Securities and markets regulatory news, October 2020 # 3

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Recent regulatory developments of interest to financial institutions and markets. Also check our General regulatory news in the Related Materials links.

Contents

  • ISDA 2020 IBOR Fallbacks Protocol to be launched on 23 October 2020
  • MiFID II Quick Fix: overview and further MiFID II review process (Deutsche and English)
  • Brexit: Ofgem update on REMIT contingency arrangements
  • Proposed Regulation on EU crowdfunding service providers: Parliamentary Committee seeks clarification on UK approach

ISDA 2020 IBOR Fallbacks Protocol to be launched on 23 October 2020

The International Swaps and Derivatives Association, Inc. (ISDA) has announced that the ISDA 2020 IBOR Fallbacks Protocol, which is designed to assist derivatives market participants with their IBOR transition plans, will be launched on 23 October 2020. It has also published the text of the supplement and the protocol ahead of their official launch – these, and other related documents, are available on the ISDA website.

Read more in our separate briefing on Hogan Lovells Engage.

MiFID II Quick Fix: overview and further MiFID II review process (Deutsche and English)

As a reaction to the coronavirus and the associated disruptions, the European Commission published its Capital Markets Recovery Package on 24 July 2020. In addition to proposals for amendments to the Prospectus Regulation and the Securitization Regulation, the package also contains a proposal of amendments to Directive 2014/65/EU on markets in financial instruments ("MiFID II"). The aim of the package is to facilitate investments in the real economy and to enable rapid recapitalization of European companies.

Read our briefing here.

Brexit: Ofgem update on REMIT contingency arrangements

Ofgem has published a letter updating contingency plans for how the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) will apply in Great Britain at the end of the Brexit transition period. Ofgem confirms to GB Market Participants (MPs) that, regardless of whether a future partnership agreement is reached between the UK and the EU before the end of the transition period, the REMIT arrangements that will apply in GB from 1 January 2021 will be consistent with those set out in Ofgem's September 2019 letter on no-deal Brexit arrangements. It summarises these arrangements as follows:

  • REMIT monitoring and enforcement: REMIT will be retained in UK law by application of the European Union (Withdrawal) Act 2018 and amended by a subsequent statutory instrument to ensure its operability. The Electricity and Gas (Market Integrity and Transparency) (Enforcement etc) Regulations 2013 will continue to apply. Consequently, all of the REMIT prohibitions and obligations currently in force will continue to apply in GB from 1 January 2021 and Ofgem will continue to have the powers to monitor and enforce them. Ofgem intends to continue to interpret REMIT with regard to the EU Agency for the Co-operation of Energy Regulators (ACER) guidance on the application of REMIT. Ofgem will review any particular need for a GB specific REMIT guidance in due course.
  • GB Registration: MPs currently registered with a National Regulatory Authority (NRA) of an EU member state will not need to re-register with Ofgem in order to enter into transactions for wholesale energy products deliverable in GB after EU exit. MPs currently registered with Ofgem will remain so (unless they elect to re-register with another EU member state). After the end of the transition period, Ofgem will no longer use ACER's Central European Register of Market Participants to administer registration requests. It will set up its own registration system. MPs currently registered with Ofgem who wish to enter into transactions or place orders to trade in wholesale energy products where delivery is in the EU, will be required to re-register with an NRA of an EU member state. Re-registration requests will be executed after the end of the transition period.
  • Data reporting: Trade and fundamental data relating to GB wholesale energy markets and products will no longer be collected by ACER. After the transition period, Ofgem will, until further notice, monitor the market for possible breaches of market integrity using existing data sources, including data currently collected directly from GB brokers and exchanges. GB MPs will not be required to report to Ofgem the data currently reported to ACER. Ofgem will keep the effectiveness of these arrangements under review.
  • Ofgem currently has no further communications planned in advance of 1 January 2021. Should any unforeseen circumstances arise that cause these arrangements to change, Ofgem will notify the market without delay.

Proposed Regulation on EU crowdfunding service providers: Parliamentary Committee seeks clarification on UK approach

The House of Lords European Union Select Committee Chair has published a letter it has written to John Glen, Economic Secretary to the Treasury, in which it asks for further clarification on the UK government's approach to the European Commission's proposed Regulation on European Crowdfunding Service Providers for Business and the related Commission proposal for a Directive making consequential amendments to the Markets in Financial Instruments Directive relating to crowdfunding.

[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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