T2S (TARGET2- Securities, the Pan-European securities settlement platform)<\/a> and CCBM2 (single management platform for Central Bank collateral).<\/p>\n<\/p>\n
2010 was a year of intense regulatory activity during which
\nthe European authorities prepared many texts. 2010 was however marked by few formal adoptions of directives or regulations. For all that, the will to succeed was obvious, particularly in the course of
\n2011, thus reflected in the provisional schedules submitted by the European Commission, as [we referred to in February
\n2011->article541].<\/p>\n
Where do we stand one year later? It must be noted that although the activity in European institutions has remained very intense, few new texts have been effectively adopted and published in the Official Journal. The best is therefore yet to come.<\/p>\n
Let us review the main initiatives which SGSS is monitoring:<\/p>\n
EMIR (European Market Infrastructures Regulation)<\/h2>\n
This text was proposed by the European Commission (EC) on 15th
\nSeptember 2010 and the objective for the end of the year 2010 was
\nadoption in April 2011, with the regulation to come into force during
\nthe second half of 2012. At the end of 2011, it was clear that the
\ncomplexity of the subjects being considered and the need to ensure
\nthe consistency of the European text with its American equivalent
\nsomewhat delayed the progress of the work in the EC. The new
\nschedule specifies adoption at the start of 2012, followed up with
\nwork by ESMA aimed at compiling the technical standards and
\nproceedings by the end of June 2012.This would enable the
\nregulation to come into effect before the end of 2012, in line with the
\nschedule set by the G20.<\/p>\n
Regulation of short selling and certain aspects of Credit Default Swaps<\/h2>\n
The text, which was approved by the European Parliament on 15th
\nNovember 2011, must now be formally adopted by the European
\nCouncil in order to come into effect in November 2012, the date
\ncurrently set.<\/p>\n
The objective of this regulation is to build a preventive framework
\n(made of permanent measures complemented by temporary
\nmeasures that can be activated by the competent authorities), that
\nis rational (the draft does not question the benefits that short selling
\ncan provide in normal market conditions and exempts certain
\nactivities) and harmonised, aimed at regulating the short selling of
\nshares and of sovereign debt, as well as the use of CDS\u2019s. Such a
\nframework is only meaningful if it is accompanied by; a
\nstrengthening of the powers assigned to the competent local
\nauthorities and to ESMA, and by an increase in transparency, which
\nis necessary for the exercise of their function. The text therefore
\nspecifies the roles of the various competent authorities and stresses
\nthe need for cooperation between them.<\/p>\n\nEssentially aimed at the investor (corporate entity or individual), the
\ntext deals with short selling from two aspects: a declarative
\n(potentially public) obligation and the obligation to have taken all the
\nnecessary steps in order to enable the settlement of the sale on time. With regard to CDS\u2019s, it prohibits \u201cnaked\u201d short selling.<\/p>\n
The text also requires the Central Counterparties (CCP) to put in place penalties on settlement fails and a harmonised Buy-in procedure
\n(triggered 4 business days after the intended settlement date). It should be noted that this proposal is in line with the one contained in the draft regulation on Central Depositaries (CSD\u2019s). Moreover, it is not the only instance of a connection between the proposals in EC
\ntexts. The earmarking of short selling orders, which was envisaged in this regulation for a while, seems to have been finally abandoned in favour of the marking of transactions which could be easily achieved using Transaction Reporting as specified in the future MiFIR regulation.<\/p>\n
CSD Regulation (Central Securities Custodians)<\/h2>\n
The main objective of the text is to harmonise the regulatory
\nframework applying to CSD\u2019s in Europe, which is completely new.
\nFurthermore, it deals with various harmonisation topics, particularly
\nrelating to T2S, like Settlement Disciplines and settlement cycles.<\/p>\n
The work had begun with discussions amongst the Member States
\non 15 July 2010. The proposed text was to be published on 30
\nNovember 2011. This publication will undoubtedly be deferred to
\nthe beginning of 2012. At that date the co-decision (trilogues) phase
\nwill begin. The regulation can then be voted on in the following 12
\nmonths, before ESMA devotes itself to producing the many
\napplication decrees specified by the text. On this basis, it is
\nenvisaged that the regulation will come into force in 2014.<\/p>\n
SLD (Securities Law Directive)<\/h2>\n
You will remember that the main objectives of this directive, which
\nhas now been in discussion for several years, are to facilitate crossborder investments by tackling the heterogeneity of the securities
\nlaws and the rules for the conflict of laws that apply in Europe, but
\nalso to support the harmonisation work in progress on corporate
\nactions. This follows the example of many other harmonisation
\nprojects being conducted in the post-market area, intending to
\nfacilitate the implementation of the T2S project. At the end of the
\nyear 2010, it had been indicated that a proposal in this domain was
\nexpected in June 2011. Today a date is no longer indicated and the
\nEC\u2019s financial regulation programme for 2012 makes no reference to
\nit\u2026<\/p>\n
MiFID II (Markets in Financial Instruments Directive)<\/h2>\n
The Markets in Financial Instruments Directive, or MiFID, came into
\neffect in November 2007. It governs investment services in the
\nfinancial instruments field (such as brokerage, advice, dealing,
\nportfolio management, subscription services, etc.) supplied by the
\nbanks, and the functioning of regulated markets and other trading
\nplatforms (referred to as \u201cmultilateral trading facilities\u201d).<\/p>\n\nA proposal to review this directive was announced for 2011. The EC
\nhas kept to its commitment and both a directive proposal and a
\nregulation proposal have been submitted for consultation on
\n20October 2011. The aims of these proposals are to make the
\nfinancial markets more efficient, more resilient and more transparent,
\nbut also to strengthen investor protection. The new regulation will
\nexpand its cover to the trading platforms which were not regulated
\nhitherto. It will harmonise the rules that apply to regulated markets
