Investment Funds Update - Europe: Key legal and regulatory updates for the funds industry from the primary European asset management centres and fund domiciles: EU

EMIR: Non-Deliverable FX Forwards and Interest Rate Swap Clearing

Non-deliverable FX forwards
ESMA confirms that EMIR clearing requirements will not apply to non-deliverable FX forwards, though reserves its position to impose these standards at a future date.

Read ESMA's feedback statement "Consultation on the Clearing Obligation for Non-Deliverable Forwards" (PDF)

Interest rate swap clearing
ESMA has now issued its opinion on the modifications made by the European Commission (the “Commission”) to its draft regulatory technical standards submitted to the Commission on 1 October 2014.

ESMA endorses the Commission’s modifications regarding delaying the start date of the frontloading obligation, though proposes a broader application of the intra-group exemption from clearing meaning that, for a three year period, “financial counterparties” can apply for this exemption from clearing when they enter into transactions with non-EU counterparties who have not yet been subject to a “declaration of equivalence”.

Read ESMA's opinion document "Draft RTS on the Clearing Obligation on Interest Rate Swaps" (PDF)


MiFID II: New Consultation Paper

ESMA has published an Addendum Consultation Paper to implementing rules for MiFID II/MiFIR, covering the following non-equity asset classes: (1) foreign exchange derivatives; (2) credit derivatives; (3) other derivatives; and (4) contracts for difference (CFDs). The paper gives an analysis of the definition of a liquid market, and of calculations for pre-trade and post-trade transparency thresholds.

The last section of the paper sets out draft regulatory technical standards for transparency requirements in respect of bonds, structured finance products, emission allowances and derivatives

Read "Addendum Consultation Paper: MiFID II/MiFIR" (PDF)


Benchmark Regulation: Council and Commission Agreement

The European Council has agreed to tighter controls on the manipulation of financial benchmarks, backing the Commission’s proposals for a regulation for benchmarks which are used in financial instruments (e.g. bonds, shares, futures or swaps) and financial contracts (e.g. mortgages or consumer contracts).

Full details are of the European Council and Commission’s position are available in the following press releases:

Read "Benchmarks for financial instruments: Council agrees stance on tighter controls"

Read "EU Council backs European Commission proposal to fight against the manipulation of financial benchmarks"


Capital Markets Union

The Commission has published a green paper on building a Capital Markets Union (CMU). The CMU project includes certain short-term priority actions, orientated towards:

  • Lowering barriers to accessing capital markets through a review of the current prospectus regime. 
  • Widening the investor base for SMEs by improving credit information on SMEs. 
  • Developing proposals to encourage 'high-quality' securitisation and free up banks’ balance sheets. 
  • Supporting take up of long-term investment funds. 
  • Supporting industry led work to develop European private placement markets.
     

Read the green paper (PDF)

Read the explanatory press release (PDF)

Two related consultations, reviewing the information required to be provided to investors under the Prospectus Directive, and for “high quality” securitisations have also been published:

Read "Consultation on the Review of the Prospectus Directive"

Read "Public Consultation on Securitisation"


ESMA Opinion and Advice on Investment-Based Crowdfunding

On 18 December 2014, the European Securities and Markets Authority, ESMA, has published an Opinion on Invesment-based crowdfunding addressed to the national competent authorities to provide clarity on how existing EU rules are likely to apply to crowdfunding platforms, depending on the business model used. It also provides guidance on how to regulate certain crowdfunding platforms on a national basis. Along with the Opinion, ESMA published an Advice asking EU institutions to consider policy options in order to reduce incentives among crowdfunding platforms to structure their business models to fall outside the scope of EU rules.

Read the full opinion

Read the full advice

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