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21/12/2016 2016/1682 2016-1682 Press Release on Feedback Statement on ESEF , , , Press Release PDF
225.03 KB
30/05/2017 ESMA70-145-103 Communication on launch of reference data submission under MAR , Opinion PDF
132.12 KB
26/09/2017 ESMA71-99-599 EBA and ESMA provide guidance to assess the suitability of management body members and key function holders , , , Press Release PDF
243.97 KB

The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have published their joint Guidelines to assess the suitability of members of management bodies and key function holders.

11/01/2016 2016/28 Emergency measure by the Greek HCMC under Section 1 of Chapter V of Regulation (EU) No 236/2012 on short selling and certain aspects of credit default swaps , Opinion PDF
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OPINION

Emergency measure by the Greek HCMC under Section 1 of Chapter V of Regulation (EU) No 236/2012 on short selling and certain aspects of credit default swaps

 

I.Legal basis

  1. According to Article 27(2) of Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps (the Regulation), the European Securities and Markets Authority (ESMA) shall within 24 hours of the notification having been made by a competent authority under Article 26 of the Regulation issue an opinion on whether it considers the measure or proposed measure necessary to address exceptional circumstances.
  2. ESMA’s competence to deliver an opinion is based on Article 29(1)(a) of Regulation (EC) No 1095/2010 (ESMA Regulation). In accordance with Article 44(1) of the ESMA Regulation the Board of Supervisors has adopted this opinion.

II.Previous measures adopted by the Hellenic Capital Market Commission (HCMC)

  1. On the 29th of June 2015, ESMA issued an opinion on an emergency measure proposed by the HCMC under Article 20 of the Regulation. The measure consisted of a temporary prohibition of transactions in any financial instrument that create, or increase, a net short position on any of the shares admitted to trading on the Athens Exchange and the Multilateral Trading Facility of “EN.A” (Alternative Market of the Athens Exchange) of which the relevant Competent Authority is HCMC and was applied from 30th June 2015 at 00.00.01 CET to the 6th July 2015 at 24:00:00 (CET).
  2. The HCMC indicated that the measure was a complementary action to the ones already established on the 29th of June 2015 by the Greek Authorities in order to tackle the broader Greek financial system crisis.
  3. On the 6th, the 13th, the 20th and the 27th of July and on the 3rd of August 2015, some of the measures adopted by the Greek authorities were renewed until the 30th of August 2015.
  4. On the 31st of August 2015, in accordance with Article 26 of the Regulation, the HCMC introduced a new emergency measure under Article 20 of the Regulation consisting in a ban on short selling of shares and units of Exchange Traded Funds (ETFs) admitted to trading on the Athens Exchange and the Multilateral Trading Facility of “EN.A” (Alternative Market of the Athens Exchange) of which the relevant Competent Authority is the HCMC. It also concerned all depository receipts (ADRs, GDRs) representing shares admitted to trading on the Athens Exchange and the Multilateral Trading Facility of “EN.A” (Alternative Market of the Athens Exchange). The short selling measure applied to any natural or legal person, irrespective of their country of residence, but contained the exemption for market making activities, provided that short selling transactions were conducted for hedging purposes. The emergency measure adopted on August 31st expired at 24:00:00 (CET) on the 30th of September 2015.
  5. In respect of all the above cases, the HCMC notified ESMA and other competent authorities of its intention to impose/renew the relevant short selling measures in accordance with Article 26 of the Regulation and ESMA issued in all cases a positive opinion concerning the imposition/renewal of the relevant short selling measure pursuant to Article 27(2) of the Regulation.

