1. Regulatory News – January 2019
1
Final report on the tick size regime
The minimum tick size, under RTS 11, applicable to shares and depositary receipts is calibrated to
the ADNT on the most liquid market in the EU. While this metric appears to be an adequate liquidity
indicator for the vast majority of equity instruments, experience since MiFID II’s implementation
shows that it may not be suited to instruments where the most liquid venue is located outside the EU.
In those cases, the mandatory tick size may be calculated only based on a small subset of the global
trading activity and, as a result, EU trading venues may be subject to minimum tick sizes that are
larger than those applicable on non-EU venues.
Implementing Regulations under SFTR amending EMIR
European Commission adopted the Implementing Regulations under SFTR (Securities financing
transaction reporting) which also impact EMIR
• Commission Implementing Regulation implementing standards with regard to the reports
on securities financing transactions to trade repositories in accordance with the SFTR and
amending regulation with regard to the use of reporting codes in the reporting of derivative
contracts; and
• Commission Implementing Regulation implementing technical standards with regard to the
procedures and forms for exchange of information on sanctions, measures and investigations
in accordance with the SFTR
ESAs publish joint EMIR STS standards
These standards provide a specific treatment for simple, transparent and standardised (STS)
securitisation to ensure a level playing field with covered bonds. They are required for the proper
implementation of the European Market Infrastructure Regulation (EMIR) and will amend the current
regulation on the clearing obligation and risk mitigation techniques on OTC derivatives not cleared
by central counterparties (CCPs).
Q&A update : Benchmark Regulation
The updated BMR Q&As provide new clarifications regarding the following topic:
Methodology and input data: parameters to be considered as input data
The purpose of these Q&As is to promote common supervisory approaches and practices in the
application of BMR. It aims at providing investors and other market participants with clarifications on
the applicable requirements. ESMA will periodically review these Q&As and update them where
required.
Q&A Update: Credit Rating Agencies Regulation
The Credit Rating Agencies Regulation (CRAR) requires a CRA to immediately notify errors in its
rating methodologies or in their application to ESMA and all affected rated entities. This Q&A clarifies
ESMA’s view as to what constitutes an error within the meaning of Article 8(7) of CRAR.

2. Regulatory News – January 2019
2
Consultation to amend Regulation on benchmarking of internal models
Based on the feedback received from the recent interactions with institutions, the EBA's proposals
included in this Consultation Paper aim at facilitating the reporting for the credit risk portfolios. The
simplification of the structure of the data collection as well as the reduction of the number of portfolios
is expected to enhance the data quality. Furthermore, the objective is to keep the structure of the
portfolios stable for the 2021 exercise.
The main changes in the definitions of the credit risk portfolios are (1) a reduction in the number of
portfolios to be submitted, (2) a simplification and alignment in the structure of the portfolios to be
submitted and (3) a number of technical refinements, such as the inclusion of covered bonds, an
update of the Indexed loan-to-value range (ILTV), Statistical Classification of Economic Activities of
the EU (NACE) and Credit Risk Mitigation (CRM) splits, and the introduction of a sub sample of large
corporates with revenue below or above 500m€.
Consultation on measures to promote sustainability in EU capital markets
The European Securities and Markets Authority (ESMA) has today launched three public
consultations on sustainable finance initiatives to support the European Commission’s (EC)
Sustainability Action Plan in the areas of securities trading, investment funds and credit rating
agencies (CRAs).
Consultation on integrating sustainability risks and factors in MiFID II
In MiFID II , in UCITS and AIFMD
Proposal to amend bilateral margin requirements to assist Brexit
preparations for OTC derivative contracts
In the context of the on-going withdrawal negotiations between the EU and the UK, and to address
the situation where a UK counterparty may no longer be able to provide certain services across the
EU, counterparties in the EU may want to novate their OTC derivative contracts by replacing the UK
counterparty with an EU counterparty. However, by doing this, they may trigger the clearing obligation
or the bilateral margin requirements for these contracts, therefore facing costs that were not
accounted for when the contract was originally entered into.
Transparency Directive: Delegated Regulation on single reporting format.
The European Commission published a draft Delegated Regulation supplementing the
Transparency Directive (as amended) with regard to regulatory technical standards on the
specification of a single electronic reporting format. The draft Delegated Regulation specifies the
single electronic reporting format, as referred to in Article 4(7) of the Transparency Directive (as
amended), to be used for the preparation of annual financial reports by issuers from 1 January 2020.
The Delegated Regulation enters into force on the twentieth day following its publication in the Official
Journal of the EU.
EBA Calls for more action by financial institutions in their Brexit related
Communication to customers

3. Regulatory News – January 2019
3
Political agreement reached on EU Banking Package
“On Tuesday, two deals were concluded on banks’ resilience and on a clear roadmap for banks to
deal with losses. A deal to amend the EU’s prudential requirements should help to boost the EU
economy by increasing lending capacity and creating deeper and more liquid capital markets.”
Insufficient knowledge at investment firms about money laundering and
terrorist financing
The Netherlands Authority for the Financial Markets published the outcome of its investigation into
investment firms and their compliance with the Act on the prevention of money laundering and
financing of terrorism and the Sanctions Act 1977.
ESMA Risk Dashboard
“With the exception of bank shares, equity markets increased slightly over the course of 3Q18.
However, market nervousness and sensitivity are rising, as evidenced by the global equity market
sell-off at the beginning of 4Q18. Sovereign bond market volatility remained high, mainly driven by
budget plans of Italy.
Market risk thus remains very high, due also to generally high market valuations coupled with
market uncertainty as the period of ultra-low interest rates is drawing to a close. Our outlook for
liquidity, contagion and credit risk remains unchanged. Operational risk remains elevated with a
negative outlook, as cyber threats and Brexit-related risks to business operations continues to be
a major concern.“
Annual report on risks and vulnerabilities in the EU banking sector
EBA sees further improvements in EU banks resilience but highlights challenges connected to
profitability, funding and operational risk

4. Regulatory News – January 2019
4
Wholesale banks and asset management cyber multi-firm review
findings
In late 2017 and early 2018 FCA carried out a cyber multi-firm review with a sample of 20 firms in the
asset management and wholesale banking sectors
Cyber-resilience: range of practices
The report:
• provides a high-level overview of current approaches taken by jurisdictions to issue cyber-
resilience guidance standards;
• assesses the range of practices regarding governance arrangements for cyber-resilience;
• focuses on current approaches on cyber-risk management, testing and incident response
and recovery;
• explores the various types of communications and information-sharing; and
• analyses expectations and practices related to interconnections with third-party services
provides in the context of cyber-resilience.