International Organization of Securities Commissions
Emerging retail market conduct issues - IOSCO publishes consultation - 21 March 2022
The International Organization of Securities Commissions (IOSCO) has published a consultation report (CR03/2022) on recent retail investor trends and related conduct implications. The findings of the report are based on IOSCO’s 2021 survey and public information issued by IOSCO members. The report builds on a paper issued by the IOSCO Retail Market Conduct Task Force in December 2020 on the impact of the COVID-19 pandemic on firm and retail investor behaviour.
According to the press release: “Increased retail participation in securities markets could mean retail investors increasingly influence market trends and pricing, with corresponding regulatory implications for retail market conduct. Increased retail participation carries with it the threat of misconduct. Misconduct in capital markets has far reaching consequences for financial consumers, investors, national economies and the overall global financial system.”
Among the most important retail investor trends and developments identified in the consultation, the report notes that IOSCO members are concerned about the suitability for retail investors of cryptoassets and platforms, and possible related fraudulent platforms and scams. The report also considers some authorities’ strategies in detail, including approaches to disclosure and investor education.
IOSCO has asked 14 consultation questions in the report. The deadline for comments is 23 May 2022. IOSCO plans to engage further with consumer groups and other stakeholders on these issues at a roundtable in the first quarter of 2022.
IOSCO Retail Market Conduct Task Force (CR03/2022)
Press release
European Commission
PRIIPs KID - European Commission adopts Delegated Regulation on extension of transitional arrangements - 17 March 2022
The European Commission (the Commission) has adopted Commission Delegated Regulation C(2022) 1541 (final) amending regulatory technical standards (RTS) laid down in Commission Delegated Regulation (EU) 2017/653 on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs KID Delegated Regulation). The amendments concern the extension of transitional arrangements in article 14(2) of the PRIIPs KID Delegated Regulation and amend the RTS laid down in Commission Delegated Regulation (EU) 2021/2268 regarding the date of application of the PRIIPs KID Delegated Regulation.
The Commission Delegated Regulation aligns the application deadline in article 18(3) of Commission Delegated Regulation (EU) 2017/653 with the end of the transitional exemption laid down in article 32 of the PRIIPs Regulation (1286/2014/EU) (that is, 1 January 2023).
The Council of the EU and the European Parliament will now scrutinise the Commission Delegated Regulation. If neither object, it will enter into force 20 days after its publication in the Official Journal of the European Union.
Commission Delegated Regulation (EU) …/… of 17.3.2022 amending the regulatory technical standards laid down in Delegated Regulation (EU) 2017/653 as regards the extension of the transitional arrangement laid down in Article 14(2) of that Regulation and amending regulatory technical standards laid down in Delegated Regulation (EU) 2021/2268 as regards the date of application of that Regulation (C(2022) 1541 final)
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MiFIR - Commission Delegated Regulation on derogation criteria for DRSPs published in OJ - 24 March 2022
Commission Delegated Regulation (EU) 2022/466, supplementing the Markets in Financial Instruments Regulation (600/2014/EU) (MiFIR) by specifying criteria for derogation from the principle that approved publication arrangements and approved reporting mechanisms are supervised by the European Securities and Markets Authority (ESMA), has been published in the Official Journal of the European Union.
The European Commission adopted the Commission Delegated Regulation in December 2021. It will enter into force on 27 March 2022.
Commission Delegated Regulation (EU) 2022/466 of 17 December 2021 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council by specifying criteria for derogation of the principle that approved publication arrangements and approved reporting mechanisms are supervised by the European Securities and Markets Authority
European Parliament
MiCA - ECON publishes report on proposed Regulation - 23 March 2022
The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has published its report, dated 17 March 2022, on the proposed Regulation on ‘Markets in Crypto-Assets’ (MiCA) (2020/0265(COD)). The European Commission adopted the proposed Regulation in September 2020 as part of its Digital Finance Strategy.
ECON adopted the report on 14 March 2022 and the procedure file for the legislative initiative indicates that the report was tabled for consideration by the European Parliament in its plenary session on 17 March 2022.
ECON Report on the proposal for a regulation of the European Parliament and of the Council on markets in crypto-assets and amending Directive (EU) 2019/1937 (2020/0265(COD))
European Central Bank
Central clearing - ECB publishes speech - 22 March 2022
The European Central Bank (ECB) has published the welcome address speech by Fabio Panetta, a member of the Executive Board of the ECB, at the Fourth Annual Joint Conference of the Deutsche Bundesbank, ECB and Federal Reserve Bank of Chicago on central counterparty (CCP) risk management.
