PIMFA Weekly News Bulletin - 30 November 2020

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PIMFA WEEKLY NEWS BULLETIN | 30 November 2020 Dear Nigel Welcome to the PIMFA Bulletin; grab a coffee and take 10 minutes to read this week's latest industry news impacting you and your firm.

LATEST NEWS

Brexit Negotiations

End of the Brexit Transition Period & the Trading Obligation for Derivatives

The UK - EU Brexit talks continued virtually after a member of EU Chief

Negotiator Michel Barnier’s team tested positive for COVID-19. Progress has been made on law enforcement, judicial cooperation, social security coordination, goods, services and transport, but the talks remain stuck on governance, fisheries and the level playing field. Barnier is expected to travel to London late on Friday for face-to-face Brexit talks over the weekend. As we get closer to the Brexit transition deadline of 31 December, pressure to reach a deal and allow time for ratification on both sides remains high.

In a statement issued on 25 November, concerning the application of the trading obligation for derivatives (DTO) under Article 28 of Regulation (EU) No 600/20141 (MiFIR), ESMA said that EU firms will not be able to trade certain derivatives in the UK post Brexit and will have to continue using EU recognised venues. ESMA acknowledges that this approach creates challenges for some EU counterparties, particularly UK branches of EU investment firms. However, ESMA considers that EU counterparties can meet their obligations under the DTO by trading on EU trading venues or eligible

It seems likely that a high-level political intervention will be required to achieve a final breakthrough. The European Parliament believes the legal and

trading venues in third countries, and says that this situation is primarily a consequence of the way the UK has chosen to implement the DTO.

translation processes required for ratification will take around three weeks.

The final plenary session is scheduled for w/c 14 December, but the Commission thinks an extra session is unavoidable and this could be scheduled as late as 28

Based on the current legal framework, and in the absence of an equivalence decision by the European Commission, ESMA says it does not see room for providing different guidance.

December.

Equivalence for UK CSDs NCA Suspicious Activity Annual Report 2020 The EU decided on 25 November 2020 to grant equivalence status for the regulatory The National Crime Agency (NCA) has published its Suspicious Activity Reports (SARs) Annual Report for 2020. This showed that in the year 2019-20 there was a 20% increase in the number of

framework applicable to Central Securities Depositories (CSD) of the UK for a limited period of time, until 30 June. The European Commission explains that such

SARs, with 573,085 SARs submitted.

a decision is in the interest of the Union

Requests for Defence Against Money

and its Member States, and will give

Laundering (DAML) had also increased by

Union CSDs the time needed to develop

81% with a total of 62,408 requests made.

further their offer of services in relation to

The DAML requests resulted in

Irish corporate securities and ETFs, and

approximately £172 million being denied

Union issuers the time needed to migrate

to those suspected of money laundering,

their positions to Union CSDs.

an increase of 31% compared to the previous year.

The decision will allow Euroclear UK & Ireland, licensed by British regulators, to

For over £100m of the total restrained,

continue serving as the CSD in Dublin.

there was no previous or existing law

Securities settlement is the second

enforcement investigation, showing the

UK financial area deemed equivalent,

value added by the SARs regime in

alongside clearing houses which have

enabling new law enforcement

been given equivalence for 18 months.

investigations, as well as enhancing existing ones.

PIMFA in the Press You can read the full report here.

Professional Adviser: FSCS funding again Latest PIMFA Press Releases

under the spotlight after supplementary levy announcement International Adviser: UK lifeboat scheme

•

•

•

PIMFA disappointed to learn of

seeks additional £92m

supplementary costs to be levied

Financial Adviser: ‘Bitter pill to swallow’:

on members by FSCS

advisers react to FSCS interim levy

PIMFA sets out priorities for the

Financial Adviser: FCA fee hike is a

future as it updates member

'barrier to entry' for advice firms

manifesto

Mail on Sunday/Thisismoney.co.uk: Small

PIMFA hosts first in series of

shareholders being 'robbed' by City rule

masterclasses to encourage

blocking them from investing in shares

young women from all

worth billions in pandemic

backgrounds to consider a career

MoneyMail/Thisismoney.co.uk: Why

in finance

thousands can't cash in their pension: Savers struggle to hire financial advisers after watchdog cracks down on transfers

•

Senior Wealth management and financial advice figures gather for PIMFA's virtual leadership summit

PIMFA Firms: Are you Prepared for Brexit?

