Securities and markets regulatory news, 23 November 2020

Contents

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• UK BMR: FCA approach to orderly wind down of LIBOR and consultation on Statements of Policy
• UK listing regime: HM Treasury call for evidence
• ESMA strategic supervisory priorities for 2020
• CCP resolution: FSB final guidance on assessing adequacy of financial resources
• Recognition of EU and UK bail-in clauses for other liabilities: AFME and ICMA model clauses

UK BMR: FCA approach to orderly wind down of LIBOR and consultation on Statements of Policy

The UK Financial Conduct Authority has published a document on the Benchmarks Regulation (UK BMR) and proposed amendments under the Financial Services Bill 2019-21, which will enable it to designate a critical benchmark and to impose changes to that benchmark.

The FCA has also published a statement on its proposed new powers, policy and decision-making under the BMR, announcing the following consultations on Statements of Policy required of the FCA under the BMR:

• Consultation on proposed policy with respect to the designation of benchmarks under new Article 23A; and
• Consultation on proposed policy with respect to the exercise of the FCA's powers under new Article 23D (imposing requirements on the administrator of a critical benchmark).

In another statement announcing these consultations, the FCA sets out its potential approach to the use of its proposed new powers to ensure an orderly wind down of LIBOR. This statement is published in light of the announcement by ICE Benchmark Administration Limited (IBA), the FCA-regulated and authorised administrator of LIBOR, that it will consult on its intention that the euro, sterling, Swiss franc and yen LIBOR panels will, subject to confirmation following the consultation, cease at the end of 2021.

IBA states that discussions involving itself, the FCA, other official sector bodies and the panel banks are continuing regarding the future of USD LIBOR. It expects to be able to make further announcements regarding USD LIBOR when the discussion process concludes. It states that there can be no certainty or guarantee that it will be able to publish any USD LIBOR settings after 31 December 2021.

The deadline for responses to the FCA consultations is 18 January 2021. The FCA will finalise its statements of policy in due course, taking into account responses to the consultations.

The FCA plans to consult in Q2 2021 on its policy intentions for exercising powers under the proposed Article 21A and Article 23C BMR. It will also conduct a further consultation in due course on any future decision to use its powers under the proposed Article 23D in relation to LIBOR.

UK listing regime: HM Treasury call for evidence

HM Treasury has launched a review of the UK listing regime, chaired by Lord Hill of Oareford, as part of a plan to strengthen the UK's position as a leading global centre. It has also published the review's terms of reference and a call for evidence.

The deadline for submitting responses is 5 January 2021. Following receipt of responses, the review will report to HM Treasury in early 2021.

ESMA strategic supervisory priorities for 2020

The European Securities and Markets Authority (ESMA) has published a press release on the identification of its EU strategic supervisory priorities for national competent authorities (NCAs). ESMA identifies costs and performance for retail investment products and market data quality as the EU strategic supervisory priorities and, more specifically:

• costs and fees charged by fund managers; and
• improving the quality of transparency data reported under the Markets in Financial Instruments Regulation (MiFIR).

CCP resolution: FSB final guidance on assessing adequacy of financial resources

The Financial Stability Board (FSB) has published final report on guidance on financial resources to support central counterparty (CCP) resolution and on the treatment of CCP equity in resolution. The purpose of the guidance is to assist resolution authorities in determining whether there is a gap in the resources and tools available for the resolution of a CCP that must be addressed.

The draft guidance does not cover the wind-down plans of systemically important CCPs. It does not replace or supersede the FSB's key attributes of effective resolution regimes for financial institutions or its July 2017 guidance on CCP resolution and resolution planning.

The FSB consulted on a draft version of the guidance in May 2020 and has published a summary of responses to the consultation and the policy decisions it has taken in response to this feedback.

Recognition of EU and UK bail-in clauses for other liabilities: AFME and ICMA model clauses

The Association for Financial Markets in Europe (AFME) has published a document containing model clauses developed by it and the International Capital Market Association (ICMA) relating to the recognition of EU and UK bail-in clauses for liabilities other than debt instruments or liabilities governed by industry standard master agreements (other liabilities).

The document sets out model clauses relating to:

• the contractual recognition of bail-in powers for other liabilities governed by a non-EEA law reflecting the requirements of Article 55 of the Bank Recovery and Resolution Directive; and
• the contractual recognition of bail-in powers for other liabilities governed by a non-English law reflecting the requirements of the UK bail-in regime, as set out in Part I of the Banking Act 2009.

AFME states that these clauses were originally developed by a group of leading law firms for AFME and ICMA. Their intended uses include contracts related to new issues of bonds, bond issuance programmes and euro commercial paper issuance programmes.

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Authored by Yvonne Clapham