General

International Organization of Securities Commissions

Cryptoasset Roadmap 2022-2023 - Published by IOSCO - 7 July 2022

The International Organization of Securities Commission (IOSCO) has published a Cryptoasset Roadmap for 2022-2023 setting out its regulatory policy agenda and work programme for the sector (the Roadmap). The Roadmap has been developed by the IOSCO Board-level Fintech Taskforce (FTF), which was established in March 2022 to develop, oversee, deliver and implement IOSCO’s regulatory agenda for fintech and cryptoassets.

The FTF will prioritise policy-focused work on cryptoasset markets and activities in its initial 12 to 24 months of operation, while continuing to monitor market developments associated with broader fintech-related trends and innovation. It has also set up two workstreams focusing on crypto and digital assets, and decentralised finance. They each aim to publish a report with policy recommendations by the end of 2023.

The Roadmap will be reviewed and updated annually and as needed.

IOSCO Fintech Task Force

Press release

European Parliament

EU digital finance package - Political agreement reached on MiCA - 30 June 2022

The European Parliament has announced that political agreement has been reached on the proposed Regulation on Markets in Crypto-Assets (2020/0265(COD)) (MiCA). MiCA aims to provide a uniform legal framework for cryptoassets, some of which are currently unregulated, that boosts users’ confidence and supports the development of digital services and alternative payment instruments. MiCA forms part of the European Commission’s (the Commission’s) digital finance package, published on 24 September 2020, as previously reported in this Bulletin. The Council of the EU (the Council) adopted its negotiating mandate on MiCA in March 2022.

Key aspects of the provisional agreement include that:

• cryptoasset service providers (CASPs) will need an authorisation to operate within the EU. National competent authorities (NCAs) will be required to issue authorisations within a timeframe of three months, and will regularly transmit relevant information concerning the largest CASPs to the European Securities and Markets Authority (ESMA);
• non-fungible tokens (NFTs) will be excluded from the scope of MiCA, except if they fall under existing cryptoasset categories. The Commission will be mandated to assess the issue and, if necessary, adopt a legislative proposal to create a regime for NFTs; and
• significant CASPs will be required to disclose their energy consumption under MiCA, and ESMA will prepare regulatory technical standards on these obligations to provide the market with clear guidance on how such disclosures should be carried out. CASPs should also publish information on their environmental and climate impacts and forward this information to their NCA, which will inform ESMA.

The European Parliament and the Council must now approve the provisional agreement before it goes through the formal adoption procedure.

European Parliament press release

Council of the European Union press release

European Commission press release

Taxonomy Climate Delegated Act on nuclear and gas activities - European Parliament announces MEPs do not object - 6 July 2022

The European Parliament has announced that Members of the European Parliament have rejected a motion to oppose the inclusion of nuclear and gas activities in the list of environmentally sustainable activities covered by the EU Taxonomy Regulation ((EU) 2020/852). The Complementary Climate Delegated Act (C(2022) 631) (the Act) specifies the conditions under which nuclear and natural gas energy activities can be included in the list and it was adopted by the Commission in March 2022. The Act also introduces specific disclosure requirements for large non-financial and financial undertakings related to their activities in these sectors.

If neither the European Parliament nor the Council of the EU reject the Commission’s proposal by 11 July 2022, the Act will enter into force and apply from 1 January 2023.

Press release

Financial Conduct Authority

Change in control notification delays - FCA updates webpage - 1 July 2022

The FCA has updated its webpage on how to submit a change in control notification. The webpage indicates that the FCA has experienced delays in allocating notifications to case officers and there is currently a delay of approximately six weeks between submission of a complete notification and allocation of a case officer. The FCA published a previous update on the delays in February 2022.

The FCA is recruiting additional case officers to tackle the backlog. However, it encourages firms to provide all relevant information and documents in their initial submissions to avoid delays associated with incomplete notifications. The FCA also reminds firms that it is a criminal offence to proceed with a transaction before the FCA has made a decision or before the statutory assessment period has expired.

Updated webpage

Regulated firms - FCA publishes Finalised Guidance (FG22/4) on approach to compromises - 5 July 2022

The FCA has published Finalised Guidance (FG22/4) on its general approach to compromises. Compromises are arrangements that allow a firm to settle its liabilities with creditors and/or shareholders. The Finalised Guidance focuses on three types of compromise: (i) schemes of arrangement (Schemes); (ii) restructuring plans (RPs); and (iii) voluntary arrangements (VAs). It only relates to compromises in relation to liabilities and does not apply to the use of Schemes or restructuring arrangements in other circumstances, such as with-profits restructuring. The Finalised Guidance follows the FCA’s January 2021 consultation (GC22/1) on the proposed guidance.