On CCPs’ resilience, Mr Panetta highlights recent events, including the COVID-19 pandemic, supply chain bottlenecks, rapidly rising energy and commodity prices, and now the fallout from the Russian invasion of Ukraine. This has prompted the ECB to revisit the procyclicality of margins and to examine its system-wide impact. Mr Panetta also notes the heightened threat of cyber attacks. He promotes the cyber information and intelligence sharing initiative launched by the Euro Cyber Resilience Board for pan-European Financial Infrastructures as a platform to promote preparedness and resilience.
Mr Panetta champions a diversified approach towards risk management that will provide banks and end users with the flexibility to react and adapt to individual crisis scenarios and other challenges. He foresees a “dynamic and robust” European clearing ecosystem that can increase the overall attractiveness of central clearing and further reduce systemic risk, to the benefit of global financial markets, and believes that the euro’s relevance as an international currency, combined with the size of the European economy, means that there is ample room for the EU to expand the availability of clearing options. To this end, Mr Panetta notes the European Commission’s consultation on expanding EU clearing capacity and revising the supervisory framework to ensure that risks remain appropriately managed.
Mr Panetta cautions that the fast evolution of the clearing ecosystem may produce risks that have not been considered previously, while new channels might help spread existing risks. He highlights the importance of understanding new risks stemming from climate change and notes that ESMA’s work to develop a climate risk stress test for CCPs is an important step that the ECB is actively supporting. Mr Panetta also sets out the importance of understanding the role of CCPs in relation to cryptoassets, noting that oversight and supervision is the minimum that must be done and that the impact of cryptoassets from the perspective of corporate responsibility should also be considered.
Welcome address by Fabio Panetta, Member of the Executive Board of the ECB, at the Fourth Annual Joint Conference of the Deutsche Bundesbank, European Central Bank and Federal Reserve Bank of Chicago on CCP Risk Management
Bank of England
FX Global Code - Bank of England publishes statement of commitment - 18 March 2022
The Bank of England (the Bank) has published a statement of commitment to the Global Code of Conduct for the wholesale foreign exchange market (FX Global Code, the Code), acknowledging that the Code represents a set of principles generally recognised as good practice in the wholesale foreign exchange market (FX Market). The Code was first published in 2017 and updated in July 2021 by the Global Foreign Exchange Committee.
In an accompanying press release, the Bank strongly encourages all market participants, including its regular counterparties, to adhere and commit to the updated Code.
Bank of England Statement of Commitment to the FX Global Code
Press release
Financial Conduct Authority
COVID-19 - FCA publishes Primary Market Bulletin No.39 - 23 March 2022
The FCA has published its Primary Market Bulletin No.39. Among other things, this edition announces the removal of the temporary measures the FCA introduced in 2020 allowing for delayed annual and interim financial reporting, and rescinds the temporary measures regarding working capital statements and general meetings.
The temporary reliefs will cease to apply from 28 June 2022.
FCA Primary Market Bulletin No.39
International Financial Reporting Standards Foundation
Sustainable finance - IFRS Foundation announces alignment with GRI - 24 March 2022
The International Financial Reporting Standards Foundation (IFRS Foundation) has announced a collaboration agreement, in the form of a Memorandum of Understanding, with the Global Reporting Initiative (GRI). Under the agreement, their standard-setting boards, the International Sustainability Standards Board (ISSB) and the Global Sustainability Standards Board (GSSB), will seek to coordinate their work programmes and standard-setting activities. The establishment of the ISSB was announced at COP26 in November 2021 and established shortly afterwards with a mandate to develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ demand for reporting.
By working together, the IFRS Foundation and GRI provide two ‘pillars’ of international sustainability reporting: (i) investor-focused capital market standards of IFRS Sustainability Disclosure Standards developed by the ISSB; and (ii) GRI sustainability reporting requirements set by the FSSB.
Commenting on the agreement, Erkki Liikanen, Chair of the IFRS Foundation Trustees said, “this agreement with GRI will help ensure capital market standards are developed in a way that minimises the reporting burden for those companies also using GRI Standards”. Eelco van der Enden, CEO of GRI, similarly remarked that the agreement “is a strong signal to capital markets and society that a comprehensive reporting system, which combines financial and impact materiality for sustainability reporting, is possible on a global scale”.
The announcement highlights that the ISSB intends, next week, to publish proposed Climate and General Sustainability-related Disclosure requirements that will form the global baseline for climate-related disclosures. The global baseline concept has been welcomed by the G20 Leaders, the International Organization of Securities Commissions and others.
Press release
