Financial Services Regulatory Update – July 2020 Round Up



On 17 July 2020, the European Commission announced the adoption of Commission delegated regulations supplementing the Benchmarks Regulation on the following sustainable finance issues (here):

  • Commission delegated regulation supplementing Regulation (EU) 2016/1011 as regards the explanation in the benchmark statement of how environmental, social and governance factors are reflected in each benchmark provided and published
  • Commission delegated regulation supplementing Regulation (EU) 2016/1011 as regards the minimum content of the explanation on how environmental, social and governance factors are reflected in the benchmark methodology
  • Commission delegated regulation supplementing Regulation (EU) 2016/1011 as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks

On 24 July 2020, the European Commission published a legislative proposal to amend the Benchmarks Regulation as regards the exemption of certain third country foreign exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation (here). 

On 23 July 2020, the ECB announced that it has published the results of its industry-wide assessment of the preparedness of banks supervised under the Single Supervisory Mechanism in relation to interest rate reform, including a list of risks and challenges for banks and good practices for banks in relation to interest rate transition (here).


On 7 July 2020, the European Commission updated its webpage on getting ready for the end of the Brexit transition period (here). The webpage states that the Commission is reviewing, and where necessary updating, more than 100 sector-specific stakeholder preparedness notices that it published during the Article 50 negotiations with the UK, including in the area of financial services.

On 17 July 2020, ESMA, EU national securities regulators, and the FCA confirmed (here) that the memoranda of understanding between ESMA and EU national securities regulators on the one hand and the UK’s FCA on the other, which cover co-operation and exchange of information, agreed in 2019, will come into effect at the end of the transition period, on 31 December 2020. See our briefing here.

On 21 July 2020, ISDA published version 8 of its Brexit FAQs, which address possible outcomes for the derivatives market post-Brexit (here).

On 29 July 2020, the EBA published a statement on financial institutions’ preparations for the end of the Brexit transition period (here) which calls on financial institutions to finalise the full execution of their contingency plans in accordance with the conditions agreed with the relevant competent authorities and ensure adequate communication to their EU customers.  The EBA also reminds financial institutions that the transition period between the EU and UK will expire on 31 December 2020, which will end the possibility for UK-based financial institutions to offer financial services to EU customers on a cross-border basis.

On 31 July 2020, ISDA and other interested parties published a paper setting out reasons why the end of the transition period has the potential to create a disruptive ‘cliff-edge’ change in the EU regulatory requirements that apply to the over-the-counter derivatives business (here).

Capital Requirements

On 7 July 2020, Guideline (EU) 2020/978 of the ECB on the exercise of the discretion under Article 178(2)(d) of the Capital Requirements Regulation (“CRR”) by national competent authorities (“NCAs”) in relation to less significant institutions (“LSIs”) with regard to the threshold for assessing the materiality of credit obligations past due was published in the EU’s Official Journal (here).

Central Securities Depositories Regulation (“CSDR”)

On 8 July 2020, ESMA published an updated version of its Q&As on the implementation of the CSDR (here). The updated Q&A relates to the implementation of the settlement discipline regime and clarifies that, for the purpose of initiating a buy-in process, the concept of “business days” under CSDR refers to the definition given in the rules of the securities settlement systems where the settlement fail occurred.

Climate Risks in Financial Stability Monitoring

On 20 July 2020, the Financial Stability Board published a stocktake of financial authorities’ experience in including climate-related risks in financial stability monitoring (here). The stocktake draws on information provided by FSB member national authorities, international bodies and a workshop with the private sector.


There were a number of COVID-19 related developments in July. Generally, this briefing does not deal with these developments, a number of which we have summarised elsewhere. The McCann FitzGerald website has a dedicated COVID-19 section containing FAQs, briefings and guidance on a range of legal and business issues that may need to be addressed (here).

Data Protection

The Court of Justice of the European Union handed down its long awaited decision in Case C-311/18 Data Protection Commissioner v. Facebook Ireland Limited, Maximillian Schrems (“Schrems II”) on 16 July 2020. In its judgment, the Court upheld the validity of Standard Contractual Clauses in principle as a means for companies to transfer data to non-EU ‘third countries’, subject to important caveats on their use in practice. However, the EU-US Privacy Shield, which facilitates the transfer of data between Europe and the United States, has been deemed invalid. See our related briefing here.

