HM Treasury publishes joint statement on the Inaugural meeting of the US-UK Financial Regulatory Working Group

HM Treasury has published a joint statement from the inaugural meeting of the US-UK Financial Regulatory Working Group that has been held in London [12.09.2018] (Joint Statement). According to the Joint Statement, the Group was formed to deepen the "bilateral regulatory cooperation" between the UK and the US financial regulators "with a view to the further promotion of financial stability; investor protection; fair, orderly, and efficient markets; and capital formation in both jurisdictions." As noted in the Joint Statement: "This cooperation is especially important given transition in the UK's regulatory relationships as it withdraws from the European Union."

The meeting included participants from the US Department of the Treasury and HM Treasury, and regulators including the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Office of Comptroller of the Currency, Securities and Exchange Commission, the Bank of England, and the Financial Conduct Authority.

According to the Joint Statement at the meeting points discussed included:

  • "financial regulatory reforms and future priorities, including possible areas for deeper regulatory cooperation to facilitate further financial services activity between US and UK markets";
  • "the implications of the UK's exit from the EU on financial stability and cross-border financial regulation" particularly focusing on contract continuity "including servicing existing financial contracts after exit, noting the importance of reducing potential cliff-edge risks for business and consumers"; and
  • "US-UK financial regulatory issues resulting from the UK's exit from the EU, and recognised the importance of maintaining bilateral activity of the US and UK financial services firms."

The next meeting of the Working Group is to be held in the first half of 2019 in Washington DC. However, the Joint Statement says "bilateral contacts will continue, as appropriate, outside the Working Group on any issue related to our ongoing financial regulatory cooperation." Read more about this Working Group in an earlier IMB here. Contains public sector information licensed under the Open Government Licence v3.0.

HM Treasury updates Women in Finance Charter Guidance

HM Treasury has published the list of signatories to its Women in Finance Charter (Charter) as at August 2018 and has released an updated version of the Women in Finance Charter Guidance [06.09.2018] available on the Women in Finance Charter page. According to HM Treasury: "Since the Charter launched, over 85% of the signatories that have set their Charter targets have committed to have at least 30% women in senior roles by 2021. Over 25% of the firms that have set their Charter targets have committed to a 50/50 gender split in senior roles by 2021." As of July 2018, according to the Treasury, 273 firms in the financial services sector had signed the Charter. Firms can still sign the Women in Finance Charter and join the next cohort of signatories committing to put in place the 4 key industry actions the Charter contains. Read more in our earlier update click here. Contains public sector information licensed under the Open Government Licence v3.0.

Government publishes response to Treasury Committee's Women in Finance Report

The Government's Response to the Treasury Committee's 15th Report of Session 2017 -19, Women in Finance (HC 477) has been published [13.09.2018]. Read more on the Treasury Committee's Women in Finance report here. The response was delivered by the economic secretary to the Treasury, John Glen MP, and the Minister for Women, Victoria Atkins MP.

The Government's Response commenced by noting that as the Committee's Women in Finance report identified, there is a "problem when it comes to the representation of senior women in the financial services sector" and that a mix of "non-inclusive cultural, recruitment and remuneration practices have resulted in a woefully low number of women in leadership levels" which is "both morally wrong and damaging to the sector's productivity". The Government's Response discussed a range of issues including barriers to gender diversity, the gender pay gap, and appointments to regulators.

In its conclusion the Government's Response noted "financial services contribute a great deal to the British economy", which is why it is "so important the sector reflects wider society". Achieving greater diversity is not only the "right thing to do", but it is also "the smart thing to do" according to the Government's Response, as "it will make the sector more competitive and productive". Contains Parliamentary information licensed under the Open Parliament Licence v3.0.

