ESMA Publishes Final Report on Amendment of Draft RTS on Reporting Obligations under Article 26 of MiFIR
On May 4, 2016, The European Securities and Markets Authority (ESMA) published its final report requesting an amendment of ESMA draft regulatory technical standards (RTS) on transaction reporting under the Markets in Financial Instruments Regulation (MiFIR).
The draft RTS were submitted to the European Commission in September 2015. However, ESMA has since identified a need to amend Article 2 of RTS 22 as a result of an unintentional omission in the final stage of drafting.
The amendment relates to the list of instances that are not considered to be reportable transactions for the purposes of Article 26 of MiFIR. It resolves an unintended omission by adding acquisitions or disposals that are solely a result of a transfer of collateral to the list of exclusions from transaction reporting specified in Article 2(5) of RTS 22. It thus ensures that investment firms are not required to submit transaction reports for transfers of collateral, which ESMA concluded would be costly and bring no supervisory benefit. ESMA anticipates that the amendment will be taken into account in the context of the Commission's endorsement of RTS 22.
EBA Publishes Discussion Paper on Use of Consumer Data by Financial Institutions
On May 4, 2016, the EBA published a discussion paper on innovative uses of consumer data by financial institutions, in line with its mandate to monitor financial innovation. The EBA report notes that although general provisions apply to financial institutions regarding secrecy, conduct and data protection, which impose restrictions on the use of consumer data, EU legislation specific to the financial sector contains few requirements that address the use of consumer data by financial institutions.
In recent years, some financial institutions have started using consumer data in innovative ways across the EBA's regulatory remit (that is, mortgages, personal loans, payment accounts, payment services, and electronic money). The paper identifies risks and benefits for consumers and financial institutions of such uses, as well as for financial integrity in general. Feedback received on this discussion paper will inform the EBA's decision on which, if any, further actions may be required to mitigate the risks arising from this innovation, while also allowing market participants to harness its benefits.
EBA Amends Historical Look-Back Approach Method for Calculating Additional Collateral Outflows
On May 3, 2016, the European Banking Authority (EBA) issued an opinion to the European Commission supporting the Commission's proposed amendment to the historical look-back approach (HLBA) methodology used in the draft Regulatory Technical Standards (RTS) on additional collateral outflows.
The amendment by the EBA followed a request by the European Commission that the draft RTS be amended so that the calculation of the additional collateral outflows was based on the HLBA for market valuation changes developed by the Basel Committee on Banking Supervision (BCBS). The BCBS's HLBA focuses on the largest net difference in collateral posted instead of the largest gross difference which had been the focus of the EBA's approach. In December 2015, the Commission had raised concerns that the EBA's HLBA approach could have a significant impact on credit institutions and international derivative markets. Therefore, it decided not to adopt the draft RTS as it had been submitted by the EBA, but signalled it was open to endorsing an amended draft RTS based on the BCBS's HLBA approach.
European Parliament Adopts Final Text of Benchmark Regulation
On May 3, 2016, the Council of the EU published the text of the proposed Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (Benchmark Regulation). This follows adoption of the Benchmark Regulation by the European Parliament on April 28, 2016.
Next, the Benchmark Regulation must be formally adopted by the Council, after which it will be published in the Official Journal of the EU. It will then enter into force on the day after its publication.
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