FCA Updates & Developments

The FCA is consulting on rules and guidance to improve conduct standards and communications to the payment services and e-money sectors. It aims to achieve this by proposing to extend the Principles for Businesses and certain rules on promotion and communication to cover a wider category of regulated businesses.

The regulator also proposes new guidance to ensure firms do not mislead consumers when advertising payment services involving currency conversion. These measures should help customers understand the expectations of the FCA as well as make it easier for the regulator to intervene.

The deadline for comments for the consultation paper is 1 November 2018.

EU Regulatory Updates

The European Securities and Markets Authorities (ESMA) has agreed to renew the prohibition of the marketing, distribution or sale of binary options to retail clients from 2 October 2018 for a further three months. The previous measures taken on binary options can be found in CCL’s June Newsletter.

After having considered criteria that are less likely to lead to a significant investor protection concern, ESMA has agreed to exclude the following binary options from the scope of the renewal:

  • A binary option for which the lower of the two predetermined fixed amounts is at least equal to the total payment made by a retail client for the binary option, including any commissions, transaction fees and other related costs
  • A binary option that meets cumulatively the following three conditions:
    • The term from issuance to maturity is at least ninety calendar days
    • A prospectus drawn up and approved in accordance with the Prospectus Directive is made available to the public
    • The binary option does not expose the provider to market risk throughout the term of the binary option and the provider or any of its group entities do not make a profit or loss from the binary option, other than previously disclosed commissions, transaction fees or other related charges

ESMA has published an updated version of the Markets in Financial Instruments Directive II (MiFID II)/Markets in Financial Instruments Regulation (MiFIR) transitional transparency calculations (TTC).

The update includes the calculations for the following:

  • Equity derivatives
  • Equity and equity-like instruments
  • Tick size band assessment.

ESMA has updated its validation rules regarding EMIR in relation to the technical standards on reporting under Article 9 of EMIR.

The following fields have been updated for the submitted reports:

  • Reporting timestamp
  • Reporting counterparty ID
  • ID of the other counterparty
  • Underlying identification
  • Confirmation means.

The amendments will be applicable from 5 November 2018.

Financial Crime

The European Commission has adopted a commission delegated regulation amending delegated regulation (EU) 2016/1675 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council regarding adding Pakistan to the table in point I of the Annex as a high risk third country.

Enforcement Action

The FCA has commenced a criminal prosecution against Market Barry Starling for three offences in relation to the alleged operation of unauthorised investment schemes between August 2008 and April 2017.

The alleged offences are fraud and the operation of a collective investment scheme without authorisation or exemption under the Financial Services and Markets Act 2000 (FSMA).

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