Regulatory Update from the European ACT - Nov 2016

The EACT’s monthly update can be found here.

EU members are reminded that their UK operations will continue to be required to comply with EU regulations until Brexit occurs, and should expect much of the EU originated regulation to continue once completed. The UK is separately a member of the G20 and that organisation is the ultimate source of much of the change which has been brought into effect in the UK since 2008 albeit through the EU.

Notable exceptions are:

• Financial Transaction Tax: FTT is being considered by 10 member states which do not include the UK and so becomes an issue only if transactions must pass through those states.
• Banking Separation: interest in the EU is waning but the UK banking separation remains on target for implementation by 2019. All five major UK banking groups are preparing for separation and this most likely means that corporates will find their counterparty changes, and that the implementation process commences prior to the final date.

Otherwise regulation continues to be implemented and reviewed following the Call for Evidence by the Commission in 2015 for which the Commission’s output is yet to be published as final drafting of Money Market Fund regulation and a revised Prospectus Directive remain under Trilogue: the process of debate between the Commission, the Council of Ministers, and the European Parliament.

There are some helpful ideas emerging on EMIR and its reporting burden which more likely reflect the National Competent Authorities’ (for example: FCA for the UK) experiences on reviewing the vast amount of transaction data which has been gathered through Trade Repositories. There is little comfort offered on the requirement for margin for NFC+ and Credit Value Adjustment for NFC-.

Please forward any questions on the report’s content to technical@treasurers.org