This month's roundup of developments affecting banks, wealth managers, brokers and funds includes:

Investment & Investment Services:
  • FCA interim report on investment platforms; and AG Newsflash
  • Delegated regulations on depositaries' safe-keeping obligations under UCITS and AIFMD
  • ISDA publishes French and Irish master agreements
  • ESMA updates Q&A on MiFID II and MiFIR transparency topics
General Developments
  • FSB, FCA and ISDA publications on interest rate benchmark reform

Click here for a printable pdf version of this bulletin.

Investment & Investment Services

CMA provisional decision in investment consultants market investigation

The Competition & Markets Authority (CMA) has published its provisional decision report on the supply and acquisition of investment consultancy and fiduciary management services in the UK. Proposals include mandatory tendering when first moving to fiduciary management, and requiring firms to give customers clearer information. 

CMA, 18 July 2018

The FCA published a brief welcoming response.

FCA, 18 July 2017

FMSB issues new good practice guide for algorithmic trading

The Fixed Income, Currency and Commodities (FICC) Markets Standards Board (FMSB) has issued a transparency draft of a new statement of good practice on algorithmic trading in FICC markets. The statement of good practice is intended to apply to the use of algorithms in all FICC businesses, including those not covered by MiFID II. 

FMSB, 6 July 2018

FCA welcomes recommendations of the Institutional Disclosure Working Group

The Financial Conduct Authority (FCA) has welcomed the recommendations made by the Institutional Disclosure Working Group (IDWG). According to a statement made by the FCA director of strategy and competition, Christopher Woolard, the FCA believes that the group has made significant progress in tackling the issues the FCA found in relation to institutional disclosure as part of the Asset Management Market Study.

FCA, 5 July 2018

ECB issues SREP methodology for LSIs

The European Central Bank (ECB) has published SSM LSI SREP Methodology 2018 edition, which sets out a methodology for the supervisory review and evaluation process (SREP) of less significant institutions (LSIs), which has been developed by the ECB and national competent authorities (NCAs). The methodology is based on the European Banking Authority SREP guidelines and builds on the significant institutions methodology and national SREP methodologies in place.

ECB, 4 July 2018

ECB report on recovery plans for significant institutions

The European Central Bank (ECB) has published a report setting out best practices it has identified after analysing three successive cycles of recovery plans. It aims to help significant institutions (SIs) further shape their plans, and clarifies the supervisory experience in relation to certain recovery plan-related requirements that have already been set by existing legislation.

ECB, 4 July 2018

Industry bodies agree framework for pension and investment transfers

The Transfers and Reregistration Industry Group (TRIG), which comprises representatives from 10 major industry trade bodies, has published a framework for firms to work to in delivering fast, efficient transfers of investment products and assets between different financial businesses and pension schemes. TRIG has also published a request for proposal (RFP) for organisations interested in participating in the ongoing governance of the framework. The deadline for submissions is 31 August 2018.

TRIG, 29 June 2018


FCA interim report on investment platforms

The FCA has published its Interim Report on the on the investment platform market study. The FCA notes that the investment platforms market has almost doubled in size since 2013, accounting for £500bn assets under management and remains a growing sector. The FCA, therefore, considers it vital that competition between platforms is working well. 

To read AG's more detailed Newsflash, click here.

FCA, 16 July 2018

The Association of Investment Companies (AIC) has responded to the report, encouraging the FCA to look at how platforms promote competition in a broader sense. "Looking at competition between asset managers is fine, but competition between different types of investment product is also vital for a healthy market."

AIC, 17 July 2018

Commission adopts delegated regulations on depositaries' safe-keeping obligations under UCITS and AIFMD

The European Commission has adopted delegated regulations amending Delegated Regulation (EU) 2016/438 as regards safe-keeping duties of depositaries for UCITS funds and Delegated Regulation (EU) 231/2013 as regards safe-keeping duties of depositaries for alternative investment funds. The changes are intended to provide more clarity on the rules on asset segregation to ensure their uniform application throughout the EU.

European Commission, 12 July 2018

Money Market Funds

Commission Delegated Regulation (EU) 2018/990 of 10 April 2018 has been published in the Official Journal. It amends and supplements the Money Market Funds Regulation (EU) 2017/1131 (MMF Regulation) with regard to simple, transparent and standardised (STS) securitisations and asset-backed commercial papers, requirements for assets received as part of reverse repurchase agreements, and credit quality assessment methodologies.

