International Organization of Securities Commissions
Liquidity risk management recommendations - IOSCO publishes final report on thematic review - 16 November 2022
The International Organization of Securities Commissions (IOSCO) has published a final report (FR13/22) on a thematic review of its liquidity risk management recommendations.
The report sets out the results and observations of the review and the extent to which participating IOSCO member jurisdictions have implemented the necessary regulatory measures relating to the eighteen key recommendations in IOSCO’s 2018 Recommendations for Liquidity Risk Management for Collective Investment Schemes (CIS), as previously reported in this Bulletin.
The review considered five recommendations relevant to the CIS design process, three recommendations on liquidity management and two recommendations on liquidity contingency planning. The report makes a number of observations, including:
- seven of the 14 participating jurisdictions were fully consistent with all ten recommendations, but IOSCO observed shortcomings in the other participating jurisdictions in relation to one or more of the recommendations;
- four of the 11 additional jurisdictions received a rating for all ten recommendations of ‘final adoption measures taken and in force’. Two additional jurisdictions received a rating of ‘drafting adoption measures not published’ for almost all recommendations, which indicates that they had not taken any published steps to implement most of the recommendations; and
- participating jurisdictions were broadly consistent across all recommendations. For additional jurisdictions, there was a relatively high level of implementation for recommendation 1 (drawing up an effective liquidity risk management process compliant with local jurisdictional liquidity requirements) and 17 (implementation of additional liquidity management tools to protect investors from unfair treatment or prevent the CIS from diverging significantly from its investment strategy) but implementation of other recommendations was lacking.
IOSCO: Thematic review on liquidity risk management recommendations: final report (FR13/22)
Press release
European Securities and Markets Authority
MiFID II - ESMA publishes Consultation Paper on technical standards for passporting rights - 17 November 2022
The European Securities and Markets Authority (ESMA) has published a Consultation Paper on a review of the technical standards under Article 34 of the Markets in Financial Instrument Directive (2014/65/EU) (MiFID II) relating to the provision of investment services across the EU and passporting rights.
Article 34 of MiFID II requires ESMA to develop draft regulatory technical standards (RTS) and implementing technical standards (ITS) to: (i) specify the information to be provided by firms wishing to provide cross-border services without the establishment of a branch; and (ii) to prescribe the standard forms, templates and procedures for transmitting the required information.
ESMA and the national competent authorities (NCAs) have noted the continued increase in cross-border activities provided under the MiFID II regime relating to freedom to provide services. This requires NCAs to increase their focus on the supervision of cross-border activities and on cooperation. ESMA notes that the information the home state NCA receives through the investment services and activities passport notification plays a role in the NCA increasing its scrutiny of a firm’s cross-border activities or its plans to conduct such activities.
ESMA’s consultation proposes a number of changes to the current RTS and ITS by requiring firms to provide further information at the notification stage regarding:
- the marketing channels the firm will use in host Member States;
- the languages in which the firm is able to deal with client complaints;
- the Member States in which the firm will actively use its passport, and the categories of clients targeted; and
- the firm’s internal organisation in relation to its cross-border activities.
The consultation closes on 17 February 2023. ESMA expects to publish a final report and submit draft technical standards to the European Commission for endorsement by the end of 2023.
ESMA Consultation Paper: review of the technical standards under Article 34 of MiFID II
Press release
European Supervisory Authorities
PRIIPs KID - ESAs update Q&As document - 14 November 2022
The Joint Committee of the European Supervisory Authorities (ESAs), comprising the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, has published an updated version of its Q&A document relating to the key information document (KID) requirements for packaged retail and insurance-based investment products (PRIIPs) under Commission Delegated Regulation (EU) 2017/653.
The updated version includes the following new sections: (i) ‘what is the product?’; (ii) past performance; (iii) investment funds; and (iv) autocallable products. These updates flow from amendments made to the original delegated rules in Commission Delegated Regulation (EU) 2017/653 by Commission Delegated Regulation (EU) 2021/2268, which will apply from 1 January 2023. The ESAs also note that some of the Q&As relate to requirements which may no longer be relevant from 1 January 2023.
Updated version: Q&As on the PRIIPs Key Information Document (KID)
ICE Benchmark Administration
LIBOR cessation - IBA publishes feedback statement on cessation of USD LIBOR ICE Swap Rate - 14 November 2022
The ICE Benchmark Administration (IBA) has published a feedback statement on its intention to cease the publication of ICE Swap Rate settings based on USD LIBOR for all tenors immediately after publication on 30 June 2023. This follows a related Consultation Paper published in August 2022.
In an accompanying press release, the IBA recommends that users of the benchmark should take account of its upcoming cessation and should ensure their contractual and other arrangements linked to the benchmark contain appropriate fallback or other arrangements to address the cessation.
ICE SWAP Rate based on USD LIBOR - Feedback Statement on Consultation on Potential Cessation
Press release
