In the first in a series of weekly podcast updates, Robert Parker, Chairman to ICMA's Asset Management & Investors Council, reviews market conditions and the effect of Covid-19 on the global economy.
ICMA has launched a dedicated webpage on COVID-19 pandemic centralising a large amount of information from key resources.
ICMA published a note on the ICMA standard force majeure clause and the COVID-19 pandemic.
ICMA Asset Management and Investors Council (AMIC) Regulatory Update
Fund liquidity (COVID-19)
20 March 2020 Update of the FAQ CSSF on the swing pricing mechanism
In the context of the financial market developments around the COVID-19, the Commission de Surveillance du Secteur Financier (CSSF) has extended the possible use of swing pricing to protect remaining investors in a fund. In particular, the CSSF has indicated that funds can increase the swing factor to be applied on the NAV up to the maximum level laid down in the relevant prospectus without prior notification to the CSSF.
Financial reporting delay (COVID-19)
25 March 2020 CSSF grants delay for audit report
Given the impact of COVID-19 on audited entities and funds, as well as on the auditors, the Commission de Surveillance du Secteur Financier (CSSF) has decided that where necessary the long form report may exceptionally be remitted up to four months after the annual general meeting of the audited entity or fund, excluding delays for such AGMs granted by the government through exceptional measures. Both delays shall not be applied cumulatively.
25 March 2020 ESMA issues guidance on accounting implications of COVID-19
The European Securities and Markets Authority (ESMA) has issued a Public Statement on some accounting implications of the economic support and relief measures adopted by EU Member States in response to the COVID-19 outbreak. The measures include moratoria on repayment of loans and have an impact on the calculation of expected credit losses in accordance with IFRS 9.
26 March 2020 Delaying annual company accounts during the coronavirus crisis
Companies and their auditors have been facing unprecedented challenges in preparing audited financial information as a result of the coronavirus pandemic. In response to the current situation, the FCA, FRC and PRA have announced a series of actions to ensure information continues to flow to investors and support the continued functioning of the UK’s capital markets.
27 March 2020 ESMA issues guidance on financial reporting deadlines in light of COVID-19
The European Securities and Markets Authority (ESMA) has issued a Public Statement on the implications of the COVID-19 pandemic on the deadlines for publishing financial reports which apply to listed issuers under the Transparency Directive. The Statement recommends National Competent Authorities (NCAs) to apply forbearance powers towards issuers who need to delay publication of financial reports beyond the statutory deadline.
Regulatory delay (COVID-19)
19 March 2020 AMF states its expectations on Market activities continuity during the coronavirus pandemic
In order to fully accompany financial market professionals in the current context, the Autorité des Marchés (AMF) has reminded the financial industry of the various requirements arising from the European texts. Transaction reporting under EMIR and MIFID are described as "crucial for the fulfilment of a regulator’s duties and nonetheless so for the AMF in its monitoring of markets and participants, especially in times of crisis". "Participants must ensure that the transmission of reports remains steady, of good quality and is carried out within the regulatory timelines. Participants who encounter occasional difficulties with report transmission will be expected to swiftly submit missing data. Participants who encounter persistent difficulties are invited to contact their usual AMF staff member in order to provide information on the nature of the difficulties encountered and inform on the projected return to normal".
23 March 2020 CSSF's regulatory reporting
Reliable supervisory information is crucial, especially in times of crisis. Therefore the Commission de Surveillance du Secteur Financier (CSSF) have asked supervised entities to perform the CSSF regulatory reporting when it is due. If, however, for operational reasons supervised entities experience difficulties to prepare or validate their CSSF reporting due to staff not being available, for example because they work remotely without having full access to all systems, then the supervised entities should contact the CSSF through their usual channels as soon as possible and ahead of reporting deadlines. The CSSF will not apply a strict enforcement policy with regards to reporting if delays are duly justified, during the COVID-19 crisis.
25 March 2020 ESMA clarifies position on SFTR backloading
The European Securities and Markets Authority (ESMA) has issued a revised version of its 19 March Public Statement on coordinated supervisory actions on the application of Securities Finance Transactions Regulation (SFTR).
