EBF position on the review of MiFID
The European Banking Federation (EBF) has published a position paper on the review of the Markets in Financial Instruments Directive (MiFID).
Overall, the EBF is pleased with the proposed changes to the MiFID framework. However, the EBF states that there are significant areas of concern, which need to be addressed to ensure the legislation is well adapted to the needs of investors and issuers who use the markets.
Areas of specific concern for the EBF include:
- The Commission’s proposal for a new category of Organised Trading Facilities (OTFs). The EBF states that OTFs should be regulated in way that permits OTFs and existing venues to compete fairly for business.
- The Commission’s proposal to extend the Systematic Internaliser regime to non-equities.
- The imposition of market-making obligations on algorithmic traders.
- The Commission’s proposed extension of transparency obligations to depositary receipts, exchange traded funds and certificates issued by companies.
- The extension of transaction reporting. The EBF states that the transaction reporting regime should not include transactions in all commodity derivatives as position reports may be more appropriate.
- The conduct of business rules. In particular, the EBF is concerned about the proposed labelling of different kinds of advice (i.e. independent versus non independent).
- The application of equivalence requirements to third-country legislation.
View EBF position on the review of MiFID, 4 January 2012
Meeting of the Financial Stability Board in Basel on 10 January
The Financial Stability Board (FSB) has issued a press release following its recent meeting in Basel at which it discussed vulnerabilities currently affecting the global financial system and its work plan for 2012 to strengthen global financial regulation.
In relation to the financial regulatory reform programme the press release states that:
- The FSB discussed the work ahead to further develop and implement the framework for systemically important financial institutions (SIFIs) including extending it to domestic systemically important banks, and global systemically important insurance companies and other types of financial institution. The FSB also approved work plans to implement the core elements set out in the Key Attributes of Effective Resolution Regimes for Financial Institutions, including the preparation of resolvability assessments, recovery and resolution plans, and cross-border cooperation agreements between home and host authorities for each global SIFI by end 2012.
- The FSB reviewed the status of the work streams that are designed to strengthen the regulation and oversight of shadow banking. In March 2012 the FSB will review in more detail the progress made by each work stream.
- The FSB has set up an OTC Derivatives Coordination Group to ensure coordination with different international work streams. An initial focus of the group will be on establishing adequate safeguards for a global framework for central counterparties (CCPs) so that, by June 2012, authorities can make informed decisions on the appropriate form of CCPs to meet the G20 commitment that all over-the-counter derivatives be centrally cleared by end 2012.
- The FSB is supporting the development of a legal entity identifier (LEI) - a unique global identifier for parties to financial transactions. The FSB has set up an expert group to deliver proposals by April 2012 on the implementation of a global LEI system.
- The FSB has agreed to study how to improve the role that external audits play in providing early warnings to prudential supervisors and regulators of financial institutions and to encourage improvements to the regulation of external audits.
The press release also briefly covers the FSB’s work on implementation monitoring including peer reviews and compensation practices. In relation to the latter the FSB states that a bilateral complaint handling process will be established by which national supervisors will address specific level playing field concerns regarding the implementation of the FSB Principles and Standards for Sound Compensation Practices.
View Meeting of the Financial Stability Board in Basel on 10 January, 10 January 2012
Finalised guidance - Statement on using Switching Terms in mortgage contracts under the Unfair Terms in Consumer Contracts Regulations 1999
The FSA has published finalised guidance which comprises of a statement that considers terms in interest-only mortgage contracts that allow firms to switch consumers from an interest-only mortgage to a repayment mortgage (so called Switching Terms). The statement briefly sets out why the FSA believes that some Switching Terms in standard consumer contracts may pose a risk of being considered unfair, or of not being expressed in plain and intelligible language, under the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations).
The FSA notes that the scope of the statement is limited to a consideration of the Regulations and firms should be aware that there may be other Handbook rules that may be applicable. In addition, in relation to the Regulations, the FSA states that the risks identified in the statement are not intended to be exhaustive and instead represent what the FSA regards as the most likely risks.
View Finalised guidance - Statement on using Switching Terms in mortgage contracts under the Unfair Terms in Consumer Contracts Regulations 1999, 12 January 2012
FSA letter on the Legislative Reform Order and CREDS
The FSA has published a number of documents concerning the changes introduced on 8 January 2012 by the Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2010 (LRO) and the new Credit Union New sourcebook (CREDS).
