COVID-19: Ongoing Regulatory Reporting Obligations for firms


First published 19/03/2020, Last Updated 22/05/2020

As circumstances regarding the spread of the COVID-19 unfold and firms face increasing market uncertainty, they must also be mindful of the ongoing and continually developing regulatory reporting requirements being placed on them:

Laven Webinar: Compliance and Operational Risk in a time of uncertainty

ESMA moves shorting disclosure reporting threshold

On 16th March 2020, ESMA moved the short disclosure reporting threshold to 0.10% from 0.20%. This temporary measure now requires “holders of net short positions in shares traded on a EU regulated market to notify the relevant national competent authority (NCA) if the position reaches or exceeds 0.1% of the issued share capital after the entry into force of the decision.” 

Firms that may not previously have been required to report to NCAs, or have not made such reports to NCAs for some time should, therefore, remind themselves of these obligations and should familiarise themselves with the relevant jurisdictions reporting processes.

A full list of all of each jurisdiction’s regulatory SSR reporting requirement to the relevant NCAs can be found on the ESMA library.

For more information regarding this topic please see the ESMA release (16 March 2020).

SFTR Delayed until July 2020

On 19th March 2019 ESMA issued a statement announcing that the implementation of the Securities Financing Transactions Regulation will be delayed for three months from the initial date of 13th  April 2020. This is in order to “mitigate the impact of COVID-19 on the EU financial markets”.

Competent authorities will now not be obligated to supervise entities subject to Securities Finance Transactions until 13 July 2020.

Expiration of short selling bans by Austrian FMA, Belgium FSMA, French AMF, Greek HCMC and Spanish CNMV and termination of short-selling ban by Italian CONSOB​​

The FCA would like to draw the industry’s attention to the announcements made on 18 May 2020, by the following national competent authorities of the expiration of the restrictions on short selling and similar transactions:

The FCA also notes the announcement on 18 May 2020, by the Commissione Nazionale per le Società e la Borsa (CONSOB) of Italy of the early termination of the restrictions that were due to expire on 18 June 2020.

The Depreciating Reporting requirement

The Depreciating Reporting requirement, also known as ‘the 10%’ rule which was introduced by MiFID II requires firms who provide investment management services to clients to send notifications to such clients (including both those categorised as retail and professional) when the total value of their portfolio depreciates by 10%. This is measured from the start of the most recent reporting period and then by multiples of 10% thereafter.

Such notifications must be made, “No later than the end of the business day in which the threshold is exceeded”. Discretionary management firms must, therefore, ensure that they have the correct data channels necessary in order to notify not only their clients but that information is available to be provided to underlying clients in a timely manner.

UK schools close

The UK Government has closed schools for all children other than those with at least one parent who is a ‘Key Worker’. This definition includes “staff needed for essential financial services provision (including but not limited to workers in banks, building societies and financial market infrastructure)”.

The 2020 Stewardship Code

On 24 October 2019, the FRC published the 2020 Stewardship Code (the “2020 Code”), which took effect from 1 January 2020 and applies to firms which, “manage assets on behalf of institutional shareholders such as pension funds, insurance companies, investment trusts, and other collective investment vehicles.”

While the code itself is voluntary, FCA authorised asset managers are required under the COBS rules to disclose whether, and if so how, they comply with it. This will usually take the form of a statement on the firm’s website.

FCA delays open consultation papers

Yesterday, the FCA released the following statement outlining that certain open consultation papers will be delayed until at least 1 October 2020.

Guidance for Mortgage Providers taking part in the Coronavirus Business Interruption Loan Scheme. 

The FCA released a statement outlining its new guidance for mortgage providers and for lenders taking part in the Coronavirus Business Interruption Loan Scheme.

They have also set out their expectation for general insurance firms during the coronavirus (Covid-19) pandemic and that certain open consultation papers will be delayed until at least 1 October 2020.

ESMA Calls for Transparency on COVID-19 Effects in Half-Yearly Financial Reports

The European Securities and Markets Authority (ESMA), the EU Securities Markets regulator, has published a Public Statement addressing the implications of the COVID-19 pandemic on the half-yearly financial reports of listed issuers.

The Public Statement provides recommendations on areas of focus identified by ESMA and highlights:

The importance of providing relevant and reliable information, which may require issuers to make use of the time allowed by national law to publish half-yearly financial reports without undue delay; and
The importance of updating the information included in the latest annual accounts to adequately inform stakeholders of the impacts of COVID-19, in particular in relation to significant uncertainties and risks, going concern, impairment of non-financial assets and presentation in the statement of profit or loss; and
The need for entity-specific information on the past and expected future impact of COVID-19 on the strategic orientation and targets, operations, performance of issuers as well as any mitigating actions put in place to address the effects of the pandemic.

Period to cover absent Senior Managers extended due to COVID-19​​

The FCA has extended the maximum period firms can arrange cover for a Senior Manager without being approved, from 12 weeks to 36 weeks, in a consecutive 12-month period.

The modification by consent to rule SUP10.3.13R is available to all solo regulated firms. It aims to provide flexibility to firms managing their governance arrangements during the coronavirus pandemic.

It also allows firms to allocate an absent Senior Manager’s prescribed responsibilities to the individual covering the role (a modification to SYSC 24.1.2).

Firms can use the modification by consent if, for example, a Senior Manager is absent because of coronavirus, or recruitment to replace a Senior Manager is delayed due to the coronavirus pandemic.

Firms can apply for the modification by consent as a precautionary measure, in advance of actually needing it.

The modification by consent will take effect from the date the firm applies for it and will end on 30 April 2021.

For further information, to apply to take advantage of this modification by consent, and for a list of firms that have applied visit click here.

FCA’s national and international response to coronavirus (COVID-19) and Brexit

A speech delivered by Nausicaa Delfas, Executive Director of International, at Deloitte Annual Conduct Risk Conference webinar.

Some highlights include:

  • In response to the pandemic, the FCA has been working with partners nationally and internationally to keep markets open and orderly, help firms continue to operate, protect consumers and small businesses, and to maintain high standards of conduct.
  • It will be important to get the post-crisis recovery right and to leverage off the experience of working through the pandemic.
  • We continue to prepare for the end of the Brexit transition period. Working closely with the Treasury and the Bank of England, we are doing whatever we can within our remit to prepare for a range of scenarios, and ensure as smooth a transition as possible.
  • Firms should continue to consider what actions they need to take to be ready for the end of the transition period, and what this will mean for their customers.

How can Laven help

At Laven, our consultants are on hand to help identify the actions your firm needs to take to ensure you are compliant and aware of all the risks outlined in this update. Whether this is through assisting with new policies and procedures that need to be put in place or providing online training for staff to make them fully aware of the regulatory burden.

Laven has also built Laven Tech, a unique Regulatory Technology (RegTech) solution that leverages advanced technology combined with our vast subject matter expertise. Our RegTech solution is designed to assist fund managers, service providers and investors to meet today’s growing demands.

If you would like to find out more: 

Regulatory Hosting

Laven offers a UK regulatory hosting platform which provides clients with the opportunity to conduct regulated activities as an Appointed Representative (AR).


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