Diversity and Inclusion in Insurance Firms

On 29 July 2020, the Central Bank of Ireland (“CBI”) published a press release on the results of its thematic assessment of diversity and inclusion (“D&I”) in insurance firms (here). Among the key findings and observations arising out of the Assessment are that most entities do not have a D&I strategy and where there is a D&I strategy, it is not clear how this strategy is aligned to the overall company strategic objectives. Most firms are not sufficiently prioritising D&I and considerations of diversity and the overall effectiveness of boards and senior executive teams is not sufficiently evident in senior recruitment and succession planning. There is also clear evidence of significant gender pay gaps in most firms.


On 14 July 2020, the European Commission published provisional versions of three delegated regulations supplementing EMIR, as amended by Regulation (EU) 2019/2099 (EMIR 2.2), with regard to the fees charged by ESMA and ESMA’s determinations regarding the systemic importance and comparable compliance of third country CCPs (here, here and here).

On 8 July 2020, ESMA published an updated version of its Q&As on the implementation of EMIR (here). It includes an updated Q&A on the frequency of reports, under Article 9 of EMIR (see trade repositories Q&A 11).

Investment Funds – Liquidity Stress Testing

On 13 July 2020, the CBI published a Notice of Intention in relation to the application of the ESMA guidelines on liquidity stress testing in UCITS and AIFs (here), which will apply from 30 September 2020.   According to the Notice, the CBI will consult on the incorporation of a requirement in the Central Bank UCITS Regulations and AIF Rulebook that UCITS Management Companies, AIFMs and depositaries adhere to the Guidelines.  In the interim, the Central Bank expects full compliance with the Guidelines from 30 September 2020. The CBI also updated its AIFMD and UCITS Q&A to clarify its expectations around liquidity stress testing.

Markets in Financial Instruments

On 13 July 2020, ESMA published its second report on sanctions and measures imposed by National Competent Authorities (“NCAs”) under the Markets in Financial Instruments Directive (here).

On 3 July 2020, a notice of information on postponement of entry into application of MiFIR open access provisions with regard to exchange-traded derivatives was published in the EU's Official Journal (here).

On 8 July 2020, ESMA published an updated version of its:

  • Q&A on MiFIR data reporting topics (here). The Q&A clarifies the reporting requirements for submission of transaction reports under Art. 26 of MiFIR and RTS 22. In particular, the new Q&A provides two reporting scenarios where an investment firm executes a transaction through an execution algorithm provided by another firm.
  • Q&As on MiFID II and MiFIR transparency topics (here). The updated Q&A provides technical clarifications for the performance of the mandatory systematic internaliser test. It specifies how the number of transactions and the nominal amount traded of a derivative shall be allocated when a derivative contract changes over the observation period from one sub-class to another.

Online Intermediation Services

The European Union (Promoting fairness and transparency for business users of online intermediation services) Regulations 2020 (here) give further effect to Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services (the “Regulation”), which requires online intermediation service providers to comply with certain transparency obligations vis-à-vis the business users of their services and which entered into force on 12 July 2020.  The 2020 Regulations designate the Competition and Consumer Protection Commission for the purposes of the Regulation and prescribe offences for certain breaches.


On 17 July 2020, the European Commission adopted a legislative proposal for a new regulation on cross-border payments in the EU (here).  The purpose of the proposed regulation is to codify the existing Regulation 924/2009 on cross-border payments (924/2009).


On 21 July 2020, the Joint Committee of the European Supervisory Authorities (“ESAs”) published a letter addressed to the European Commission setting out the outcome of their review of proposed amendments to Commission Delegated Regulation 2017/653 on key information documents for packaged retail and insurance-based investment products (here).  The review states that given the fact the draft regulatory technical standards were not adopted by the three ESA boards, the ESAs are not in a position to formally submit them to the Commission.

Prospectus Regulation

On 15 July 2020, ESMA published a Final Report on its Guidelines on disclosure requirements under the Prospectus Regulation (here). The Report follows an extensive public consultation, which ended in October 2019.


On 22 July 2020, the EBA published a report on benchmarking of remuneration practices at EU level for the financial years 2017 and 2018 and data on high earners for 2018 (here).  As in previous years, the report shows that remuneration practices within institutions were not sufficiently harmonised. In particular, the application of deferral and pay out in instruments differed significantly across Member States and institutions.


