FIG Bulletin
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FIG Bulletin Recent developments 27 July 2020 General 4 Brexit: House of Lords EU Services Sub-Committee seeks clarity on future relationship in financial services 4 Brexit: Cooperation and information-exchange MoUs between FCA and ESMA 4 Brexit: FCA information on Electronic Commerce Directive exclusion 4 UK cross-border trade in services with Australia: City of London Corporation report 5 UK financial promotion approvals: HM Treasury consultation 5 Cryproasset financial promotions: HM Treasury consultation 5 FCA's cancellation of authorisation process: HM Treasury policy statement 6 Complaints against financial services regulators: BoE, FCA and PRA consultation 6 UK-Singapore financial dialogue: Joint communiqué 6 HM Treasury launches independent FinTech Strategic Review 7 COVID-19: FCA proposes extending guidance for insurance and premium finance firms on customers in temporary financial difficulty 7 Remuneration: FCA review of firms' policies and practices 8 Intergenerational differences: FCA feedback statement 8 FCA warns of fake Financial Services Register website 8 Regulatory sandbox: FCA announces successful applicants to sixth cohort 8 BoE's Enforcement Decision Making Committee: first annual report 8 Economic crime levy: HM treasury consultation 9 PRIIPs Delegated Regulation: Joint Committee of ESAs review 9 Financial stability monitoring: FSB stocktake on including climate risks 9 BigTech: International Banking Federation report 9 Banking and Finance 10 COVID-19: HM Treasury statement on applicability in UK of CRR Amending Regulation 10 Securitisation significant risk transfer: PRA PS17/20 10 Recovery planning: PRA CP10/20 on simplified obligations 10 2 New and growing non-systemic banks: PRA CP9/20 on approach to supervision 11 Interest rate transition: ECB good practices for banks 11 COVID-19: EBA guidelines on pragmatic 2020 SREP 12 BRRD: EBA consults on RTS on estimating Pillar 2 and combined buffer requirements for setting MREL 12 BRRD: EBA consults on RTS and ITS on impracticability of contractual recognition of bail-in 12 Benchmarking of remuneration practices at EU level: EBA report 12 CRR: EBA consults on draft RTS for determination of indirect exposures to underlying clients of derivatives and credit default derivatives 13 CRR: EBA consults on draft guidelines on application of alternative treatment of institutions' exposures related to tri-party repurchase agreements 13 CRR: EBA consults on draft RTS on estimating default probabilities and losses give defaults for internal default risk model 13 Reporting requirements: EBA questionnaire and call for case studies on cost of compliance 13 Payments 15 Hogan Lovells Global Payments Newsletter, July 2020 15 EU Regulation on cross-border payments: European Commission adopts legislative proposal 15 Securities and Markets 16 UK BMR: HM Treasury policy statement on extending transitional period for third-country benchmarks 16 BMR: Commission Delegated Regulations on sustainable finance issues 16 MiFIR: ESMA opinion on assessment of pre-trade transparency waivers 17 MiFIR: ESMA final report on MiFIR transparency requirements for non-equity instruments 17 Brexit: ISDA updates FAQs 18 Insurance 19 COVID-19: FCA updates on business interruption insurance test case 19 Brexit: Lloyd's delays scheme effective date of Part VII transfer of EU business 19 COVID-19: EIOPA supervisory statement on Solvency II recognition of schemes based on reinsurance 19 3 General Brexit: House of Lords EU Services Sub-Committee seeks clarity on future relationship in financial services The House of Lords EU Services Sub-Committee has published the letter it has sent to John Glen, Economic Secretary and City Minister, on the UK-EU negotiations in financial services and UK financial services after Brexit. Mr Glen appeared before the committee on 2 July 2020 to give evidence relating to its inquiry on financial services after Brexit. The purpose of the letter is to enable the committee to follow up on some of the points that were raised during the discussion. Brexit: Cooperation and information-exchange MoUs between FCA and ESMA The UK Financial Conduct Authority (FCA) and the European Securities and Markets Authority (ESMA) have confirmed that the memoranda of understanding (MoUs) on cooperation and exchange of information agreed in 2019 between the FCA and ESMA and EU securities regulators will come into effect at the end of the Brexit transition period, currently set to expire on 31 December 2020. Brexit: FCA information on Electronic Commerce Directive exclusion The FCA has published a new webpage on changes relating to the Electronic Commerce Directive (ECD) at the end of the Brexit transition period. The ECD provides an exclusion from host