Securities and markets regulatory news, September 2020 # 3

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Recent regulatory developments of interest to financial institutions and markets including publications relating to short selling, EMIR and MiFIR. Also check our General regulatory news in the related materials links.

Contents

  • FMI supervision: BoE policy statement on fees regime for 2020/21
  • EMIR: Delegated Regulations on tiering, comparable compliance and fees for third-country CCPs
  • EMIR clearing obligations: ISDA asks Commission to address Brexit implications for pension scheme arrangements
  • MiFIR derivatives trading obligation: ISDA analysis of impact of Brexit
  • COVID-19: ESMA and EFTA Surveillance Authority extend lowered short selling reporting threshold

FMI supervision: BoE policy statement on fees regime for 2020/21

The Bank of England (BoE) has published a policy statement on the fees regime for the supervision of financial market infrastructure (FMI) that will apply for the 2020/21 fee year.

The BoE states that it expects to issue invoices in October 2020 for the 2020/21 fee year, including any rebate from the 2019/20 fee year.

EMIR: Delegated Regulations on tiering, comparable compliance and fees for third-country CCPs

The Council of the EU and the European Parliament have not objected to three Delegated Regulations supplementing the European Market Infrastructure Regulation (EMIR) with regard to tiering criteria, comparable compliance and fees charged by the European Securities and Markets Authority (ESMA) to third-country central counterparties (TC-CCP). This means they will proceed to being published in the Official Journal of the EU. They will enter into force on the day following their publication in the OJ.

The Delegated Regulations follow amendments made to EMIR by EMIR 2.2 and relate to:

  • the criteria that ESMA should take into account to determine whether a TC-CCP is, or is likely to become, systemically important and consequently the tier to which it should be assigned;
  • the minimum elements to be assessed by ESMA when assessing TC-CCPs' requests for comparable compliance and the modalities and conditions of that assessment; and
  • the types of fees, the matters for which fees are due, the amount of the fees and the manner in which fees are to be paid by TC-CCPs applying for recognition and by recognised TC-CCPs.

EMIR clearing obligations: ISDA asks Commission to address Brexit implications for pension scheme arrangements

The International Swaps and Derivatives Association (ISDA) has published a letter sent to European authorities to highlight the risks posed to EU banks, investment firms and pension funds, as well as UK pension funds, by the fact that UK pension funds will cease to benefit from the clearing obligation exemption for pension scheme arrangements (under Article 89 of EMIR) following the end of the Brexit transition period on December 31, 2020.

In its letter, ISDA sets out a number of proposed solutions that European authorities could adopt to mitigate the impact.

MiFIR derivatives trading obligation: ISDA analysis of impact of Brexit

ISDA has published a paper analysing the impact of Brexit on the derivatives trading obligation (DTO) under Article 28 of the Markets in Financial Instruments Regulation (MiFIR) and the characterisation of OTC derivatives in the EU and the UK.

In the paper, ISDA considers the potential impact of the failure by the UK and the EU to recognise the equivalence of each other's derivatives trading venues by the end of the Brexit transition period and potential other mitigating actions available to the EU and the UK.

ISDA considers that it is critical that the EU and the UK recognise the equivalence of each other's derivatives trading venues in order to mitigate the impact of the UK's withdrawal from the EU.

COVID-19: ESMA and EFTA Surveillance Authority extend lowered short selling reporting threshold

On 17 September 2020, ESMA published a decision renewing, for a further three months, the temporary requirement for the holders of net short positions in shares traded on an EU-regulated market to notify the relevant national competent authority if the position reaches or exceeds 0.1% of the issued share capital after the entry into force of the decision.

In accordance with Article 28(10) of the Short Selling Regulation (SSR), ESMA is required to review the requirement, which was first imposed in a decision published in March 2020 and renewed in June 2020, at appropriate intervals and at least every three months.

The decision enters into force on 18 September 2020 and applies until 18 December 2020. This means that net short positions of 0.1% and above held until that date must be notified to the relevant competent authority no later than 15.30 CET on 19 December 2020.

In a related press release, ESMA notes that the EFTA Surveillance Authority, in cooperation with ESMA, has adopted a corresponding decision applicable to EEA EFTA states' markets. This decision is also effective as of 18 September 2020 and applies until 18 December 2020.

[View source.]

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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