CUBE RegNews: 11th July

Eva Dauberton

Eva Dauberton

News Editor

FCA publishes final UK Listing Rules 

The Financial Conduct Authority (FCA) has issued policy statement (PS) 24/6, which includes the final UK Listing Rules (UK LR). The new UK LR introduces a simplified listing regime with a single category and streamlined eligibility for companies seeking to list their shares in the UK. These rules will come into force on 29 July 2024. 

Chancellor of the Exchequer Rachel Reeves stated, “These new rules represent a significant first step towards reinvigorating our capital markets, bringing the UK in line with international counterparts and ensuring we attract the most innovative companies to list here.” 

Some context 

As part of the broader review of the UK’s capital markets regulatory landscape, the FCA published consultation paper (CP) 23/10 in May 2023, proposing reforms to listing rules. 

On 20 December 2023, the FCA published detailed proposals in CP23/31. These proposals, aimed at addressing the sources of friction and inefficiency in the listing rules, with measures such as:

  • Replacing the ‘premium’ and 'standard’ listing segments with a new, consolidated, single category for commercial companies. 
  • Reshaping the significant transactions and related party transaction regime. 

Key takeaways 

The FCA's final position is broadly as consulted on in CP23/31, with certain amendments as set out in the lengthy PS. 

The key features of the new UK LR are as follows: 

  • The introduction of new listing categories such as Commercial Companies (Equity Shares) (ESCC), International Secondary Listings (Equity Shares), Transition (Equity Shares), and Shell Companies (Equity Shares). Existing issuers on the premium and standard listing segments will be automatically mapped to the relevant new listing categories. 
  • A single set of listing principles for all categories. 
  • Changes to the sponsor regime. 
  • Modifications in the requirements for material transactions with a focus on disclosure. 

Next steps 

The new UK LR will come into force on 29 July 2024, replacing the current Listing Rules sourcebook. Changes to the official list will start to appear from 26 July 2024. Applicants for the admission of securities that have made a complete submission to the FCA for an eligibility review for listing by 4:00 pm on 11 July 2024 will be treated as ‘in-flight applicants’ under the UK LR Instrument. 

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MiFIR review: ESMA launches new consultations 

The European Securities and Markets Authority (ESMA) has published a new set of public consultations to implement changes resulting from the review of the Markets in Financial Instruments Regulation (MiFIR). 

Some context 

The changes to MiFIR and the second Markets in Financial Instruments Directive (MiFID II) were published in the Official Journal of the EU on 8 March 2024. As a result, ESMA has been given the authority to develop various technical standards to specify certain provisions further. This consultation paper includes several mandates with a 12-month deadline and one with a 9-month deadline. 

Key takeaways 

This package includes the following proposals 

  • Amending the level 2 provisions specifying the requirements on equity transparency, including technical advice to the Commission and amendments to the regulatory technical standard (RTS) on equity transparency. 
  • A new implementing technical standard (ITS) for the notification of investment firms acting as Systematic Internalisers (SIs) to competent authorities. 
  • Amending the RTS specifying the volume cap. 
  • Amending the RTS specifying organisational requirements for trading venues to integrate the new empowerment on circuit breakers and reflecting the changes stemming from the Digital Operational Resilience Act (DORA). 
  • A new RTS on input/output data for the equity consolidated tape providers (CTPs). 
  • A proposal on flags for post-trade transparency for the transparency requirements for non-equity instruments, notably bonds. 

Next steps 

ESMA has requested feedback with various deadlines depending on the proposed amendment: 

  • 15 September 2024 for the technical advice (Section 3), RTS 1 (Section 4), the RTS on input/output data for shares and ETFs CTP (Section 8) and the flags under RTS 2.  
  • 15 October 2024 for the SI ITS (Section 5), RTS 3 (Section 6) and RTS 7 (Section 7).  

ESMA will prepare a final report and aims to submit the technical advice and draft technical standards for RTS 1, the whole input/output data RTS, and RTS 2 (including the flags) in December 2024 and the remaining mandates in March 2025. 

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APRA and ASIC publish updated information on FAR 

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have released a package including updated information on the implementation of the Financial Accountability Regime (FAR) to help insurers and superannuation trustees.  

Some context  

The FAR establishes a robust framework for responsibility and accountability, aiming to enhance risk and governance cultures within Australia’s financial institutions. The regime came into effect for authorised deposit-taking institutions (ADIs) and their authorised non-operating holding companies (NOHCs) on 15 March 2024. It will apply to insurance entities, their licensed NOHCs, and superannuation trustees from 15 March 2025.  

