Super Tuesday RegDelta alert no 1

JWG analysis Last week, long after the news of Super Tuesday which reshaped the EU regulatory landscape, Europe made MiFID II, MAR, CSMAD, DGSD and the BRRD law of the land. The final Markets in Financial Instruments Directive (MiFID II) , weighing in at a slim 69% fewer pages thanks to repagination, appears to be


JWG analysis. This month the Japanese Financial Services Agency published their latest FAQ on the Financial Instruments and Exchange Act (FIEA). The current version of FIEA was approved and enacted in June 2006.  It aims to: make Japanese financial and capital markets more adaptive to environmental change; promote investor protection and improve competition; ensure that


ESMA: “No more guidance from us”

JWG analysis. Depending on whom you listen to, Europe’s trade repositories either popped in for a chat with ESMA, or were hauled in for a stern reprimand last week.  Whichever it was, the resulting discussion was pretty explosive.  ESMA made themselves very clear; trade repositories must work harder to address low levels of inter-trade repository


JWG analysis. In our previous piece we spelt out the breadth and depth of the regulatory onslaught in the context of MiFID II.  Here, we unveil how RegDelta can help you redefine the battlefield. What is RegDelta? RegDelta gives firms the ability to control global regulatory challenges.  RegDelta is a financial services regulatory data management


Battle weary? RegDelta is on its way!

JWG analysis. For the past decade we have been making sense of the changes regulators want to make … and it’s not been easy.  JWG has worked with over 100 financial institutions, dozens of trade associations and regulators in several countries to mirror the detailed compliance requirements specified by the regulatory agenda to help define


In our previous article we looked at the current surveillance regime in Europe and the challenges of extending it. See here for more background on the 860 questions that need to be answered by 1 August. While not comprehensive, this will help describe three issues that should be on your checklist: context, identification and linkage.


As debate rages across the Atlantic today over controlling HFT in Chicago, we’ve been digging into ESMA’s 42 pages on transaction reporting in its MiFID II discussion paper.  See here for more background on the 860 questions that need to be answered by 1 August.  Years after Dodd-Frank upgraded the surveillance capability of the US,


JWG analysis. The continent was rocked by far more than parliamentary elections on 22 May. Early reports from major financial centres confirm the impact from the 844 pages of text released by ESMA on MiFID II / MIFID to be about a 9 on the Richter scale – so high that ESMA’s website gave up


JWG has extracted the following questions from ESMA‘s Consultation Paper on MiFID/MiFIR Technical Advice.  ESMA needs to deliver this advice to the European Commission by December 2014 and is therefore subject to a condensed consultation process for this paper. For more on MiFID/MiFIR see here. Q1.      Do you agree with the proposed cumulative conditions to be


  [accordion] JWG has extracted the following questions from ESMA‘s Discussion Paper on MiFID/MiFIR draft RTS/ITS.  This paper will provide the basis for a further consultation paper on the draft RTS/ITS which is expected to be issued in late 2014/early 2015. For more on MiFID/MiFIR see here. Q1:      Do you agree that the existing work/standards


JWG analysis. Our jaws hit the floor when it was revealed at our CDMG meeting last week that ESMA’s MiFID II technical standards are expected to be in excess of 800 pages with more than 800 questions to be answered by August 2014. And this is just the start.  ESMA’s 2014 work plan has over


JWG analysis. On 15 April the European Parliament formally adopted the Regulation on Central Securities Depositaries (CSDR), a crucial piece of the new EU landscape for securities trading.  The impact will be far reaching – and not just for Europe. As firms chart their way through MiFID II and global OTC reform, they will be


The minefield of KYC compliance

JWG analysis. The idea of KYC compliance has traditionally been associated with AML, PEP checks and international sanctions, however the new wave of regulations that is to begin rolling out in 2015 will place a whole new set of pressures on businesses to ‘know their clients’. Rachel Wolcott, writing for Accelus’ Compliance Complete, has highlighted


