UK regulatory 

FCA consults on PRIIPs KID and its enforcement approach for PRIIPs

The FCA published its Quarterly Consultation No 18 (CP17/32**) [01.09.17] which consults on, among other things, its enforcement approach for breaches of the PRIIPs Regulation (chapter 3) and on the PRIIPs Key Information Document (KID) and personal projections (chapter 6). Responses are sought for chapter 3 by 1 November 2017 and for chapter 6 by 2 October 2017.

FCA update on MiFID II authorisations and variations of permission

The FCA [18.09.17] published further information on MiFID II authorisations and variations of permissions. The FCA has already stated that a complete application for either authorisation or variation of permission was required by 3 July 2017 for the FCA to guarantee it would be determined in time for the required permissions to be in place by 3 January 2018. The FCA reminds those who have not yet applied, and those who have been asked to provide missing information, to do so without delay. The FCA again reminds firms that from 3 January 2018 they can only carry on MiFID II activities for which they have the appropriate regulatory permissions in place; so they may need to make contingency plans in case they do not, while steering those that are unsure whether they do need new permissions to the FCA's application and notification user guide.

The FCA also reminds any firms or venues providing clients with direct electronic access to trading venues (DEA providers) of (i) their obligation under MiFID II to carry out due diligence on their prospective DEA clients; and (ii) to work with those clients to make sure they know they may need to be authorised to carry on activities under MiFID II and, if so, that they need to be authorised in time: as some currently unauthorised proprietary traders that are DEA clients may need to be authorised for MIFID II activities from 3 January 2018.

FCA updates its MiFID II notifications obligations page

The FCA updated its page on MiFID II notifications obligation for firms [11.09.17]. This page provides further information on the Ancillary activity exemption; General Clearing Members; Systematic Internalisers, and DEA providers and Algorithmic Trading.

FCA Market Watch September 2017

The September edition of the FCA's Market Watch, its newsletter on market conduct and transaction reporting, includes information on the MiFID II Legal Entity Identifier (LEI) requirements for firms subject to transaction reporting obligations.


EU regulatory 

ESAs publish Q&A on the PRIIPs KID and non-binding flow diagrams

The European Insurance and Occupational Pensions Authority (EIOPA) announced the publication by the European Supervisory Authorities (ESAs) of Q&A on the Key Information Document (KID) for Packaged Retail and Insurance-based Investment Products (PRIIPs) [18.08.17] requirements in the European Commission's Delegated Regulation (EU) 2017/653 on PRIIPs KIDs. The new Q&A contains additional responses on a range of issues including: the general point as to whether the categorisation of a retail investor depends on the definition in MiFID II; and in respect of the market risk assessment (Annex II Part 1); Summary Risk Indicator (SRI) (Annex III); and costs presentation (Annex VII). These new Q&A supplement those published previously [04.07.17]. To read more click here.

The ESAs also published [16.08.17] an additional document: PRIIPs - Flow Diagram for the risk and reward calculations in the PRIIPs KID. This sets out calculation steps for the Summary Risk Indicator (market risk and credit risk assessment) and Performance Scenario calculations in the Delegated Regulation (EU 2017/653). These are part of the Q&A, are stated to be non-binding and are not professional or legal advice. The ESAs point out that the legal requirements are those in the Delegated Regulation EU 2017/653 and not the text in the diagrams. There is also a warning that the ESAs could adopt a different position to that in the diagrams document and for users to expect updates to the document, which the ESAs will review from time to time.

Amendments to the PRIIPs delegated regulation

Corrigendum published [15.08.2017] containing minor amendments to the layout of the investment scenarios table for cost over time in Annex VII Presentation of Costs on page 51 of the PRIIPs Delegated Regulation (EU) 2017/653 to remove some erroneously placed percentage signs.

European Parliament publishes amendments to proposed new rules on the EuSEF and EuVECA

The European Parliament amended proposed regulations for European venture capital funds (EuVECA) (Regulation (EU) No 345/2013) and for European Social Entrepreneurship funds (EuSEF) (Regulation (EU) No 346/2013) and adopted the revised texts [14.09.17]. Such funds aim to encourage greater investment in innovative EU small and medium sized entities (SMEs) and in EU undertakings with social objectives. The Parliament proposed a range of amendments including to widen the definition of qualifying portfolio undertakings in which EuVECA can invest by including companies with up to 499 employees that are not admitted to trading on a regulated market or multilateral trading facility, and SMEs listed on SME growth markets. To increase the use of EuSEFs, the range of eligible undertakings in which they can invest is expanded "by extending the positive social impact" definition.

ESMA updates Q&A on MAR

ESMA has updated its Q&A on the Market Abuse Regulation [01.09.17] in relation to:

  • whether the obligation to detect and report market abuse under Article 16(2) of MAR applies to investment firms under MiFID only or also to UCITS management companies, AIFMD managers or firms professionally engaged in trading on own account;
  • whether MAR Article 11 (market soundings) covers all communications of information to one or more potential investors to gauge their interest prior to a transaction being announced and the conditions relating to it;
  • whether persons acting on behalf of or on account of the issuer (such as advisors and consultants) are to draw up, update and provide their own insider list to the National Competent Authority upon request;
  • when the issuer remains fully responsible under the second subparagraph of Article 18(2) of MAR for the compliance with the insider list requirements by persons acting on behalf of or on account of the issuer.

FinTech

European Commission's Summary of contributions to the 'Public consultation on FinTech'

The European Commission published its Summary of contributions to the 'Public Consultation on FinTech: a more competitive and innovative European Financial Sector'. Responses were received from respondents in 22 Member States including 40 responses from the UK. Some key messages were:

  • broad support for EU-level action for:
    • a clear EU framework for crowd and peer-to peer financing;
    • a clearer and more convergent approach in the EU for the way supervisors address licensing, outsourcing (in particular to cloud services) and support innovation, such as via innovation hubs;
    • better developed interoperability and standardisation;
    • cybersecurity improvements;
  • the main risks identified were cybersecurity, use and control of data and money laundering;
  • the EU's approach to FinTech should be technological neutrality, proportionality and integrity with a "same service, same risk, same rule" principle applied to all market players;
  • an open dialogue is important – between regulators, supervisors and firms: whether start-ups or incumbent.

The document contains the Commission's summary of the responses it received on the objectives consulted upon. Read more here.

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