID 2 highlights: that execution-only firms are not clear on what is expected of them, given the restricted information they hold about their clients; the need to stress manufacturers of mass market products should seek only relevant information. WMA thinks the focus should […]

ESMA publishes MAR FAQs

ESMA has published an updated questions and answers document on MAR. New questions cover whether transactions should be aggregated for the purpose of the trigger for the notification obligation for PDMRs and their closely associated persons, how the price of gifts should be calculated for these purposes, and whether shares received as part of a […]

ESMA updates funds FAQs

ESMA has published updates to its FAQs on: the AIFMD: this includes questions on whether creating a new share class of an AIF which is to marketed cross-border with existing share classes, constitutes a material change to the original notification and a confirmation that where an AIFM notifies a material change to a notification it […]

ESMA’s MiFID 2 product governance guidelines

Andrew Barber and Emma Radmore gave an interview to Lexis PSL on ESMA’s draft product governance guidelines for manufacturers and distributors of products covered by MiFID 2. We have now published the contents of this interview.

ESMA publishes fund remuneration guidelines

ESMA has published its guidelines on remuneration practices under the AIFMD and for UCITS. The guidelines are new for UCITS management companies, and amended for AIFMs to address how to apply the rules in a group context where some group members are banks. The guidelines apply from 1 January 2017.

ESMA publishes MiFID 2 investor protection FAQs

ESMA has published a new set of FAQs on investor protection issues under MiFID 2. The initial questions cover best execution, suitability and appropriateness, recording telephone conversations and electronic communications, record keeping, investment advice on an independent basis, underwriting and placement of a financial instrument, and inducements (research). No doubt ESMA will build significantly on […]

ESMA updates funds FAQs

In early October, ESMA updated its FAQs on the AIFMD in respect of the impact of the SFTR on AIFM reporting, and its FAQs on UCITS in respect of this and other questions including on regulated markets and reinvestment of cash collateral.

ESMA consults on product governance guidance

ESMA is consulting on draft guidelines for supervisors to help them assess whether product manufacturers and distributors have properly complied with MiFID 2’s requirements on product governance. The guidelines focus on the determination of target markets for products.