Contents

• Download the full regulatory news bulletin
• Accessing and using wholesale data: FCA call for input
• COVID-19 impact: ESMA recommends action by financial market participants
• MiFIR transparency regime for non-equity instruments: ESMA consultation
• BMR: ESMA consults on RTS
• ESMA supervision work programme 2020

Accessing and using wholesale data: FCA call for input

The Financial Conduct Authority (FCA) has published a call for input (CFI) on the use and value of data and advanced analytics in wholesale financial markets, now and in the future.

The FCA is launching this CFI to understand better how data and advanced analytics are being accessed and used, the value offered to market participants and whether data is being competitively sold and priced. It will help the FCA to determine whether it needs to do further work to address any harm, as well as ensure its regulations do not hinder innovation.

The FCA is looking in particular at:

• trading data;
• benchmarks; and
• market data vendor services.
  Comments are welcome until 1 May 2020.

The FCA intends to publish a feedback statement setting out its analysis, findings and any next steps in autumn 2020. These next steps may include a market study or other regulatory action or a decision to take no further action.

COVID-19 impact: ESMA recommends action by financial market participants

The European Securities and Markets Authority (ESMA) has released a statement recommending action by financial market participants for COVID-19 impact. The recommendations relate to:

• business continuity planning: all financial market participants, including infrastructures should be ready to apply their contingency plans, including deployment of business continuity measures, to ensure operational continuity in line with regulatory obligations;
• market disclosure: issuers should disclose as soon as possible any relevant significant information concerning the impacts of COVID-19 on their fundamentals, prospects or financial situation in accordance with their transparency obligations under the Market Abuse Regulation;
• financial reporting: issuers should provide transparency on the actual and potential impacts of COVID-19, to the extent possible based on both a qualitative and quantitative assessment on their business activities, financial situation and economic performance in their 2019 year-end financial report if these have not yet been finalised or otherwise in their interim financial reporting disclosures; and
• fund management: asset managers should continue to apply the requirements on risk management, and react accordingly.

ESMA, in coordination with national competent authorities (NCAs), continues to monitor developments in financial markets as a result of the COVID-19 situation and is prepared to use its powers to ensure the orderly functioning of markets, financial stability and investor protection.

MiFIR transparency regime for non-equity instruments: ESMA consultation

ESMA is consulting on the transparency regime for non-equity instruments and the trading obligation for derivatives under the Market in Financial Instruments Regulation (MiFIR). ESMA aims to simplify the current complex trade reporting regime to create a uniform set of rules in the EU, while also trying to improve the overall trade transparency available to market participants for non-equity instruments.

The consultation paper contains ESMA's proposals for possible amendments to the transparency regime following in-depth data analyses of the effects of the current regime since January 2018. ESMA has found that, since 2018, the overall level of pre-trade transparency appears to be limited due to the high share of financial instruments benefitting from a waiver. Also, the available deferral options for post-trade transparency appears detrimental to attaining the objective of improving the functioning of the EU internal market.

The consultation paper includes ESMA's report on the impact of the newly established trading obligation for derivatives and the progress made in moving trading in standardised OTC derivatives to exchanges or electronic trading platforms. It also includes the level 2 review relating to the transparency regime in Commission Delegated Regulation (EU) 2017/583 on transparency requirements for non-equity instruments (RTS 2).

Comments can be made until 19 April 2020. ESMA intends to publish a final report and submit, if necessary, draft technical standards to the European Commission for endorsement in July 2020.

The consultation paper is part of the broader review of MiFIR and complements the ESMA's consultation paper published on 4 February 2020 on the transparency regime for equity and equity-like instruments.

BMR: ESMA consults on RTS

ESMA is consulting on draft regulatory technical standards (RTS) supplementing the Benchmarks Regulation (BMR). ESMA seeks views on draft RTS reflecting mandates introduced by amendments to the BMR made by the European System of Financial Supervision (ESFS) Omnibus Regulation relating to:

• governance arrangements (new Article 4(9) BMR) - these RTS relate to requirements intended to ensure that the governance arrangements of an administrator are sufficiently robust;
• methodology (new Article 12(4) BMR) – these RTS relate to the conditions intended to ensure that the methodology an administrator uses to determine a benchmark complies with the relevant requirements in Article 12(1) of the BMR;
• reporting of infringements (new Article 12(4) BMR) – these RTS concern the characteristics of the systems and controls established by an administrator to ensure the integrity of input data to be able to identify and report to the competent authority any conduct that may involve manipulation or attempted manipulation of a benchmark;
• the mandatory administration of a critical benchmark (new Article 21(5) BMR) – these RTS concern the criteria that the competent authority should apply when assessing how a critical benchmark will be transitioned to a new administrator or will cease to be provided; and
• non-significant benchmarks (new Article 26(6) BMR) – these RTS relate to the criteria under which competent authorities may require changes to the compliance statement produced by an administrator of a non-significant benchmark.

The consultation closes on 9 May 2020. ESMA expects to publish a final report and to submit the draft RTS to the European Commission for endorsement by 1 October 2020.

ESMA supervision work programme 2020

ESMA has published "ESMA Supervision: Annual Report 2019 and Work Programme 2020" relating to its 2019 supervisory and monitoring activities for credit rating agencies (CRAs), trade repositories (TRs) and its monitoring of third-country central clearing counterparties (TC-CCPs) and central securities depositories (TC-CSDs).

ESMA also identifies the following supervisory priorities for 2020:

• CRAs: ESMA's work will include proactive identification of risks in outstanding credit ratings, ensuring that CRAs have robust and well-structured rating processes and addressing identified concerns on ITS and information security in CRAs;
• TRs: ESMA's work will include focusing on data quality and access by authorities, IT systems reliability and the effectiveness of the information security function and business continuity plans; and
• TC-CCPs and TC-CSDs: ESMA's work will include monitoring the impact of Brexit on the TC-CCP and TC-CSD regimes, establishing new processes corresponding to EMIR 2.2, recognition and implementing new monitoring processes for tier 2 CCPs. ESMA may also reassess the recognition decision for UK CCPs, if necessary.

The document also looks ahead to ESMA's new supervisory mandates under the Regulation on reporting and transparency of securities financing transactions (SFTR), the Securitisation Regulation, the BMR and MiFIR. ESMA's supervisory priorities for 2020 include work on its supervisory strategy for securitisation repositories and preparing for its direct supervisory role from 1 January 2022 for European critical benchmarks and data reporting service providers.

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