It is well documented that over the past two years the European and US Authorties have made numerous efforts to strengthen the regulatory and supervisory framework that apply to financial activities.<\/p>\n
\nThis has been deemed necessary in order to restore confidence in the financial markets and to prevent the occurrence of a new crisis. European institutions have also decided to foster greater harmonisation of national laws to improve the integration of financial markets and the consolidation of market infrastructures. Once this has been achieved, the financial landscape will have changed considerably.<\/p>\n
The new Internal Market Commissioner, Michel Barnier, has decided
\nto legislate in all its areas of intervention. The post-trading arena,
\nneglected under his predecessor, is now being addressed progressively, as demonstrated by the number of initiatives launched
\nduring the past few months.<\/p>\n
Few of these regulatory initiatives, however, are at the same stage of
\ndevelopment. The occasional snapshot of the progress made to
\ndate can prove very helpful. The texts relating to UCITS IV
\n(Undertakings for Collective Investment in Transferable Securities)
\nand FCD (Financial Collateral Directive) have already been adopted
\nat European level and are now being transposed into national laws.
\nBy contrast, Level 2 measures are still under discussion for the
\nAIFMD (Alternative Investment Fund Managers Directive). Also still
\nunder discussion among European Authorities are EMIR (European
\nMarket Infrastructure Regulations) and the Short Selling regulation.
\nCSD (Central Securities Depository) regulation, UCITS V, ICSD
\n(Investor Compensation Scheme Directive), MiFID 2 (Markets in
\nFinancial Instruments 2) and SLD (Securities Law Directive) are also
\nin preparation. The European Commission intends to finalise the
\nadoption of most of the texts during 2011 and target their
\ntransposition and entry into force in 2011 (SFD, FCD, UCITS IV),
\n2012 (Short Selling regulation, ICSD) or 2013 (Solvency 2, SLD,
\nAIFMD). As far as European Central Bank initiatives are concerned,
\nCCBM2 (Correspondent Central Banking Model 2) is currently
\nforecast for mid-2013 while migration to T2S (Target 2 Securities)
\nshould begin by September 2014.<\/p>\n
The goals of the different initiatives vary but they are largely
\ncomplementary. They all target the same final objectives:
\nsoundness, effectiveness, transparency, and safety for markets,
\nintermediaries and investors. A further overarching objective is the
\nachievement of a level playing field for all market professionals, even
\nif in the interim it can sometimes feel as if the goalposts are being
\nmoved regularly.<\/p>\n
They have been revised in order to strengthen transactions
\ncarried out among market players by isolating pending transactions
\nand guarantees from creditors in cases of counterparty bankruptcy. In
\nterms of collateral, CCBM2 coupled with T2S will facilitate the
\nmobilisation of collateral across Europe at a time when more and more
\ntransactions need to be collateralised for reasons of safety and liquidity<\/p>\n
It is an attempt to remove “Giovannini barriers”<\/em> 13 and 15 by tackling national differences in the legal treatment of securities and an uneven application of conflicting laws. These differences create obvious obstacles for cross-border investment. The SLD would also help in the removal of Giovannini barrier<\/em> 3 for Corporate Actions, at a time when the industry is working very hard to implement Corporate Actions They are the first regulatory initiatives from the European Commission that aim at regulating post-trading infrastructures. European Authorities were previously more concerned with front-end activities such as MiFID and initiatives related to investment funds such as UCITS. Before the full impact of the financial crisis struck, the emphasis was primarily on efficiency, economies of scale and cost. Since 2008, there has been a radical switch to focus on transparency and risk management. This has also led the authorities to consider enlarging the franchise of market infrastructures to include other financial products, mainly OTC (over the counter) derivatives, and – EMIR<\/strong> covers the eligibility criteria of OTC derivatives for central – The regulation for CSDs<\/strong> intends to define the nature and role of a CSD at the European level, the services it is allowed to provide and its regulatory, prudential and supervisory framework. The main issue with the current proposal made by the European Commission is the level of service that it will be authorised to provide. Intermediaries are in favour of a very restrictive approach (i.e. a notary function and central settlement only), whereas the European Commission leans towards the inclusion of multiple banking services. In the latter case, CSDs are thus positioned as direct competitors to their participants rather than as pure systemic infrastructure. As already noted, the final – UCITS IV<\/strong> mainly pursues three objectives :<\/p>\n The KID represents a significant burden for asset managers who may look for support from their providers in the delivery of this essential document. Choices made by asset managers in rationalising the range of funds will inevitably have an impact upon depositories and providers of valuation services.