Hello everyone and welcome to this week’s financial services updater.
The first highlight this week is that the FSA has updated its web page concerning CRD IV harmonised reporting.
Articles 95 and 96 of the proposed Capital Requirements Regulation or CRR introduce a new EU-wide supervisory reporting framework for Financial Reporting (FINREP) and Common Reporting (COREP). COREP covers capital requirements and own funds reporting whereas FINREP covers financial reporting for supervisory purposes based on IAS/IFRS, as endorsed by the European Union.
On the FSA’s updated web page there is a summary of the supervisory reporting frameworks and firms are provided with guidelines and templates.
The FSA also sets out a link to new Frequently Asked Questions which cover COREP, FINREP and FSA reporting. One of the issues covered in the FAQs is whether FSA reporting will completely disappear with COREP and FINREP? The FSA’s response is that FSA data items overlapping COREP and FINREP will be deleted but some data elements within these may be retained.
The FSA also covers timing in the FAQs, when it will tell firms exactly which returns will be replaced or amended? However, unsurprisingly, the FSA states that this will only be possible once it has seen the final CRD IV text.This may be some time.As I mentioned last week it appears that the CRD IV will not be adopted by the EU institutions until autumn 2012 and on that basis it does not appear feasible that the legislation will enter into force on 1 January 2013 as originally intended.
Incidentally the European Banking Federation and others have sent a letter this week to the EU institutions calling on them to consider allowing ‘a reasonable period of time between the final CRD IV text and implementation’ in order to allow banks to put in place the necessary procedures to comply with the new rules.
The second highlight this week is that the European Securities and Markets Authority (ESMA) has published an update on MiFID waivers from pre-trade transparency.
You may remember that under MiFID operators of Regulated Markets and Multilateral Trading Facilities (MTFs) must make public the current bid and offer prices and the depth of trading interests in respect of shares admitted to trading on a regulated market unless exemptions apply. However, MiFID allows national regulators to waive the obligation for operators of Regulated Markets and MTFs regarding pre-trade transparency requirements for shares based on the market model or the type and size of orders.
Articles 18 and 20 of the MiFID Implementing Regulation allow national regulators to grant 4 types of waiver. These waivers apply to reference price systems, negotiated trade systems, order management facilities and large-in-scale transactions.
The purpose of ESMA’s waiver document is to ensure that when granting waivers national regulators are acting along similar lines in accordance with ESMA’s opinion. The updated parts of ESMA’s waiver document are set out in red and relate to the waiver applying to order management facilities.
Two new examples have been added. Firstly, “Trailing Stop Orders”. These are stop orders with an additional feature - an absolute or percentage distance between the stop limit and the current reference price is entered. The stop limit adjusts automatically to the development of the reference price. Secondly, “One-cancels-others” orders which operate by the simultaneous placement of a stop order and a limit order within one order.
I hope you find this week’s updater helpful. Good bye.
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