state regulation for e-commerce activities provided from one European Economic Area (EEA) state to a person in another EEA state. The exclusion is on the basis that the host state regulator can rely on the regulation of the firm's home state because both are within the same EEA regulatory framework. In the UK, the relevant provisions that transpose this exclusion are in article 72A of the Regulated Activites Order 2001 (RAO), article 20B of the Financial Promotion Order 2005 (FPO), and certain provisions of the ECD (Financial Services and Markets) Regulations 2002. Following the end of the transition period, the ECD exclusion will fall away. The FCA advises that UK firms will need to contact local regulators in EEA states to check if other ways to provide their services are available, and then decide on their approach to servicing existing customers in accordance with local law and local regulators' expectations. In all circumstances, the FCA expects firms to provide timely, fair, clear and not-misleading information to their customers. The FCA advises EEA-based firms to consider whether they are affected by this change. If they are, they should address any impacts to their business models, their marketing, or both, before the end of the transition period. EEA-based firms wishing to continue their regulated e- commerce business in the UK need to consider whether they require UK authorisation and, if so, should consider the timing and other implications of this. EEA-based firms wishing to wind down their e-commerce business that falls within the exclusion (and that was entered into before the end of the transition period), will be able to do so under the provisions in Part 4 of the Electronic Commerce and Solvency 2 (Amendment etc) (EU Exit) Regulations 2019 (SI 2019/1361). 4 UK cross-border trade in services with Australia: City of London Corporation report The City of London Corporation has published a report on UK cross-border trade in services with Australia. The report identifies policy areas where joint focus, either through free trade agreement (FTA) negotiations or other trade tools such as mutual recognition agreements and regulatory dialogue, could address some common goals. UK financial promotion approvals: HM Treasury consultation HM Treasury has published a consultation paper on proposed reforms to the regulatory framework for the approval of financial promotions under the Financial Services and Markets Act 2000 (FSMA). The government proposes to establish a regulatory gateway that authorised firms must pass through before they are able to approve the financial promotions of unauthorised firms. Any firm wishing to approve unauthorised firms' financial promotions would first need to obtain the FCA's consent. It is seeking stakeholders' views on two policy options. The first would restrict the approval of unauthorised firms' financial promotions by imposing requirements on authorised firms. The second would specify the approval of financial promotions communicated by unauthorised persons as a regulated activity under FSMA. Both options would result in amendments needing to be made to section 21 and other sections of FSMA. The deadline for responses to the consultation is 25 October 2020. Cryproasset financial promotions: HM Treasury consultation HM Treasury has published a consultation paper on cryptoasset promotions. It proposes to expand the perimeter of the financial promotion regime to enhance consumer protection while the government continues to consider its approach to the broader challenges of cryptoasset regulation. To bring the relevant activities into scope, the government proposes to amend the FPO to include certain unregulated cryptoassets in the list of controlled investments and amend a number of the current controlled activities. The government considers that applying the financial promotion regime to too wide a range of cryptoasset activity could stifle innovation without a proportionate benefit to consumer protection. Accordingly, the proposed definition of "qualifying cryptoassets" (that is, the unregulated cryptoassets to be covered by the FPO as controlled investments) includes only those cryptoassets that are both fungible and transferable. The government has identified the most relevant controlled activities and intends to amend them to incorporate activities in relation to the buying, selling, subscribing for or underwriting of qualifying cryptoassets. In the government's view, the financial promotion restriction exemptions for qualifying cryptoassets should generally be consistent with the approach taken to exemptions for other controlled investments. However, the government proposes to add a new FPO exemption to ensure that vendors merely offering to accept cryptoassets in exchange for goods or services, and buyers