The ‘Super Tuesday’ safety net

JWG analysis. While the significant reforms of MiFID II, the BRRD, the SRM and the DGS stole the limelight on ‘Super Tuesday’, other significant legislation also made its way through Parliament. The following reforms highlight Parliament’s move to solidify consumer protection within the wider European market.  These reforms, the BAD, PRIIPs KID and UCITS V


JWG analysis. As the European Parliament adopted MiFID II/ MiFIR on 15 April, the financial services industry was left wondering what exactly the new transparency regime is going to mean. Despite a curiously low EC estimate of compliance costs, at between €512 and €732 million, it is clear that MiFID will have a large impact


JWG analysis. Without a consolidated viewpoint on what new risk data requirements mean, firms will be at a loss when it comes to determining best practice. We are in the middle of a massive, global industry transformation with many rulebooks. With divergent regulatory timelines, standards and existing data architectures a common and holistic ‘best practice’


JWG analysis. On Tuesday, 15 April the European Parliament approved several new reforms to manage banking sector risk and ensure that shareholders, not taxpayers, pick up the tab for the next crisis. Now the political work is done, the MEPs are busy campaigning, and it’s up to the industry and ESAs to work out how


JWG analysis. When MiFIR is implemented in 2016, all of the pain experienced in preparing for EMIR’s transaction reporting regime, which went live earlier this year on 12 February, is likely to be rekindled.  Thankfully, at least this time around the industry has significantly more time to get prepared. Hopefully, that means enough time to


Algo flagging – the future

By Sam Tyfield, Vedder Price. Algo flagging is currently only the concern of direct members of German venues.  But it’s going to have a much broader application under MiFID / MiFIR and become of concern to the buy-side too. Yesterday, the good Doctor Voigt of Fidessa published a blog about algo flagging.  It is well worth


MiFID II to calm the US HFT storm?

JWG analysis. While the US HFT debate rages and the FBI launches its investigations, Europe is quietly preparing to set a hard-hitting set of new rules for technical standards. When ESMA begins its consultation around MiFID II / MiFIR tech standards this summer, market participants will need to have their ducks in a row and


JWG analysis. Earlier this month, New York Attorney General (NYAG), Eric Schneiderman, set out his stall with a scathing attack on high frequency trading firms and their practices.  Describing HFT firms as ‘parasitic’ and comparing their strategies to “Insider Trading 2 .0”, the NYAG’s statement would have been music to the ears of financial luddites


JWG analysis. Last week, Nasdaq OMX became the first infrastructure provider to be authorised as a Central Counterparty (CCP) under the European Markets Infrastructure Regulation (EMIR).  The decision sent waves of mild panic rippling through the OTC markets, putting the focus back on an issue that was already predicted to pose problems for European banks


JWG hosted a jam-packed CDMG meeting last week for the first sneak-peek of what MiFID II holds in store for 2016. The big conclusion:  a lot of work still needs to be done to scope out the operational implications of MiFID II / MiFIR and firms will need to coordinate responses quickly once the consultation


JWG analysis. This week marked the one year anniversary of EMIR’s first implementation deadline.  And what a difference a year makes … or does it? This time last year, banks and their customers were busy determining who had passed certain thresholds (determining who would be classified as NFC or NFC+), along with implementing confirmation processes


Europe trade reporting: fines for all?

By Sam Tyfield and JWG. We asked a prominent city lawyer what current EMIR reporting issues could mean if the regulators chose to get nasty.  The bottom line: big fines could appear on the cards years down the line.  Given where we are with current data quality efforts, this might have an impact on the


JWG analysis. Once MiFIR is enacted over the coming months, there will no doubt be a lot of concern about one little word that threatens to have a serious impact on the commercial operations of many service providers in Europe. That word is ‘reasonable’. By itself, the word reasonable seems harmless. But when used as


The OTC dilemma: is the data awesome?

