* INFORMATION TO BE KEPT AND ORGANISATIONAL REQUIREMENTS UNDER MIFID II

On the 27th April the Council of the EU made public its ANNEXES to the COMMISSION DELEGATED REGULATIONsupplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purpose of that Directive

• Minimum list of records to be kept by investment firms depending upon the nature of their activities
• Identified costs that should form part of the costs to be disclosed to the clients
• All costs and associated charges related to the financial instrument that should form part of the amount to be disclosed
• Requirement for operators of trading venues to immediately inform their national competent authority
• Signals that may indicate abusive behaviour under Regulation (EU) No 596/2014
• Record keeping of client orders and decision to deal
• Record keeping of transactions and order processing  

* HST . Occassional Paper FCA_ UK

High-frequency traders (HFTs) have received a mixed reaction from academics and practitioners with some people underlining their role as liquidity providers and others highlighting the problems that they could bring to the market.

• Occasional Paper No. 16: Are high-frequency traders anticipating the order flow? Cross-venue evidence from the UK market

From summary:  Do HFTs exploit their small (milliseconds) latency advantages to anticipate orders arriving in very quick succession at different trading venues from other market participants?. The regulatory EU set-up makes it more difficult to predict where orders will be routed, compared to the US market?

EU. Parliament and ECB to study virtual currencies, whilst Luxembourg grants first distributed ledger technology

The European Parliament’s Economic and Monetary Affairs Committee  voted last week  in favor of creating a task force to study and regulate virtual currencies such as bitcoin with the aim of preventing their use by money launderers and terrorist groups. 

Also, the European Central Bank has begun experimenting with "distributed ledger technology," the platform underpinning the bitcoin digital currency, an official said Monday, cautioning that the technology’s “far-reaching” ramifications require more investigation.

Further, Bitstamp announced that Luxembourg has granted it a payment institution license, making the company the first nationally licensed Bitcoin exchange in the world. With the European Union’s “passport” that allows financial services providers legally established in one member state to operate in others, Bitstamp, the third-largest Bitcoin exchange, will also be able to operate across all 28 European Union countries. The license starts operativity on July 1, from Luxembourg

Background article here;  and here

Bank Recovery and Resolution Directive. Data disclosure (summaries / collective data)

The European Banking Authority (EBA) published its Guidelines defining how confidential information collected under the Bank Recovery and Resolution Directive (BRRD) should be disclosed in summary or collective form without identifying individual institutions or relevant entities.

• To access the guidelines, see here
• Final report, here

* Remuneration policies and recent USA and EU documents

In USA the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Housing Finance Agency on Tuesday became the latest U.S. financial regulators to put forward proposals that would limit incentive compensation for senior bank executives, traders and other employees. Part of a six-agency rule first unveiled last week in a bid to restrict excessive risk-taking that many say helped contribute to the 2008 financial crisis, Tuesday's proposal by the FDIC and OCC likewise enacts Section 956 of the 2010 Dodd-Frank Act

Meanwhile, ESMA guidelines on  remuneration policies (UCITS / AIFMD) ...Article 14a(4) of Directive 2009/65/EC (“UCITS Directive”), as amended by Directive 2014/91/EU (“UCITS V Directive”) provides that ESMA shall issue guidelines addressed to competent authorities or financial market participants concerning the application of the remuneration principles set out under Article 14b of the UCITS Directive (“UCITS Remuneration Guidelines”)....See  ESMA Guidelines on sound remuneration policies under the UCITS Directiveand AIFMD. 31.03.2016

• Also:LETTER_TO_EUROPEAN_COMMISSION_EUROPEAN_COUNCIL_AND_EUROPEAN_PARLIAMENT_ON_THE_PROPORTIONALITY_PRINCIPLE_AND_REMUNERATION_RULES_IN_THE_FINANCIAL_SECTOR.pdf(154.73 KB)  

   

* Credit conditions. Financing securities and OTC transactions. Quarterly results

The SESFOD survey is conducted four times a year and covers changes in credit terms and conditions over the three-month reference periods ending in February, May, August and November. The March 2016 survey collected qualitative information on changes between December 2015 and February 2016. The results are based on responses from a panel of 28 large banks, comprising 14 euro area banks and 14 banks with head offices outside the euro area.

EUCentral Bank has published: .... 

18 April 2016

• Less favourable credit terms for counterparties across the entire spectrum of securities financing and OTC derivatives transaction types.
• Less favourable non-price credit terms being offered in securities financing transactions but at the same time more favourable financing rates for many types of collateral.

Overall credit terms offered to counterparties across the entire spectrum of securities financing and OTC derivatives transaction types became less favourable during the three-month reference period ending in February 2016. The tightening of credit terms was most pronounced for counterparties which are hedge funds and non-financial corporations. Credit terms are expected to tighten somewhat further over the next review period (i.e. between March and May 2016). More