Business continuity (COVID-19)
22 March 2020 CSSF asks for immediate review of current organisational setups on Coronavirus (COVID-19)
In light of the development of COVID-19, the Commission de Surveillance du Secteur Financier (CSSF) has urged all supervised entities to immediately review their current organisational setup so as to ensure that:
- The least possible staff has to travel to, and work from, their usual workplace or backup site. The deployment of staff members to the usual workplace or backup site should be limited to vital functions that are essential to maintain the critical mission of supervised entities for them to remain operational provided that these functions cannot be performed remotely; and
- Where staff is not equipped with laptops or other mobile devices, entities implement as soon as possible virtual desktop and other remote access solutions, cloud based or not.
Supervisors' statements (COVID-19)
23 March 2020 FCA statement on UK markets
The Financial Conduct Authority (FCA) has been working with international counterparts in the US, EU and elsewhere so that markets can remain open and orderly, and so they can continue to perform their essential role in supporting businesses, governments, jobs and the broader economy.
25 March 2020 Securities regulators coordinate responses to COVID-19 through IOSCO
The International Organisation of Securities Commissions (IOSCO) issued a statement on on-going cooperation between securities regulators to "ensure that capital markets continue to function throughout this difficult period in an open and orderly manner to enable all participants to price and transfer risk across all traded asset classes".
Prudential rules (COVID-19)
25 March 2020 EBA provides clarity to banks and consumers on the application of the prudential framework in light of COVID-19 measures
Following its call on 12 March 2020 to Competent Authorities to make use of the full flexibility provided for in the existing regulation, the European Banking Authority EBA) has issued a second statement to explain a number of additional interpretative aspects on the functioning of the prudential framework. The EBA calls for flexibility and pragmatism in the application of the prudential framework and clarifies that, in case of debt moratoria, there is no automatic classification in default, forborne, or IFRS9 status.The EBA, nonetheless, insists on the importance of adequate risk measurement and expects institutions to prioritise individual assessments of obligors’ likeliness to pay when possible.
26 March 2020 FCA’s expectations on financial resilience for FCA solo-regulated firms
The Financial Conduct Authority (FCA) has been wanting to see firms to continue operating in this challenging period, and, where we can, we intend to provide flexibility to regulated firms to ensure this. "Capital and liquidity buffers are there to be used in times of stress. Firms who have been set buffers can use them to support the continuation of the firm’s activities."
25 March 2020 Impact of the coronavirus on firms’ LIBOR transition plans
The Financial Conduct Authority (FCA), Bank of England and members of the Working Group on Sterling Risk-Free Reference Rates have discussed the impact of the coronavirus on firms’ LIBOR transition plans over the coming months. The central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed and should remain the target date for all firms to meet.
Short-selling ban (COVID-19)
23 March 2020 ESMA's position opinion on Austrian short-selling ban
The European Securities and Markets Authority (ESMA) issued a positive opinion in respect of a proposed emergency measure, put forward by the Austrian Finanzmarktaufsicht, under the EU Short-Selling Regulation, for a period of one month to 18 April.
26 March 2020 AMF's frequently asked questions on ban of net short positions
In order to support investors in the implementation of its decision taken on March 17 concerning the ban on equity net short positions, the Autorité des Marchés Financiers (AMF) has put together in a document the answers to practical questions that may arise.
Consultation delays (COVID-19)
20 March 2020 ESMA extends consultations response dates
The European Securities and Markets Authority (ESMA) has decided to extend the response date for all ongoing consultations with a closing date on, or after, 16 March by four weeks.
20 March 2020 ESMA SMG puts forward advice to ESMA
The European Securities and Markets Authority (ESMA) SMSG put forward its advice to ESMA in an own initiative report on measures relating to the COVID 19 crisis, dated 20 March. The SMSG urges ESMA to take action to postpone deadlines in respect of consultations; implementation, and reporting obligations. The SMSG also strongly advises ESMA to use it powers to coordinate diverging Member State short-selling measures and publish what measures NCAs have taken in this respect on a dedicated web-page. The SMSG recommends for ESMA to closely coordinate with NCAs to ensure that European markets will remain open and continue to operate efficiently in this challenging environment; and comments on the impact of work from home on voice recording and time stamping.