The FSA has published a letter to the boards of every credit union setting out the key points of the LRO and what credit unions need to do. In particular the letter states that all credit unions should be aware of the following points:
- The LRO clarifies the position on the attachment of shares and this is something which all credit unions should be aware of, regardless of whether they are choosing to take up options under the LRO.
- All credit unions will need to be aware of the strengthened prudential rules (and the associated transitional provisions that apply) and must consider any steps they may need to take to meet the strengthened requirements.
- The LRO gives the FSA the power to automatically vary all credit unions’ permissions so that they can admit the full range of corporate members, if they wish. Even if a credit union does not want to take on corporate members immediately, varying its permission now will mean that it will have the appropriate permission to accept corporate members in the future.
The FSA has also published four fact sheets which cover:
- Changes affecting credit unions under the LRO.
- Changes to prudential rules for credit unions.
- Amending the registered rules of a credit union.
- Regulatory reporting for credit unions.
View FSA letter on the Legislative Reform Order and CREDS, 6 January 2012
View Fact sheet - Regulatory reporting for credit unions, 6 January 2012
View Fact sheet - Changes to prudential rules for credit unions, 6 January 2012
View Fact sheet - Changes affecting your credit union under the Legislative Reform Order, 6 January 2012
View Fact sheet - Amending the registered rules of a credit union, 6 January 2012
Complaint against the FSA
On 5 January 2012, the Office of the Complaints Commissioner published a decision relating to a complaint against the FSA regarding material on its website about cheque clearing times.
The complainant argued that information on the FSA's website was incorrect because it implied that banks must adhere to cheque clearance timescales set by the FSA. This is not the case as the timescales set out on the FSA's website were simply recommendations.
The decision states that the FSA did amend material on some of its web pages following an initial enquiry by the Complaints Commissioner. However, at the time of the decision, the FSA had not amended one particular publication entitled Bank accounts - Know your rights.
Therefore, the Complaints Commissioner recommended that the FSA amend the publication, apologise to the complainant and make an ex gratia payment of £50 to the claimant.
View Complaint against the FSA, 5 January 2012
FSA publishes new web pages on change of control
The FSA has published new web pages relating to the change of control requirements under the Financial Services and Markets Act 2000 (FSMA).
The first new web page is entitled FSA's section 178 notice requirements. This web page includes links to the FSA’s updated notification forms.
The second new web page is entitled Quick Reference Guide: Acquisitions and the Change in Control regime. This web page sets out the key requirements under FSMA and also provides a structure chart to help firms identify controllers.
View FSA publishes new web pages on change of control, , 4 January 2012
View Quick Reference Guide: Acquisitions and the Change in Control regime, 4 January 2012
The FSA has published a Final Notice concerning Karamat Ali cancelling his registration as a small payment institution under the Payment Services Regulations 2009 (the PSRs).
The FSA has concluded that Mr Ali has changed the address of his head office without notifying the FSA thereby preventing it from regulating Mr Ali’s business effectively. The FSA has cancelled Mr Ali’s registration as a small payment institution in order to protect the interests of consumers, in accordance with Regulation 10(1)(h) of the PSRs.
View Final Notice - Karamat Ali, 5 January 2012
The FSA has published Final Notices concerning Kumarans Silk Limited (KSL), Sohail Anjum, Sardar Agha and Akhtar Mahmood trading as AM & Sons Money Exchange cancelling their registration as a small payment institution under the Payment Services Regulations 2009 (the PSRs).
Each Final Notice reports that the FSA has taken this action on the basis for failure to submit a Payment Services Directive Transactions return for the period ended 31 December 2010 and to respond adequately to repeated FSA requests to do so. The FSA has cancelled their registration as a small payment institution in order to protect the interests of consumers, in accordance with Regulation 10(1)(h) of the PSRs.
View Final Notice - Kumarans Silk Limited, 5 January 2012
View Final Notice - Sohail Anjum, 5 January 2012
View Final Notice - Sardar Agha, 5 January 2012
View Final Notice - Akhtar Mahmood trading as AM & Sons Money Exchange, 5 January 2012