III.Present measure

  1. On the 30th of September 2015, in accordance with Article 26 of the Regulation, the HCMC notified ESMA and other competent authorities of its intention to make use of its powers of intervention in exceptional circumstances and to introduce a new emergency measure under Article 20 of the Regulation.
  2. The measure consisted in a ban on short selling of shares of five credit institutions admitted to trading on the Athens Exchange and comprising the FTSE/Athex Banks Index, irrespective of the venue where the transaction was executed. The temporary prohibition included sales of shares covered by subsequent intraday purchases. The temporary prohibition of short selling applied to all depository receipts (ADRs, GDRs) and warrants representing shares of such credit institutions admitted to trading on the Athens Exchange and comprising the FTSE/Athex Banks Index.
  3. The above mentioned credit institutions were:
  • Alpha Bank A.E. (ISIN GRS015013006)
  • Attica Bank S.A. (ISIN GRS001003003)
  • National Bank of Greece S.A. (ISIN GRS003003019)
  • Eurobank Ergasias S.A. (ISIN GRS323003004)
  • Piraeus Bank S.A. (ISIN GRS014003008)
  1. In the notification, the HCMC explained the reason for the measure was that in July 2015 the Eurogroup agreed on a specific package of measures regarding the development of the Greek Economy, the most important element of the Eurogroup agreement being that 25 billion euros would be earmarked for the re-capitalisation needs of the Greek Banking system. Nevertheless, the amount of funds needed to secure the capital adequacy of the Greek banks, and most importantly, the legal framework that would apply in relation to such re-capitalisation, including whether some incentives for private shareholders will be provided or not, had not been officially disclosed at the time.
  2. On the 30th of September 2015, ESMA issued a positive opinion (ESMA/2015/1489) regarding this new emergency measure. The measure entered into force as of 00:00:01 hours (CET) on the 1st of October 2015 and the original expiring date was the 9th of November 2014 24:00:00 hours (CET).
  3. On the 9th of November 2015 and on 7th of December 2015, the HCMC notified ESMA and other competent authorities of its intention to make use of its powers of intervention in exceptional circumstances and to renew the emergency measure originally introduced on the 30th of September 2015. On the same days ESMA issued positive opinions regarding these renewals (ESMA/2015/1638 and ESMA/2015/1854), which expired on the 21st of December 2015 at 24:00:00 (CET).
  4. The proposed renewals in November and December 2015 concerned exactly the same instruments as the original measure (see paragraph 9 and 10), foreseeing an exemption for market making activities in the affected financial instruments.
  5. In the notifications for the renewals, the HCMC considered that adverse circumstances were persisting in the Greek capital market, including also the existence of capital controls in respect of stock exchange transactions, but mainly in connection with the re-capitalisation of the systemic credit institutions that was not finalised yet, resulting in persistent market uncertainty that posed threats to the financial stability and the general level of market confidence
  6. The HCMC explained that the re-capitalisation of the Greek Banking System, that the law voted by the Greek Parliament on October 31st 2015 provides for, was actually in progress and had not been yet concluded for all credit institutions. Moreover, considering that the trading in the new shares issued from the relevant capital raising had not yet been started in all cases, the HCMC argued that, the lifting of the ban on short sales would tend to increase price volatility on listed credit institutions and would increase market uncertainty.  
  7.  Taking into consideration that the market behaviour of banking sector securities has traditionally played a very important role in driving overall market valuations, concerns remained as regards unexpected sudden and significant swings in market confidence and therefore in relevant asset prices. The HCMC added that the successful conclusion of the aforementioned bank re-capitalisation and restructuring process as well as the commencement of trading of the new shares of all credit institutions were thus absolutely necessary, in order to safeguard the stability of the financial system and of the Greek capital market.
  8. On the 21st December 2015, the HCMC notified ESMA and other competent authorities of its intention to make use of its powers of intervention in exceptional circumstances and to renew the current emergency measure introduced on the 30th of September 2015 once more, but this time with a limited scope.
  9. The renewed measure consisted of a ban on short selling limited only to the shares of Attica Bank S.A. (ISIN GRS001003011) admitted to trading on the Athens Exchange, irrespective of the venue where the transaction is executed. The temporary prohibition included sales of shares covered by subsequent intraday purchases. The temporary prohibition of short selling applied to all depository receipts (ADRs, GDRs) and warrants representing shares of Attica Bank S.A. (ISIN GRS001003011) admitted to trading on the Athens Exchange. As for previous bans, an exemption for market making activities in the affected financial instruments would be foreseen.
  10. In the notification for the partial renewal, the HCMC explained that the re-capitalisation of the Greek Banking System, based on the law 4340/2015 voted by the Greek Parliament on October 31st 2015, was still not fully concluded. Re-capitalisation of Attica Bank was still on-going. HCMC indicated that the capital increase was to be concluded at the latest by the 31st of December 2015 and that, subject to the successful completion of the issue, the trading of the new shares of Attica Bank was expected early January 2016, and thus the effect on the share price of this credit institution and on the volatility this trading might impose, had not yet been fully evaluated by market participants.
  11. The HCMC considered that the lifting of the ban on short sales on Attica Bank shares would tend to increase price volatility on the institution and would increase market uncertainty. Within this context, the HCMC argued that, as done previously for the other banks for which the short selling ban applied during the re-capitalisation process and also covered a few trading days of the new shares, the proposed renewal should be limited to Attica Bank and should expire on the 11th of January 2016.
  12. In the notification, the HCMC also explained that the proposed limited temporary ban of short-selling concerning shares of Attica Bank admitted to trading on the Athens Exchange was not expected to significantly impair price discovery and therefore market efficiency. Given that the main liquidity and trading activity on those instruments normally is located within Greece, the HCMC believed the proposed renewal would not create disproportionate negative effects, since it would affect a fairly small part of the EU overall market.
  13. On the 21st of December 2015, ESMA issued a positive opinion regarding the renewal of the emergency measure (ESMA/2015/1900), which is expiring on the 11st of January 2016 at 24:00:00 (CET).
  14. On the 11th January 2016, the HCMC notified ESMA and other competent authorities of its intention to make use of its powers of intervention in exceptional circumstances and to renew the emergency measure introduced on the 21st of December renewal as described in paragraph 19 above, namely Attica Bank.
  15. In the notification of renewal of the measure for Attica Bank, the HCMC indicated that the re-capitalisation of the Greek banking system is not yet fully completed, the one of Attica Bank still being in progress. Even though the capital increase of Attica Bank was finalised since the end of December 2015, the trading of the new shares has not started yet. Both the dates of the delivery of the new shares to the beneficiaries of the capital increase and of their admission to trading remain to be announced by Attica Bank and the Stock Market operator. The HCMC expects this will take place within the next week following the relevant decision of the Athens Exchange.
  16. Within this context, the HCMC argues that the short selling ban on Attica Bank should be extended to also cover a few trading days of the new shares to ensure equal treatment with the banks that had undertaken and concluded the re-capitalisation process before. Furthermore, the HCMC considers that such an extension would mitigate any possible risk of market volatility of the shares of Attica Bank and respond to any possibility of market uncertainty.
  17. In the notification, the HCMC also explained that the proposed limited temporary ban of short-selling concerning shares of Attica Bank admitted to trading on the Athens Exchange was not expected to significantly impair price discovery and therefore market efficiency. The proposed renewal of the emergency measure should be in force as of 00:00:01 hours (CET) on the 11th January 2016 until 24:00:00 (CET) on the 25 January 2016.

