On 19 July 2016, the European Securities and Markets Association (ESMA) published an updated version of its AIFMD Q&A.
The Q&A includes one new question and answer on the impact of the European Market Infrastructure Regulation (EMIR) on the AIFMD framework, regarding the valuation of centrally cleared OTC derivatives by AIF managers.
ESMA has also published its advice on the application of the AIFMD passport to non-AIFMs and AIFs) in twelve countries, including; Australia, Canada, the Cayman Islands and the United States. View our more detailed article here.
On 15 July 2016, ESMA issued a consultation paper on asset segregation and custody services under AIFMD and UCITS. The consultation follows from ESMA's 2014 consultation on guidelines on asset segregation under the AIFMD. ESMA decided to carry out a further consultation aimed at:
gathering further evidence on the arguments set out by the majority of stakeholders in their responses to the initial consultation and,
broadening the scope to include the asset segregation rules under the UCITS Directive.
The Consultation runs until 23 September 2016. View our more detailed article here.
On 27 July 2016, ESMA published its updated Q&A with regard to the implementation of the European Markets Infrastructure Regulation (EMIR). The Q&A includes a new answer in relation to reporting of trades cleared by a clearing house which is not a CCP under the EMIR definition.
ESMA has also published an updated list (dated 22 July 2016) of third-country markets considered as equivalent to a regulated market in the European Union for the purposes of Article 2(7) of EMIR.
On 2 August 2016, the Central Bank published its Regulatory Service Standards Performance Report for the first half of 2016. The report sets out the Central Bank’s performance against service standards that it has committed to for the authorisation of financial service providers and Pre-Approval Control Functions under the fitness and probity regime. Appendix B to the report sets out the main reasons why PCF IQs continue to be returned as incomplete. These include:
Omitting ‘Other relevant experience’ or details of roles and responsibilities demonstrating the applicant’s experience in a particular sector and/or to a particular function;
Incomplete supporting documentation demonstrating compliance with the Minimum Competency Code 2011; Applicant providing an incomplete list of directorships/senior positions and/or inaccurate/inappropriate number of days dedicated to the position; and
IQ completed by and/or submitted by a person whose name does not match the name of the applicant or the name of the proposer and/or the proposer is not an approved person within the entity with the authority to submit the IQ.
View the report here
Market Abuse Regulation
On 13 July 2016, ESMA published an updated version of its Q&A on the Market Abuse Regulation (MAR). The Q&A includes a new question and answer with regard to PDMR transactions and the 30-day closed period requirement under Article 19(11) of MAR. PDMRs are prohibited from dealing in shares and debt instruments of the issuer in a closed period, except in specified circumstances.
View the Q&A here
MiFID: Investor Protection
On 26 July 2016 the Central Bank published a Discussion Paper (DP) on the Payment of Commission to Intermediaries. The DP seeks views on the payment of commission to intermediaries and outlines current practices of paying commission. The paper notes that MiFID regulated firms offer both standard commission and models involving initial and trail commission and that each product appears to have its own set commission structure. Increments can be based on a percentage of the investment management fees as well as based on the value of the fund. Responses are invited until 18 October 2016.
On 25 July 2016, ESMA issued a warning on CFDs, binary options and other speculative products. The warning is intended to inform retail investors about the significant risks associated with these products and the resulting investor protection concerns. ESMA noted the rise in both the number of speculative products being offered to retail clients and complaints made regarding these products. On 28 July, the Central Bank issued a statement wishing to draw attention to ESMA's warning and highlight, in particular, that these products carry a very high level of risk. It also noted its November 2015 advice to consumers issued following a themed inspection of the CFD market in Ireland, during which the Central Bank identified several issues in relation to execution-only sales. ESMA has also published an updated Q&A on CFDs and other speculative products. Although aimed at national competent authorities the answers are also intended to help firms by providing clarity on MiFID rules.
On 19 July 2016, ESMA published an updated version of its UCITS Q&A. The Q&A includes one new question and answer on the impact of the European Market Infrastructure Regulation (EMIR) on the UCITS framework, regarding the valuation of centrally cleared OTC derivatives by UCITS management companies.
Contributed by Audrey Giles of William Fry.