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

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    FASB Proposes Improvements to 2023 GAAP Reporting Taxonomy

    The Financial Accounting Standards Board (FASB) is seeking comments, until November 03, 2022, on the proposed technical and other conforming improvements for the 2023 GAAP Financial Reporting Taxonomy.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8588