IV.Opinion

  1. ESMA is adopting the following opinion on the measure notified on the 11 January  2016, on the basis of Article 27(2) of the Regulation:

On the adverse events or developments

ESMA considers that adverse developments which constitute a serious threat to market confidence in Greece could be understood as having considerably decreased with the successful completion of the share capital increase of Attica bank as announced by that bank on the 30th December 2015. Attica Bank has been the last of the five banks to undertake the re-capitalisation process envisaged under Greek law. It represented less than 1 % of the total market capitalisation of the 5 re-capitalised banks before the Attica capital increase and less than 7% after the increase. It also stands for a very small fraction of the Greek banking sector. Not surprisingly, and unlike the other banks mentioned in paragraph 10 above, Attica Bank is not a significant supervised entity under the direct supervision of the ECB.

Although acknowledging that the successful and full conclusion of all the Greek banks’ re-capitalisation is important in order to safeguard the stability of the financial system as a whole and of the Greek capital market, as well as the protection of investors, ESMA considers that given that the capital increase of Attica Bank is agreed, priced, subscribed and publicly announced on the 30th of December 2015, the threat to the financial stability of the bank, and more widely to the financial stability of the Greek financial market, is much less acute than in December 2015.

ESMA notes that the trading of the newly issued shares further to the completed capital increase has not started yet and thus there is a risk of increased volatility in the relevant market and that the confidence in the concerned bank could be affected if price movements were extreme. However, the evolution of the stock price of Attica Bank during the last month does not point towards, on average, a significant downward pressure on the prices. The volatility observed on Attica Bank is relative to the currently volatile stock markets in the EU.

In the trading figures of Attica Bank shares since late November 2015, it is evident that the trading volumes have reduced progressively but the price of the stock has not suffered from a downward price spiral. Only in one occasion (10 December2015) the stock price fell more than 10% in a single session. In general, looking at the last 30 trading sessions, the price has increased by 37%. In the last 10 trading sessions, the price has moved in an overall range (counting intraday minimum and maximum values) of 13% around the average closing price of the period. In terms of closing prices, the maximum fluctuation has been -3,97% since 22 December (observed on January 7 2016). Putting these moves in the context of quite volatile EU stock markets, linked to the international market trends, it is questionable whether the volatility of the stock price of Attica Bank could be qualified as extreme or even high. Obviously, one could argue that the price has found a support thanks, among other things, to the existing ban on short sales. While it is extremely difficult to isolate the price effect of the short selling ban with current data, it is ESMA’s view that, all in all, the pricing history of the stock does not give the impression of a highly fragile situation.