The FCA notes that respondents to the consultation mainly welcomed the proposed guidance. It is therefore proceeding with the guidance largely as consulted on, with changes to give greater clarity on certain areas in response to feedback. These include:

• the timeframe for engagement with the FCA: firms should make every effort to gather information as quickly as possible and provide it to the FCA for its assessment. The FCA has not included a specific timeframe as compromises are considered on a case-by-case basis and, therefore, the appropriate timeframe will vary from case to case;
• the minimum information to be provided to the FCA for assessment of a compromise: the FCA has extended the period for management accounts so that it covers the period since the last formal accounts and financial forecasts and aligns with the period of the proposed compromise. The guidance has also been amended to request details of firms’ contractual clawback provisions and to include a link to the information on the FCA’s website on skilled person reviews;
• engagement with the Financial Services Compensation Scheme and the Financial Ombudsman Service: the FCA clarifies that, where a firm is proposing a scheme that will ultimately extinguish a person’s right to bring a claim against the firm, the FCA will look at the communications a firm proposes to send to potential redress customers and the time frame in which claims must be brought before existing rights are extinguished, to ensure that these are fair in all of the circumstances;
• the treatment of consumers: the guidance has been amended to avoid any conflicts with the proposed new Consumer Duty;
• participation in the court process: the FCA clarifies that the legislative framework for its participation in the court process is different for VAs compared to Schemes and RPs. The FCA has also noted that the factor of whether a compromise fairly balances all interested parties should be extended to include all stakeholders;
• special project fees: the FCA explains the rationale for charging special project fees and clarifies how they are calculated; and
• the FCA’s approach to assessing compromises: the FCA clarifies that its consideration of whether to exercise its regulatory functions will be determined on a case-by-case basis, taking account of its statutory objectives.

While the Finalised Guidance will not apply retrospectively to any compromise where the firm has issued a practice statement letter or proposal to its creditors before the date that the Finalised Guidance comes into effect, the FCA will review these on a case-by-case basis, taking into account the principles in the proposed guidance which may be relevant.

FCA Finalised Guidance: FCA’s approach to compromises for regulated firms (FG22/4)

Webpage​​​​​​​

Director of Consumer Finance, Director of Wholesale Buy-Side, Director of Digital Assets, Director of Retail and Regulatory Investigations, Director of Strategy, Policy International and Intelligence, and Director of Wholesale, Sell-Side - FCA makes new appointments - 5 July 2022

The FCA has announced the appointment of six individuals to its senior leadership team, filling the roles of Director of Consumer Finance, Director of Wholesale Buy-Side, Director of Digital Assets, Director of Retail and Regulatory Investigations, Director of Strategy, Policy International and Intelligence, and Director of Wholesale, Sell-Side:

Roma Pearson is to be the Director of Consumer Finance, responsible for the supervision and policy development in the consumer lending and mortgages sectors. Ms Pearson was most recently FCA’s Head of Department in the Risk and Compliance Oversight division. She will take up her new position in July 2022.

Camille Blackburn is to fill the newly created role of Director of Wholesale Buy-Side. Ms Blackburn will be responsible for policy development and the effective supervision across asset management, alternative investments, custody banks and investment research. She was most recently Global Chief Compliance Officer at Legal & General Investment Management.

Matthew Long is to fill the newly created role of Director of Payments and Digital Assets, which will oversee the e-money, payment and cryptoasset markets, and lead related policy development. Mr Long was most recently a Director within the National Economic Crime Command within the National Crime Agency and has also led the UK Financial Intelligence Unit. He will join the FCA in October.

Anthony Monaghan is to be Director of Retail and Regulatory Investigations, which he has been covering on an interim basis since April 2021. Before this, Mr Monaghan was Head of Retail & Regulatory Investigations within the FCA’s Enforcement and Market Oversight Division.

Karen Baxter is to be Director of Strategy, Policy, International and Intelligence. Ms Baxter had a 30-year policing career, holding senior roles including Commander and National Coordinator for Economic Crime at the City of London Police and is an Ofcom board member for Northern Ireland, having being appointed by the Secretary of State for Digital, Culture, Media and Sport in March 2022.

Simon Walls will continue in the role of Director of Wholesale, Sell-Side on a permanent basis, having been appointed interim director in May 2022.

Press release

Network for Greening the Financial System

Climate-related data gaps - The NGFS publishes final report - 6 May 2022

The Network for Greening the Financial System (NGFS), a group of central banks and supervisors that contribute to the development of climate risk management best practice in the financial sector, has published its final report on bridging climate-related data gaps (the Report). The Report follows on from the NGFS’s progress report, published in May 2021.

Since the progress report, the NGFS has worked on finalising its directory, which is intended to provide a comprehensive assessment of climate-related decision-useful data needs and availability, drawing evidence-based conclusions about the main data gaps and key challenges to closing those gaps. The Report builds on these identified gaps and sets out specific NGFS policy recommendations for improving the quality, availability and comparability of climate-related data, and highlights areas where the directory can prove useful in meeting these challenges. The recommendations include:

• fostering convergence towards a common and consistent set of global disclosure standards: there is a need to substantially increase the availability of decision-useful granular data on emissions and to improve the reliability of reported climate-related data;
• increasing efforts towards mutually shared and operationalised principles for taxonomies and sustainable finance classifications: there is a need to harmonise taxonomies and sustainable finance classifications across the globe and to foster interoperability;
• developing well-defined and decision-useful metrics and methodological standards: there is a need to substantially increase the harmonisation of forward-looking metrics; and
• better leveraging available data sources, approaches and tools: the NGFS notes that many existing data sources, approaches and tools have already improved data availability. Knowledge sharing and capacity building are key to enhancing their use and development.

The NGFS stresses that there is an urgent need for further action on climate-related data. It highlights its 2022-2024 work programme, which provides for the workstream dealing with climate-related data gaps to evolve into an internal data experts’ network.

Webpage

Press release