Rather like opening an Advent calendar, in which you wonder what surprise or treat lurks behind each window, Brussels gave us a festive treat on the first day of Advent; a paper. It was the Commission’s report to various EU bodies “Follow up to the Call for Evidence – EU regulatory framework for financial services”. It forms part of the Better Regulation agenda. In the paper they announced four areas that justified targeted follow-up measures:
- Reducing unnecessary regulatory constraints on financing the economy;
- Enhancing the proportionality of rules while preserving prudential objectives;
- Reducing undue regulatory burdens;
- Making the regulatory framework more consistent and forward-looking.
If you found those parcels under your Christmas tree you would certainly be justified in breaking out the yuletide cups. In the conclusion, you find the intention to identify policy areas where, over time, decision-making and implementation could be returned to Member States. This would be a welcome relief from repetitive processes and a reduction in the cost of compliance to the Capital Requirements Regulation (CRR), the Directive CRD IV and will feed into amendments to EMIR.
As you continue to open the windows of your Advent calendar, look out for the 12th day. The Fundamental Review of the Trading Book (FRTB) is a hot topic and the Basle Committee meets on that day. Currently this key piece of regulatory reform is slated for 2019. However, the Europeans have asked for a 4-year delay following the American demand for more time to consider this massive task with its innovative approaches. The betting is for an announcement of a delay to 2022.
As we continue to open our Advent calendar, look out for flurries of MiFID II news. I have recently moderated a few panels at conferences covering FX, Regulation and Market Abuse. Listening to some excellent panellists has prepared me for the stark fact that MiFID II is going to have a very bumpy landing for banks, regulators and financial institutions. Expect by the 24th window to having revealed forecasts of significant headwinds and an icy start to the New Year with risks of intermittent frozen markets! The famous map of EU countries that have yet to enact MiFID II into national law still shows a sizeable number of member and EEA states rushing to achieve this in December. The Christmas mystery, for some, is how does a regulatory elf get the reindeers to fly in the direction of, what will be, the forthcoming law without a stick or a carrot?
In a similar vein, some windows might reveal the status of PSD2 with the deadline for transposition into National Law set as the 13th of January 2018. With only four nations having achieved the objective so far, it will be worth keeping an eye out for this one. However, with the current EBA consultation ending on the 5th of January 2018 do not expect too many surprises with regards to matters of payments as Burns and Haggis is a closer celebration for this one – and remember it did not finish well for the pudding in the eponymous poem.
Overall, the major worry and most likely candidate for surprises is MiFID II, so keep opening each Advent calendar window in case something lurks behind it. It reminds me of some old Christmas jokes. With regard to the need for interpretation of the RTS’ your regulatory Santa might ask what do you call an incomplete Christmas sentence? A Santa clause. Alternatively, for those pouring through the legals the legal Santa would ask what do you call Santa’s little helpers? Subordinate clauses……..boom boom. However, looking at the whole MiFID II landscape I will finish with an old favourite –
What is the best Christmas present? A broken drum - you just cannot beat it!
With that, enjoy your Advent festivities!