The main risk related with extreme volatility in a re-capitalisation exercise arises when the issuance price of the new shares and the allotment of the volume to be subscribed is not yet complete. In that scenario, significant (downward) price movements can dis-incentivise the investors that were considering to subscribe to new shares or can affect the issuance price in a manner that the re-capitalisation (in terms of the effective amount of funds to be received by the bank) can be put at risk. Once the pricing and the subscription are firm, price moves have a much lower impact on the success prospects of a re-capitalisation. They mainly affect the willingness of the new investors to hold their new shares or to sell them when the new shares start to trade. But the effects of this process on the financial stability of the entity are much less direct than when the volatility scenario precedes the establishment of the price and of the allotment of the capital increase. The latter was the prevalent scenario in most of the other occasions in which the measures of the HCMC was extended and on which ESMA issued positive opinions in the past. In ESMA’s opinion, such scenarios should be distinguished from the case at hand.

The question of whether the risk of falling prices on Attica Bank shares (which has not yet been observed) would endanger the orderly functioning of the whole Greek financial market and its integrity is not evident to ESMA, due to the small size of this particular institution and to the fact that the only pending element is the formal admission to trading of the new shares.

On the appropriateness and proportionality of the proposed measure

ESMA considers that the renewal of the emergency measure limited to the shares of Attica Bank is not appropriate and proportionate to address the above mentioned potential threat stemming from the volatility of the price of the market of Attica Bank shares. Given that the share capital increase of Attica Bank is firm and definitive as well as publicly known, ESMA considers that the prohibition of short sales in the shares of Attica Bank admitted to trading on the Athens Exchange will only serve the purpose of assisting in reducing market volatility until the final admission of the new shares and the first days of their trading. While this may be a positive goal, ESMA notes that the situation of Attica Bank is very different from the ones of the other Greek banks both in terms of quantitative significance with respect to financial stability (much smaller in the case of Attica Bank) and in terms of the timing in the process of re-capitalisation (given that only the final listing of the new shares is pending, as opposed to the fixing of the issuance price and the allotment of the subscriptions).

ESMA is thus of the view that there are alternative tools and measures, including those provided by Article 23 of the Short Selling Regulation consisting in a short term restriction of short selling in case of a significant fall in price, to address extreme market volatility concerns, should this volatility materialise in the coming days and more specifically risks of a downward spiral of the price of Attica shares. Those measures would be in ESMA’s opinion more appropriate and proportionate to address the risks that would arise from that situation than a total ban on short sales.

On the duration of the proposed measure

Considering the above negative opinion on the appropriateness and proportionality of the measure, ESMA is not further assessing the duration of the proposed renewal.

 

