Financial Services Alerter

August 2019

This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should

be obtained before taking or refraining from any action as a result of the contents of this document

August 2019

Welcome to Simmons & Simmons' Financial Services Alerter, our monthly bulletin containing brief

details of significant legal and regulatory developments of relevance to the fund management and

investment banking communities.

Although the primary focus of Financial Services Alerter is the UK, we also cover EU and other

international developments of relevance to the UK.

The information contained in Financial Services Alerter is based exclusively on publicly available

sources and relates to developments taking place in August 2019.

UK developments

EU developments

International developments

elexica and other client items

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Financial Services Alerter

Introduction

This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should

be obtained before taking or refraining from any action as a result of the contents of this document

1

FCA publishes Market Watch issue 60

On 01 August 2019, the FCA published a newsletter, “Market Watch”, providing an overview of recent

market conduct and transaction reporting issues. In the August edition, the FCA reports its findings on

control of access to inside information and highlights its recent thematic review of money laundering

risks in capital markets.

FCA publishes review of embedding SMCR in banking

On 05 August 2019, the FCA published a webpage, “Senior Managers and Certification Regime

Banking Stocktake Report”, outlining the findings of the FCA’s review into the embedding of SMCR in

the banking sector. SMCR was introduced for deposit-taking firms and dual-regulated investment firms

in March 2016. The webpage covers the following areas:

senior manager accountability

certification

conduct rules

impact on culture

unintended consequences and

embedding and overcoming initial implementation issues.

FCA publishes letter on tightening UK liquidity standards for UCITS

On 07 August 2019, the FCA published a letter, “Review of the case for the UK establishing its own

requirements for liquidity standards for [UCITS]” from Andrew Bailey, FCA Chief Executive, to Lord

Myners on the possibility of the UK establishing liquidity standards requirements for UCITS at a higher

levels than those currently specified in UCITS.

Investment Association publishes updated model trust deed for charity authorised investment funds

On 09 August 2019, the Investment Association (IA) published a updated version of its model trust

deed for charity authorised investment funds (CAIFs), amending it to include a reference to Scottish

recognised bodies and Northern Ireland charities in the definition of "charity" and "charities".

Financial Services Alerter

UK developments

2

FCA outlines plan for implementing strong customer authentication under PSD2

On 13 August 2019, the FCA published a press release, “FCA agrees plan for a phased

implementation of Strong Customer Authentication”, confirming that the FCA will take forward an 18-

month plan to implement Strong Customer Authentication (SCA) with the e-commerce industry. The

plan follows the recent opinion of the European Banking Authority (EBA) which indicated more time

was needed to implement SCA. SCA rules apply from 14 September 2019.

This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should

be obtained before taking or refraining from any action as a result of the contents of this document

1

ECB calls on banks to step up no-deal Brexit preparations

On 14 August 2019, the European Central Bank (ECB) published an article, “Brexit: stepping up

preparations”, emphasising that a hard Brexit could still occur on 01 November 2019 and that it

expects banks to increase preparations for this eventuality. The ECB urges banks to do the following:

fully implement any implementation plans to minimise execution risk

address operational challenges associated with transferring staff and clients and setting up necessary internal processes and systems

follow up on agreed commitments regarding the build-up of local risk management capabilities and governance structures

prepare for potential differences in the application of the prudential provisions of CRR and CRD after the end of October 2019

implement effective mitigating actions regarding the continuity of uncleared cross-border derivatives contracts, including novations and

have sufficient onshore capacity to originate business and access key financial market infrastructures (FMIs) on a continuous basis. Banks should also consider which alternative FMIs would be available if their access to existing FMIs were impeded or the finality of their instruments/settlements could no longer be guaranteed.

ECB Decision on oversight of systemically important payment systems published in OJ

On 16 August 2019, Decision (EU) 2019/1349 of the European Central Bank (ECB) on procedures

and conditions for the exercise by competent authorities of certain powers in relation to oversight of

systemically important payment systems was published in the OJ. The Decision enters into force on

05 September 2019.

ECB publishes communication on supervisory coverage expectations for non-performing exposures

On 22 August 2019, the European Central Bank (ECB) published a communication, “Communication

on supervisory coverage expectations for NPEs”, confirming that it has revised its supervisory

expectations for prudential provisioning of non-performing exposures (NPEs) / non-performing loans

(NPLs). The ECB updated its expectations due to the entry into force on 26 April 2019 of Regulation

(EU) 2019/630 amending CRR regarding minimum loss coverage for NPLs.

Financial Services Alerter

EU developments

This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should

be obtained before taking or refraining from any action as a result of the contents of this document

BCBS publishes FAQs on Basel III standardised approach for operational risk

On 14 August 2019, the Basel Committee on Banking Supervision (BCBS) published a webpage,

“Frequently asked questions on the Basel III standardised approach for operational risk”, providing

seven FAQs that relate to the new standardised approach (SA) for operational risk capital. The SA for

operational risk capital was first published in the final Basel III standards in December 2017.

Financial Services Alerter International

developments

B_LIVE_EMEA1:5199716v1

elexica and other client items

09 August 2019 FCA - Final rules on SMCR and confirmation on Head of Legal - overview

09 August 2019 CBI publishes letter on liquidity management

29 August 2019 The new DIFC Insolvency Law

30 August 2019 BaFin Explanatory Note on PRIIPs Regulation

30 August 2019 Contributing Editors for the 2019/20 Telecoms and Media edition of Getting The Deal

Through

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