The Financial Conduct Authority (FCA) has fined Citigroup Global Markets Limited (Citigroup Global Markets) £12,553,800 for failing to properly implement the Market Abuse Regulation (MAR) trade surveillance requirements relating to the detection of market abuse. By failing to properly implement the MAR trade surveillance requirements, Citigroup Global Markets could not effectively monitor its trading activities for certain types of insider dealing and market manipulation. 

Continue reading…

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published the results of its fourth stress test exercise of Central Counterparties (CCPs). The results confirm the overall resilience of European Union (EU) CCPs, as well as third country Tier 2 CCPs, to credit, concentration and operational risks under the tested scenarios and implemented framework. However, the stress test also identified areas where some CCPs may need to strengthen their risk management frameworks, or where further supervisory work should be prioritised, including on concentration and operational risks. Continue reading…

On August 24, the Commission decided to register a European Citizens’ Initiative (ECI) entitled ‘Call to achieve a tobacco-free environment and the first European tobacco-free generation by 2030′. The organisers of the initiative call on the Commission to propose legislation to save new generations from falling into tobacco addiction, to act against related environmental dangers and against smoking. More specifically, they ask the Commission to propose legal acts to end the sale of tobacco and nicotine products to citizens born in 2010 onwards. The initiative also calls on specific measures to achieve tobacco-free and cigarette butt-free beaches and riverbanks, create a European network of tobacco and cigarette butt-free national parks, to extend outdoor vapour-free spaces, and to eliminate tobacco advertising and its presence in audiovisual productions and social media. Continue reading…

The Commission welcomes the decision by the International Civil Aviation Organisation (ICAO) to call on the Russian Federation to immediately cease its infractions of international aviation rules, in order to preserve the safety and security of civil aviation. The ICAO decision refers to the violation of Ukraine’s sovereign airspace in the context of Russia’s war of aggression, and to the deliberate and continued violation of several safety requirements in an attempt by the Russian government to circumvent EU sanctions. These actions include illegally double-registering in Russia aircraft stolen from leasing companies, and permitting Russian airlines to operate these aircraft on international routes without a valid Certificate of Airworthiness, which is the necessary safety certificate. Continue reading…

The Financial Conduct Authority (FCA) has confirmed its plans to bring in a new Consumer Duty, which will fundamentally improve how firms serve consumers. It will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first. The Duty is made up of an overarching principle and new rules firms will have to follow. It will mean that consumers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it. Clarity on the FCA’s expectations and firms focusing on what their customers need should lead to more flexibility for firms to compete and innovate in the interests of consumers. Continue reading…

On 17 July 2022, Hyun Song Shin, Economic Adviser and Head of Research of the BIS, gave a speech at the G20 High-level Seminar “Monetary and financial sector policy to support stability and recovery”. For near-term macroeconomic stabilisation of the economy, we are accustomed to viewing the economy mainly through the demand side, with supply adjusting smoothly in the background. However, a more balanced approach between demand and supply is essential in addressing the current inflation challenge. Today, I use this perspective to assess the odds of a soft landing for the global economy by drawing on a BIS Bulletin released this week. Continue reading…

Financial firms are prioritising communications surveillance, but most are still failing to monitor Social Messaging i.e., text and WhatsApp communications, putting themselves at risk of regulatory scrutiny and fines like those levied against Bank of America this week, according to the latest data from RegTech leader SteelEye. SteelEye’s Compliance Health Check report surveyed 170 senior compliance professionals in financial services and found that just 15% of firms are monitoring WhatsApp at all, despite the continued levying of huge fines against those found to be failing to monitor the communications of regulated employees effectively. Even fewer are monitoring Slack (9%) and Signal (3%) – and even considering the more expected channels there remains significant work to be done, with just 40% capturing Microsoft Teams, 40% Bloomberg Chat and 25% Zoom. Continue reading…

by Michel Klompmaker

According to the chairman of the SOBI Foundation, Pieter Lakeman, De Nederlandsche Bank (DNB) is forcing pension funds to use incorrect actuarial interest rates. For their annual reports for 2021, the pension funds were obliged to use an actuarial interest rate of approximately 0.57%. If 4% had been used as the actuarial interest rate, which was done until 2007, the pension provisions would have been approximately 60% smaller at the end of 2021. It is clear that this is not a matter of several thousand euros. For example, the pension provision of PMT, the third largest pension fund, was over 95 billion euros on 31 December 2021. At an actuarial interest rate of 4%, this would be more than 55 billion euros less. In fact, this means that the equity capital is then understated by more than EUR 55 billion in the balance sheet. At an actuarial interest rate of 5%, the provision would even be approximately 70% smaller and PMT’s equity would amount to 65 billion euros. For the largest pension fund, the ABP, the equity is shown in the balance sheet as 54 billion euros via the actuarial interest rate prescribed by DNB, while in reality, with a somewhat more normal actuarial interest rate of 4%, it amounts to more than 370 billion.  Continue reading…

The European Central Bank (ECB) and the European Systemic Risk Board (ESRB) has on 26 July published a joint report on how climate shocks can affect the European financial system. The findings show that climate risks can quickly spread and harm companies and banks alike. The report adds further evidence on the systemic nature of climate risks and provides a foundation for a macroprudential policy response. The report identifies several amplifiers of climate risk across the financial system. Transition risks may be magnified because of economic and financial linkages between and across banks and companies. For example, a surge in carbon prices could increase the likelihood that the default of one company leads to the default of another. While this particularly applies to high-carbon companies, it could also affect their less carbon-intensive counterparties. Continue reading…

The European Union faces the risk of further gas supply cuts from Russia, due to the Kremlin’s weaponisation of gas exports, with almost half of our Member States already affected by reduced deliveries. Taking action now can reduce both the risk and the costs for Europe in case of further or full disruption, strengthening European energy resilience. The Commission has therefore on 20 July proposed a new legislative tool and a European Gas Demand Reduction Plan, to reduce gas use in Europe by 15% until next spring. All consumers, public administrations, households, owners of public buildings, power suppliers and industry can and should take measures to save gas. The Commission will also accelerate work on supply diversification, including joint purchasing of gas to strengthen the EU’s possibility of sourcing alternative gas deliveries. Continue reading…