30/04/2013 2013/542 Emergency measure by the Greek HCMC under Section 1 of Chapter V of Regulation No 236/2012 on short selling and certain aspects of credit default swaps , Opinion PDF
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05/05/2015 JC/2015/02 ESAs- main risks to EU financial market stability have intensified , , Press Release PDF
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The Joint Committee of the European Supervisory Authorities (ESAs) published its fifth Report on Risks and Vulnerabilities in the EU Financial System. Overall, the report found that in the past six months, risks affecting the EU financial system have not changed in substance, but have further intensified. The EU’s economic performance improved slightly in early 2015, however the financial sector in general continues to be affected by a combination of factors such as low investment demand, economic uncertainty in the Eurozone and its neighbouring countries, a global economic slow-down and a low-interest rate environment. The main risks affecting the financial system remain broadly unchanged from those identified in the report’s previous edition, but have become more entrenched. The major risks include: • Low growth, low inflation, volatile asset prices and their consequences for financial entities; • Search for yield behaviour exacerbated by potential rebounds; • Deterioration in the conduct of business; and • Increased concern about IT risks and cyber-attacks. Despite these risks, a number of ongoing policy and regulatory initiatives are contributing to improving the stability and confidence in the financial system as well as facilitating additional funding channels to the real economy. These include ongoing regulatory reforms in the securities, banking and insurance sectors such as the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR), the work on the implementation of the Capital Requirements Directive and Regulation (CRDIV/CRR), the work on the Bank Recovery and Resolution Directive (BRRD), the Deposit-Guarantee Schemes Directive (DGS) and the Solvency II Directive, as well as the European Commission’s plan for a Capital Markets Union (CMU). Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA) and the current Chairman of the Joint Committee, said: “The Joint Committee has noted some improvement in overall market conditions; however, the recovery is not yet sustained and is exposed to risks related to broad macroeconomic conditions, in particular the low interest environment and resulting search-for-yield behaviour. Additionally regulators continue to have concerns about the operational risks generated by some financial institutions’ inappropriate business conduct, as well as those risks posed by inadequate management of IT risks. “However, recent regulatory initiatives across the banking, insurance and securities sectors, such as the Comprehensive Assessment, the insurance sector stress test and Solvency II along with, the ongoing MiFID, EMIR and PRIPS reforms are contributing to improving the stability and confidence in the EU financial system." Key Risks Identified The identified risks in the Report can be divided into macro risks to the EU financial system and economy and operational risks. Macro Risks The key macro risks identified relate to: 1. Risks from weak economic growth and low inflation environment, which include: • Adverse effect that low interest rates and uncertainties about the economic recovery have had on the outlook for the financial industry; • Higher valuation and market liquidity risk has raised concerns about the outlook for financial entities’ stability in the event of reversals in interest rates and asset prices; 2. Low profitability is motivating financial institutions and other investors to search for yield, which requires increased supervisory attention to the viability of business models, related restructuring activity and adequate management of risks. However, the promotion of sound and innovative business models for market-based funding structures could help to deliver additional stimulus; and 3. Some continued doubts on the comparability and consistency of banks’ calculations of risk weighted assets. Operational Risks The key operational risks relate to: 4. Business conduct risk remains a key concern with the Report recommending that supervisors should include misconduct costs in future stress tests where appropriate, while financial institutions should strengthening product oversight and governance frameworks. Further improvements in the regulatory framework and supervisory practices to address conduct risks are also warranted. In addition, further progress needs to be made on benchmark reforms where continuity and integrity remain a source of concern even if key panels remained stable; and 5. IT operational risk and cyber risk remain of great concern and pose challenges to the the safety and integrity of financial institutions. IT risk increased due to costs pressures, outsourcing, the need for additional capacities and a mounting number of cyber-attacks. The adequate integration of IT risk into overall risk management is a key policy for mitigation.
06/06/2013 2013/684 ESMA and the EBA publish final principles on benchmarks , , Press Release PDF
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11/01/2013 2013/13 ESMA and the EBA take action to strengthen Euribor and benchmark rate-setting processes , Press Release PDF
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28/02/2013 2013/266 ESMA and the EBA warn investors about contracts for difference , , Press Release PDF
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The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) have published a warning to retail investors about the dangers of investing in contracts for difference (CFDs).The two authorities are concerned that during the current period of low investment returns, inexperienced retail investors across the EU are being tempted to invest in complex financial products, which they may not fully understand and which can end up costing them money they cannot afford to lose.Andrea Enria and Steven Maijoor, Chairs of the EBA and ESMA, warned:“Retail investors across the EU should be aware of all the risks arising from investing in CFDs.  These products appear to promise investors substantial returns at a low cost but may ultimately cost them far more than they may have intended or could afford to lose.“CFDs are complex products that are not suitable for all types of investors, therefore you should always make sure that you understand how the product you are buying works, that it does what you want it to do and that you are in a position to take the loss if it fails.”Investors trading CFDs should protect themselvesInvestors should only consider trading in CFDs if they have extensive experience of trading in volatile markets, if they fully understand how these operate and have sufficient time to manage their investment on an active basis.Investors should carefully read their agreement or contract with the CFD provider before making a trading decision.  They should make sure that they at least understand the following: •    the costs of trading CFDs with the CFD provider,  •    whether the CFD provider will disclose the margins it makes on their trades, •    how the prices of the CFDs are determined by the CFD provider, •    what happens if they hold their position open overnight,  •    whether the CFD provider can change or re-quote the price once an investor places an order, •    whether the CFD provider will execute investor’s orders even if the underlying market is closed, •    whether there is an investor or deposit protection scheme in place in the event of counterparty or client asset issues.If investors do not understand what’s on offer, they should not trade. Further information Always check if the CFD provider is authorised to do investment business in your country.  