International Organization of Securities Commissions
Artificial intelligence and machine learning - IOSCO guidance for market intermediaries and asset managers - 7 September 2021
The International Organization of Securities Commissions (IOSCO) has published a final report on the use of artificial intelligence and machine learning (AIML) by market intermediaries and asset managers.
The report describes how such firms currently use AIML to reduce costs and increase efficiency. It notes that the rise in the use of electronic trading platforms and the increasing availability of data have led firms progressively to use AIML in their trading and advisory activities, as well as in their risk management and compliance functions.
The report then goes on to provide guidance to assist IOSCO members in supervising market intermediaries and asset managers that use AIML. It sets out six measures that seek to ensure that market intermediaries and asset managers have: appropriate governance, controls and oversight frameworks; staff with adequate knowledge, skills and experience; robust testing processes; and appropriate transparency and disclosures to investors and regulators. For example, regulators should consider requiring firms to have designated senior management responsible for the oversight of the development, testing, deployment, monitoring and controls of AIML, and should require firms to understand their reliance on and manage their relationship with third party providers.
IOSCO members are encouraged to consider these measures carefully in the context of their legal and regulatory framework.
Report: The use of artificial intelligence and machine learning by market intermediaries and asset managers (FR06/2021)
Press release
European Commission
PRIIPs KID - European Commission adopts Delegated Regulation amending RTS - 7 September 2021
The European Commission has adopted a Delegated Regulation amending the regulatory technical standards laid down in Commission Delegated Regulation (EU) 2017/653 on key information documents (KID) for packaged retail and insurance-based investment products (PRIIPs KID Delegated Regulation). Among other things, the Delegated Regulation amends the PRIIPs KID Delegated Regulation by setting out:
- new methodologies underpinning the calculation of appropriate performance scenarios and a revised presentation of these scenarios;
- a modified methodology underpinning the calculation of transaction costs; and
- modified rules for PRIIPs that offer a range of options for investment.
The Commission intends for amendments also to be made to the Undertakings for the Collective Investments in Transferable Securities Directive (2009/65/EC) (UCITS) and the Regulation on Packaged Retail and Insurance-based Investment Products (1286/2014/EU) (PRIIPs) to avoid investors receiving two pre-contractual disclosure documents.
A related press release states the Delegated Regulation will be subject to scrutiny by the European Parliament and the Council of the EU. However, the Delegated Regulation is scheduled to apply from 1 July 2022.
Commission Delegated Regulation (EU) …/… amending the regulatory technical standards laid down in Commission Delegated Regulation (EU) 2017/653 as regards the underpinning methodology and presentation of performance scenarios, the presentation of costs and the methodology for the calculation of summary cost indicators, the presentation and content of information on past performance and the presentation of costs by packaged retail and insurance-based investment products (PRIIPs) offering a range of options for investment and alignment of the transitional arrangement for PRIIP manufacturers offering units of funds referred to in Article 32 of Regulation (EU) 1286/2014 as underlying investment options with the prolonged transitional arrangement laid down in that Article (C(2021) 6325 final)
Annexes
Implementing and Delegated Acts: full list
Webpage
Press release
Official Journal of the European Union
EMIR - Delegated Regulation on FRANDT commercial terms for clearing services published in OJ - 8 September 2021
Delegated Regulation (EU) 2021/1456 supplementing the European Market Infrastructure Regulation ((EU) 648/2012) (EMIR) specifying the conditions under which commercial terms for clearing services for over-the-counter (OTC) derivatives are to be considered to be fair, reasonable, non-discriminatory and transparent (FRANDT) has been published in the Official Journal of the EU.
The Delegated Regulation comes into force on 9 September 2021, and will apply from 9 March 2022 (subject to transitional provisions for commercial terms for clearing services agreed before 9 September 2021).
Commission Delegated Regulation (EU) 2021/1456 supplementing Regulation (EU) 648/2012 by specifying the conditions under which the commercial terms for clearing services for OTC derivatives are to be considered to be fair, reasonable, non-discriminatory and transparent
UK Parliament
BMR - Critical Benchmarks (References and Administrators’ Liability) Bill publication and first reading - 8 September 2021
The Critical Benchmarks (References and Administrators’ Liability) Bill has been introduced to Parliament and has had its first reading in the House of Lords. The UK Parliament has published the text of the Bill, together with explanatory notes.
The Bill supports the effective operation of the powers granted to the FCA under the Financial Services Act 2021 to oversee the wind-down of a critical benchmark. In particular, the Bill is intended to provide legal certainty as to how contractual references to a critical benchmark should be treated where the FCA exercises powers under the UK Benchmarks Regulation (EU) 2016/1011 (BMR) to provide for the continuity of an unrepresentative critical benchmark.
The Bill also grants immunity from claims for damages to the administrator of a critical benchmark that is designated under Article 23A of the BMR where the administrator acts in accordance with specific requirements imposed upon it by the FCA.
Critical Benchmarks (References and Administrators’ Liability) Bill (HL 49)
Explanatory notes
Impact assessment
Human rights memorandum
Bill webpage
Lords Hansard: First reading
Minutes of Proceedings