On 10 July 2020, ESMA published guidelines to provide clarity for market participants and securitisation repositories (“SRs”) on the accepted levels of No-Data options contained in the securitisation data submitted to SRs (here).

Solvency II

On 31 July 2020, EIOPA published a press release announcing the launch of its Solvency II single rulebook (here).  It aims to expand the scope of the single rulebook by adding questions and answers submitted via EIOPA’s dedicated Q&A process.

Selected Consultations and Discussion Papers Published

  • EBA – Consultation paper on draft RTS on indirect subscription of minimum requirement for own funds and eligible liabilities (“MREL”) groups under Article 45f of the Bank Recovery and Resolution Directive (here).  The closing date is 27 October 2020.
  • EBA – Draft RTS on specifying the methodology to be used by resolution authorities to estimate the requirement referred to in Article 104a of Directive 2013/36/EU and the combined buffer requirement for resolution entities at the resolution group consolidated level for the purpose of setting MREL under BRRD Art. 45c(4) (here).  The closing date is 24 October 2020.
  • EBA – Consultation paper on draft ITS and draft RTS on the impracticability of contractual recognition of write-down and conversion powers and related notifications as set out in the Bank Recovery and Resolution Directive (here).  The closing date is open until 24 October 2020.
  • EBA – Consultation on draft RTS on the determination of indirect exposures to underlying clients of derivatives and credit default derivatives under Article 390(9) of the CRR II Regulation (here).  The closing date is 23 October 2020.
  • EBA – Consultation paper on draft guidelines specifying the conditions for the application of the alternative treatment of institutions' exposures related to “tri-party repurchase agreements” set out in Article 403(3) of the Capital Requirements Regulation for large exposure purposes (here).  The closing date is 22 October 2020.
  • EBA – Consultation on draft RTS on requirements that an internal methodology or external sources used under the internal default risk model are to fulfil for estimating default probabilities (“DPs”) and losses given default (“LGDs”) under Article 325bp(12) of the Capital Requirements Regulation, as amended by the CRR II Regulation ((EU) 2019/876) (here).  The closing date is 22 October 2020.
  • EBA – Consultation Paper on Draft Guidelines on Internal Governance (here). The closing date is 31 October 2020.
  • EBA/ESMA – Consultation to revise Joint ESMA and EBA Guidelines on the assessment of the suitability of members of the management body and key function holders (here). The closing date is 31 October 2020.      
  • ECB – Consultation on the publication of compounded term rates using the euro short-term rate (€STR) (here).  The closing date is 11 September 2020.
  • ECB – Consultation on a draft version of a guide on its supervisory approach to consolidation for banks in the Single Supervisory Mechanism (here).  The closing date is 1 October 2020.
  • ESMA – Consultation on draft guidelines on the calculation of positions by trade repositories under the Securities Financing Transactions Regulation (here).  The closing date is 15 September 2020.
  • European Commission – Roadmap for consultation, on a delegated regulation on taxonomy-related disclosures by undertakings reporting non-financial information supplementing the Taxonomy Regulation (here).  The closing date is 8 September 2020.
  • European Commission – Consultation on a revision of Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the EU (here).  The closing date is 2 October 2020.
  • European Commission – Consultation on a roadmap on a communication on an action plan for the Capital Markets Union (here).  The closing date is 4 August 2020.
  • European Commission – Consultation relating to the 2020 review of the Solvency II Directive (here).  The closing date is 21 October 2020.
  • IAIS – Consultation on the impact of COVID-19 for the insurance sector (here).  The closing date is 28 August 2020.

You may also be interested in---

McCann FitzGerald regularly publishes briefings on topics relevant to financial services regulation, among others. In addition to our wide range of briefings relating to COVID-19, referenced above, you may also be interested in our other briefings, including the following:

  • Financial Services Regulatory Update – June 2020 Round Up (here)
  • Brexit: ESMA Confirms Brexit Co-Operation Agreements (here)
  • Brexit and the Share and Derivatives Trading Obligations - Still at Square One! (here)
  • Loan Sales: Purchaser’s Proofs Fail to Pass High Court Scrutiny (here)
  • Beneficial Ownership: Central Register for ICAVs, Credit Unions and Unit Trusts (here)
  • The Programme for Government and Finance (here)
  • Amending Consumer Finance Contracts at a Distance:  Recent Decision of the Court of Justice of the European Union Prompts Pause for Thought (here)

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.