Securities and markets regulatory news, 6 August 2021

FIG Bulletin

Recent UK and EU regulatory developments of interest to financial institutions and markets. Also check our supplementary Financial institutions general regulatory news of broader application in the Related Materials links.

Contents

This is our last edition of the weekly regulatory news as we move to focus on more topic-driven material. We will send you notification of new publications from your area(s) of interest in the usual Hogan Lovells Engage Alerts. If you have any enquiries, please contact us.

Benchmarks (Provision of Information and Documents) (Amendment) Regulations 2021 published

The Benchmarks (Provision of Information and Documents) (Amendment) Regulations 2021 (SI 2021/920) (Amending Regulations) have been published, together with an explanatory memorandum. The Amending Regulations come into force on 8 August 2021. They amend the Benchmarks (Provision of Information and Documents) Regulations 2021 (SI 2021/812), which make provision in respect of a notice or permission given by the Finance Conduct Authority (FCA) to a benchmark administrator under Articles 22A, 22B, 23A and 23D of the UK Benchmarks Regulation (UK BMR) where the FCA is considering whether to wind down a critical benchmark.

As currently drafted, SI 2021/812 only applies to an administrator of a benchmark that is specified as critical by regulations made under Article A20 or Article 20 of the UK BMR. The Amending Regulations correct a drafting error to ensure that SI 2021/812 also applies to an administrator of a critical benchmark that is listed in Commission Implementing Regulation (EU) 2016/1368 establishing a list of critical benchmarks used in financial markets pursuant to the Benchmarks Regulation n ("the Commission Implementing Regulation").

This amendment will ensure that SI 2021/812 will apply to LIBOR, the only critical benchmark in the UK at present and which is listed under the Commission Implementing Regulation.

Updated FX Global Code and accessible FX market disclosures: BoE speech

The Bank of England (BoE) has published a speech by Rohan Churm, BoE Head of Foreign Exchange (FX) Division, on accessible FX market disclosures.

Mr Churm chaired the Disclosure and Transparency Working Group established by the Global Foreign Exchange Committee (GFXC) as part of its three-year review of the FX Global Code. In his speech, Mr Churm reflects on the review and, in particular, the key issues in the disclosure landscape and the changes to support transparency in the FX market.

BMR: European Commission consults on draft Delegated Regulation specifying fees, fines and penalties applicable to ESMA's supervision of certain benchmark administrators

The European Commission is consulting on a draft Delegated Regulation supplementing the Benchmarks Regulation (BMR) by specifying fees and rules of procedure for measures applicable to the supervision by the European Securities and Markets Authority (ESMA) of certain benchmark administrators.

ESMA will supervise European critical benchmark administrators and third country benchmark administrators that want to obtain recognition as from January 2022. This initiative establishes:

  • the fees that benchmark administrators need to pay ESMA for supervision; and
  • the procedure ESMA needs to follow to impose fines or penalties on benchmark administrators under its supervision.

The consultation closes on 27 August 2021. The Commission expects to adopt the draft Delegated Regulation in Q3 2021.

Data reporting service providers: European Commission consults on supervision

The European Commission is consulting on a draft Delegated Regulation which supplements the Markets in Financial Instruments Regulation (MiFIR) by specifying fees, rules of procedure for measures and criteria for derogation relating to the supervision by ESMA of data reporting service providers (DRSPs).

The supervision of DRSPs will be transferred from national competent authorities to ESMA from January 2022. The draft Delegated Regulation establishes the:

  • derogation criteria for DRSPs that will continue to fall under national supervision instead of ESMA supervision;
  • fees that DRSPs need to pay ESMA for supervision; and
  • procedure ESMA needs to follow to impose fines or penalties on DRSPs under its supervision.

The consultation closes on 27 August 2021.

Designating replacement rates for CHF LIBOR and EONIA: European Commission consultations

The European Commission is consulting on:

  • a draft Implementing Regulation on the designation of a statutory replacement for certain settings of Swiss Franc (CHF) LIBOR; and
  • a draft Implementing Regulation on the designation of a replacement for the EONIA benchmark, which will be discontinued from 3 January 2022. The replacement rate is calculated using an already updated EONIA methodology that is based on recommendations by the relevant industry working group and the consensus of relevant stakeholders. The designated rate will replace contractual references to EONIA in the EU on 3 January 2022.

Both consultations close on 31 August 2021.

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Authored by Yvonne Clapham

 

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