\nand MTFs and will set up a framework regulating algorithmic trading
\nactivity. It will also increase the transparency of market participants
\ntrading equities and introduce new transparency regime for bonds,
\nstructured products and derivatives. It will then strengthen the role
\nand the powers of the regulatory authorities, especially in terms of
\nregulation and supervision of activities on commodities. Lastly, the
\nrevised MiFID will define stricter requirements for portfolio
\nmanagement, investment advice and offers of complex financial
\nproducts like structured products.<\/p>\n
The proposal has been transmitted to the European Parliament and
\nto the European Council. The legislative process should last more
\nthan a year, definitive publication of the texts being forecast for the
\nthird or even fourth quarter of 2013. Transposition of the Directive
\nshould occur in the Member States by the end of 2015. As the
\nregulation is not by nature a text subject to transposition, it could
\nsee its application delayed to the Directive\u2019s transposition date for
\nreasons of consistency.<\/p>\n
AIFM Level 2 Measures (Execution measures of the Directive on managers of alternative investment funds)<\/h2>\n
The AIFM Directive was published on 1 July 2011 in the Official
\nJournal of the European Union. Beyond the rules applicable to fund
\nmanagers, the AIFM Directive (and its implementing measures)
\nregulates in detail the missions of the alternative investment fund depositary by defining its functions relating to cash monitoring,
\nassets in custody (a broad definition has been adopted, bringing
\nback into the field of custody, in particular, financial instruments
\nregistered or held directly or indirectly in the name of the depositary),
\nrecord keeping and depositary oversight duties. The directive also
\nestablishes a principle of liability in the case of the loss of assets by
\nthe depositary or one of its sub-custodians. The entity can only
\nexonerate themselves in case of an external event beyond its
\nreasonable control (limited cases like sovereign acts or natural
\ndisasters) or, in the case of insolvency, only if the local insolvency law
\ndoes not recognise the effects of the segregation of assets.<\/p>\n
The AIFM Directive will have to be transposed in all Member States
\nby 22 July 2013. In parallel, the European Commission has
\nlaunched the legislative process for the level 2 measures by asking
\nESMA for its technical advice, which was delivered on 16 November
\n2011. The Commission foresees the definitive adoption of the level
\n2 measures in July 2012 with transposition in July 2013, at the same
\ntime as the framework Directive.<\/p>\n
UCITS V (Consultation of the European Commission on the custodian function and the remuneration of managers)<\/h2>\n
In December 2010, the European Commission launched a
\nEuropean consultation in order to clarify the UCITS depositary\u2019s
\nregime and that of the remuneration of UCITS managers. Since that
\ndate, the work on the AIFM directive has taken precedence over that
\nof UCITS V and an alignment of the two texts in terms of the
\nfunctions and responsibility of the depositary has been firmly
\nenvisaged by the European Commission.<\/p>\n
If alignment is confirmed, the provisions of the AIFM Directive and in
\nparticular its future implementing measures should be found in the
\nfuture text on UCITS V. One new item should be introduced: minimum sanctions for managers who do not play the game and therefore contravene European legislation.<\/p>\n
Certain rumours mention a possible expansion of the field of
\napplication of UCITS V to eligible assets and to complex\/noncomplex
\nUCITS\u2019s, which would be likely to delay the publication of
\nthe draft directive. But that has not been confirmed by the European
\nCommission. For the time being, UCITS V is the order of the day for
\nthe 2012 EC\u2019s work programme and an initiative concerning the
\nsubjects mentioned above (depositaries, remuneration of managers
\nand sanctions) should emerge during 2012.<\/p>\n
SOLVENCY II (Directive on the solvency of insurance companies) <\/h2>\n
On 16 November 2011, EIOPA (European Insurance and
\nOccupational Pensions Authority), officially confirmed the deferral for
\none year of the new prudential rules issued in the Solvency II
\nDirective.<\/p>\n\nThe European Parliament and the European Council finally
\naccepted that the Directive be applied gradually, i.e. that the Member States should transpose the Directive before 1 January 2013, the
\nnew regime would only fully apply to insurers from 1st January 2014.
\nYou will remember that the objective of Solvency II is to better adapt
\nthe solvency requirements for insurance and reinsurance companies
\nto the real economic risks incurred by their activity (like the CRD
\nadopting the provisions defined by the Basle Committee for banks).
\nDespite this deferral, the schedule remains tight. EIOPA hopes that
\nthe Omnibus 2 Directive which is to partially modify the Solvency
\nFramework Directive can be voted on during the first half of 2012,
\ngiven that EIOPA intends to launch in parallel in May 2012 a
\nconsultation on the Solvency II application measures.<\/p>\n","protected":false},"excerpt":{"rendered":"
2009 was a year of intense reflection on the functioning of the financial sector. There followed an intense regulatory activity in 2010, unfortunately with few formal adoptions of regulations. 2011 marked the surge of the will to succeed with provisional schedules. Where do we stand one year later? Eric de Nexon, Head of Strategy for Market Infrastructures of Societe Generale Securities Services sheds some light through a closer look at securities services<\/p>\n","protected":false},"author":1,"featured_media":22165,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1508],"tags":[1655,1854,1671,1836,1842,1841,1651,1837,1985,1649,2243,1865,1970,1984],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/22167"}],"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=22167"}],"version-history":[{"count":1,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/22167\/revisions"}],"predecessor-version":[{"id":85411,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/22167\/revisions\/85411"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/22165"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=22167"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=22167"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=22167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}