FCA publishes Quarterly Consultation Paper No. 22

The FCA has published Quarterly Consultation Paper No 22 CP18/24 [07.09.2018] containing the FCA's "miscellaneous amendments" to the Handbook on which it seeks feedback. Proposed changes include to the FCA's existing supervisory principles in SUP 1A.3.2G, to replace them with the supervisory principles in Chapter 2 of the FCA's Approach to Supervision on which it consulted earlier this year. Read more on the Approach to Supervision in our earlier update here. The FCA is proposing to publish the final version of the Approach to Supervision in the winter of 2018 - 19 and to make the changes to SUP 1A then also. The FCA seeks feedback on this proposal contained in chapter 3 of its Quarterly Consultation by 7 October 2018. According to the FCA:

"Some of the recent changes to the FCA supervisory approach reflected in our updated supervisory principles include:

  • the focus on the individual as well as firm accountability (see proposed new Principle 4) which reflects how we will approve and hold to account the most senior individuals, whose decisions and personal conduct have a significant effect on the conduct of their firm, particularly in light of the Senior Managers and Certification Regime, and
  • the increasingly interconnected nature of the FCA's work with other regulators in the UK and abroad (see proposed new Principle 7)."

FCA publishes Policy Development Update for September 2018

The FCA published its latest policy development update [07.09.2018] containing, among other items, the following:

  • a link to the updated Global Financial Innovation Network page (GFIN) [05.09.2018]. Read more on the launch of GFIN in our earlier update here;
  • Q4 2018 the FCA will publish a review of the permitted links rules for insurers on investment in Patient Capital and a discussion paper on Patient Capital investment in authorised funds. Feedback is currently targeted for Q2 2019. Read more on Patient Capital in our earlier update here;
  • the feedback date is to be confirmed for the chapter concerning a new 'pooled investment vehicle' definition for the marketing restriction rules on NMPIs in CP16/17 Quarterly Consultation No. 13 [July 2016].

FCA's Chief Executive speaks on multilateralism and global coordination

Andrew Bailey, Chief Executive of the FCA, has delivered a speech [06.09.2018] at the Eurofi Financial Forum in Vienna, focusing on multilateralism and global coordination in which he explained his belief that "competition and innovation in financial markets, supported by robust regulatory and supervisory standards provide better outcomes for users of financial services, particularly so in wholesale markets".

While "it has always been the case that one jurisdiction cannot constrain the autonomy of another's domestic regulation" Bailey said (noting that in this context he is treating the Single Market as one such jurisdiction). In his view it would be both a big and an "unfortunate" step to then say "we cannot envisage open financial markets which support free trade - and to suggest that we cannot underpin open markets with a common commitment to international standards where they exist". In his words "Such a commitment to international standards is an essential part of achieving equivalent outcomes and thereby managing risks which go across borders" Bailey said. Even where international standards do not exist and jurisdictions set their own this "can certainly co-exist with international co-operation in a way that enables agreed equivalence of outcomes" Bailey said - referring to benchmark interest-rate reforms and regulatory 'sandboxes' in this context.

The speech also focuses on areas in which UK authorities "will need to closely coordinate with the EU, the US and others" according to Bailey, whilst managing their own autonomy and respecting that of others. Bailey uses MiFID II as an example here, saying it was "calibrated based on UK and EU27 markets combined and it may not make sense to break that down and have different UK and EU transparency rules for the same products". He then explained his sense of what he referred to as a "common interest" among regulators to "preserve the benefits of collaboration, sharing of information, and to ensuring effective supervision" - but that there is "debate on this" he said, "as we think about the post-Brexit situation". In this context he noted that "one perspective is the desire to keep access to the Single Market open to third countries, including the UK, on the basis of open markets, equivalent standards and the right of establishment."

Bailey welcomed the proposals of Commissioner Chris Giancarlo of the US Commodity Futures Trading Commission "for closer cross border cooperation and a greater use of deference - reliance on comparable overseas rules - where they deliver broadly equivalent outcomes". Bailey concluded by focusing on the 4 key elements he views as forming the basis of strong regulatory co-ordination which are, he said "comparability of rules (but not exact mirroring), supervisory co-ordination, exchange of information, and a mechanism to deal with differences."

