European Securities and Markets Authority
CRA Regulation - ESMA publishes final report on Guidelines and Recommendations on scope - 15 July 2022
The European Securities and Markets Authority (ESMA) has published a final report (ESMA80-196-6345) (the Report) on revisions to its Guidelines and Recommendations on the scope of the Credit Ratings Agencies Regulation (1060/2009/EC) (CRA Regulation), originally published in 2013 (the 2013 Guidelines). ESMA consulted on the revisions in January 2022.
Respondents to the consultation were broadly supportive of ESMA’s objectives to expand on the existing regulatory provisions on private credit ratings. ESMA is therefore proceeding with the revisions as consulted on, with minor clarifications, including that:
- a private credit rating agreement should include a provision indicating the exclusive issuance of the rating to the person who placed the order. This person should sign a non-disclosure undertaking, precluding the dissemination of the rating to more than a limited number of third parties; and
- the receiving party should only share the private credit rating on a confidential basis and with a selected and definite number of natural and legal persons, limited to 150 persons. The rating providers should implement appropriate controls to monitor the distribution limit of the private credit rating.
The revised paragraphs 14 and 15 of the 2013 Guidelines will be translated into all official languages of the EU and will be published on ESMA’s website. ESMA will consider the revised 2013 Guidelines for the purposes of its supervision 18 months after their publication.
ESMA Final Report: Revision to Guidelines and Recommendations on the Scope of the CRA Regulation (ESMA80-196-6345)
MiFID II/MiFIR - ESMA updates Q&As on market structures and transparency - 15 July 2022
ESMA has published an updated version of its Q&As on market structure issues and transparency topics under the Markets in Financial Instruments Directive (2014/65/EU) (MiFID II) and the Markets in Financial Instruments Regulation (600/2014/EU) (MiFIR).
The revised version introduces the two new Q&As relating to algorithmic trading.
ESMA: Q&As on MiFID II and MiFIR market structures topics
CCP supervision - ESMA publishes annual peer review report - 19 July 2022
ESMA has published its annual peer review report (ESMA91-372-2064) (the Report), dated 4 July 2022, on the supervision of EU central counterparties (CCPs) by national competent authorities (NCAs) under Article 21 of the European Market Infrastructure Regulation (648/2012/EU) (EMIR). The Report focuses on the effectiveness of NCAs’ assessment of CCPs’ compliance with EMIR requirements on business continuity, in particular in remote access mode.
Although ESMA makes a range of recommendations, overall the Report finds that NCAs’ practices broadly meet the supervisory expectations. It also identifies best practices and considerations to enhance supervisory convergence.
ESMA Report: Annual peer review of EU CCP supervision
SFTR and MiFIR - ESMA updates Q&As on data reporting - 19 July 2022
ESMA has updated its Q&As on complying with data reporting requirements under:
- the Securities Financing Transactions Regulation ((EU) 2015/2365) (SFTR) to include new questions on the construction of a trade state report and the reporting of valuation and collateral on the final day of a transaction; and
- the Markets in Financial Instruments Regulation (600/2014/EU) (MiFIR) to include new questions on reporting emission allowances.
Updated Q&As on SFTR data reporting (ESMA74-362-893)
Updated Q&As on MiFIR data reporting (ESMA70-1861941480-56)
UCITS Directive and AIFMD - ESMA updates Q&As on application - 20 July 2022
ESMA has updated its Q&As on the application of the Directive relating to undertakings for collective investment in transferable securities (UCITS) (2009/65/EC) (UCITS Directive) and its Q&As on the application of Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) with questions on the frequency of reconciliations.
Updated Q&As on the application of the UCITS Directive
Updated Q&As on the application of AIFMD
Future Regulatory Framework for CCPs and CSDs – HM Treasury responds to consultation - 20 July 2022
HM Treasury has published a response to its January 2022 consultation on a revised regulatory framework for central counterparties (CCPs) and central securities depositories (CSDs) as part of its ongoing Future Regulatory Framework (FRF) Review (see item in the Beyond Brexit section).
In the response, HM Treasury summarises the key themes raised by respondents to the consultation and outlines the proposals it intends to take forward, which include the following:
- giving the Bank of England (the Bank) a general rule-making power so it can set direct requirements on the CCPs and CSDs it regulates (subject to consultation and a range of accountability measures);
- power for the Bank to impose requirements on individual CCPs and CSDs, to advance its objective to protect and enhance UK financial stability;
- establishing the concept of a ‘systemic third country CCP’ so the Bank may subject systemically-important third country CCPs to direct UK regulation and oversight. It will also be able to apply its rulebook for domestic CCPs, in whole or part, to these CCPs;
- a new secondary objective for the Bank on innovation;
- a new power for HM Treasury to be able to set points to which the Bank must ‘have regards’ when making rules in specific areas of regulation, as well as power to place obligations on the BoE to make rules in specific areas of regulation; and
- placing the bank’s FMI Board on a statutory footing.
The Bank will also be required to report annually on the efforts it has made to engage with stakeholders outside its direct regulation, such as users of CCP and CSD services, and to provide a summary of this engagement.
The government is legislating for these reforms through the Financial Services and Markets Bill 2022-23, so its final policy is set out in the Bill and the accompanying impact assessment and explanatory notes. As noted in the relevant item above, the Bill was introduced to Parliament and had its first reading in the House of Commons on 20 July 2022.
HM Treasury response
See also the Beyond Brexit section for an item summarising the Financial Services and Markets Bill 2022-23, which contains reforms to the regulatory framework for the supervision of CCPs and CSDs.