Featured Product

    HM Treasury Publishes Policy Statement Amending Benchmarks Regulation

    October 21, 2020

    HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament. This Bill includes amendments to the Benchmarks Regulation, which provide FCA with new and enhanced powers to oversee the orderly wind-down of critical benchmarks such as LIBOR. The Treasury also published a Policy Statement that addresses certain amendments to the Benchmarks Regulation to support LIBOR transition. The Policy Statement also emphasizes the importance of continued active transition away from LIBOR, ahead of the expected cessation of LIBOR after the end of 2021. FCA welcomed these developments, highlighting that this will help to maintain high standards and provide greater clarity to firms.

    This latest development on LIBOR transition provides an overarching legal framework that equips FCA with new and enhanced powers to manage and direct the orderly wind-down of LIBOR. To cater to the contracts that face insurmountable barriers to transitioning away from LIBOR (tough legacy contracts), this framework includes the option for FCA to direct a change in the methodology of a critical benchmark and extend its publication for a limited time period. In such a scenario, use of that benchmark by UK supervised entities will be prohibited. However, to ensure an orderly wind-down of the benchmark for “tough legacy” contracts, FCA will have discretion to determine specific categories of contracts which will be exempt from this prohibition on use. HM Treasury and FCA are of the view that this  exemption is intended for those contracts that genuinely have no realistic ability to be renegotiated or amended to transition to an alternative benchmark. Before exercising certain new powers, FCA will be required to issue statements of policy to inform the market about how it intends implement the legal framework set out under the Benchmarks Regulation. FCA will be able to engage with industry stakeholders and international counterparts, as appropriate, through this process.

    The Financial Services Bill will ensure that the regulatory framework of UK continues to function effectively for UK after leaving EU. This Bill is the first step in shaping the post-Brexit regulatory framework for the financial services sector in UK. Measures in the Bill will:

    • Enhance the prudential standards and promote financial stability by enabling the implementation of the remaining Basel III standards and a new prudential regime for investment firms and by giving the FCA the powers it needs to oversee an orderly transition away from the LIBOR benchmark
    • Promote openness between the UK and international markets by simplifying the process to market overseas investment funds in the UK and delivering a Ministerial commitment to provide long-term access between the UK and Gibraltar for financial services firms
    • Maintain an effective financial services regulatory framework and sound capital markets with a number of smaller measures, including measures to improve the functioning of the Packaged Retail and Insurance-based Investment Products Regulation and increase penalties for market abuse

    Following its introduction to Parliament, the Bill will be subject to the usual processes of legislative scrutiny in both the House of Commons and the House of Lords. Once both Houses of Parliament have agreed, it will move forward to receive Royal Assent, at which point the Bill will become law. The timing of the Bill’s progression through Parliament is subject to parliamentary scheduling.

     

    Related Links

    Keywords: Europe, UK, Banking, Insurance, Securities, Benchmark Regulation, Financial Services Bill, FCA, HM Treasury

    Related Articles
    News

    PRA and FPC Finalize Changes to Leverage Ratio Framework in UK

    The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA

    October 08, 2021 WebPage Regulatory News
    News

    CFPB Proposes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.

    October 08, 2021 WebPage Regulatory News
    News

    PRA Decides to Maintain O-SII Buffers for Another Year

    The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.

    October 08, 2021 WebPage Regulatory News
    News

    FSB Report Assesses Implementation of Recommendations on Stablecoins

    The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.

    October 07, 2021 WebPage Regulatory News
    News

    APRA Updates Loan Serviceability Expectations for Home Lending

    In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.

    October 06, 2021 WebPage Regulatory News
    News

    CPMI and IOSCO Consult on Guidance on Stablecoin Arrangements

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.

    October 06, 2021 WebPage Regulatory News
    News

    EBA and EIOPA Set Out Work Priorities for 2022

    The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.

    October 05, 2021 WebPage Regulatory News
    News

    MFSA Issues Reporting Updates and Guidance for Banks

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.

    October 05, 2021 WebPage Regulatory News
    News

    EC Publishes Decision on List of Equivalent Third Countries Under CRR

    The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).

    October 04, 2021 WebPage Regulatory News
    News

    EC Rule on Contractual Recognition of Write-Down and Conversion Powers

    EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.

    October 04, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7552