Markets and Securities Unit

29.04.15

Markets and Securities Unit

By bringing together buyers and sellers in financial assets such as stocks, bonds, commodities, derivatives and currencies, the Financial Markets provide access to capital, aids effective price discovery and assists with the transfer of risk and liquidity.

The Markets and Securities Unit seeks to best represent Ireland’s interests during EU negotiations to ensure that the legislative framework in place for financial markets promotes stability, market integrity and investor protection while also facilitating competition and innovation.

The following are the main EU financial services files which the Markets and Securities unit is responsible for:

Markets in Financial Instruments Directive (MiFID I) & Markets in Financial Instruments Regulation (MiFIR)

These proposals aim to strengthen the protection of investors by making financial markets more efficient, resilient and transparent. The new framework will also increase the supervisory powers of regulators and provide clear operating rules for all trading activities. The transposition deadline for MiFID and MiFIR is July 2016.

Regulation on OTC derivatives, central counterparties and trade repositories(commonly known as the European Markets Infrastructure Regulation, or EMIR)

EMIR provides for more stability, transparency and efficiency in OTC derivative markets. It is a G20 commitment and a key step in the efforts to establish a safer and sounder regulatory framework for the European financial markets.

Regulation on indices used as benchmarks in financial instruments and financial contracts (Benchmarks Regulation)

This proposal will cover all benchmarks that are used to reference financial instruments admitted to trading or traded on a regulated venue.The ultimate objective is to ensure the integrity of benchmarks.

Regulation on improving securities settlement in the European Union and on central securities depositories (CSDs) and amending Directive 98/26/EC (CSDR)

The purpose of this proposal is to bring more safety and efficiency to securities settlement in the EU. Settlement is an important process which ensures the exchange of securities against cash following a securities transaction. CSDs are systemically important institutions for the financial markets because they operate the infrastructures that enable the settlement of virtually all securities transactions.

Market Abuse Regulation and Criminal Sanctions for Market Abuse Directive (MAR &CSMAD)

The existing regime on market abuse is being replaced with a Regulation covering the administrative regime (including administrative sanctions) and supplemented by a Directive on criminal sanctions. The revised rules will strengthen and harmonise market abuse regimes across the EU, extend their scope to cover new trading platforms and OTC trading and provide for tougher sanctions.

Securities Financing Transaction (EU draft Regulation)

This proposal is for the Regulation on the reporting and transparency of securities financing transactions (SFTs). SFTs consist of any transaction that uses assets belonging to the counterparty to generate financing means (for example repo transactions and buy/sell back transactions). These techniques are used by almost all actors in the financial system (banks, securities dealers, insurance companies, pension funds or investment funds). They provide additional market liquidity, facilitate funding of market participants, support price discovery of tradable assets and enable monetary financing operations of central banks. However, they can also lead to credit creation via maturity and liquidity transformation and allow market participants to build large exposures to each other and for this reason strengthening transparency and data availability is essential, and this is what the proposal aims to do.

Capital Markets Union (CMU)

Capital Markets Union (CMU) is set to be a high profile initiative scheduled to run from 2015 to 2019. The context is that the traditional dominance of EU banks in financing the economy – in contrast to the US – is seen as imbalanced. This leads to an EU policy focus on the potential to source additional financing for the economy from capital markets.

CMU, through a wide ranging series of initiatives, aims to make EU capital markets more integrated, liquid and competitive. Its ultimate purpose is to increase resilience of the financial system and provide greater opportunities for SMEs and longer term infrastructure projects. From an Irish perspective CMU could serve to increase issuer and investor access to more liquid European markets.

Ireland has been actively engaging in preparing for this initiative, both at a domestic and an EU level. Following on from the publication of a green paper on Capital Markets Union in February 2015, the European Commission will produce an action plan later in the year and this will set out the various stands of the CMU initiative.

 

Useful links

Link to the European Commission Financial Services and Capital Markets site:

http://ec.europa.eu/internal_market/top_layer/financial_capital/index_en.htm

Links to the European Parliament sites on the following files:

MiFID II/MiFIR:

http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2011/0298(COD)&l=en

Benchmarks Regulation:

http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2013/0314(COD)&l=en

CSDR:

http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2012/0029(COD)

EMIR:

http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2010/0250(COD)

MAR and CSMAD:

http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2011/0295(COD)

Link to the Central Bank of Ireland Securities Market Regulation site:

http://www.centralbank.ie/regulation/securities-markets/Pages/default.aspx

Link to the European Securities and Markets Authority (ESMA):

http://www.esma.europa.eu/#

 [AM1]This should be the start of a second new page / subsection, linked under ‘Financial Services Division 2 EU’ (Section above)