EMEA Centre for Regulatory Strategy in Financial Services UK

Equity release: the FCA’s scrutiny is set to increase further

Keys circular

In this blog we explore how the FCA’s frequently-articulated policy priorities on the ageing population and vulnerable consumers, product complexity, and retirement advice may shape future FCA work on equity release. We also consider how advisors and product manufacturers and lenders can best respond to this increased scrutiny.

Continue reading

Posted on 15/03/2018 | 0 Comments

The EU’s FinTech Action Plan: charting the way forward


The European Commission’s FinTech Action Plan, published today, represents a significant milestone in the development of EU financial services (FS) policy. It gives the strongest indication yet that technological innovation and disruption will be among the main drivers of the EU’s future FS policy agenda, particularly after the next Commission takes office in 2019.

Continue reading

Posted on 08/03/2018 | 0 Comments

IFRS 9 Methodology Arbitrage



Our previous article “IFRS 9: What to expect of an expectation” generated significantly more interest and feedback than usual. In this article we explore some of the common themes from respondents’ correspondence, and explore whether firms’ methodological choices lead to arbitrage opportunities in the market.

We would like to first extend our thanks to everyone who took the time to send their comments (publicly as well as privately). Correspondence focused on three important themes, which we discuss below:

  • Scenario Design;
  • How to estimate probabilities of loss data points; and
  • The principle of parsimony;

We then explore whether firms’ methodological choices lead to arbitrage opportunities for market participants.

Continue reading

Posted on 08/03/2018 | 1 Comments

EU Commission notice on the withdrawal of the UK and EU rules in the field of asset management


On 8 February 2018 the EU Commission released a number of “Notices to Stakeholders” in relation to Brexit. These notices covered a wide range of sectors, including investment managers and MiFID firms, both of which will be of interest to asset managers in the EU.

In this blog, we highlight some of the potential implications of these notices for both UK and EU27 asset managers and areas that firms should be considering as part of their Brexit planning.

Continue reading

Posted on 07/03/2018 | 0 Comments

IFRS 9: What to expect of an expectation?



The IFRS 9 standard requires firms to quantify expectations of lifetime default risk and Expected Credit Losses (ECL) for certain financial instruments. The standard recognises that future losses are uncertain and asks firms to evaluate a range of possible outcomes to arrive at an estimate of expected loss that is “unbiased and probability-weighted” (paragraph 5.5.17).

Continue reading

Posted on 23/02/2018 | 1 Comments

ESRB Recommendation on liquidity and leverage risks in investment funds

ESRB Recommendation on liquidity

The European Systemic Risk Board (ESRB) has published a Recommendation on liquidity and leverage risks in investment funds. This topic has received significant attention from international bodies due to concerns about systemic risk. In 2017 the Financial Stability Board (FSB) published its Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities (see our blog). The International Organization of Securities Commissions (IOSCO) has recently updated its Recommendations for Liquidity Risk Management for Collective Investment Schemes (see our blog) and is due to make recommendations on fund leverage measures later in 2018.

Continue reading

Posted on 23/02/2018 | 0 Comments

Cyber risk and regulation for European banks


2018 will be an important year for the regulation of cyber resilience in banks. Indeed, almost three quarters of the G20 Financial Stability Board’s members recently indicated that they intend to release new standards or supervisory initiatives on cyber security in the year ahead. As part of this drive, regulators are not only likely to clarify their expectations for the level of cyber resilience they expect to see in banks, but they will also begin to intervene more actively when they observe deficiencies.

Continue reading

Posted on 20/02/2018 | 0 Comments

Effective governance of algorithmic trading in wholesale markets

Algo Trading blog_image

On 12 February the FCA and the PRA both published papers relating to regulated firms’ use of algorithmic trading. The FCA published a report on algorithmic trading compliance in wholesale markets, and the PRA proposed a number of expectations regarding a firm’s governance and risk management of algorithmic trading through a formal consultation on a Supervisory Statement. Together the documents represent further scrutiny of and more detailed expectations from the UK regulators on the use of algorithms by capital markets participants. The two regulators will continue to collaborate on the subject to ensure coordinated approaches going forward.

Continue reading

Posted on 15/02/2018 | 0 Comments

PRIIPs and MIFID II: true transparency and comparability at last?



The Markets in Financial Instruments Directive II (MiFID II) and the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation rules went live in January this year, introducing requirements for firms to disclose specific information on the costs and charges of certain investment products or services. The overriding regulatory objective is to help consumers assess the value for money of these investments - since charges can absorb a significant proportion of total returns – and make more informed investment decisions.

Continue reading

Posted on 12/02/2018 | 0 Comments

Liquidity risk management for investment funds | IOSCO’s new recommendations

Liquidity risk management  IOSCO  International Organization of Securities Commissions  asset portfolio  liquidity management  ESMA  ECB  FCA

In response to the Financial Stability Board’s 2017 Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities (see our blog), the International Organization of Securities Commissions (IOSCO) has published two documents:

Continue reading

Posted on 08/02/2018 | 0 Comments