European Commission, 13 July 2018

The Financial Conduct Authority (FCA) has published policy statement 18/17 (PS18/17): The European Money Market Funds (MMF) Regulation, in which the FCA responds to feedback arising from consultation paper 18/4 (CP18/4) and publishes final rules amending the Handbook to ensure consistency with the requirements of the MMF Regulation. The FCA has also applied fee schedules to enable it to recover the cost of authorising and supervising money market funds under the Regulation.

FCA, 12 July 2018

The Financial Conduct Authority (FCA) has published a new application form and checklist for the authorisation of money market funds (MMFs) under the EU MMF Regulation, which applies to new MMFs from 21 July 2018. The FCA has also updated other application forms to account for the introduction of the MMF Regulation.

FCA, 22 June 2018

Cross-border distribution of collective investment undertakings

The Council of the EU has published a proposed update to the European Commission proposals for a Directive to amend the Undertakings for Collective Investment in Transferable Securities Directive (Directive 2009/65/EC) (UCITSIV Directive) and the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) with regard to cross-border distribution of collective investment undertakings, and a Regulation to facilitate cross-border distribution of collective investment undertakings and amending Regulation (EU) No 345/2013 on European venture capital funds and Regulation (EU) No 346/2013 on European social entrepreneurship funds.

Council of the EU, 18 June 2018

The economic secretary to HM Treasury, John Glen MP, has written a letter to the chair of the House of Commons European Scrutiny Committee, Sir William Cash MP, dated 3 July 2018. The letter responds to the Committee's report on the proposal for a directive of the European Parliament and of the Council amending UCITS IV (Directive 2009/65/EC) with regard to cross-border distribution of collective investment funds.

HM Treasury, 10 July 2018

IA launches FinTech accelerator for the asset management industry

The Investment Association (IA) has launched Velocity, its specialist FinTech accelerator for the asset management industry, with a view to promoting innovative new technological solutions to increase business efficiency and enhance customer experience. FinTech firms with market-viable technology are invited to apply to participate in the accelerator programme by 28 September 2018.

IA, 18 July 2018

ESMA hosts workshop for national supervisors on closet indexing

On 27 June 2018 the European Securities and Markets Authority (ESMA) held a supervisors' workshop for National Competent Authorities (NCAs) to promote supervisory convergence in NCAs' supervision of 'closet indexing'. This is the practice whereby asset managers claim to manage their funds in an active manner whilst in fact staying very close to a benchmark and charging management fees in line with actively managed funds.

ESMA, 27 June 2018

Commission welcomes Council agreement on cross-border funds and PEPPs

The European Commission has welcomed the agreement reached by the Council of the EU on 19 June 2018 on the cross-border distribution of investment funds package and the pan-European personal pension product (PEPP). This provides the Council Presidency with the mandate to start trilogues negotiations with the European Parliament.

European Commission, 22 June 2018


ISDA adds French and Irish master agreements to its law choices

The International Swaps and Derivatives Association (ISDA) has made additions to its existing suite of English, New York and Japanese law choices by publishing new French and Irish versions of the ISDA Master Agreement. The new French and Irish master agreements offer options for institutions who prefer to continue trading under a EU Member State law with EU court jurisdiction clauses after Brexit.

ISDA, 3 July 2018

ISDA releases global calendar

The International Swaps and Derivatives Association (ISDA) has updated its global calendar of compliance deadlines and regulatory dates for the Over-the-counter (OTC) derivatives space. The document covers 2018–2023, including a vast number of dates for decisions, and international timeframes around derivative compliance.

ISDA, 3 July 2018

ISDA, GFMA and IIF respond to BCBS consultation on the Fundamental Review of the Trading Book

The International Swaps and Derivatives Association (ISDA), the Global Financial Markets Association (GFMA) and the Institute of International Finance (IIF) have submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on proposed revisions to the market risk framework, known as the Fundamental Review of the Trading Book (FRTB). Although the industry bodies say the revised standardised approach addresses many shortcomings of the earlier standard, they believe further changes are necessary—in particular on non-modellable risk factors, which remain an area of concern as the associated capital is still excessive.

ISDA, 22 June 2018

ESMA updates Q&A on EMIR data reporting

The European Securities and Markets Authority (ESMA) has updated its Q&A on practical questions regarding the European Markets Infrastructure Regulation (EMIR). The purpose of the Q&A is to promote common supervisory approaches and practices in the application of EMIR. It provides responses to questions posed by the general public, market participants and competent authorities in relation to the practical application of EMIR.

ESMA, 12 July 2018


ESMA updates Q&A on MiFID II and MiFIR transparency topics

The European Securities and Markets Authority (ESMA) has updated its Q&A document on MiFID II and MiFIR transparency topics to include new guidance on the treatment of updated international securities identification numbers (ISINs) following corporate actions. The document also sets out ESMA's latest timetable for publishing data with respect to the systematic internaliser regime.

