Hello everyone and welcome to this week’s financial services updater which is an international edition.
Turning to this week’s highlights, the first one is the initial Discussion Paper that the Treasury has published on the Wheatley Review.
You may recall that the Chancellor of the Exchequer has commissioned Martin Wheatley, Managing Director of the FSA and Chief Executive-designate of the Financial Conduct Authority, to undertake a review of the structure and governance of the London Inter-Bank Offered Rate (known as LIBOR).
The Discussion Paper sets out the Wheatley Review’s initial analysis of the issues that have come to light in relation to LIBOR. At this stage the review is looking at two possible options: either to reform LIBOR or to use alternatives for at least some of its current uses.
In relation to options for reform, the Discussion Paper focuses on three key areas: (1) how LIBOR is compiled; (2) governance around how LIBOR is compiled; and (3) the regulation of LIBOR. In relation to this third point the Discussion Paper considers a number of options. This includes strengthening the powers of prosecution available to the FSA (and, in the future, the Financial Conduct Authority) for LIBOR-related offences.
The deadline for comments on the Discussion Paper is 7 September 2012.
The second highlight this week is an FSA publication. The FSA has published its latest Market Watch newsletter which is a special short selling edition.
The EU Regulation on short selling and certain aspects of credit default swaps was published in the Official Journal of the European Union on 14 March 2012 and comes into effect on 1 November 2012.
The Regulation, which is directly applicable to Member States, has a number of objectives including increasing transparency on short positions held by investors in certain EU securities and ensuring Member States have clear powers to intervene in exceptional situations to reduce systemic risks arising from short selling and credit default swaps.
The FSA’s Market Watch covers a number of issues relating to the UK’s transposition of the Regulation including the removal of the domestic short position disclosure regime.
The Regulation offers the option that existing national short selling measures can continue in operation in parallel with the European regime until July 2013. However, in previous papers the FSA has always stated that it expected the domestic regime to be superseded by the EU regime. In Market Watch, the FSA states that it will therefore shortly be consulting on proposals to amend the FSA Handbook to remove its existing short selling rules with effect from 1 November.
As the Regulation is directly applicable in Member States, the European Securities and Markets Authority (ESMA) will be producing FAQs regarding the Regulation and subsidiary legislation. According to ESMA’s website we can expect to see the first set of FAQs by the end of September.
Whilst the FSA is not producing its own FAQs it has said in the Market Watch that it will respond to questions concerning the procedures it is putting in place to enable UK market participants to comply with the Regulation’s provisions.
That’s this week’s highlights.
I mentioned at the beginning that this week’s updater is also an international edition which contains articles from our offices in Shanghai, Hong Kong, Singapore, Netherlands, France and Germany.
Our Shanghai team has produced a regulatory Q&A for firms that are looking to conduct business in The Peoples’ Republic of China. This Q&A has been added to the other jurisdiction Q&As which can be found on the third country matrix in our Pegasus online technical resource.
Our Hong Kong colleagues have produced a client briefing note on the joint conclusions of the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority on the proposed regulatory regime for OTC derivatives. In Singapore our colleagues report in the SGX proposing to review its listing manual.
Our team in Frankfurt have produced a client briefing note on the German Federal Ministry of Finance consultation on the Alternative Investment Fund Managers Directive.
Our team in Amsterdam have produced a number of articles including a recent review by the Dutch regulator concerning so called ‘wild west signs’ on marketing materials.
And in Paris our team has produced a short article on the AMF’s recent consultation on the regulation of entities who may bid in greenhouse gas emission allowance auctions.
I hope you find this week’s updater helpful, good bye.
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