<\/p>\n – The Alternative Investment Fund Managers Directive (AIFMD)<\/strong> will – UCITS V<\/strong> aims at reviewing the current framework applicable to UCITS depositories in line with AIFMD dispositions and introducing new Last but most certainly not least, the Markets in Financial It is well documented that over the past two years the European and US Authorties have made numerous efforts to strengthen the regulatory and supervisory framework that apply to financial activities.<\/p>\n","protected":false},"author":1,"featured_media":17238,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1508],"tags":[1655,1673,1671,1842,1841,1837,1985,1650,2243,1865,1669,1984],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/17240"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=17240"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/17240\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/17238"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=17240"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=17240"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=17240"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nstandards. The removal of these three barriers – or at least the mitigation of the constraints they represent – is of paramount importance for delivering most of the benefits expected from T2S.<\/p>\nEMIR and the CSDs regulation<\/h2>\n
\nconsequently to implement a strong regulatory framework dedicated to
\nthese infrastructures at the European level (and beyond if possible) as
\nthey are now recognised as systemic.<\/p>\n
\nclearing, defines the harmonised regulatory framework that will apply to all Central Counterparties (CCPs) and Trade Repositories in Europe and specifies the rules for implementing interoperability links among CCPs for cash products.<\/p>\n
\ncontent of the regulation could significantly reshape the future post-trading landscape.<\/p>\nAIFMD, UCITS IV and UCITS V<\/h2>\n
\n
\nprocedure for fund distribution (fund passports);<\/li>\n
\ncompany passports and by providing asset managers with tools to help
\nrationalise their range of funds: facilitating cross-border fund mergers
\nand the introduction of master-feeder structures.<\/li>\n<\/ul>\n
\nimpact Alternative Investment Managers rather than directly impact
\nalternative investment funds. The directive introduces general operating conditions that AIFMs must meet, the role of an external valuer or independent valuer and, for the first time, a genuine single market framework which will allow AIFMs to passport their services throughout the EU on the basis of a single authorisation. The AIFMD requires that each alternative investment fund manager appoints a depository: although the exact scope of depository liability remains to be agreed in the Level 2 measures, the range of depository responsibilities is significantly increased in comparison with most previous European regulation and practice. French regulation stands out as an exception to this general rule, due to the gold plating ensured by the introduction of additional measures when UCITS III was transposed into French law.<\/p>\n
\nprovisions for UCITS managers’ remuneration in order to improve
\ninvestor protection. The Investor Compensation Scheme Directive
\n(ICSD) pursues the same aim as, among other goals, it intends to cover
\nthe potential loss suffered by a fund shareholder in the event that the
\nfund’s depository or one of its custodians is unable to return assets to
\nthe fund. This initiative is generally disregarded by the industry as it
\nseems somewhat redundant with the new definition of the depository’s
\nliabilities and because the amount called for to cover the level of
\npotential risk seems totally disproportionate.<\/p>\nMarkets in Financial Instruments Directive 2 (MiFID 2)<\/h2>\n
\nInstruments Directive 2 (MiFID 2) has come to the forefront in the
\nlast three years as the European Commission has deemed it necessary
\nto review the market and financial product changes that have occurred
\nduring this time period and to draw lessons from the financial crisis. The
\nEuropean Commission would like to enlarge the scope of the text to
\nfixed income and derivatives markets, including commodities. It also
\naims at improving current legislation in order to regulate or better
\nregulate new players (dark pools, crossing networks, algorithmic
\ntraders) and to improve market transparency (pre- and post-trade), as
\nwell as increasing investor protection.<\/p>\n","protected":false},"excerpt":{"rendered":"