Capital Markets in Financial Services UK
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Just in time for Christmas, the EBA published its long-awaited report setting out recommendations for a review of the current prudential regime for investment firms. Produced at the request of the European Commission, and in cooperation with ESMA, the report identified a number of issues in the current application of the CRD/CRR requirements to investment firms (including a lack of adequate risk sensitivity and the complexity of the framework stemming from the current categorisation of firms based on MiFID definitions) and suggested a new approach to their categorisation. The latter would distinguish between systemic and "bank-like" investment firms, to which full CRD/CRR requirements should apply, and other investment firms namely those that are not considered ‘systemic’ or ‘interconnected’. For the ‘non-systemic’ firms, the EBA recommended that requirements should be tailored to reflect the risks specific to their activities.
Some say that technology revolutionized knowledge. Once controlled by a privileged few, knowledge is now becoming available to everybody. What if the same were about to happen with trust?
Defining vulnerability and ensuring staff understand and apply the definition has long presented a challenge to firms.
One of the Financial Conduct Authority’s (FCA’s) main observations, in its occasional paper (number eight), was an acknowledgement that vulnerability is difficult to define and that currently firms apply a range of definitions. It concluded that vulnerability itself is a very fluid, changeable state but for some individual consumers it can indeed be a permanent state. Nonetheless, it made clear that the firms need to work around these difficulties as access to services for all consumers is seen as central to core conduct.
We explore some of the challenges a firm may face when implementing a vulnerability definition across an operation.
It is striking, and perhaps not entirely coincidental, that since the start of November two very senior regulators have each used examples from maritime history in their speeches about the future of bank capital regulation. Neither example is a happy one. Stefan Ingves, Governor of the Swedish Riksbank and Chair of the Basel Committee on Banking Supervision (BCBS), referred to the fate of the Vasa. The Vasa when it was completed in 1628 was the most impressive vessel in the Swedish navy. But it sank on its maiden voyage, a casualty of significant design flaws. Nobuchika Mori, Commissioner of the Japan Financial Services Agency, drew on another tragic tale. The SS Eastland sank on Lake Michigan in 1915, having overloaded itself with life rafts to meet a regulation that had been introduced after the sinking of the Titanic. 841 lives were lost, more than on the Titanic itself.
November 4, 2014 marked a turning point in European banking supervision. It was the day the Single Supervisory Mechanism (SSM) took over responsibility for banking supervision in the Eurozone. Compared to many other European endeavours, the SSM was set up quickly; the vision for the Banking Union, of which the SSM is a part, was created only in 2012. During this period a whole new organisation had to be made operational, with supervisory approaches and processes drawn from best practices across Europe, and staffing and governance adapted to the new arrangements. On its first birthday, how is the SSM getting on?
The first year of the Single Supervisory Mechanism (SSM) was a busy one for banks – and for supervisors. There is much still to do, but even as they continue to tackle the near-term challenges, many banks are asking what the SSM will look like in the future, and what the implications will be for their business models, and for the banking industry more broadly.
MiFID II will have significant and wide-ranging implications for the strategy, operations, conduct and governance of a broad range of firms in Europe. It raises many important questions for the investment management industry. What are the key challenges and implications of MiFID II? How can investment managers gain a competitive advantage? And how much progress have investment managers made in implementation? We discussed these questions with 15 investment managers and two independent external experts to inform our new paper Navigating MiFID II - Strategic decisions for investment managers. The key findings are highlighted below.
On 17 September 2015, HM Revenue and Customs (HMRC) released their draft guidance on the Automatic Exchange of Financial Account Information guidance. The guidance is intended to help Financial Institutions (FIs) with the four different Automatic Exchange of Information regimes; the US Foreign Account Tax Compliance Act (FATCA), the Crown Dependencies and Overseas Territories (CDOT) and the Common Reporting Standards (CRS) and the EU Directive on Administrative Cooperating (DAC) in tax matters.
With the end of the final authorisation landing slots looming in early 2016, the majority of firms in the consumer credit market will have now submitted their applications for Financial Conduct Authority (FCA) authorisation.
But what comes next?
Affordability of credit and the way firms assess this is a key focus area for the Financial Conduct Authority (FCA). The FCA is using the authorisation process as a means of gathering information on the affordability assessment processes used by firms. It is likely to use this information to determine whether or not further rules or guidance are required in this area. This blog explores the insights that we have gained from both our client work and our interactions with the FCA. So what have we learnt and how should the affordability assessment rules be applied in practice?