The UK election delivered a significant shock when Prime Minister May lost her majority, as the voters failed to back her hard Brexit and austerity programme. May immediately looked to form an alliance with the Democratic Unionist Party in order to form a majority government and to lead the country in negotiations with the European Union. The European Securities and Markets Authorities made it clear that financial services companies moving out business from London to Europe because of Brexit must establish fully-staffed offices, and could not just have a ‘name on the door’. In the United States, sacked FBI director James Comey appeared before Congress, increasing political pressure on President Trump. In France, the first round of parliamentary elections suggested a significant win for Emmanuel Macron. Here are the main developments in finance and regulation from the last two weeks.


The Companies Registration Office announced a delay in launching the Central Register of Beneficial Ownership, citing July 2016 proposals to amend the 4th Money Laundering Directive and the need for further consideration of the issue of public access and associated privacy implications. The original launch date of 26 June 2017 will be missed, and will be reset by the Department of Finance to Quarter 4 in 2017, with more detailed information promised in September.

The Central Bank Commission approval a restructuring of the Central Bank’s financial regulatory functions. The functions will be organised under two pillars - Prudential Regulation and Financial Conduct - whilst the fiscal and operational aspects of the institution will remain unchanged. A Deputy Governor for Prudential Regulation and another for Financial Conduct will be appointed. The former will cover the bank’s representation at the Single Supervisory Mechanism, the European Banking Authority and the European Insurance and Occupational Pensions Authority. The latter will cover representation at the European Securities and Markets Authority.

A Research Technical Paper was published by the Central Bank on how banks treat collateral provided by SME borrowers. It found that banks were more likely to require collateral from riskier borrowers for larger loans, but that such collateral was not always successful in mitigating against loan defaults; securing a loan with collateral did not reduce the probability of a rating downgrade or a loan default. However, security provided to banks was found to have a favourable impact on a bank’s capital ratios.


Spanish bank Banco Popular was taken into bank resolution by European regulators following a declaration that the bank was likely to fail. It had reportedly received €3.6bn of emergency funding and faced a run on customer deposits when the European Banking Authority took control. It was then sold to its rival Banco Santander for €1. This was the first test case of the banking resolution regulations in action, although it resulted in the sale of the bank rather than a full-scale resolution.

The European Securities and Markets Authority published a number of documents in the last two weeks, including Guidelines on MIFID II product governance, the framework for mandatory benchmark contributions and its principles on the supervisory approach to relocations from the UK. The European Central Bank opened a Consultation on regulatory fees. The European Payments Council published its report '18 months on – Impact of the Interchange Fee Regulations on the European Union cards market.’

The European Council adopted its position on the further Directive on countering money laundering by criminal law. New rules will establish criminal offences and sanctions, improve cross-border judicial and police cooperation and bring the EU into line with international obligations, such as those arising from the Warsaw Convention and Financial Action Task Force recommendations. The Council is now due to engage with the European Parliament on the final text.

Moody’s Deutschland GmbH and Moody’s Investors Service Limited were fined a total of €1.24m for two negligent breaches of the Credit Rating Agencies Regulation. The two offences related to the public announcement of 19 ratings between 2011 and 2013 without disclosure of the principal methodology used: the regulation requires disclosure of methodologies. The announcements referred to a number of supranational entities including the European Investment Bank, the European Investment Fund, the European Stability Mechanism, the European Financial Stability Facility and the European Union. Moody’s also suffered a blow in the Hong Kong Court of Appeal which confirmed that it had breached the territory’s code of conduct requiring it to act honestly, exercise due diligence and uphold market integrity, in respect of 2011 reports on a number of Chinese companies. The Hong Kong Securities and Futures Commission had reprimanded the rating agency and fined it $3m.

   United Kingdom

A former compliance officer with UBS bank was charged with insider dealing by passing sensitive information in 2013 and 2014. Fabiana Abdel-Malek faces five counts of insider dealing along with Walid Choucair, who traded on the information. Meanwhile HSBC bank was reported to be facing a fresh legal battle over allegations of manipulating foreign exchange markets which dated back to 2006. In a court filing, the ECU Group complained of suffering losses due to HSBC front running foreign exchange orders for the bank’s own benefit. The litigation followed findings of manipulation by HSBC and other banks in 2014.


The US House of Representatives approved a bill to remove federal bailout powers, ease requirements on banks and weaken the Consumer Financial Protection Bureau, measures which were all part of the Dodd-Frank Regulations. The bill ran to 600 pages of proposals, and has the support of President Trump, but commentators did not expect it to become law in its present form. The Congressional Budget Office estimated the changes would lower the federal government deficit by $24bn.

Topics covered by Better Regulation include
  • BRRD
  • Banking Structural Reform
  • Basel
  • Benchmarks Regulation
  • Brexit
  • Capital Markets Union
  • Capital Requirements Legislation
  • Central Securities Depositories Regulation
  • Credit Rating Agencies Regulation
  • Deposit Guarantee Schemes Directive
  • Dodd-Frank
  • EMIR
  • GDPR
  • Solvency II
  • Insurance Distribution Directive
  • Interchange Fees Regulation
  • Market Abuse/Insider Dealing
  • Markets in Financial Instruments Legislation
  • Money Laundering Directives
  • Money Market Funds Regulation
  • Mortgage Credit Directive
  • Payment Services Directive
  • PRIIPs Regulation
  • Prospectus Directive
  • Ring-fencing
  • Securities Financing Transactions Regulation
  • Securitisation Regulation
  • Senior Insurance Managers Regime
  • Senior Managers Regime
  • Undertakings for Collective Investment in Transferable Securities Directive