Financial Guidance and Claims Act 2018 (Commencement No 1 and Transitional Provision) Regulations 2018

The Financial Guidance and Claims Act 2018 (Commencement No 1 and Transitional Provision) Regulations 2018 (Regulations) have been made [06.09.2018] that will bring into force, on 8 September 2018, Section 35 of the Financial Guidance and Claims Act 2018 (FGCA) that amends the Privacy and Electronic Communications (EC Directive) Regulations 2003 (2003 Regulations). According to the Explanatory Note to the Regulations, the amendment made by section 35 FGCA, creates "a special class of unsolicited marketing calls relating specifically to claims management services ("cold claims calls")" and will "prohibit people from making such calls unless recipient subscribers have previously opted in to receive them."

The Regulations contain a transitional measure providing that changes made to the 2003 Regulations by section 35 of the FGCA will not apply to calls already in progress on commencement of that section. Contains public sector information licensed under the Open Government Licence v3.0.


Central Bank of Ireland Feedback Statement on Exchange Traded Funds*

The Central Bank of Ireland ("Central Bank") published its Feedback Statement on DP6 – Exchange Traded Funds ("Feedback Statement") [14.09.2018] issued in response to the Central Bank's Discussion Paper 6 – Exchange Traded Funds (DP6), which was published in May 2017.

The Central Bank focused on exchange traded funds ("ETFs") to ensure that this fund type and any inherent risks are understood and to highlight areas where it views that further regulatory consideration and discussion is warranted.

Arising from this review, the Central Bank has announced the following regulatory developments:

  • Investment funds can establish both listed and unlisted share classes within a single fund structure, subject to disclosure requirements. It is expected that the Central Bank will develop guidance on the appropriate disclosure requirements to apply for both listed and unlisted share classes;
  • Different dealing times will be permitted for hedged and unhedged share classes within the same ETF;
  • There will be no change in the requirement to have daily portfolio disclosure at this time. The Central Bank believes that the introduction of such a policy change at this stage would be premature; and
  • There will be ongoing dialogue with stakeholders via domestic, European and international work-streams.

Gerry Cross, Director of Policy and Risk at the Central Bank stated: "This exercise has been extremely useful to further the debate, both domestically and internationally, in relation to ETFs. We regard the publication of this feedback statement as a continuation of this discussion and not the conclusion of our work. We remain firmly of the view that where regulatory change is needed, it is most effective when implemented on a consistent basis. This is why we will continue to actively contribute and collaborate within Europe and at IOSCO, seeking progress on the issues identified as part of DP6."

* Contains Irish Public Sector Information licensed under a Creative Commons Attribution 4.0 International (CC BY 4.0) licence. For further information please click here.


ESMA updates benchmarks register

The European Securities and Markets Authority (ESMA) moved its register for benchmark administrators and third country benchmarks to its registers database [07.09.2018]. On 3 January 2018 ESMA began publishing the list of benchmark administrators and third country benchmarks daily on its website. From 7 September 2018 the public register is available at According to ESMA, "As for all ESMA registers, the portal offers machine-to-machine services to large scale organisations, including a set of web services for retrieval of data maintained in ESMA Registers repositories."

ESMA publishes responses received to its consultation on the tick size regime

The European Securities and Markets Authority (ESMA) published [18.09.2018] the responses it received to its consultation paper on Amendment to Commission Delegated Regulation (EU) 2017/588 (RTS 11). ESMA received 15 responses in the consultation period which closed on 7 September 2018. To read more on ESMA's consultation see our earlier edition of the IMB here.

Council of EU not intending to object to delegated acts on safekeeping duties of depositaries under UCITS and AIFMD

The Council of the EU has released 'I/A' item notes showing it is not intending to object to the European Commission's delegated acts concerning safekeeping duties of depositaries under AIFMD (EF 232, ECOFIN 814, DELACT 130) and UCITS (EF 234, ECOFIN 816, DELACT 132). In these 'I/A' item notes the Council's General Secretariat suggests that the Permanent Representatives Committee "invites the Council to confirm that the Council has no intention to object" to the relevant delegated act. By implication therefore, unless the European Parliament objects, the delegated act amending Delegated Regulation (EU) 231/2013 as regards safekeeping duties of depositaries under AIFMD (read more in our earlier updates here and here); and amending Delegated Regulation (EU) 2016/438 as regards safekeeping duties of depositaries under UCITS (read more in our earlier updates here and here) will be published and enter into force.


