15 March 2018

Financial Markets in brief – new regulation and other developments

There have been many developments in national and European financial markets regulation during the past month. We provide a brief overview of these developments, which include the AFM’s consultation on advertisements for financial products, the Interactive Single Rulebook launched by the ESMA, and Sound Practices on the implications of fintech for the financial sector.

Highlighted publications

 

Advertisements for “fast” mortgage credit

The Dutch Financial Markets Authority (AFM) has noticed a trend in advertisements for “fast and easy” mortgage credit. In response, the AFM is drawing attention to existing rules for mortgage credit advertisements. It further points out that mortgage credit providers cannot point to the speed and ease of obtaining a mortgage credit in their advertisements.

 

Insurance Distribution Directive – delay and implementation in the Netherlands

The Directive postponing the date of application of the Insurance Distribution Directive’s member states’ transposition measures until 1 October 2018 has been adopted by the Council of the EU, following an agreement with the European Parliament. The European Parliament approved the Directive at the beginning of March 2018. The date by which the Directive must be implemented in member states has also been extended to 1 July 2018.

In addition, the bill implementing the Directive in the Netherlands has been adopted by the First Chamber.

 

Consultation on advertisements for financial products

The AFM has launched a consultation for an update of its policy rule on what information financial institutions must provide when offering financial products and services. The AFM clarifies the definition of “advertisement” and answers the question whether all advertisements must meet all requirements.

In particular, the AFM addresses a number of rules for advertisements relating to an offer of securities to the public, or to an admission to trading on regulated markets. These rules include the requirement for advertisements to state that a prospectus has been or will be published and indicate where investors are or will be able to obtain it, and that the information contained in an advertisement may not be inaccurate or misleading.

 

ESMA launches Interactive Single Rulebook

The European supervisor ESMA has launched its Interactive Single Rulebook aimed at facilitating the consistent application of the EU single rulebook for securities markets area. The tool provides, for Directives or Regulations in ESMA’s remit, a comprehensive overview of all implementing or delegated acts, guidelines, opinions and Q&As. The tool has been launched for Level 1, 2 and 3 measures of UCITS. ESMA intends to provide an interactive version for each key level 1 text under its remit, with the next texts being MiFID II/MiFIR and the CRA Regulation.

 

Further simplification to insurers’ capital requirements recommended by European supervisor

European supervisor EIOPA has published a second and final set of Advice to the European Commission on the Solvency Capital Requirement (SCR) standard formula. EIOPA calls for more flexibility in the calculations to allow for the application of a proportionate formula for the calculation of the capital requirements. This includes the application of simpler formulas and the reduction of the burden of insurers to collect granular data.

 

Implementation of European anti-money laundering rules in the Netherlands

The Second Chamber has adopted the bill implementing the Fourth Anti-Money Laundering Directive (AMLD4) and the regulation on information accompanying transfers of funds in the Netherlands.

 

Sound Practices on the implications of fintech for the financial sector

The Basel Committee has set up a taskforce to provide insight into fintech and identify the implications for banks and supervisory authorities. The Committee recently published a Report with Sound Practices on the implications of fintech for the financial sector. The Basel Committee has further identified 10 key implications and considerations on these supervisory issues:

  • the safety and soundness of the banking system must be ensured without hampering beneficial innovation in the banking sector
  • supervisory programmes aimed at ensuring effective governance structures and risk management processes that appropriately identify, manage and monitor the key risks related to fintech development, including strategic/profitability risks, operational, cyber and compliance risks, can enhance the safety and soundness and financial stability
  • effective risk management processes and control environments are needed to address the risks involved with the use of innovative enabling technologies
  • appropriate risk management processes are needed to address risks associated with the growing use of third parties (including fintech firms) via outsourcing and partnerships
  • cross-sectoral cooperation between supervisors and other relevant authorities can address issues beyond the scope of prudential supervision, such as data privacy, cybersecurity, and compliance with AML/CFT
  • further international coordination and information sharing between bank supervisors can enhance safety and soundness relating to cross-border fintech
  • the supervisory skillset may need to be reassessed to make sure that the knowledge, skills and tools of bank supervisor staff are relevant and effective
  • supervisors could potentially use innovative technologies to improve supervisory efficiency and effectiveness
  • current regulatory, supervisory and licensing frameworks could be assessed to ensure alignment with new innovative business models
  • supervisors could learn from each others’ regulatory initiatives aimed at facilitating fintech innovation

 

Other publications

EC

EP

EBA

ESMA

EIOPA

ECB

Official Journal EU

MinFin

MinSZW

AFM

DNB

Other