International Organization of Securities Commissions
Emerging retail market conduct - IOSCO publishes final report - 31 March 2023
The International Organization of Securities Commissions’ (IOSCO) Retail Market Conduct Task Force (RMCTF) has published its final report (FR05/2023) on emerging retail market conduct issues. This follows its Consultation Paper published in March 2022.
The report provides a ‘global point-in-time view’ of emerging retail market conduct issues and the factors driving, and affecting, these issues, including the evolving retail trading landscape, changing macro conditions, demographic trends and technological developments such as social media and digitalisation. Chapter 7 of the report sets out a collection of adaptable measures for regulators to consider when dealing with retail market conduct issues, in the form of a toolkit. The toolkit includes several innovative approaches under five overarching categories:
- heightening regulators' digital presence and online strategy to proactively address retail investor harm;
- honing approaches to better identify and mitigate misconduct;
- enhancing cross-border and domestic supervisory and enforcement co-operation frameworks, both bilaterally and multilaterally;
- addressing retail investor harm that stems from cryptoassets; and
- implementing new regulatory approaches against retail misconduct.
IOSCO remains committed to promoting investor protection, market integrity and greater global regulatory cooperation and coordination in this space and welcomes opportunities for further collaboration with other international bodies and stakeholders in the pursuit of this objective.
Final report on emerging retail market conduct issues
Work Programme - IOSCO publishes 2023-2024 Work Programme - 5 April 2023
The International Organization of Securities Commissions (IOSCO) has published its 2023-2024 Work Programme, building on its 2021-2022 Work Programme published in February 2022.
The IOSCO Board (the Board) has agreed five focus areas: (i) strengthening financial resilience of capital markets; (ii) supporting market effectiveness; (iii) protecting investors; (iv) addressing new risks in sustainability and fintech; (v) and promoting regulatory cooperation and effectiveness.
With respect to sustainability-related issues in capital markets, the Work Programme indicates that IOSCO will continue its efforts in contributing to the urgent goal of improving the completeness, consistency and comparability of sustainability reporting under the stewardship of its board-level Sustainability Taskforce. Among other things, it will review the first set of standards developed by the IFRS International Sustainability Standards Board (ISSB) to determine whether they can be endorsed as a global framework standard for sustainability-related disclosures. The Taskforce will also continue work on carbon markets, on promoting independent assurance of corporate sustainability disclosures, and also consider the role of securities and markets regulators in promoting integrity and mitigating greenwashing in relation to firms’ transition plans.
In relation to fintech, the Work Programme indicates that IOSCO will maintain the momentum under its July 2022 cryptoasset roadmap to assess and respond to the risks associated with cryptoasset market activities and decentralised finance (DeFi) under the stewardship of its board-level Fintech Taskforce.
IOSCO will also sustain its efforts in other important areas, including matters of special importance to growth and emerging markets, its collaboration with the Financial Stability Board (FSB) and other standard setting bodies, as well as implementation monitoring, capacity building for its members and supporting investor education as a critical pillar of investor protection.
IOSCO will review and, if appropriate, refresh the two-year work programme at the end of 2023.
IOSCO Work Programme
European Securities and Markets Authority
Derivative trading obligation - ESMA publishes statement - 30 March 2023
The European Securities and Markets Authority (ESMA) has published a statement on the derivatives trading obligation (DTO) in the context of the migration of credit default swap contracts out of ICE Clear Europe under Article 28 of the Markets in Financial Instruments Regulation (600/2014/EU) (MiFIR).
The statement aims to support the orderly migration of positions from ICE Clear Europe to other central counterparties (CCPs), following the announcement of the forthcoming closure of the ICE Clear’s Europe credit default swap clearing service on 27 October 2023 (as previously reported in this Bulletin). Considering the global dimension of the migration, ESMA has closely coordinated its approach with the FCA and the US Commodity Futures Trading Commission.
MiFID II remuneration and suitability requirements - ESMA publishes official translations of Guidelines - 4 April 2023
The European Securities and Markets Authority (ESMA) has published the official translations, including English language versions, of two sets of Guidelines on certain aspects of the remuneration and suitability requirements under the Markets in Financial Instruments Directive (2014/65/EU) (MiFID II). These comprise:
Guidelines on certain aspects of the MIFID II remuneration requirements (ESMA35-43-3565), published in March 2022, including in relation to the application of ex-post adjustment mechanisms; and
Guidelines on certain aspects of the MiFID II suitability requirements (ESMA35-43-3172), published in September 2022. These aim to integrate sustainability factors, risk and preferences into certain organisational requirements and operating conditions for investment firms.
The official translations of the Guidelines are available on the ESMA website. Both sets of Guidelines will apply from 3 October 2023 (that is, six months from the date of publication of the guidelines on ESMA's website in all EU official languages).
Guidelines on certain aspects of the MiFID II remuneration requirements
Guidelines on certain aspects of the MiFID II suitability requirements
Financial Conduct Authority
LIBOR cessation - FCA publishes statement on one, three and six-month synthetic USD LIBOR - 3 April 2023
The FCA has published a statement on the continued publication of the one, three and six-month USD LIBOR settings, as consulted on in its November 2022 Consultation Paper (CP22/21).
The statement indicates that the FCA has required LIBOR's administrator, ICE Benchmark Administration Limited (IBA), to continue the publication of the one, three and six-month USD LIBOR settings after 30 June 2023 for a short period until September 2024 using a synthetic methodology.
The FCA has also published the following documents:
- the final version of a notice of first decision under Article 21(3) of the UK Benchmarks Regulation (UK BMR) dated 14 March 2023. This compels IBA to continue publishing the USD LIBOR settings for 12 months starting immediately after the publication of the settings on 30 June 2023 and will be extended to the end of September 2024, but not beyond that date;
- the final version of a notice of designation under Article 23A of the UK BMR dated 3 April 2023. This will designate the settings as Article 23A benchmarks with effect from 1 July 2023;
- a draft notice of permitted legacy use by supervised entities under Article 23C of the UK BMR. This will permit the use of the settings on a synthetic basis in all legacy contracts except cleared derivatives;
- a draft notice of requirements under Article 23D of the UK BMR. This will require IBA to calculate the settings using the relevant forward-looking term SOFR reference rates provided by CME Group Benchmark Administration plus the respective ISDA fixed spread adjustment.
The regulator reiterates the need for all market participants to continue actively transitioning contracts that reference USD LIBOR. From 1 July 2023, all new use of synthetic USD LIBOR will be prohibited under Article 23B of the UK BMR and the continued publication of the one, three and six-month USD LIBOR settings on a synthetic basis will only apply to legacy contracts. The overnight and 12-month USB LIBOR settings will cease permanently after publication on 30 June 2023.
The FCA intends to publish a detailed Feedback Statement to CP22/21 later in Q2 2023 and will publish final versions of the notices under Articles 23C and 23D on 1 July 2023.
FCA press release