Securities and Markets

Issue 1138 / 2 December 2021

Committee on Payments and Market Infrastructures and International Organization of Securities Commissions

Client clearing access and portability - CPMI and IOSCO publish joint Discussion Paper - 29 November 2021

The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have published a joint Discussion Paper on access to central counterparties (CCP) clearing and client-position portability.

Firms who are not direct participants of a CCP must rely on having their trades cleared by an intermediary, a client clearing service provider (CCSP), who is a direct participant of the CCP. Firms who are not able to become, or choose not to become, a direct participant of a CCP are known as ‘clients’, and the term ‘client clearing’ encompasses the activities and the services that enable clients’ access to CCPs. One core aim of the report is to develop knowledge and understanding regarding new access models by which entities that historically have participated indirectly as ‘clients’ could directly access CCP services.

The report further aims to develop knowledge and understanding of effective porting practices. Porting refers to a situation where a CCSP defaults and its clients’ accounts need to be transferred (‘ported’) to another CCSP or liquidated in a short time frame.

Finally, the Discussion Paper sets out suggested next steps for consideration by CCPs, CCSPs and clients relating to, amongst other things, alternative CCSPs, protocols for client consent and greater transparency about porting risk.

The deadline for feedback is 24 January 2022.

CPMI and IOSCO Discussion paper: On client clearing: access and portability

Press release

European Securities and Markets Authority

SFDR - ESMA publishes letter to European Commission - 29 November 2021

The European Securities and Markets Authority (ESMA) has published a letter from the European Commission to the European Parliament’s Economic and Monetary Affairs Committee (ECON) and the European Economic and Financial Affairs Council (ECOFIN) regarding regulatory technical standards (RTS) under the Sustainable Finance Disclosure Regulation ((EU) 2019/2088) (SFDR).

The letter states that the draft RTS under Articles 8(4), 9(6) and 11(5) SFDR, submitted to the Commission in October, cannot be adopted by the Commission within the three-month period given their length and technical detail. As announced in July 2021, the Commission will bundle the RTS under the SFDR into a single delegated Act, whose implementation date will now be deferred from 1 July 2022 to 1 January 2023.

Finally, the letter highlights that financial market participants which are required to publish the statements referred to in Article 4(1)(a), 4(3) or 4(3) SFDR will have to comply with the disclosure requirements on principle adverse impacts on sustainability matters laid down in the RTS the first time by 30 June 2023.

ESMA: Letter from John Berrigan regarding regulatory technical standards under the Sustainable Finance Disclosure Regulation ((EU) 2019/2088) (Ref. Ares(2021)7263490)


CSDR - ESMA announces future data publication to enable CSDs to apply cash penalties - 1 December 2021

The European Securities and Markets Authority (ESMA) has announced that it will start publishing information on trading venues with the highest turnover for bonds, identified by the Market Identifier Code (MIC), to enable central securities depositories (CSDs) to apply cash penalties under the Central Securities Depositories Regulation (909/2014/EU) (CSDR).

ESMA aims to publish the data by 1 February 2022, and will update it on a quarterly basis.

Press release

Financial Conduct Authority

UK IFPR - FCA publishes third Policy Statement (PS21/17) - 26 November 2021

The FCA has published its third Policy Statement (PS21/17) on the UK Investment Firm Prudential Regime (IFPR), which contains final rules setting out prudential requirements for solo-regulated investment firms in the UK. The final rules do not differ significantly from those consulted on in the FCA’s August 2021 consultation paper CP21/26. As reported in a previous edition of this Bulletin, these rules concern disclosures, the requirements that depositaries must meet, and how the FCA will use its enforcement powers among other things.

The FCA reminds firms to make the necessary preparations to be able to comply with the requirements, and to return the answers to the questionnaire that was sent out on 12 November 2021. The FCA also reminds firms that, under MIFIDPRU (the prudential sourcebook for MiFID (Markets in Financial Instruments Directive (2004/39/EC)) Investment firms) TP5, they must begin collecting data on K-factor metrics that are relevant to the activities they undertake by no later than 1 December 2021.

The IFPR will come into force on 1 January 2022.

FCA Policy Statement: Implementation of Investment Firms Prudential Regime (PS21/17)

Webpage: PS21/17

Investment Firms Prudential Regime (No 2) Instrument 2021 (FCA 2021/49)

Investment Firms Prudential Regime (Consequential Amendments) Instrument 2021 (FCA 2021/50)

Technical Standards (Financial Conglomerates Directive) (Amendment) Instrument 2021 (FCA 2021/51)

Webpage: Investment Firms Prudential Regime (IFPR)


CMC charges - FCA publishes Policy Statement (PS21/18) - 29 November 2021

The FCA has published a Policy Statement (PS21/18) on restricting claims management company (CMC) charges for financial products and services claims. The Policy Statement follows the FCA Consultation Paper (CP21/1) on the matter that was published 21 January 2021.

The Policy Statement sets out new rules restricting the fees charged by CMCs for managing claims about non-PPI financial products and services. Following feedback received to CP21/1, the FCA amended three elements of the proposed price cap as consulted on, as follows:

  • the cap will not apply to pre-existing contracts, subject to specified exceptions (such as where contracts are varied to increase fees);
  • in certain circumstances, the cap will not apply to claims management services provided in relation to court proceedings; and
  • the FCA has not proceeded with its proposal to require CMCs to identify and tell consumers which of the cap’s redress bands are most likely to apply to their claims. Instead, CMCs will be required to provide a fee illustration for each of the redress bands.

The Appendices to PS21/18 set out the FCA Handbook instruments relating to these changes: (i) the Claims Management (Fees Rules) Instrument 2021 (FCA 2021/52); and (ii) the Claims Management Instrument 2021 (FCA 2021/53). Both instruments come into force on 1 March 2022.

FCA Policy Statement: Restricting CMC charges for financial products and services claims (PS21/18)


Claims Management (Fees Rules) Instrument 2021 (FCA 2021/52)

Claims Management Instrument 2021 (FCA 2021/53)

UK MiFID - FCA publishes Policy Statement (PS21/20) - 30 November 2021

The FCA has published a Policy Statement (PS21/20) on changes to conduct and organisational requirements laid down in UK laws and regulations implementing the Markets in Financial Instruments Directive (2014/65/EU) (UK MiFID).

The FCA is proceeding with the changes as consulted on in April 2021 (CP21/9), which relate primarily to the Conduct of Business sourcebook (COBS), as follows:

  • research: amendments to the inducements rules in COBS 2.3A will broaden the list of what is considered to be “minor non-monetary benefits” to include fixed income currencies and commodities (FICC) research and research on small and mid-cap listed or unlisted companies (SMEs) with a market cap below £200m. There are also changes to how the inducement rules apply to openly available research and research provided by independent research providers;
  • best execution: the requirement for execution venues to publish a report on various execution quality metrics to enable market participants to compare execution quality at different venues (RTS 27 reports) is to be removed. The requirement for investment firms who execute orders to produce an annual report setting out the top five venues used for executing client orders and a summary of the outcomes achieved (RTS 28 reports) is also to be removed.

The removal of the best execution reporting in RTS 27 and RTS 28 will come into force on 1 December 2021. The changes to the research rules will come into force variously on 1 December 2021 and 1 March 2022.

FCA Policy Statement: Changes to UK MiFID’s conduct and organisational requirements (PS21/20)


Conduct of Business Sourcebook (Amendment) Instrument 2021 (FCA 2021/59)

Technical Standards (Markets in Financial Instruments Regulation) (Best execution) Instrument 2021 (FCA 2021/60)