Ireland: Investment Firms Quarterly Legal And Regulatory Update

Last Updated: 24 October 2016
Article by Dillon Eustace

Markets in Financial Instruments Directive ("MiFID")

(i) ESMA publishes Q&A on contracts for difference and other speculative products

On 25 July 2016, the European Securities and Markets Authority ("ESMA") published an updated questions and answers document (the "Q&A") on the application of MiFID to the marketing and sale of financial contracts for difference ("CFDs") and other speculative products to retail clients.

The Q&A includes nine new questions and answers, which address the following topics:

  • The information provided to clients and potential clients about how CFDs and other speculative products work and the risks involved, including marketing communications;
  • The assessment of appropriateness when offering CFDs or other speculative products to retail investors; and
  • Factors for national competent authorities ("NCAs") to take into account when considering commercial arrangements between two authorised firms that result in the offer of CFDs or other speculative products to retail clients.

The purpose of the Q&A is to promote common supervisory approaches and practices in the application of MiFID and its implementing measures to key aspects that are relevant when CFDs and other speculative products are sold to retail clients by providing responses to questions identified by NCAs in relation to practical aspects of the day-to-day supervision of firms involved in offering these products.

A copy of the Q&A is available at the following link:

https://www.esma.europa.eu/sites/default/files/library/2016-1165_qa_on_cfds_and_other_speculative_products_mifid.pdf

ESMA also published a warning about the sale of CFDs, binary options and other speculative products to retail investors who are unaware of the risks associated with such products which can be found at the following link:

https://www.esma.europa.eu/press-news/esma-news/esma-issues-warning-sale-speculative-products-retail-investors

Markets in Financial Instruments Directive II ("MiFID II")

(i) ESMA publishes Discussion Paper on Mandatory Trade Execution Obligations for OTC Derivatives under MiFIR

On 20 September 2016, ESMA published a discussion paper (the "Discussion Paper") on the trading obligations for derivatives under the Markets in Financial Instruments Regulation (Regulation (EU) 600/2014) ("MiFIR"). Under MiFIR certain derivatives will be required to be concluded on a regulated market, multilateral trading facility, organised trading facility or a trading venue in a third country that is declared equivalent under MiFIR (the "Trading Obligation").

MiFIR restricts the Trading Obligation to apply only to classes of derivatives that are: (i) admitted to trading or traded on at least one trading venue (the Trading Venue Test); and (ii) sufficiently liquid and have sufficient third-party buying and selling interest (the Liquidity Test).

The Discussion Paper is seeking feedback from stakeholders on the options put forward by ESMA on how to calibrate the Trading Obligation. The Trading Obligation is closely linked to the clearing obligation provided for in the European Markets Infrastructure Regulation (Regulation (EU) 648/2012) ("EMIR"); once a class of derivatives needs to be centrally cleared under EMIR, ESMA must then determine whether these derivatives should be subject to the Trading Obligation.

Comments on the Discussion Paper must be submitted to ESMA by 21 November 2016. ESMA expects to publish a further consultation paper in the first quarter of 2017, and to submit draft technical standards to the European Commission in mid-2017.

The Discussion Paper is available at this link:

https://www.esma.europa.eu/sites/default/files/library/2016-1389_dp_trading_obligation_for_derivatives_mifir.pdf

(ii) European Commission publishes updated table showing the state of play of technical standards under MiFID II

On 14 September 2016, the European Commission published an updated table (the "Table") showing the state of play of technical standards under MiFID I, MiFID II and MiFIR. Several of the technical standards are awaiting finalisation or a corrigendum before being published in the Official Journal of the EU.

The Table is available at this link:

http://ec.europa.eu/finance/securities/docs/isd/mifid/its-rts-overview-table_en.pdf

(iii) European Commission adopts MiFID II Delegated Regulations

On 14 July 2016, the European Commission adopted several delegated regulations to supplement MiIFID II and MiFIR, respectively (the "Delegated Regulations").

The Delegated Regulations adopted by the European Commission include the following:

  • Exchange of information between competent authorities (which specifies the information to be exchanged between regulators for these activities, and covers information requests with respect to investment firms, credit institutions and also natural or legal persons);
  • Requirements for authorisation (which sets out the authorisation requirements for MiFID firms);
  • Tick size (which details the tick size regimes for shares, deposit receipts, exchange-traded funds, certificates and other similar financial instruments);
  • Data standards for financial instrument reference data for the purpose of transaction reporting (which specifies the data standards and formats for the reference data to be provided, and includes a table of details to be reported in the annex accompanying the regulation);
  • Information for registration of third-country firms (which specifies the information necessary for third-country firm registrations (including full name, contact details, website and details on the investment services and or activities to be performed));
  • Organisational requirements of trading venues; (specifies the organisational requirements for regulated markets, multilateral trading facilities and organised trading facilities that enable algorithmic trading through their systems);
  • Transparency obligations in respect of trading venues and investment firms with respect to shares, depository receipts, exchange-traded funds, certificates and other similar instruments (which sets out pre and post trade requirements for equity instruments); and
  • Transparency obligations in respect of bonds, structured finance products, emissions allowances and derivatives (which sets out pre- and post-trade transparency requirements for non-equity instruments).

If neither the Council of the EU or the European Parliament objects, the Delegated Regulations will enter into force 20 days after their publication in the Official Journal of the EU and will apply from 3 January 2018.

