November 30, 2017

Verena Ross, the Executive Director of ESMA, gave a keynote address at the ASIFMA Annual Conference 2017 in Hong Kong. She focused her remarks on the EU regulatory framework and the role of ESMA; work of ESMA toward further strengthening the third-country frameworks; and implications of the EU regulation (for example, MiFID II/MiFIR) on Asian firms.

Ms. Ross discussed the role of ESMA in regard to dialog and cooperation with supervisors outside the EU. It develops contacts, enters into administrative arrangements and regulatory interactions with the supervisory authorities of "third countries" and with international organizations. She then discussed work of ESMA toward further strengthening the third-country frameworks and highlighted that there is no generic third-country framework. This framework is a set of arrangements varying across the different pieces of legislation such as European Market Infrastructure Regulation (EMIR), Markets in Financial Instruments Directive (MiFID), Alternative Investment Fund Managers Directive (AIFMD), CRA Regulation, and Benchmarks Regulation. "No arrangement is identical and they are mixtures of equivalence, endorsement, recognition, third-country passporting, or no arrangement at all." She mentioned, " ...it would be beneficial to create greater consistency." To ensure a common approach to third-country entities active across the EU financial markets, the supervisory and enforcement powers should be conducted at EU level by ESMA for third-country entities such as credit rating agencies (CRAs), trade repositories, central counterparties (CCPs) and benchmarks. In the context of CCPs, EC has put forward an extensive EU-wide third-country regime in a proposal to amend the EMIR legislation. ESMA should play such a central role also regarding third-country trading venues and potentially other important market players. A step to centralize the third-country supervision would not only bring a number of benefits for EU, but will also allow third-country firms to have a single point of reference in relation to the regulatory issues in the EU. 

She highlighted that Asian-headquartered firms with branches or subsidiaries providing investment services in the EU will be directly subject to the new MiFID requirements. From January 03, 2018, under MiFID II/MiFIR, no LEI means no trade. Thus, the Asia-based institutions will be asked to get a Legal Entity Identifier (LEI). She discussed ESMA guidance on MiFID II/MiFIR requirements with a third-country dimension, noting the publishing, in May, of the two opinions clarifying under which circumstances transactions on third country trading venues are subject to the post-trade transparency requirements for investment firms and/or are considered to be economically equivalent over-the-counter (EEOTC) contracts for the purpose of the position limit regime. She also informed, "We are now in the process of assessing more than 200 third-country trading venues for which we have received requests. ...I know that you’re particularly concerned about the application of the trading obligation for shares to shares which have their primary pool of liquidity outside the EU. I hope that our recently issued guidance together with the European Commission provided you with some comfort that, in the absence of an equivalence decision, transactions in shares would not be considered to be of a systematic, regular and frequent nature and therefore not subject to the trading obligation for shares. (sic)" In conclusion, she notes that international convergence is difficult, but absolutely necessary. In coordination with EC, but also in close cooperation with national regulators, ESMA will continue to play a central role in ensuring that "Europe speaks with one single voice vis-à-vis regulators outside the EU."

 

Related Link: Speech

Keywords: Europe, Banking, Securities, MiFID/MiFIR, LEI, Third-Country Regimes, ESMA

Related Articles
News

IOSCO Report Examines Application of International Cyber Standards

IOSCO published a final report that examines the application of the three internationally recognized cyber standards and frameworks by IOSCO member jurisdictions.

June 18, 2019 WebPage Regulatory News
News

EC Amends Regulation Supplementing Solvency II Directive

EC published the Delegated Regulation (EU) 2019/981 that amends the Regulation (EU) 2015/35, which supplements Solvency II Directive (2009/138/EC) on the taking-up and pursuit of the business of insurance and reinsurance.

June 18, 2019 WebPage Regulatory News
News

PRA Finalizes Reporting Amendments to Pillar 2 Liquidity Framework

PRA published the final Policy Statement PS13/19 on regulatory reporting amendments and clarifications to the Pillar 2 liquidity framework for banks in UK.

June 17, 2019 WebPage Regulatory News
News

FSB Assesses Implementation of Compensation Standards and Principles

FSB published the sixth progress report on the implementation of its principles and standards for sound compensation practices in financial institutions.

June 17, 2019 WebPage Regulatory News
News

IMF Publishes Reports on 2019 Article IV Consultation with Ireland

IMF published its staff report and selected issues report under the 2019 Article IV consultation with Ireland.

June 17, 2019 WebPage Regulatory News
News

EBA Updates Data on Deposit Guarantee Schemes in EU

EBA published the 2018 data on two key concepts in the Deposit Guarantee Schemes Directive (DGSD)—namely, available financial means and covered deposits.

June 17, 2019 WebPage Regulatory News
News

SNB Updates Form for Reporting Solvency Risk of Counterparties

SNB published the survey (Form Release 5.01) and related documentation for reporting solvency risk of counterparties in the interbank sector (ARIS).

June 17, 2019 WebPage Regulatory News
News

ISDA Studies Variation in Global Implementation of Margin Requirements

ISDA published a paper that highlights the main areas of difference in the implementation of margin requirements for non-cleared derivatives across jurisdictions and makes recommendations on how to resolve these variations.

June 17, 2019 WebPage Regulatory News
News

US Agencies Finalize Rule to Streamline Reporting for Small Banks

US Agencies (FDIC, FED, and OCC) adopted a final rule to streamline the regulatory reporting requirements for small institutions.

June 17, 2019 WebPage Regulatory News
News

IAIS Consults on Revisions to IAIS Supervisory Material

IAIS has launched a public consultation on revisions to the IAIS supervisory material.

June 14, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3264