ESAs' report shows slow growth in automated financial advice

A news item from the European Insurance and Pensions Authority (EIOPA) announced that the three European Supervisory Authorities (ESAs) (namely EIOPA, the European Banking Authority and the European Securities and Markets Authority) have now "published the results of their monitoring exercise on automation in financial advice" [05.09.2018]. According to the EIOPA announcement "the Report shows that while the phenomenon of automation in financial advice seems to be slowly growing, the overall number of firms and customers involved is still quite limited." Considering "the limited growth of the phenomenon", the ESAs' view is "that no immediate action is necessary", as the "identified risks have not materialised" the EIOPA announcement said.

The risks and benefits of this "phenomenon", already identified by the ESAs "have largely been confirmed by national competent authorities (NCAs) and remain valid" according to EIOPA's announcement. In their review of new business trends, the ESAs discovered "that automated services are being offered, through partnerships, by established financial intermediaries, rather than by pure FinTech firms" the EIOPA announcement said. The monitoring also revealed "new trends are emerging, such as the use of Big Data, chatbots and a broader range of products" EIOPA said. The ESAs conclusion according to EIOPA's announcement is "that given the overall importance of the topic, and the emergence of some ongoing changes to business models, a new monitoring exercise will be conducted if and when the development of the market and market risks warrant this work".

Speech by the vice-president of the European Commission describes Commission's approach to FinTech

Valdis Dombrovskis, the European Commission's vice-president, has described the Commission's approach to digital innovation and Fintech in a speech providing introductory remarks on "Digital Challenges for the Financial Sector" at the Austrian Financial Market Authority event in Vienna [06.09.2018]. Referring to the Commission's FinTech Action Plan, launched in March 2018, Dombrovskis provided an overview of the three goals the Action Plan is focussed on.

Firstly the Commission want to ensure that "innovative companies can benefit from the full scale of the single market" Dombrovskis said noting that "Especially in FinTech, it is important to reach new customers and build economies of scale". Taking crowdfunding as an example, although the sector is growing, he highlighted the "patchwork of national regulations that hinders platforms from expanding past nation borders." Hence the Commission's proposal earlier in 2018 for a passport for EU crowdfunding platforms to operate across the EU based on a single authorisation, which is currently in discussion in the European Parliament and the EU Council.

Dombrovsksis then spoke about the Commission's "range of ongoing initiatives" that aim to "support the uptake of transformative technologies such as blockchain or artificial intelligence" he said. An expert group has been formed looking at the obstacles to FinTech innovation in financial services legislation. The group's first meeting was in June with a report to follow by the middle of 2019. The Commission is "continuously monitoring the developments of crypto-assets and ICOs together with supervisors, the European Central Bank, the Financial Stability Board, as well as other international standard setters" Dombrovskis said. One challenge the Commission faces in relation to crypto-assets "is how to categorise and classify them" he said, and whether/how "to apply existing EU financial rules" to them. Dombrovskis explained that the Commission is working "on a regulatory mapping of crypto assets", to see "whether existing financial sector rules are suitable for crypto-assets", or if new EU-level initiatives are required. The Commission hopes to conclude this assessment later in the year. "At the same time" Dombrovskis said "we need to work together with our international partners, including in the G20. Borders are almost irrelevant when we talk about technology."

The third goal of the Action Plan "is to ensure the cyber resilience of the financial sector" Dombrovskis said noting that "even though finance is better prepared than other sectors to withstand cyber-attacks, it is also the most frequent target. Se we need to keep improving our defences." Therefore, the Commission recently organised a public-private workshop, to identify barriers that hinder information-sharing about cyber threats among market participants. Dombrovskis emphasised the Commission's support of "existing efforts to develop an EU-wide testing framework", and has recently adopted a Digital Education Action Plan "to improve digital skills throughout Europe, including on cybersecurity".

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