JWG analysis. There is a new film making the rounds where the evil ‘Lord Business’ locks up all the master builders in a think-tank and uses them to design his empire. Quite apart from giving JWG analysts a lot to laugh about, it’s a useful theme when exploring what is going on with OTC trade


JWG analysis. “When a tree falls in the woods, does it make a noise?” While some may find the question trivial, it has provided much food for thought for philosophers since it was first raised in the early 1700s. The answer to the question relies on one’s assumptions on whether observation is a necessary condition


AMLD IV adds fuel to KYC utility model

JWG analysis. The European Parliament recently published (here) the latest amended text of the proposed 4th Anti-Money Laundering Directive (AMLD IV), which includes measures to help simplify the way firms conduct KYC today, and adds weight to the KYC utility business model by requiring the industry to maintain accurate and timely data on beneficial ownership.


Putting the ‘PRA’ in suPRAnational

JWG analysis. The Prudential Regulation Authority last week published a consultation paper that threatens to impose stricter requirements on international banks operating UK-based branches. The new proposals have been designed to ‘ensure the stability of the UK financial system’ by promoting ‘safety and soundness’, including requirements for increased transparency, resolution measures to protect investors and


Transparency: the new wonder drug?

JWG analysis. MiFID II and its regulatory cousin, MiFIR, have some lofty ambitions for European securities and derivatives markets.  And one of their most clearly stated goals is to enhance market transparency by bringing about changes to market practices, and potentially even market structures. The problem is that, while transparency may be seen as a


ESMA publishes 3rd country CCP list

JWG analysis. ESMA has published an updated list of non-EEA central counterparties (CCPs) that have applied for recognition under Article 25 of EMIR. ESMA has taken care to note that the list is not exhaustive and only includes applicants that have agreed to have their name mentioned. Those CCPs that pass the approval process will be permitted


JWG analysis. When the requirement brought about by the German high frequency trading act to tag algorithms comes into force in April of this year, market participants may well feel hamstrung by the complexity of the regime.  And while the regulatory goal of improving market surveillance and reducing systemic risk may be valid, some might


JWG analysis. The road to mandate trading of OTC derivatives on electronic trading platforms will be long but, without a harmonised approach on both sides of the Atlantic, the process will be fraught with challenges. Although the core principles and requirements for Swap Execution Facilities (SEFs) were articulated by the CFTC at the beginning of


JWG analysis. The Fed made some concessions in timing and scope, but pressed ahead with measures to insulate the US financial sector from future bailouts earlier this week.  The news stoked fears that European regulators may look to reciprocate, triggering a race to the highest common denominator when it comes to determining capital buffers, and potentially


MiFID II: now under starter’s orders

JWG analysis. The first 700 of 18,000 pages of MiFID II texts have now been published, a little more than a month after the European Commission announced agreement in the trilogue process, but this milestone foreshadows a confused standards landscape that will stretch forward to implementation of the regulations and directives in 2016. For those


JWG analysis. EU and US taxpayers scratched their heads in disbelief this week as the regulators made it painfully clear that they have squandered both years and billions with little to show for it. The politicians that gathered in Pittsburgh were quite explicit – they want OTC transparency.  Did they expect that, nearly five years


Trade data: seeing through the smoothie

JWG analysis. When G20 leaders met in Pittsburgh back in September 2009, there was clear consensus on the direction that the financial industry needed to take in the aftermath of the global financial crisis.  Transparency was a key theme. The view was that, by mandating industry-wide reporting obligations for OTC derivatives, regulators would be armed


JWG analysis. Until the world has a definitive LEI, we are going to have to recognise that piecemeal adoption brings with it significant hidden costs in validating, enriching and mapping for regulatory purposes. LEI watchers have been encouraged to see Saudi Arabia and Italy joining the fold in the past month.  They might be just


EU to change IP laws within four years

By Sam Tyfield.  In November 2013, the EU Commission published a draft Directive on “the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure”. All else being equal, we may expect the Directive to be put into national laws within the next four years. Notwithstanding the extended timetable,