ESMA, 13 July 2018

ICMA addresses new Central Securities Depository Regulation

The International Capital Market Association (ICMA) has assessed the potential market consequences of one of the provisions of the Central Securities Depository Regulation (CSDR). The report addresses the potential risks the CSDR buy-in regime will create for bond market participants—buyers and sellers and intermediaries and lenders of securities. It also looks at the incentives which will face market participants as they try to minimise these risks and the potential to incur losses beyond their control. The CSDR contains a section on ‘settlement discipline’, which includes measures to improve settlement efficiency, such as cash penalties for fails and the provision for mandatory buy-ins.

ICMA, 27 June 2018

Capital Requirements 

Council of the EU publishes compromise text on CRD IV amendment

The Council of the EU has published a Presidency compromise text of the proposed Directive amending the Capital Requirements Directive 2013/36/EU (CRD IV) as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures.

Council of the EU, 29 May 2018

EU Withdrawal 

Cabinet Office White Paper on Brexit

The Cabinet Office has published a white paper on “The future relationship between the United Kingdom and the European Union”.  Financial Services is covered at paragraphs 58-67 on pages 28-30. 

Cabinet Office, 12 July 2018

European Commission communication on Brexit

The European Commission has published its communicationPreparing for the withdrawal of the United Kingdom from the European Union on 30 March 2019” document along with an annex. There is also a factsheet “Seven things businesses in the EU27 need to know in order to prepare for Brexit”.

European Commission, 19 July 2018

EBA opinion sets out preparations firms should take for no-deal Brexit

The European Banking Authority (EBA) has published an opinion on the risks of inadequate preparations by financial institutions for the possibility of a no-deal Brexit. The EBA says firms should not rely on political agreements or public policy interventions that may not be proposed and/or agreed in time. In particular, financial institutions should ensure they have the correct regulatory permissions and associated management capacity in place ahead of time, and are aware of their customer protection obligations in these circumstances.

EBA, 25 June 2018

ICMA open letter warns of the cliff-edge risks of Brexit for capital markets

The International Capital Market Association (ICMA) has written an open letter to European Commission president Jean-Claude Junker and UK prime minister Theresa May, expressing ‘real and increasingly pressing concerns’ about the cliff-edge risks of Brexit. It says these risks would fragment international debt capital markets, and damage business in the real economy and financial stability.

ICMA, 22 June 2018

General Developments 

FSB, FCA and ISDA publications on interest rate benchmark reform

The Financial Stability Board (FSB) has published a statement concerning reforms to interbank offered rates (IBORs) and the development of overnight risk-free, or nearly risk-free, rates (RFRs) and term rates. The statement is intended to provide market participants and other stakeholders with the FSB's views in relation to a consultation by the International Swaps and Derivatives Association (ISDA) which contemplates fall backs for certain derivative contracts based on overnight RFRs.

The Financial Conduct Authority (FCA) has published a speech by Andrew Bailey warning firms not to assume that LIBOR may somehow survive, and urging them to increase the speed of the transition to alternative interest rate benchmarks. "Firms that we supervise will need to be able to demonstrate to FCA supervisors and their PRA counterparts that they have plans in place to mitigate the risks, and to reduce dependencies on LIBOR."

FSB, ISDA, FCA, 12 July 2018

EMMI publishes feedback on Euribor hybrid methodology consultation

The European Money Markets Institute (EMMI) has published feedback on the responses received to its first consultation paper on a hybrid methodology for Euribor. The consultation period closed on 15 May 2018, and EMMI says the responses showed ‘broad support’ for the proposals. Some of the changes foreseen aim to simplify the current Euribor publication process and will be implemented as of 3 December 2018.

EMMI, 29 June 2018

IA report sets out practical steps to promote LGBT+ inclusivity in the asset management industry

The Investment Association (IA) has published a report into the LGBT+ experience in asset management, which sets out 12 steps organisations can take to create more inclusive workplaces. The report, Bringing our whole selves to work, follows a roundtable discussion the IA hosted with more than 20 members and allies from LGBT+ networks.

IA, 6 July 2018

AIC says FCA should take urgent action to prevent consumers being misled by investment company KIDs

The Association of Investment Companies (AIC) has published research which it says demonstrates why consumers are being misled by key information documents (KIDs) issued under the PRIIPs Regulation and why the Financial Conduct Authority (FCA) needs to act now to protect consumers.

AIC, 3 July 2018

Key Contacts

Lorna Finlayson

Lorna Finlayson

Partner, Financial Regulation

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Richard Small

Richard Small

Partner, Financial Regulation
London, UK

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