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Articles tagged by ESMA

ESMA Provides More Clarity on BestEx Rules The European Securities and Markets Authority (ESMA) has published a Q&A document seeking to clarify expected standards around certain practices, including best execution. The questions have been set following feedback and enquiries from the general public, other regulators and market participants. On best execution ESMA publishes two Q&As, the first explains the different between the “reasonable steps” firms were expected to take to obtain the best possible execution under MiFID I and the “sufficient steps” they are required to take under MiFID II.
Has ESMA Officially Incorporated FX Into MAR? Where, indeed if, spot FX sits within the European Securities and Markets Authority's Market Abuse Regime, MAR, has been the subject of speculation for some months. Earlier this year, ESMA issued an updated MAR document and again there was no mention of spot FX, however this did not stop some sounding concerns that the broader definition could mean spot FX is "in scope". In a Q&A paper issued last week, ESMA appears to have provided some clarification - by mentioning spot FX explicitly.
ESMA Seeks Delay for Clearing Extension The European Securities and Markets Authority (ESMA) has asked the European Commission to delay the extension of mandated clearing to smaller counterparties. Due to a range of reasons, but in particular the fact that the relevant EU legislations are under review or still being finalised, ESMA says it proposes to postpone the phase-in period for central clearing of OTC derivatives applicable to financial counterparties with a limited volume of derivatives activity. ESMA’s report proposes to amend EMIR’s Delegated Regulations on the clearing obligation in order to prolong, by two years, the phase-in for financial counterparties with a limited volume of derivatives activity – those ones classified in Category Three under EMIR Delegated Regulations.
FCA Holds Off Retail Rule Change as ESMA Considers Stronger Intervention Following an announcement from the European Securities and Markets Authority (ESMA) that it is considering exercising its product intervention powers to address its concerns over the use of contracts for difference (CFD), rolling spot FX and binary options contracts by retail traders, the UK’s Financial Conduct Authority (FCA) says it will delay its own rules on the products. In a statement, ESMA says it has been concerned about the provision of speculative products such as CFDs, rolling spot FX and binary options to retail investors for a “considerable period of time” and has conducted ongoing monitoring and supervisory convergence work in this area.
And Finally... Regular readers know that the increasingly blurred lines between retail and institutional FX markets have bothered me for years. Too many customers are unsuccessful in the retail sector and the reputational risk for the entire industry is off the scale. We need to be asking many more intrusive and difficult questions of these firms – for if we do, I think the answers – assuming they are given honestly – will highlight the scale of the problem and help deliver a solution.
NEX Business to Apply for Trade Repository Status NEX Regulatory Reporting has announced its intention to apply to become a trade repository for the Securities Financing Transactions Regulation (SFTR) and launch a dedicated reporting solution, pending the issuance of the final technical standards from ESMA. The firm, which is part of NEX Group, says it will in time add the SFTR trade repository and solution to its Global Reporting Hub to provide clients with an end-to-end solution for the securities lending and repo markets. The SFTR trade repository will be built and hosted in the cloud.
ESMA Suspends LEI Deadline: Issues MiFID II Updates The European Securities and Markets Authority (ESMA) has announced a delay gto the implementation of a key element of the impending MiFID II regulation, which is due to go into effect on January 3, 2018. The Authority says the delay is, “To support the smooth implementation of Legal Entity Identifiers (LEI) requirements under the Markets in Financial Instruments Regulation (MiFIR).” MiFIR obliges EU investment firms to identify their clients that are legal persons with LEIs for the purpose of MiFID II transaction reporting.
CMC Markets Launches “Professional” Offering Online trading provider CMC Markets has responded to the recent announcement by the European Securities and Markets Authority (ESMA) that retail clients will no longer be able to use their current leverage levels, by creating a new CMC Pro account for eligible clients. The ESMA changes establish margin limits for clients, rather than the broker-dealers and CMC says the new account will allow clients to continue to trade with their current leverage levels.To be eligible, clients will have to demonstrate that they are capable of making their own investment decisions.
ESMA Extends CFD Restrictions The European Securities and Markets Authority (ESMA) has agreed to renew the restriction on the marketing, distribution or sale of contracts for differences (CFDs) to retail clients, which have been in effect since 1 August, from 1 November 2018 for a further three-month period. ESMA says it has “carefully considered” the need to extend the intervention measure currently in effect and believes that a significant investor protection concern related to the offer of CFDs to retail clients continues to exist.
Regulators Welcome EC’s Recognition of UK CCPs The Bank of England, European Securities and Markets Authority (ESMA), and the US Commodity Futures Trading Commission (CFTC) have all welcomed the decision by the European Commission (EC) to adopt a temporary equivalence regime for central counterparties (CCPs) and Central Securities Depositories (CSDs). ESMA says it supports continued access to UK CCPs, in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the EU. It adds it aims to recognise UK CCPs in a timely manner, as long as four recognition conditions under Article 25 of EMIR are met.
ESMA Renews CFD Restrictions

in News, Regulation

ESMA Renews CFD Restrictions

The European Securities and Markets Authority (ESMA) has agreed to renew the restriction on the marketing, distribution or sale of contracts for differences (CFDs) to retail clients. The rule, which has been in effect since 1 August 2018, was due to expire on 1 February 2019 but has now been renewed for a further three-month period. ESMA says it has “carefully considered” the need to extend the intervention measure currently in effect, adding, “ESMA considers that a significant investor protection concern related to the offer of CFDs to retail clients continues to exist.”
BoE, ESMA Prepare for Brexit No-Deal with MoU The Bank of England and European Securities and Markets Authority (ESMA) have announced that they have agreed Memoranda of Understanding (MoUs) regarding cooperation and information-sharing arrangements with respect to central counterparties (CCPs) and central securities depositories (CSDs). The MoUs follow the adoption by the European Commission in December 2018 of temporary equivalence decisions on the future UK legal and supervisory framework for UK CCPs and CSDs. The Commission’s implementing acts would come into effect in the result of a no-deal Brexit. In that scenario, they would allow UK CCPs and CSDs to be recognised by ESMA from 30 March 2019, and therefore continue to provide services respectively to EU clearing members, trading venues and also provide notary and settlement services for securities issued under EU law. The MoUs will also only take effect in the event of a no-deal Brexit.
ESMA Grants Brexit Relief to UK-Based Clearing Houses Following a review of UK-based central counterparties (CCPs) and central securities depositories (CSDs), the European Securities and Markets Authority (ESMA) has announced that in the event of a no-deal Brexit, three CCPs established in the UK – LCH Limited, ICE Clear Europe Limited and LME Clear Limited – will be recognised to provide their services in the European Union. ESMA says it has adopted these recognition decisions in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the EU.