COVID-19: Financial Services Round-Up for 1 June – 5 July 2020

Benchmark Reform

On 1 July 2020, the Financial Stability Board (“FSB”) published a statement on the impact of the COVID-19 pandemic on global benchmark reform (here).

The FSB maintains its view that financial and non-financial sector firms across all jurisdictions should continue their efforts in making wider use of risk-free rates in order to reduce reliance on IBORs where appropriate and in particular to remove remaining dependencies on LIBOR by the end of 2021.  The FSB also confirms that it intends to publish a report on the remaining challenges to benchmark transition later in July 2020, as requested by G20 finance ministers and central bank governors in their February 2020 communiqué.

Capital Requirements Regulation 575/2013

On 26 June 2020, Regulation (EU) 2020/873 of the European Parliament and of the Council of 24 June 2020 amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards certain adjustments in response to the COVID-19 pandemic was published in the EU’s Official Journal (here). The Regulation entered into force on, and applies from, 27 June 2020, with the exception of amendments to the calculation of the leverage ratio which will apply from 28 June 2021. Regulation 2019/876 introduced some of the final elements of the Basel III framework into the Capital Requirements Regulation.

On 25 June 2020, Commission Delegated Regulation (EU) 2020/866 amending Delegated Regulation (EU) 2016/101 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards (“RTS”) for prudent valuation under Article 105(14) of Regulation (EU) No 575/2013 was published in the EU’s Official Journal (here). The Delegated Regulation amends Delegated Regulation (EU) 2016/101 supplementing the Capital Requirements Regulation with regard to RTS for prudent valuation under Article 105(14) of the Capital Requirements Regulation. The Delegated Regulation entered into force on 26 June 2020.

Credit Unions

The Central Bank of Ireland (“CBI”) published a letter, dated 29 May 2020, responding to a letter sent by the Credit Union Development Association on 7 April 2020 requesting immediate development of policy responses to support credit unions’ response to COVID-19 challenges (here).

On 8 June 2020, the CBI published a circular regarding COVID-19 – payment breaks in credit unions (here). The letter sets out the CBI’s expectations regarding payment breaks.

Derivatives Markets Liquidity

On 30 June 2020, ISDA published the results of a survey (here) that it conducted with Greenwich Associates and which explores the impact of the coronavirus pandemic on derivatives market liquidity, including the causes of the liquidity disruption that occurred in March 2020, the scope and extent of the problem, and the impact of government intervention. The survey was based on responses by 172 buy- and sell-side market participants from across the globe.

EMIR Refit – Extension of Consultation Deadline

On 9 June 2020, ESMA published a press release announcing that it has decided to extend the response date for the consultation on the technical standards on reporting, data quality, data access and registration of trade repositories under EMIR REFIT to 3 July 2020, in view of the effects of the ongoing COVID-19 pandemic on stakeholders and market participants (here).  The original deadline for the consultation was 19 June 2020.


On 15 June 2020, ESMA published its 2019 annual report and a revised version of its 2020 work programme (here).  The revised version of ESMA’s 2020 work programme includes ESMA’s additional work on its immediate reaction to the COVID-19 pandemic and indicates potential deprioritisation regarding ongoing and future mandates.


On 8 June 2020, the European Systemic Risk Board (“ESRB”) announced a set of actions in response to the COVID-19 emergency at its extraordinary meeting on 27 May 2020 (here).  The actions relate to the following:

  • monitoring debt moratoria, guarantee schemes and other fiscal measures put in place by member states;
  • establishing a liquidity monitoring framework for (re)insurers;
  • introducing restrictions on dividend payments, share buybacks and other pay-outs for certain financial institutions, including banks and insurers.  It has published a recommendation on the restriction of distributions during COVID-19 (here); and
  • introducing measures to address liquidity risks arising from margin calls issued by central counterparties.

On 22 June 2020, a decision of the ESRB (dated 2 June 2020) on the cancellation of certain reports on actions and measures taken pursuant to Recommendation ESRB/2014/1 and Recommendation ESRB/2015/2 was published in the EU’s Official Journal (here). Due to the challenges posed by COVID-19, addressees of the Recommendations are no longer requested to submit the reports that were due by 30 June 2020.  The submission of subsequent reports is not affected.

Financial Conduct

On 5 June 2020, Derville Rowland, Director General, Financial Conduct at the CBI gave a speech to the Association of Compliance Officers in Ireland titled ‘Protecting Consumers, Investors and SMEs during COVID-19’ (here).  The speech focused on the measures taken by the CBI in response to COVID-19 and the importance of complying with regulatory obligations during the COVID period.

Markets in Financial Instruments

On 11 June 2020, ESMA published a public statement on open access provisions for exchange traded derivatives (“ETDs”) under MiFIR in light of the COVID-19 pandemic (here).   On 3 July 2020, a notice of information on postponement of entry into application of MiFIR open access provisions with regard to ETDs was published in the EU’s Official Journal (here). According to the notice, the transitional provisions for open access arrangements, set out under Article 54(2) of MiFIR, which were due to expire on 3 July 2020, have been extended to 3 July 2021.

Payment Breaks

On 8 June 2020, the CBI published a Dear CEO letter on its expectations regarding payment breaks (here).  The letter sets out the CBI’s supervisory expectations on how COVID-19 payment breaks, extended under the Irish non-legislative moratoria programme, should operate across participating regulated firms within the State.  In particular, the CBI sets out its expectations in respect of extending payment breaks from three to six months, and to the management of the end of the payment break term, which are outlined in the appendices to the letter.

The CBI states that its ongoing supervisory engagement with firms will aim to assess the extent to which it has satisfied the CBI’s expectations in respect of COVID-19 payment breaks and the effectiveness of the firm’s operating models and capabilities.  In order to inform this engagement, the CBI requests that certain information be provided to it no later than four weeks from the date of the letter (if not stated otherwise), the details of which are set out in the letter. Firms are asked to acknowledge receipt of the letter by return email to the relevant CBI supervision team, together with a commitment to meeting the requests outlined above within the specified timeframes.

The letter also states that the CBI has identified a risk that the proposed application of certain payment breaks may not be in compliance with the EBA Guidelines in relation to non-retail exposure classes (larger SME/corporate/commercial borrowers) and this will be an area of supervisory focus.

Short Selling Regulation

On 10 June 2020, ESMA published a decision renewing its decision to temporarily require the holders of net short positions in shares traded on a European Union (EU) regulated market to notify the relevant NCA if the position exceeds 0.1% of the issued share capital (here).  In a related press release, ESMA states that the measure will maintain the ability of NCAs to deal with any threats to market integrity, orderly functioning of markets and financial stability at an early stage, allowing them and ESMA to timely address such threats in case of signs of market stress.

The measure applies from 17 June 2020 for a period of three months.

Sustainable Finance

On 19 June 2020, the Equator Principles Association published guidance on implementation of the Equator Principles during COVID-19 (here).

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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).

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.