You can check this on the website of the CFD provider’s national regulator.  A list of all the national regulatory authorities, and their websites, is also available from:•    ESMA at http://www.esma.europa.eu/investor-corner; and •    EBA at http://www.eba.europa.eu/Publications/Consumer-Protection-Issues.aspx.The investor warning on CFDs will be translated into the official EU languages.Concurrently with the publication of this warning, the EBA is addressing an internal Opinion under Art. 29 of the EBA Regulations to national supervisory authorities on the prudential supervision of CFDs. Notes for editors1.    ESMA/2013/267 Investor Warning – Contracts for Difference (CFDs)2.    ESMA and the EBA are independent EU Authorities that were established on 1 January 2011 and work closely with the European other European Supervisory Authority responsible for insurance and occupational pensions (EIOPA).3.    ESMA’s mission is to enhance the protection of investors and promote stable and well-functioning financial markets in the European Union (EU).  As an independent institution, ESMA achieves this aim by building a single rule book for EU financial markets and ensuring its consistent application across the EU. ESMA contributes to the regulation of financial services firms with a pan-European reach, either through direct supervision or through the active co-ordination of national supervisory activity.4.    The EBA has a broad remit in the areas of banking, payments and e-money regulation, as well as on issues related to corporate governance, auditing and financial reporting. Its tasks include the protection of consumers and depositors, preventing regulatory arbitrage, guaranteeing a level playing field (especially by building a single rule book for the European banking system) strengthening international supervisory coordination, promoting supervisory convergence and providing advice to EU institutions. Further information:Reemt SeibelESMA Communications Officer Tel:   +33 (0)1 58 36 4272Mob: +33 6 42 48 55 29Email: reemt.seibel@esma.europa.eu David CliffeESMA Senior Communications OfficerTel:   +33 (0)1 58 36 43 24Mob: +33 6 42 48 29 06Email: david.cliffe@esma.europa.euRomain SadetEBA Communications Officer Tel:   +44 (0) 207 997 5914Mob: +44 (0) 7785 463278  Email: romain.sadet@eba.europa.eu     Franca CongiuEBA Communications OfficerTel:   +44 (0) 207 382 1781Mob: +44 (0) 7771 376395Email: francarosa.congiu@eba.europa.eu
02/06/2016 2016/743 ESMA assesses usefulness of distributed ledger technologies , , Press Release PDF
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14/11/2013 2013/1650 ESMA begins preparatory work for new Market Abuse Regime , , Press Release PDF
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ESMA begins preparatory work for new Market Abuse Regime The European Securities and Markets Authority (ESMA) has published a Discussion Paper setting out its initial views on the implementing measures it will have to develop for the new Market Abuse Regulation (MAR). MAR aims to enhance market integrity and investor protection. It will achieve this by updating and strengthening the existing market abuse framework, by extending its scope to new markets and trading strategies, and by introducing new requirements. The Discussion Paper presents positions and regulatory options on those issues where ESMA will have to develop MAR implementing measures, likely to include Regulatory Technical Standards, Delegated Acts and Guidelines. These implementing measures are of fundamental importance to the new regime, as they set out how MAR’s enlarged scope is to be implemented in practice by market participants, trading platforms, investors, issuers and persons related to financial markets. In developing these regulatory options ESMA, where similar requirements already exist under the current Market Abuse Directive (MAD), has taken into consideration the existing MAD Level 2 texts and ESMA/CESR guidelines to set out the DP positions in light of the extended scope of MAR. This Discussion Paper is based on the version of the MAR Level 1 text agreed by the European Parliament, the Council and the European Commission on 24 June 2013. The closing date for responses is Monday 27 January 2014. MAR Policy Areas The DP covers ten sections of MAR where ESMA is expected to have to provide input, these include: • conditions to be met by buyback programmes and stabilization measures to benefit from the exemption from market abuse prohibitions; • arrangement and procedures required for market soundings, from the perspective of both the sounding and the sounded market participants; • indicators and signals of market manipulation; • criteria to establish Accepted Market Practices; • arrangement, systems and procedures to put in place for the purpose of suspicious transactions and order reporting as well as its content and format; • issues relating to public disclosure of inside information and the conditions for delay; • format for insider lists; • issues concerning the reporting and public disclosure of managers’ transactions; • arrangements for fair presentation and disclosure of conflicts of interests by producers and disseminators of investment recommendations; • reporting of violations and related procedures. Next steps ESMA will consider the feedback it receives to this consultation in Q1 2014 and incorporate it in to its full consultation papers on both its draft Technical Standards and Technical Advice to the Commission. The dates for these consultations are will depend on the publication of the final version of MAR. Notes for editors 1. 2013/1649 Discussion Paper - ESMA’s policy orientations on possible implementing measures under the Market Abuse Regulation 2. Proposal for a Regulation of the European Parliament and of the Council on insider dealing and market manipulation (market abuse) (MAR) 3. ESMA is an independent EU Authority that was established on 1 January 2011 and works closely with the other European Supervisory Authorities responsible for banking (EBA), and insurance and occupational pensions (EIOPA), and the European Systemic Risk Board (ESRB). 4. ESMA’s mission is to enhance the protection of investors and promote stable and well-functioning financial markets in the European Union (EU). As an independent institution, ESMA achieves this aim by building a single rule book for EU financial markets and ensuring its consistent application across the EU. ESMA contributes to the regulation of financial services firms with a pan-European reach, either through direct supervision or through the active co-ordination of national supervisory activity. Press Release 2013/1650 Discussion Paper 2013/1649
11/06/2013 2013/726 ESMA clarifies pay rules applicable to investment firms Press Release PDF
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15/02/2016 2016/291 ESMA consults on implementation of the Benchmarks Regulation , , Press Release PDF
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The European Securities and Markets Authority (ESMA) has today published a Discussion Paper (DP) regarding the technical implementation of the incoming Benchmarks Regulation (BR). ESMA is seeking stakeholder’s input to inform its future proposals on draft Regulatory Technical Standards (RTS) and Technical Advice (TA) to the European Commission.