JWG analysis. With the 12 February EMIR trade reporting deadline just around the corner, the atmosphere in the derivatives industry suggests just as much turmoil as ever. Issues surrounding LEI registration, UTI reconciliation and trade repository affiliations persist as the rush to comply with mandatory reporting rules begins.  The industry is still grappling with issues that


JWG analysis. In late October, the European Banking Authority (EBA) released a consultation on the use of the Legal Entity Identifier (LEI) for CRD IV’s risk reporting requirements.  Now that the consultation phase has been concluded, firms may only have around 60 days to register LEIs for all their entities that report under CRD IV.


By Conor Foley, Hume Brophy.  This alert summarises the key provisions of the proposed Regulation on structural measures improving resilience of EU credit institutions (SBR proposal) and the proposed Regulation on reporting and transparency of securities financing transactions (TSFT proposal). Both proposals were published on 29 January by the European Commission and follow the 2012


By Tristan Dehaan, Market Data Vendor Manager Following a robust market data discussion on RegTechFS, we asked Tristan, a Market Data Vendor Manager at a European Asset Manager, to tell us about his efforts to help the industry get to more client-friendly market data contracts. At the end of 2012, speaking as a well-placed member of


JWG analysis. With 9 working days to go before compulsory reporting of derivatives trades becomes a daily reality, firms are in the final phases of implementing their individual solutions.  These differ from firm-to-firm, for example some are planning to report in real-time (as in the US), while others plan to report later within the T+1


JWG analysis. According to the notice released on Thursday, the FCA has fined Standard Bank £7,640,400 for failings in its AML systems and controls relating to its treatment of corporate customers connected to politically exposed persons (PEPs). This notice is particularly relevant given that the FSA’s thematic reviews in 2010 found that “more than a


JWG analysis. The new political drive towards tax transparency is landing in money laundering legislation, and complicating an already complex landscape. G8 Leaders, as a result of the summit held in June last year, committed to publishing ‘action plans’ setting out the concrete steps they will take to combat tax evasion. It appears that those


This time next year, the market is going to be a very different place.  No-one knows the complete, consolidated impact of regulation on the market, and many of the parts are still in motion, but the core structure is starting to take shape. In Europe, our research tells us that most institutions are opening 2014


Working late into Tuesday night, European lawmakers concluded a compromise over the new Markets in Financial Instruments Directive (MiFID II).  The final text has not yet been made public, and is not expected for several days.  However, some details have emerged. Concessions had to be made on both sides, with the Parliament advocating for robust


2013 was a huge year in the development of alternate and decentralised ‘crypto-currencies’.  Some countries have so far taken relaxed stances on them, despite obvious money-laundering and tax evasion risks.  Meanwhile, others have taken the opposite approach and seen fit to ban crypto-currencies outright.  Either way, we are now beginning to see a clearer picture


Trade reporting for EMIR begins in February 2014 and firms are beginning to register their entities (and their clients) for LEIs in order to meet the deadline. However, registration volumes are set to increase as the EBA’s recent consultation paper indicates that the LEI will be used for CRD IV risk reporting, significantly expanding the


Big changes are happening at the CFTC:  With the departure of Gensler, and the swearing-in of acting Chairman Mark Wetjen, everyone knew that there would be a change of approach.  However, the scale and speed of that change has come as a surprise to many. In fact, almost the moment Gensler stepped out of the


Newsflash: ESMA and EC EMIR reporting update

By: Sam Tyfield Just in time for your holiday, December has seen a cascade of reporting work from ESMA and the EU Commission on EMIR. On December 20, 2014, ESMA release an updated Q&A on EMIR.  Specifically on ETD reporting, see towards the bottom of the page at the link here (I have cut and pasted the relevant paragraphs below,


By Sam Tyfield, Vedder Price As you will recall: 11 member states of the EU have proposed a FTT using the ‘enhanced cooperation’ procedure; the FTT proposed includes spot FX; the EU Council has obtained a legal opinion stating that the imposition of a FTT by an 11 member state group is unlawful because: A)


Today, a final version of the long-awaited Volcker Rule has been published by the five US agencies involved in its drafting.  The rule as finalised is something of a victory for banks owing to multiple broad exemptions and an extension of the timeline.  However, there are many questions still outstanding, and implementation will be a


One of the things we’ve learnt the hard way in 2013 is that the sell-side need better ways of communicating with their clients.  Maintaining a web of communications between increasingly complex, multi-entity organisations and many thousands of clients is never going to be easy, but new regulatory data demands are making it even harder. EMIR


By Sam Tyfield, Vedder Price Whilst it comes as no surprise that the FCA would like to see a UK branch or subsidiary of an overseas firm managed from within the UK, it is worth reiterating the point given that, in a speech given last month by Clive Adamson, Director of Supervision at the FCA


Dr Anthony Kirby, Chair MiFID BEWG – E&Y MiFID II will be implemented as both a regulation, “MiFIR” (with direct effect in all 28 Member States), and a directive (requiring transposition into national law). The timing of ancillary measures such as revisions to the Market Abuse Regulation (MAR/MAD II) and the Packaged Retail Investment Products


By James Humphrey-Evans, Bortstein Legal Group With annual revenues in excess of USD 20 billion, the market data industry is complex and large. It is no surprise that using, buying, creating or selling market data presents a range of risks, including technology, financial and legal risk.  Legal risk typically arises from breach of obligations under


The OTC trading space is being kept on its toes by the Commodities and Futures Trading Commission (CFTC); recent developments mean that more market participants worldwide are in scope of US derivatives rules than ever before.  In our previous piece, JWG analysed the CFTC’s rules on who is a ‘US person’ for their purposes, and


UPIs, UTIs and LEIs: Key issues and methods

Following the success of Tony Russell’s UTI article, it seems apparent that implementing new identifiers will be a major area of difficulty prior to the start of OTC/ETD trade reporting in Februrary 2014.  The presentation below sets out the details of the proposals for the UPI and UTI, identifies some of the major issues and


The Market Abuse Regulation (MAR) was adopted back in July.  However, the key changes have yet to show up on many people’s radars.  Whether this is because people aren’t aware of the changes, or because implementation will be largely principles-/outcomes-based, is unclear.  But there are things for firms to do now, especially ahead of MiFID


The 4th Capital Requirements Directive (CRD IV) requires banks to report to their national regulators, so-called ‘country-by-country reporting’.  Individual Member States have been tasked by the EBA with issuing national standards for firms regulated under CRD IV to carry out this reporting.  The results from the UK’s Country-by-Country reporting (CBCR) for capital requirements consultation were


In the past week, two key events have occurred in the EMIR space.  Firstly, ESMA responded to the Commission’s statement of intention not to allow a delay to the introduction of ETD reporting.  Secondly, ESMA also finalised its draft technical standards on EMIR extraterritoriality.  The effects of both should be good news for firms implementing


How many types of risk are there to a financial institution?  In recent years the list has grown from patently quantifiable risks – market, credit, liquidity – into more nuanced forms of risk, such as conduct risk and systemic risk.  However, increasingly ambitious regulation and certain key legal decisions have brought with them a new


By Tony Russell, Commerzbank In our previous article, we looked at why a UTI is required and at what proposals exist to standardise this across the market.  Here, we consider what that means in practice: Generally, for a sell-side institution, the ISDA proposal boils down to: If a 3rd party UTI is available, capture that,


2013 has been a real wake-up call for the buy-side.  New requirements from regulations like EMIR, AIFMD and Dodd-Frank have meant that funds, asset managers and even corporates are suddenly in regulators’ sights, some for the first time.  In the past, the reaction to such changes has frequently been to delegate new compliance responsibilities to


By Tony Russell, Commerzbank The UTI is essential for successful EMIR reporting – get it wrong and your reports won’t match.  However, although it sounds simple, in practice there is a great deal of complexity.  Anyone who needs to report under EMIR needs to determine their approach for handling UTIs as soon as possible in


By Professor Alistair Milne, Loughborough University Anyone involved with the trade repository reporting for OTC derivatives will be aware of the LEI or “legal entity identifier”. Others may have heard about it, but as yet it is unlikely to be impinging on day-to-day responsibilities.  Still it is worth paying some attention to the LEI, because


On 7 November, as planned, the European Securities and Markets Authority (ESMA) approved the registrations of the first four trade repositories (TRs) under the European Market Infrastructure Regulation (EMIR).  This means that trade reporting for OTC and exchange-traded derivatives is now due to start in February 2014. The registration of these TRs means that they


It has now officially been announced that the European Commission will reject ESMA’s application for a delay of Exchange Traded Derivatives (ETD) for the scope of EMIR.  Consensus among trade associations, conference attendees speeches from regulators all indicate that this is case. This means that we won’t have the luxury of a longer MiFID II


FIMA 2013: The data prayer

Our regulators who art in Brussels, Furloughed be thy friends, Thy directives come, Thy reports be done, For Dodd-Frank as they are for EMIR. Give us this day our draft technical standards, And allow us our indices, As we forgive those that sell market data to us. And lead us not into non-compliance, But deliver


Institutions are closely following the MiFID II negotiations, and for obvious reasons: the sequel to 2007’s headline regulation threatens to have a similarly large impact on the shape of European – and even global – markets.  But, for such a high priority issue, up-to-date information has been relatively hard to come by. At an October


European banks are currently living in a grey area when it comes to EMIR enforcement.  By ESMA’s account, all institutions should by now have classified their counterparties to derivatives trades.  However, the first tentative steps towards new utilities have yet to take root – so what kind of solutions will the industry opt for? All


With trade repositories expected to be registered by ESMA soon, the date at which trade reporting becomes mandatory is not far off. However, many parties to derivatives trades are still unsure about the finer details of how they will meet this mandate. 7 November is the date by which ESMA expects to have a trade


A variety of technology providers, consultancies and data providers (more than 10 of them at the last count) have announced (or have been rumoured to have formed) partnerships of some form in order to create new utilities that can share data between banks. With the huge and increasing number of regulatory requirements for customer data,


MiFID II is almost upon us.  Expect it to be the regulatory topic of conversation very soon.  So what do you need to know about it? The legislative package that we call MiFID II is actually made up of a Directive and a Regulation, which cover a broad range to trading activities, instruments and market


On Thursday, 10 October, the City of London Law Society (a trade body for City solicitors) published a letter dated 23 September accusing the FCA of gold-plating (or at least misinterpreting) the AIFMD (Alternative Investment Fund Managers Directive). The dispute surrounds the date by which firms must be AIFMD-compliant.  In its interpretation of the Directive,


2013 has been a busy year for KYC professionals as they respond to a number of different regulatory requirements. Regulatory demands have raised the bar on not only existing data requirements but also have introduced a number of new ones. In response to this, there are now many different conversations going on in parallel about


On 2 September 2013, the Financial Stability Board (FSB) published the sixth of its semi-annual comprehensive progress reports on over-the-counter (OTC) derivatives reform, as per the agenda of the 2009 G20 summit in Pittsburgh.  Although some of the reform proposals have stalled, particularly in light of the compromised agreement between the US and the EU


The Regulatory Oversight Committee (ROC) for the Legal Entity Identifier (LEI) system has endorsed 3 Local Operating Units as being compliant with the ROC’s criteria for mutual acceptance. The 3 pre-LOUs endorsed are Germany’s WM Datenservice, France’s INSEE, and the CFTC’s CICI utility. With 13 pre-LOUs in existence, it’s likely we’ll be seeing this list