Financial Regulatory Developments (FReD) – 01 May 2015

EUROPEAN UNION AND INTERNATIONAL

European Parliament (EP)

EP approves MMFs Regulation: EP has approved the draft Money Market Funds (MMFs) Regulation. Key elements of the version of the Regulation are:

limiting constant net asset value (CNAV) MMFs to two types: retail CNAV available for subscription only for charities, not-for-profit organisations, public authorities and public foundations; and public debt CNAV, which would invest 99.5% of assets in public debt instruments; introducing a new type of MMF, the Low Volatility Net Asset Value (LVNAV) MMF, which might display a constant net asset value but under strict conditions; a requirement that MMFs diversify their portfolios, investing in higher-quality assets, follow strict liquidity and concentration requirements and have in place sound stress testing processes; a requirement that public debt and retail CNAVs and LVNAVs apply "liquidity fees" "redemption gates" in certain circumstances to help stem sudden outflows; a requirement that MMFs report weekly all of the following information to their investors: the liquidity profile; the credit profile and portfolio composition; weighted average maturity (WAM) of the portfolio; weighted average life (WAL) of the portfolio; and concentration of the top five investors in the MMF. The vote consolidated EP's position in preparation for three-way discussions on the draft with Member States and the Commission. (Source: Making Money Market Funds More Resilient to Financial Crises)

Contact: Rosali Pretorius or Michael Wainwright

European Commission (Commission)

Commission urges EP to accept MLD 4: The Commission has published Communications addressed to EP setting out its support for the agreed versions of the fourth Money Laundering Directive (MLD 4) and revised Funds Transfer Regulation. (Source: Commission Communication on MLD 4 and Commission Communication on Funds Transfer Regulation)

Contact: Emma Radmore or Tom Harkus

European Banking Authority (EBA)

EBA updates compliance table: EBA has published an update to its table showing which national regulators comply, or intend to comply, with EBA Guidelines on Global Systemically Important Institutions (G-SIIs) published in June 2014. (Source: EBA G-SIIs Compliance Table Guidelines)

Contact: Rosali Pretorius or Michael Wainwright

EBA consults on data template: EBA is consulting on a revised data template for the identification of G-SIIs. The revision follows the new data template and some minor revisions the Basel Committee made in January for identifying global systemically important banks (G-SIBs). The consultation runs until 20 May. (Source: EBA Consults on a Revised Data Template for the Identification of G-SIIs)

Contact: Rosali Pretorius or Michael Wainwright

EBA updates single rulebook Q&As: EBA has updated its single rulebook Q&As to include one new item. (Source: Single Rulebook Q&As)

Contact: Rosali Pretorius or Michael Wainwright

European Securities and Markets Authority (ESMA)

ESMA updates EMIR Q&A: ESMA has issued the thirteenth update to its Q&A document on the implementation of the European Markets Infrastructure Regulation (EMIR). This update relates to the second level of the EMIR validation specifications that Trade Repositories (TRs) use to ensure that reporting complies with EMIR. The validation controls are based on the original rules in the December 2012 EMIR technical standards and entered into force on 12 February 2014. ESMA says it expects TRs to be able to implement the second level validation by the end of October. (Source: ESMA Publishes Updated EMIR Q&A - Focus on Reporting)

Contact: Rosali Pretorius or Tom Harkus

ESMA consults on knowledge and competence guidelines: ESMA is consulting on draft guidelines relating to the revised Markets in Financial Instruments Directive (MiFID 2) on criteria for assessing knowledge and competence of individuals in investment firms who provide investment advice or information about investments or services to clients. ESMA proposes tests based on "appropriate qualifications" and "appropriate experience" and lists the areas it thinks the assessments should relate to. ESMA suggests what areas the individuals should understand and wants national regulators to set the list of qualifications or criteria for assessing qualifications. It notes that some Member States already go further than the current MiFID requirements. Its new proposed guidelines cover organisational requirements for firms as well as specific requirements on relevant staff and the duty on firms to ensure they assess, maintain and update appropriate levels of knowledge and competence. Consultation closes on 10 July and ESMA plans to publish its final...