On 18 December 2019, the Council of the EU published a final draft of the Commission Delegated Regulation amending Delegated Regulation (EU) 2016/2251 as regards the specification of the treatment of over-the-counter (OTC) derivatives in connection with certain simple, transparent and standardised securitisations for hedging purposes. Article 11 of the European Market Infrastructure Regulation  (EMIR) requires counterparties to OTC derivative contracts that are not cleared by a central counterparty (CCP) to have risk-mitigation techniques. Commission…

On 18 December 2019, the Financial Stability Board (FSB) published its annual progress report on the implementation of its 2014 recommendations to reform major interest rate benchmarks. The report emphasises that the continued reliance of global financial markets on LIBOR poses risks to financial stability and the FSB calls for significant and sustained efforts by the official sector and by financial and non-financial firms across jurisdictions to transition away from LIBOR by end-2021. Key points…

On 18 December 2019, the PRA published a letter from Sam Woods, PRA CEO and Bank of England Deputy Governor, Prudential Regulation, to Tushar Morzaria, Chair of the Working Group on Sterling Risk-Free Rates (the Working Group). The PRA’s letter is in response to a communication from the Working Group earlier this year regarding regulatory capital impediments to Interbank Offered Rates (IBOR) transition. The PRA’s letter covers the main themes highlighted in the body of…

On 16 December 2019, the European Commission adopted a Commission Delegated Regulation supplementing the European Markets Infrastructure Regulation with regard to regulatory technical standards on the specification of criteria for establishing the arrangements to adequately mitigate counterparty credit risk associated with covered bonds and securitisations and amending Delegated Regulations (EU) 2015/2205 and (EU) 2016/1178. In terms of the Commission Delegated Regulation: Articles 1 and 2 set the clearing exemption conditions for over-the-counter derivative contracts which…

On 13 December 2019, the European Securities and Markets Authority (ESMA) issued a consultation paper on procedural rules for penalties imposed on third-country central counterparties (CCPs), trade repositories (TRs) and credit rating agencies (CRAs). In the consultation paper ESMA sets out its preferred options for the procedural rules on the imposition of penalties to third country CCPs. It also analyses whether the procedural rules applicable to the imposition of penalties to TRs and CRAs should…

On 12 December 2019, there was published in the Official Journal of the European Union (OJ), Regulation (EU) 2019/2099 amending Regulation (EU) 648/2012 as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs (EMIR 2.2). EMIR 2.2 will enter into force on the twentieth day following its publication in the OJ (1 January 2020) and will apply from that date.…

On 11 December 2019, the European Securities and Markets Authority (ESMA) issued a final report containing draft amendments to Commission Implementing Regulation (EU) 2016/1646, which specifies the main indices and recognised exchanges pursuant to paragraph 8 of Article 197 of the Capital Requirements Regulation (CRR). ESMA is introducing amendments to the Implementing Regulation to ensure that the most relevant criteria are applied to specify the main indices, and that the list of recognised exchanges is…