by Elena Pykhova

Operational resilience has always been part of the agenda of financial services firms. During the past 18 months of the widespread long-lasting disruption, it has been put to the test, and it is not surprising that regulatory emphasis on maintaining continuity of critical operations has resulted in multiple recent publications. The Basel Committee’s principles for operational resilience1 urge the firms to up their continuity and recovery capabilities. UK regulatory guidance2 goes a step further, setting out a clear plan and roadmap for firms to define business services and their impact tolerances by March 2022 and ensure their ability to operate within set tolerances by 2025. So, how far advanced are financial services firms in complying with the new set of requirements? Continue reading…

The European Securities and Markets Authority (ESMA), the EU securities markets regulator, has published its second Trends, Risks and Vulnerabilities (TRV) Report of 2021. The Report highlights the continued rise in valuations across asset classes in an environment of economic recovery and low interest rates, the increased risk taking of investors and the materialisation of event risks such as GameStop, Archegos and Greensill. ESMA continues to see elevated risks and fragile fundamentals, with an outlook for continued high risk and uncertainty over the sustainability of corporate and public debt as well as rising inflation expectations. Continue reading…

Scientists are observing changes in the Earth’s climate in every region and across the whole climate system, according to the latest Intergovernmental Panel on Climate Change (IPCC) Report, released on August 9. Many of the changes observed in the climate are unprecedented in thousands, if not hundreds of thousands of years, and some of the changes already set in motion—such as continued sea level rise—are irreversible over hundreds to thousands of years. However, strong and sustained reductions in emissions of carbon dioxide (CO2) and other greenhouse gases would limit climate change. While benefits for air quality would come quickly, it could take 20-30 years to see global temperatures stabilise, according to the IPCC Working Group I report, Climate Change 2021: the Physical Science Basis, approved on Friday by 195 member governments of the IPCC, through a virtual approval session that was held over two weeks starting on July 26. Continue reading…

Swift and forceful action from central banks and governments has limited the economic damage from the Covid-19 pandemic, and as policymakers look ahead to the next phase of the recovery they must prepare for different but no less formidable challenges, the Bank for International Settlements (BIS) said in its Annual Economic Report 2021.  In its flagship economic publication, the BIS describes the global recovery so far as incomplete and uneven, with some countries and sectors bouncing back quickly and others lagging. The uneven recovery could generate headwinds for emerging market economies (EMEs) in particular, due to tighter financial conditions as advanced economies transition more quickly. Continue reading…

Nikhil Rathi, Chief Executive of the Financial Conduct Authority (FCA), recently delivered a speech at the launch of the FCA’s Business Plan. When I became CEO last October, I joined a purposeful organisation. Our people working round the clock with great energy and to great effect to stand up for consumers and businesses affected by the pandemic. Almost five million payment deferrals granted across credit cards, loans and mortgages to people who had suddenly little or no money coming in. Businesses forced to close or scale back operations won insurance payments of more than three-quarters of a billion pounds for COVID-related losses thanks to our efforts in the Supreme Court. And all the while, the global markets we oversee proved resilient at a time of unique stress and volatility – laying the foundations for record capital raising this year to support economic recovery. Continue reading…

FCA, PRA and Bank of England set out plan to improve diversity and inclusion in regulated firms. The FCA, Prudential Regulation Authority (PRA) and Bank of England (the regulators) are seeking views on regulatory plans to improve diversity and inclusion in financial services. In a discussion paper, the regulators have set out policy options including, among others, the use of targets for representation, measures to make senior leaders directly accountable for diversity and inclusion in their firms, linking remuneration to diversity and inclusion metrics and the regulators’ approach to considering diversity and inclusion in non-financial misconduct. The discussion paper also focuses on the importance of data and disclosure in order to enable firms, regulators and other stakeholders to monitor progress.   Continue reading…

by Elena Pykhova

During the COVID-19 pandemic, in addition to dealing with financial challenges such as a drop in assets or liquidity, organisations are faced with issues that go to the core of operational risk management – people, systems, processes and the external environment. The crisis acted as a real-life stress test of existing frameworks and processes, and lessons learnt from the pandemic will trigger changes to how firms view and manage their operational risks.  Continue reading…

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published its Annual Report, which reviews its achievements in 2020 against its priorities and objectives in meeting its mission of enhancing investor protection and promoting stable and orderly financial markets in the European Union. The Report provides an overview of the work carried out by ESMA in 2020, following the entry into force of the revised ESMA Regulation and the amendments to the European Market Infrastructure Regulation (EMIR 2.2), updating ESMA’s governance and introducing new mandates for the organisation, which are shifting ESMA’s focus towards supervisory convergence. In addition to fulfilling its mandates, ESMA had to respond to the combined effects on financial markets of the COVID-19 pandemic and the United Kingdom’s withdrawal from the European Union. Continue reading…

The Belgian court of Antwerp has recently sentenced three suspects in the so-called fipronil egg contamination case to prison sentences ranging from one year effective to 18 months suspended for endangering public health. The court awarded millions of EUR in of damages to the civil parties as well. In April this year, two Dutch suspects were sentenced to one year in prison for the illegal sale of the potentially harmful insecticide fipronil to poultry farms. Eurojust assisted with investigations into the case in 2017 and provided assistance in setting up and operating a joint investigation team (JIT) between Belgium and the Netherlands, to support judicial action against the suspects. Continue reading…

Margarita Delgado, Deputy Governor of the Bank of Spain, recently gave a speech at the Banking Law Conference, organised by the Malaga Lawyers’ Association on 4 June 2021. The subject chosen for this conference is highly topical and relevant. Transparency is certainly needed for there to be effective competition between banks, and it is a central feature of the framework of conduct that should govern the relationship between banks and their customers. Clearly, too, banks’ massive dealings and business formalised through standard form contracts call for legal certainty to be ensured. Further, the necessary standardisation and speed of dealings must always be compatible with maintaining a high degree of protection for the end-customer, especially where individuals are concerned. Continue reading…