Financial Services general regulatory news, June 2021

Financial Services Act 2021 (beginning No. 1) 2021

The Financial Services Act 2021 (Initiation No 1) Regulations 2021 (SI 2021/671) have been published. SI 2021/671 was the first regulation issued in terms of the Financial Services Act 2021 and contains the following effective dates for the provisions relating to the prudential regulation of investment firms and credit institutions:

Sections 3, 4, and 5 and Schedule 3 of the Act will come into force on 9 June 2021. These provisions authorize HM Treasury to issue regulations to repeal and approve the requirements of the UK Capital Requirements Regulation (UK CRR). approve. the framework for the Prudential Regulator (PRA) to develop rules related to the Basel CRR standards. These include the introduction of the new part 9D of the Financial Services and Markets Act 2000 (FSMA) on the prudential regulation of credit institutions;

• Section 7 and Section 12 of Schedule 4 to the Act will come into force on 26 June 2021 to amend Section 500d of the UK CRR;

• Article 2 and Annex 2 of the Act enter into force on 1 July 2021. These provisions contain the legal framework for the prudential regulation of investment firms, including the new Part 9C of the FSMA. The Financial Conduct Authority (FCA) and HM Treasury will use this framework to establish the prudential regime (IFPR) of investment firms for FCA investment firms; is

• Section 1, Schedule 1, and the remainder of Schedule 4 of the Act will come into effect on January 1, 2022. These provisions amend the UK CRR to end its application to investment firms as PRA-designated firms and to make amendments. CRR prepared by CRR II, which the UK intends to implement in the UK CRR, and not in accordance with the rules of the Prudential Regulation Authority (PRA).

UK taxonomy:

HM Treasury establishes a green technical advisory group

HM Treasury has announced the appointment of the Green Technical Advisory Group (TAG), a group of experts that will independently advise the government on the development and implementation of a green taxonomy in the UK. It also published the activity and a list of TAG members.

The GTAG will deliver a series of expenditures to be implemented according to an indicative timetable agreed upon after the group’s first meeting in June 2021. It will make the first recommendations to the government in September 2021.

Treasury HM expects GTAG to invest initially for two years, after which the mandate and composition will be reviewed. The TAG meets quarterly for the first year.

Report of the Task Force on Innovation, Growth and Regulatory Reform

The Task Force on Innovation, Growth and Regulatory Reform (TIGER), which has been commissioned by the British government to map reforms of the Brexit regulations, has prepared its report. The report includes recommendations on financial regulation related to:

• Investment promotion by insurers:

 TIGRR recommends changing the corresponding adjustment and risk margins in the UK Solvency II framework, with the aim of freeing up investment capital.

• Restore a regulatory approach based on common law principles:

 the UK should move away from the EU’s codified regulatory system, which is too restrictive. For example, TIGRR recommends changing position restrictions in financial instruments markets (MiFID) to introduce more flexibility while maintaining protection in critical contracts. It also recommends a more discretionary and judgment-based approach to calculating central counterparty (CCP) margins. As general principles, regulators should adapt their support and requirements appropriate to the risks and size of companies, define ‘scale structures’, put the principle of proportionality at the heart of all UK regulation, and develop technology-neutral regulatory regimes that focus on objectives and results. instead of input.

• Supporting FinTech and the digitization of financial services infrastructure:

TIGRR recommends, among other things, accelerating the expansion of Open Banking into Open Finance and adopting a more market-oriented Australian approach; increase competition in the banking sector by using an authorized regulatory approach to challenge banks; reducing anti-money laundering (AML) requirements for new Open Banking or Fintech services; and accelerate plans to develop a central bank digital currency (CBDC), with a 12 to 18-month rollout.

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