Benchmarks are used in financial markets as a reference to price financial instruments and to measure performance of investment funds, as well as being an important element of many financial contracts and their integrity is critical to financial markets and to investors in particular. The BR’s objective is to improve the governance and control over the benchmark process, thereby ensuring their reliability and protecting users. The changes aim to:

  • improve the quality of the input data and methodologies used by benchmark administrators;
  • ensure that benchmark contributors provide adequate data and are subject to proper controls; and
  • ensure the supervision and viability of critical benchmarks.

Steven Maijoor, ESMA Chair, said:

“The Benchmark Regulation, once implemented, will ensure the accuracy, robustness and integrity of benchmarks and the benchmark setting process by clarifying the behaviours and standards expected of administrators and contributors. These requirements will ensure that benchmarks are produced in a transparent and reliable manner and so contribute to well-functioning and stable markets, and investor protection.

“ESMA, in preparing for its work on regulatory technical standards and technical advice, is keen to ensure that all affected stakeholders have their views heard on this important topic and we hope that all interested parties will take this opportunity to contribute.”

The DP is seeking stakeholder’s feedback in the following areas:

  • definition of benchmarks;
  • requirements for the benchmark oversight function;
  • requirements for the benchmark input data;
  • governance and control requirements for supervised benchmark contributors;
  • authorisation and registration of an administrator; and
  • transparency requirements regarding the benchmark methodology.

The exact date when the Benchmarks Regulation will enter into force is still unknown as it has not yet been published in the Official Journal of the EU.

Next steps

ESMA will hold an open hearing on the DP on 29 February 2016 in Paris. It will use the responses to its DP to develop detailed implementing measures on which it will publish a follow-up consultation in Q3 2016.

