Securities and markets regulatory news, July 2020 #2

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Recent regulatory developments of interest to financial institutions and markets. Includes updates on MiFIR open access regime for trading and clearing ETDs and various ESMA Q&A updated.

Contents

  • COVID-19: MiFIR open access regime for trading and clearing ETDs
  • CSDR: ESMA updates Q&As
  • MiFIR data reporting: ESMA updates Q&As
  • MiFID and MiFIR transparency: ESMA updates Q&As
  • EMIR: ESMA updates Q&As
  • EACH CSDR Settlement Discipline Framework updated

COVID-19: MiFIR open access regime for trading and clearing ETDs

On 3 July 2020, a notice of information on the postponement of entry into application of the open access provisions with regard to exchange-traded derivatives (ETDs) in the Markets in Financial Instruments Regulation (MiFIR) was published in the Official Journal of the EU (OJ). The notice of information extends the transitional period under Article 54(2) of MiFIR during which Articles 35 or 36 of MiFIR do not apply to those central clearing counterparties (CCPs) or trading venues that made a request to benefit from this transitional arrangement with respect to ETDs. The transitional period was due to expire on 3 July 2020 and has how been extended until 3 July 2021, with effect from 4 July 2020.

The extension only applies to those CCPs or trading venues that made a request to their competent authorities to benefit from the transitional arrangements with respect to ETDs.

The notice explains that the extension is required as the current market environment (including a high degree of uncertainty and volatility driven by COVID-19), increases operational risks for CCPs and trading venues. Increased risk requires more focus on business continuity and the assessment of access requests may, in the current environment, have negative repercussions on the orderly functioning of markets in trading and clearing of ETDs.

FCA Response

In response to the notice of information, on 6 July 2020, the UK Financial Conduct Authority (FCA) updated its statement on the open access regime for trading and clearing ETDs under the MiFIR in light of COVID-19.

The FCA explains the change agreed by the EU co-legislators since the FCA published its original version of the statement on 11 June 2020. As a result, the FCA advises that the relevant provisions will not apply until 4 July 2021. The amendment will form part of the EU retained law and will continue to apply in the UK after the end of the Brexit transition period.

CSDR: ESMA updates Q&As

The European Securities and Markets Authority (ESMA) has updated its Q&As on the implementation of the Central Securities Depositories Regulation (CSDR). ESMA has updated Part III of the Q&As on settlement discipline, to include a new Q&A on buy-in timeframes (see Q&A 7(b)).

MiFIR data reporting: ESMA updates Q&As

ESMA has updated its Q&As on data reporting under MiFIR. ESMA has added a new Q&A about reporting obligations in the scenario where an investment firm executes a reportable transaction through an execution algorithm provided by another investment firm (see Q&A 13).

MiFID and MiFIR transparency: ESMA updates Q&As

ESMA has updated its Q&As on data reporting under MiFIR providing a technical clarifications for the performance of the mandatory systematic internaliser (SI) test. The Q&A specifies how the number of transactions and the nominal amount traded of a derivative shall be allocated when a derivative contract changes over the observation period from one sub-class to another.

EMIR: ESMA updates Q&As

ESMA has updated its Q&As on the implementation of the European Market Infrastructure Regulation (EMIR), having amended a Q&A on the frequency of reports for trade repositories (Q&A 11).

EACH CSDR Settlement Discipline Framework updated

The European Association of CCP Clearing Houses (EACH) has updated its CSDR Settlement Discipline Framework, which sets out details of how CCPs subject to the Central Securities Depositories Regulation (909/2014) (CSDR) should implement the CSDR's provisions on settlement discipline.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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