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

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    News

    SEC Extends Comment Period on Climate Risk Disclosures

    The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.

    May 09, 2022 WebPage Regulatory News
    News

    APRA Reduces Committed Liquidity Facility, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.

    May 09, 2022 WebPage Regulatory News
    News

    CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks

    The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.

    May 06, 2022 WebPage Regulatory News
    News

    PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down

    The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.

    May 06, 2022 WebPage Regulatory News
    News

    EBA Updates Standards for 2023 Benchmarking of Internal Approaches

    The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.

    May 06, 2022 WebPage Regulatory News
    News

    EIOPA Responds to Stakeholder Views on Blockchain in Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.

    May 06, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8179