21/03/2014 2014/302 ESMA consults on major shareholders disclosures , Press Release PDF
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ESMA consults on major shareholders disclosures The European Securities and Markets Authority (ESMA) has launched a consultation on draft Regulatory Technical Standards (RTS) under the revised Transparency Directive relating to the notification of major shareholdings and the indicative list of financial instruments subject to notification requirements. The consultation runs until 30 May 2014. The revised Directive harmonises transparency requirements relating to information about issuers whose securities are admitted to trading on an EU regulated market. This harmonisation aims to enhance transparency in respect of the ownership structure of an issuer, to improve legal certainty and reduce the administrative burden for cross-border investors. The revised Transparency Directive also addresses the issue of the disclosure regime for new types of financial instruments that expose investors to an economic risk similar to when holding shares. The draft RTS support these objectives by facilitating the creation of a harmonised regime regarding the aggregation of holdings of shares and financial instruments, the calculation of notification thresholds and the exemptions from notification requirements. Steven Maijoor, ESMA Chair, said: “Transparency is essential for ensuring that markets function properly and investors are afforded adequate protection when making investment decisions. “Today’s proposals support the aims of the Transparency Directive to improve the effectiveness of the transparency regime on corporate ownership. Clarity on this issue will ensure that shareholders and potential investors are in possession of the information needed to make informed investment decisions.” Draft Regulatory Technical Standards The draft RTS on the major shareholding notifications addresses the following issues: • Method of calculation of 5% threshold exemption regarding trading books and market makers; • Calculation method regarding a basket of shares or an index; • Methods for determining the ‘delta’ for calculating voting rights; and • Exemptions regarding notification of financial instruments. The Consultation Paper also sets out the proposed content of an indicative list of financial instruments which should be subject to the notification requirements laid down in the Directive, and outlines the processes for updating that list. The input from stakeholders will help ESMA in drafting the final report and determining the content of the draft RTS. Comments to this consultation can be submitted via ESMA’s website and the deadline for submission is 30 May 2014.
22/05/2014 2014/557 ESMA consults on MiFID reforms , , Press Release PDF
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The European Securities and Markets Authority (ESMA) has launched the consultation process for the implementation of the revised Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). This is the first step in the process of translating the MiFID II/MiFIR requirements into practically applicable rules and regulations to address the effects of the financial crisis and to improve financial market transparency and strengthen investor protection.MiFID II/MiFIR introduces changes that will have a large impact on the EU’s financial markets, these include transparency requirements for a broader range of asset classes; the obligation to trade derivatives on-exchange; requirements on algorithmic and high-frequency-trading and new supervisory tools for commodity derivatives. It will also strengthen protection for retail investors through limits on the use of commissions; conditions for the provision of independent investment advice; stricter organisational requirements for product design and distribution; product intervention powers; and the disclosure of costs and charges.MiFID II/MiFIR contains over 100 requirements for ESMA to draft Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS), and to provide Technical Advice to the European Commission to allow it to adopt delegated acts. In order to ensure that MIFID II achieves its objectives in practice, ESMA is publishing the following documents:1.    Consultation Paper on MiFID/MiFIR Technical Advice – ESMA needs to deliver this advice to the European Commission by December 2014 and is therefore subject to a condensed consultation process for this paper; and2.    Discussion Paper on MiFID/MiFIR draft RTS/ITS – this will provide the basis for a further consultation paper on the draft RTS/ITS which is expected to be issued in late 2014/early 2015. The closing date for responses to both papers is Friday 1 August. Steven Maijoor, ESMA Chair, said:“The launch of today’s MiFID II/MiFIR consultation process is an important step in the biggest overhaul of financial markets regulation in the EU for a decade. The reform of MiFID is an integral part of the EU’s strategy to address the effects of the financial crisis and aims to bring greater transparency to markets and to strengthen investor protection. These changes are key to restoring trust in our financial markets.“We appreciate the magnitude of this exercise for stakeholders. We strongly encourage all those affected by these reforms to provide their views to ensure that we take them into account in our final proposals.”The main issues covered in the Discussion and Consultation Paper are divided into those addressing the structure, transparency and regulation of financial markets, and those aimed at strengthening investor protection.Financial Markets Structure, Transparency and RegulationThe main proposals in this area cover the following issues: enhanced transparency and trading obligations - increasing pre- and post-trade transparency for many categories of instruments, e.g. shares, ETFs, certificates, bonds and derivatives, limitations to trade shares OTC and new obligations to trade derivatives on trading venues; micro-structural issues – refining the definition of high frequency trading and direct electronic access and specifying the requirements for operating in the market using algorithmic techniques; data publication and access – issues related to the development of the consolidated tape including requirements for tape providers, approved publication arrangements and reporting mechanisms, and the definition of a reasonable commercial basis for data sales; and the access to CCPs,  trading venues and benchmarks; other organisational requirements for trading venues; and commodity derivatives – new regulatory tools, including position limits. Investor ProtectionThe main proposals relating to the improved protection of retail investors include technical advice on: inducements – new limitations on the receipt of commissions (inducements); independent advice – clearly distinguishing independent from non-independent advice; product governance – requirements on the manufacture and distribution of financial products including target market and risk identification; product intervention/banning - introducing powers for both ESMA and national regulators to prohibit or restrict the marketing and distribution of certain financial instruments; and improved information on costs and charges – requirements to provide clients with details of all charges related to their investment (relating to both the investment service and the financial instrument provided) so they can understand the overall cost and its effect on their investment’s return. In addition, the draft regulatory technical standards in the investor protection area relate to the authorisation of investment firms, passporting, and certain best execution obligations.Next StepsESMA will hold three public hearings about secondary markets, investor protection and commodity derivatives issues on Monday 7 and Tuesday 8 July. Further details on the hearings will be published on ESMA’s website. 2014/548 2014/549
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