From the EMA Financial Services Regulatory Centre of Excellence.
Welcome to the first edition of 2018’s Monthly Update, keeping you up to speed with the latest European and international regulatory developments. This month’s issue brings an update on what happened at the end of last year, and what’s on the horizon. We start the new year with a name change, and will now be called the EMA Financial Services Risk & Regulatory Insight Centre, to reflect the evolving landscape we find ourselves in.
The big news last month was the long awaited release of the final rules for Basel 3, and our article looks in detail at the Basel Committee's final standards for the output floor and for the capital treatment of credit and operational risk. Further analysis can be found in our client alert from December. In other banking news, the European Central Bank, the European Banking Authority and the Single Resolution Board have announced their work programmes and priorities for 2018, and the Official Journal published the fast-tracked amendment to the Bank Recovery and Resolution Directive which will be implemented by 1 January 2019.
Last month also saw the European Commission publish a roadmap detailing required steps over the next 18-months to deepen the Economic and Monetary Union, which has been identified as one of ten key priorities for completion before the end of the current Presidency term.
Of more immediate concern for firms is that the new year has seen MIFiD II ‘go live’ and we look at the tensions and teething problems implementation is inevitably bringing. Firms have also had to implement the PRIIP KID.
Meanwhile, a key European Parliamentary committee has just recommended that the implementation date of the Insurance Intermediation Directive (IID) be extended. The IID was originally part of the package of three measures (the other two being the PRIIP KID and part of MiFID II) that was intended to align the rules on distribution and disclosures for all types of “packaged” investment products, whether issued by banks, insurers or fund managers.
Many insurance firms are now on the path to being able to operate within Europe post-Brexit, following EIOPA’s recent Opinion, the PRA’s consultation paper on its approach to branch authorisation and supervision of non-UK insurers, and HM Treasury’s announcement that it would (if necessary) amend legislation to permit EEA firms to hold a 'temporary permission' allowing them to continue UK activities, and ensure they can meet their contractual obligations under pre-Brexit insurance contracts. We look at the implications for firms.