(iv) Public Consultation on national discretions in MiFID II incorporating elements of the Insurance Distribution Directive ("IDD")

On 6 July 2016, the Department of Finance published its Public Consultation on Transposition of MiFID II (the "Consultation"). The Consultation, invited all interested parties to make submissions based on national discretions on various aspects of MiFID II and the IDD.

The Consultation closed on 21 September 2016. The views expressed in this consultation process will be considered by the Minister for Finance and his officials in the context of the transposition of MiFID 2 - and to an extent the IDD - into Irish law. In total there were nine questions contained in the Consultation. The questions related to the following topics:

  • The exemption from MiFID for certain fund administrators and retail investment intermediaries;
  • The requirement to maintain the requirement that all investment firms be covered by the investor compensation scheme;
  • The requirements relating to conflicts of interest;
  • The rules relating to client order handling;
  • Whether third country firms should be required to establish a branch when providing investment services to retail clients;
  • Whether investment firms should be allowed to impose higher fees in respect of cancelled orders;
  • The designation of the Central Bank as the competent authority for MiIFD II;
  • Sanctions for breaches of the MiFID rules; and
  • Any other issues relating to the transposition of MiIFD II which have not been addressed in the Consultation.

Please see link below for a copy of the Consultation; http://www.finance.gov.ie/sites/default/files/MiFID%202%20Public%20Consultation%20Paper%20final.pdf

Capital Requirements Directive ("CRD IV")

(i) European Commission issues call for advice to the EBA on the prudential requirements applicable to investment firms

On 6 July 2016, the European Banking Authority ("EBA") published a call for advice dated 13 June 2016 that it received from the European Commission relating to the prudential requirements applicable to investment firms under the Capital Requirements Regulation (Regulation 575/2013) ("CRR") and CRD IV (the "Call for Advice").

The EBA provided a report to the European Commission on this matter in December 2015 and the European Commission has requested that the EBA provide further technical advice on some of the high level recommendations set out in the December 2015 report. The European Commission has asked the EBA to provide advice on the following:

  • The criteria and thresholds for each of the three proposed classes of investment firm (i.e. (a) systematic "bank-like" firms; (b) a middle category for the majority of firms that are note systematic but do pose risks and therefore should be subject to a less complex prudential regime; and (c) small firms which are not interconnected and which should be subject to a very simple regime to cater for wind-down;
  • The design and calibration of all relevant aspects of a new prudential regime for the three proposed classes of investment firm. This is to include advice on whether class one investment firms should be subject to the same rules as banks, and whether the new regime could be adapted to be suitable for specialised commodity derivatives firms;
  • The application of the CRD IV remuneration requirements to the different proposed classes of investment firm, and whether the proposed new classes would affect the applicability of the CRD IV corporate governance rules; and
  • Any other issues or inconsistencies that EU competent authorities may have identified in implementing the rules relating to investment firms. The EBA is to suggest how to rectify any issues identified and how to clarify terminology used.

In preparing the advice, the EBA shall consult with ESMA, as it did with the December 2015 report.

A copy of the Call for Advice is available at the following link:

https://www.eba.europa.eu/documents/10180/1321242/CfA+Investment+firms.pdf/9d8f89ab-720a-4ebf-8db7-6e5ebcddbd07

On 15 July 2016, the EBA launched a data collection aimed at supporting the response to the Call for Advice. For the purpose of this data collection, the EBA published templates and instructions which are addressed to MiFID investment firms and to UCITS/AIFMD firms that conduct MiFID activities or services. The templates should be filled in and submitted to the respective national competent authorities ("NCAs") by 7 October 2016.

Copies of the templates and instructions published by the EBA may be accessed via the following link:

http://www.eba.europa.eu/-/eba-launches-data-collection-to-support-the-new-prudential-framework-for-investment-firms

(ii) European Commission outlines topics for forthcoming CRD IV review and indicates further proposals are likely in second half of 2018

On 7 July 2016, the European Commission's expert group on banking, payments and insurance published the minutes of a meeting held on 26 April 2016 on bank regulation and supervision (the "Meeting") during which the expert group discussed the preparations for the European Commission's forthcoming review of, and proposed amendments to, the CRR and CRD IV.

The Directorate-General for Financial Stability, Financial Services and Capital Markets Union ("DG FISMA") presented the envisaged timeframe for the review and the proposal to amend the CRR and CRD IV together with the topics that would be included in the proposal. It further indicated that it would only conduct targeted consultations on very specific issues that would be addressed in the proposal, as many of the broader issues have already been publicly consulted upon either by the European Commission or by other organisations.

Following questioning from expert group members, DG FISMA also confirmed that the reviews of risk-weighted assets and the operational risk framework, being carried out by the Basel Committee on Banking Supervision ("BCBS") are on-going and will only be completed towards the end of 2016. Accordingly, DG FISMA confirmed that the results would not be included in the European Commission's CRD IV amendment proposal and that these topics will be dealt with in a subsequent proposal, which DG FISMA envisages will be put forward in the second half of 2018 at the earliest.

Similarly, the work being carried out by BCBS on leverage ratio buffers and review of the macroprudential framework is on-going and given the lack of agreement on leverage ratio buffers, DG FISMA does not expect to include them in the European Commission's CRD IV amendment proposal. It also indicated that it does not envisage including the results of the macroprudential framework review in the proposal.

A copy of the minutes of the Meeting are available at the link below:

http://ec.europa.eu/finance/general-policy/docs/expert-group/160426-minutes_en.pdf

To read this article in full, please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions