RegTech IntelligenceThe UK Treasury’s fired a warning shot across the bow of digital assets businesses yesterday. The proposed regime will be a significant challenge for the current exchanges and digital asset firms who do not have access to institutional-grade RegTech solutions. With so much at stake, it is essential that those affected understand what impact these
The UK Treasury’s consultation on further crypto asset regulation signals a heavy compliance burden for crypto businesses and some vertically integrated firms may be required to restructure to gain authorisation. Crypto businesses operating in the UK must be registered with the Financial Conduct Authority (FCA) and compliant with the Money Laundering Regulation (MLR 2017). Around
Many of the financial regulatory reforms announced in Edinburgh on Friday by Jeremy Hunt, Chancellor of the Exchequer, had a familiar ring to them. Banks, investment firms and anyone selling products to or into the UK market will need to engage with the detail of what was published. “The Edinburgh Reforms seize on our Brexit
The regulatory spotlight on stablecoins has intensified this month with the Financial Stability Board (FSB) Crypto-asset paper noting[1] that many existing stablecoins still would not meet their recommendations. International risk management principles will be welcomed, but 2023 will be the year that the industry needs to define a better approach to managing compliance in a
This year we will be producing 3 seminars which will facilitate regulator, firm and supplier collaboration and to develop and encourage interoperability between TradeFi and digital waves. We are inviting Digital Asset, Crypto and TradFi market participants to join our 2022 Digital Finance Programme which will explore our global research and the role of Digital
We are pleased to release our 3rd RegCast today. This episode shines a spotlight on the new. digital capabilities required to track neo brokers, digital influencers (e.g., roaring kitty) and the new on-line herds of citizens that can influence market pricing (e.g., GameStop). Picking up with Sam Tyfield, Rachel Wolcott and Gavin Stuart where we
The European Securities and Markets Authority (ESMA) will look at potential risks in neo-brokers’ business models after MEPs raised concerns about payment for order flow (PFOF), short selling and market abuse. Tuesday’s ECON session at the European Parliament was dedicated to discussing the GameStop market event and its impact on EU markets. Steven Maijoor, ESMA’s
On 13 September 2017, JWG held their third Client Management Special Interest Group (CMS), with attendees from over a dozen buy-side, sell-side and technology firms meeting to discuss existing issues on cost and charges disclosure under MiFID II and PRIIPs obligations. The meeting was a productive one, whereby participants expressed concerns on the following areas:
A granular understanding of the several types of costs and charges is important for all market participants. These can have a substantial effect on investors’ returns (see graph below) and, if disclosed effectively, should facilitate market efficiency. With this in mind, regulators have gone to considerable lengths to implement all the necessary requirements related to the disclosure of all costs and charges
Introduction With less than 5 months left before the deadline for MiFID II on 3 January 2018, firms are still grappling with the implementation of MiFID II. One key area is the new product governance framework which has been enacted with the objective of ensuring that firms act in the best interests of their clients
Not long now – in less than 6 months’ time – both MiFID II and PRIIPs will become effective across EU Member States. ESMA recently published a Q&A on MiFID II and MiFIR investor protection topics in which 14 new questions were added. These include new Q&As on costs and charges in relation to the
On 17 January, ESMA published advice received from the Securities and Markets Stakeholder Group (SMSG) in relation to the consultation on MiFID II product governance. This CP was released on 5 October 2016 and it set out to create guidelines relating to the target market assessment. The SMSG established a working group with the specific
Never mind a busy December, all in all, it was a busy year for financial regulation as shown in one of our previous articles, as 384 regulatory documents were captured and uploaded in our trade and transaction RegDelta library. MiFID II Before Christmas, we saw ESMA publish many documents much like in January 2016 with
On 11 January 2017, ESMA released its follow-up to the peer review on best execution which came out in February 2015. With significant improvement by many NCAs since the 2015 review, the follow-up reads as a far more positive report, with optimism for further development in the future. Although certainly not perfect, it reveals that
Transparency is the cornerstone of MiFID II. Whether it’s pricing, product or process transparency, participants will need to pull back the curtains to make more information public regarding the nature of their operations, products and services. Consequently, investment firms will need to know more about their clients than ever before, with very little margin for
In April 2016, European Supervisory Authorities (ESA) submitted a draft Regulatory Technical Standards (RTS) for Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation, focusing on the requirements of key information documents (KID). Despite the KID RTS being endorsed by the EU Commission, the European Parliament – in a surprising move – rejected the draft. It
On the 14 September 2016 there was a staggering majority vote against the EU Commission’s Regulatory Technical Standards (RTS) for the PRIIPS key information document (KID), at 602 to 4, with 12 abstentions. The rejection by the Parliament of the implementation rules proposed by the Commission is unprecedented in the financial markets, and now it
In part 1 of this article, we examined three of the six key areas of overlap between the regulations on PRIIPs and MiFID II/R. In particular, we provided detail on, and discussed the degree of similarities between, the scope, the disclosure requirements for financial instruments and the obligations to identify a ‘target market’ between both
On 18 July 2016, the FCA produced a consultation paper (CP16/18) outlining suggestions on how to prepare the rulebook for the introduction of PRIIPS. PRIIPS, which is designed to increase transparency of costs, risk and intended market, will take effect on 31 December 2016. It requires each manufacturer and distributor of insurance-based investment products (IIP) or packaged
On 17 June 2016, the Council of the European Union approved a one-year delay to the MiFID II transposition and implementation dates. Under the new regulation, the deadline for Member States to transpose MiFID II into national legislation is 3 July 2017 and the date of application for MiFID II/R is now set for 3
Earlier today, the European Commission published part of the long awaited Delegated Acts for MiFID II. This was an unexpected move by as not many were expecting to see them in separate parts. This first set of Delegated Acts for MiFID II has been based on advice from ESMA and covers three topics; safeguarding of
On 24 February, the National Audit Office of the UK published the findings of a report carried out by the Comptroller and the Auditor General which looked at financial services mis-selling. The definition of mis-selling is currently “a failure to deliver fair outcomes for customers” and this includes providing customers with misleading information or recommending
This week, the EU commission published the responses to their call for information on the impact of EU regulation so far. The FCA’s response, also published this week, has been similar to other feedback in citing the constraints on both the banks and the real economy of financing themselves, overly complex reporting obligations and spill-over
With members of the European Parliament Negotiating Team stating, in a letter addressed to Commissioner Hill, that they are “open to considering a wholesale delay of the application of MiFID II – MiFIR”, a delay to the new European market rules is now looking more likely than ever. But there are concerns that this potential
The Joint Committee of the European Supervisory Authorities has published a consultation paper on 11 November 2015 which sets out the draft regulatory technical standards (RTS) concerning the Key Information Documents (KID) for PRIIPs. After much debate and the publication of a general discussion paper (November 2014) and a technical discussion paper (June 2015), the
JWG analysis. Fees and costs currently present themselves as the top controversial issues within the investment industry. The key challenges on this topic, bearing MiFID II in mind, were discussed by Aisha Dudhia (JWG Group), Steven Charlton (Vanguard Asset Management) and Bart Heenk (Avida International) at Professional Investor’s latest roundtable. This article offers answers to
Today, ESMA has published the long-awaited MiFID II Technical Standards, leaving implementation teams across the industry with hundreds of pages to get to grips with. The publication confirms that MiFID II will represent the biggest change to the regulatory framework in living memory. It represents an extremely complex puzzle, but at least now we have
JWG analysis. The minutes of the latest MiFID II implementation roundtable, on 17 July, were published in August. At the meeting, the FCA spoke with a number of industry trade bodies, including the Association for Financial Markets in Europe (AFME), the International Swaps and Derivatives Association (ISDA) and the International Capital Markets Association (ICMA), to
JWG analysis. With MiFID II looking set to radically change the financial trading environment as we know it, following on from part 1, in this article we explore 5 more key changes we are anticipating by 2017. 6. Increasing competition In line with the policy focus on competition, the European Commission (EC) proposed rules
JWG analysis. The removal of a number of financial practices has altered the regulatory environment in recent decades. With new landmark legislations coming in to play soon, regulators across Europe look set to bring down the curtain on another. Under the existing practice of bundled commissions, asset managers charge clients to manage their funds but
JWG analysis. By January 2017, European financial services legislation will have significantly changed the financial services sector. The sheer volume of transactions, products and firms affected by the new regulation means that we can say goodbye to the trading landscape we currently know. In part 1 of this article, we discuss five of the
JWG analysis. JWG’s recent analysis report, the MiFID II KYC mountain, finds that financial institutions have a 12-item checklist to work through for their MiFID II KYC implementation due to the requirement for firms operating in the EU to acquire, document and agree much more information about their customer’s situation and their transacted business by
Regulation is coming thick and fast. With predicted document count of 200,000 by 2018, dealing with the deluge in a page-by-page, regulation-by-regulation approach is becoming impossible as G20 commitments spread across many rulebooks. Firms trying to tackle the changes one-by-one will end up with sky-high implementation costs and conflicting priorities – unless they take action
With the second round of MiFID II consultation now officially over, the time is right to get our MiFID II implementation training ready to fly on 24 March in London. We suspect that, soon, regulators will be asking tough questions about how you plan to be ready for system integration testing in a mere 350
JWG analysis. The second round of MiFID II consultation has officially ended. As we have previously noted, the tone from the recent hearing was that, despite more consultation due on some of the fine print, we are largely done discussing the standards and can now begin to start thinking about how to implement them. On
JWG analysis. This month, ESMA hosted a broad cross-section of market participants for a final ‘hearing’ on the MIFID II technical standards they will send to Brussels for approval this summer. Of course, many attendees were surprised to find that, while they were en route to Paris to sit for 10 hours with 350 of
JWG analysis. It’s only February and we’ve laid out quite a programme of work for 2015. Digesting the 4,000-page Christmas gift, curing the KYC sickness, cutting a trail through MiFID II and taming your global trading troubles – and we’re not yet at the midpoint of the first quarter. Sadly, it is not a blip
JWG analysis. There is a war going on to ‘Know Your Customer’. As regulators continue to release new requirements for firms to collect and maintain information about their clients and counterparties, the struggle to comply has turned into trench warfare fought across many fronts, and new strategies are needed to avoid a long and uncertain
JWG analysis. The industry returned after the break knowing that it had fewer than 500 working days to implement MiFID II but found over 2,000 pages of new text to read. Even worse, the grapevine whispers that more is due out this month. As we’ve written before, organising and planning is the order of the
JWG analysis. 60 attendees across the buy and sell-sides came together at Markit’s seminar in Stockholm last month to discuss today’s industry challenges. They concluded that a new focus on establishing a flexible banking operating model to meet both business and regulatory demands for data, processes and standards, is top on their wish list for 2015.
JWG analysis. In our last article on this topic, we spelt out our views on regulatory implementation standards. And the first standard that needs to be defined is how you’re going to organise your work programmes. The shape of your MiFID II programme MiFID II is far beyond just a few ‘tweaks’ to MiFID I. So much
JWG analysis. As the sun slips back into hibernation, schools reopen and autumn looms, regulators, lawyers, risk specialists, change managers and compliance professionals are returning to their desks. Here at JWG we have been busy tabulating the enormous level of movement in the regulatory space during the summer. For those of you lucky enough to
JWG analysis. “When providing investment advice or portfolio management the investment firm shall obtain the necessary information regarding the client’s or potential client’s knowledge and experience in the investment field relevant to the specific type of product or service … so as to enable the investment firm to recommend to the client or potential client the
By Dominic Hobson, COOConnect. If you are a hedge fund manager, it is always tempting to believe that you are too small to be of interest to regulators. Or not the intended target of regulation at all. The fact that resources are too short to understand the detail of every regulation tends to encourage this (potentially ostrich-like) approach.
JWG analysis. When we talk to people about MiFID II, they tend to focus on what they need to tell the regulator: transaction reporting, transparency and algorithmic trading often come up {see here for more}. It’s clearly a big deal in terms of firms’ balance sheets and an important part of the regulatory plumbing to
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
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. 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
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
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
Why EMIR has some banks threatening to stop trading derivatives by 15 September. Under EMIR there are three kinds of counterparties: financial (FC), non-financial (NFC), and non-financial over the clearing threshold (NFC+). By 15 September, FCs and NFCs trading derivatives with one another must agree in writing the joint steps to be taken to mitigate
On Thursday, consultation opened on secondary legislation from the Banking Reform Bill, which centres on implementing the Vickers recommendations to ring-fence retail banking activities. The legislation will have potentially large consequences for KYC on-boarding, risk and corporate governance. Banks are required to identify and report their ‘core’ and ‘non-core’ deposits. Core deposits must be held