The Brexit transition period ends in less than 40 days and firms need to make sure they have completed their preparations for leaving the EU Single Market by 11pm on 31 December 2020. For PIMFA firms, the situation regarding servicing clients in the EU is little affected by the developments in the UK – EU negotiations. A deal and a no deal outcome of the talks are the same as passporting will be lost at the end of the transition period and equivalence does not exist for the retail investments sector.

Firms must decide how to handle their EU-based clients after Brexit - establishing in the EU via a passporting subsidiary or local office, merging with an EU-based firm, relinquishing clients and withdrawing from the market, or using the risky reverse solicitation exemption from the establishment requirement. We do not advise the last option as it is not reliable and depends on the national regulators’ approaches in the EU Member States.

We strongly advise firms to consult local regulators before deciding on the most suitable buisness model.

EVENTS & LEARNING

FEATURED LEARNING

PIMFA Training SM&CR Conduct Rules: Train the Trainer Programme 10 December 2020 This training workshop and toolkit is ideal for firms that want to: • Feel confident you have delivered a high standard training course in line with the FCA’s requirements • Train all certified staff on the Conduct Rules by 31st March 2021 • Provide a refresher Conduct Rules training session for senior managers • Tailor their firms Conduct Rules training to specific staff job roles • Train an unlimited number of your staff on the Conduct Rules for a single, one off payment • Receive fully editable training course materials that can be personalised by you for your firm • Utilise the SM&CR resources that are used in over 30 banks and Building Societies For more info and to book your place, please click here.

FEATURED EVENT

PIMFA Online Conference Virtual Fest V2 27- 28 January 2021 Following on from the HUGE success of the inaugural PIMFA Virtual Fest in June 2020, we are proud to announce that bookings are now open for Virtual Fest V2. Taking place over two days (27 & 28 January 2021) the event will deliver presentations on key areas which members have identified as their key short- and long-term focus including: • Compliance • Risk and Resilience • ESG and Impact Investing • Cyber Resilience For more info and to book your place please click here.

To view all other upciming Events and Learning, please click here.

WHAT'S HAPPENING IN OUR INDUSTRY

PIMFA CEO Liz Field will be joining 75 speakers at INTERGEN2020, an immersive virtual conference taking place w/c 30th November, and we are delighted to be able to offer a limited number of places exclusively for PIMFA Members.

To attend please click here.

Latest PIMFA Consultation Response

PIMFA’s latest consultation response is to the FCA on the Liquidity Mismatch in Authorised Open-ended Property Funds.

Read this and all of our other PIMFA consultation papers here.

FCA: SM&CR Charges and Fees

We note the FCA's proposals for authorisation fees and SM&CR charges changes published in CP20/22.

The FCA proposes to introduce a ÂŁ250 charge for personnel changes under the SC&MR. Understandably, there is a fear that introducing an SM&CR charge could increase financial pressure on smaller firms. However, we appreciate that the FCA has incurred substantial costs in setting up the new SM&CR and Registry system.

The consultation is a reminder that, entirely reasonably, firms would like to know how fees, such as those proposed for SM&CR, relate to specific costs incurred and that there is a transparent effort to strike the fairest balance between providing value for money but, importantly, operational and supervisory effectiveness and efficiency too which, equally reasonably, requires a securely funded regulator.

The consultation paper is open for comment until 22 January 2021

FCA Releases SM&CR Training Video

The FCA issued an SM&CR training video on its website on 26th November. Firms need to train relevant staff on how the Conduct Rules apply to their roles and the explainer video sets out the key things to consider for this training. Whilst the video covers Conduct Rules training for solo regulated firms, it may also be valuable for dual-regulated firms.

More information can be found here.

Latest on EUI CCSS Migration

The change in CCSS Operator will be effective as of 7 December 2020 and, to support members with this change, Euroclear (EUI) has published a migration guide (click here to log into your myEuroclear portal and view the guide). This guide provides useful information such as new CCSS counter location and contact details, access to the CCSS counter and security, impacts to transactions, and migration activities.

PIMFA and EUI strongly recommend EUI Participants review the guide to ensure they are still able to access the CCSS counter from 7 December 2020. For further information, please contact Michael Cahill.

Find Out More.....

Bulletin is just one of the many insights and publications PIMFA produces on the latest industry news and key industry issues - most of which are accessible to PIMFA members only.

If you have a query on how to become a member firm, the work we undertake or anything in Bulletin, please contact us at info@pimfa.co.uk.

BECOME A MEMBER Find out more about becoming a PIMFA member here.

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