Key takeaways  

The package includes:  

  • An updated information paper outlining obligations under the FAR to assist entities and their accountable persons in understanding and complying with their obligations  
  • An updated accountability statement guide and template to aid entities subject to the FAR in preparing accountability statements.  
  • Reporting form instructions to facilitate insurance and superannuation entities in providing necessary information to ASIC and APRA. 


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CFPB proposes new rules to enhance mortgage assistance process 

The Consumer Financial Protection Bureau (CFPB) has issued proposed rules to simplify and enhance the process for homeowners seeking mortgage assistance. 

Some context 

The current regulations governing mortgage servicing took effect in 2014. They were developed in response to the severe foreclosure crisis between 2006 and 2014. In 2022, the CFPB sought public input on improving protections for borrowers facing financial hardships, taking into account feedback from both the mortgage industry and borrower advocates, who suggested a simpler, more flexible approach to mortgage assistance would be beneficial. 

Key takeaways 

If implemented, the proposed rules would: 

  • Eliminate dual tracking and limit fees. 
  • Streamline paperwork requirements to reduce delays. 
  • Improve borrower-servicer communications 
  • Ensure borrowers receive critical information in languages they understand. 

The new provisions would not apply to small service providers.   

Next steps 

The deadline for feedback is 9 September 2024. 

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Federal agencies impose $135.6 million fines on Citigroup for non-compliance 

The Office of the Comptroller of the Currency (OCC) has fined Citibank $75 million for violating a cease and desist order issued on 7 October 2020. Simultaneously, the Federal Reserve Board (Board) has fined Citigroup, the bank’s holding company, $60.6 million for the same violation. 

The cease and desist order mandated the firms to improve data quality management programs, including data governance, and to implement and maintain compensating controls across the organisation until the required enhancements were in place and functioning properly. 

Both the OCC and the Board stated that the firms failed to meet the remediation milestones outlined in the 2020 order and did not make adequate and sustainable progress towards compliance. The combined penalties amount to approximately $135.6 million. 

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CBI Director discusses the tapestry of regulatory change initiatives for investment funds 

At a recent McCann Fitzgerald event, Patricia Dunne, the Director of Securities and Markets Supervision at the Central Bank of Ireland (CBI), spoke about legislative and regulatory developments affecting the investment fund sector in Ireland. She highlighted several key initiatives, including the reviews of the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for Collective Investment in Transferable Securities Directive (UCITS). Dunne also mentioned the UCITS Eligible Assets Directive (EAD) review by the European Securities and Markets Authority (ESMA), the European Long-Term Investment Funds (ELTIF), and the Digital Operational Resilience Act (DORA). 


“The Central Bank recognises the importance of ESMA’s review of the UCITS Eligible Assets Directive.”  

Dunne emphasised the importance of ESMA’s review, stressing the need for high levels of investor protection and innovation. She also emphasised the importance of considering asset eligibility and overall product suitability equally. 

ELTIF 2.0: upcoming open-ended ELTIF RTS 

“The approach we have taken from an authorisation perspective provides a proportionate and appropriate framework for authorisation of these funds and we have seen a steady flow of engagement with the Central Bank.” 

She discussed the introduction of ELTIF 2.0, the revised European long-term investment funds framework. She mentioned that the CBI has only authorised closed-ended ELTIFs, but they are awaiting final EU Regulatory Technical Standards for the establishment of open-ended ELTIFs. Dunne assured that the CBI is available to discuss the structure of an open-ended ELTIF. 

AIFMD review: loan origination 

“It is a topic that the Central Bank strongly advocated for in the lead up to the AIFMD Review and we are pleased with the outcome.” 

Dunne mentioned ongoing discussions with industry representatives about new AIFMD provisions for loan-originating funds, as well as the CBI's intention to align its rules with proposed AIFMD revisions. She highlighted the importance of a robust environment with strong oversight in lending activities and announced a formal consultation scheduled for Q4 of this year to address these changes. 

AIFMD and UCITS Directives: regulatory changes for management companies 

“Amendments to these frameworks are not only attuned to international areas of focus, but they also recognise the need for updates and harmonisation where possible.” 

Dunne discussed the regulatory changes for management companies, emphasising the developments outlined by the AIFMD and UCITS Directive Reviews, as well as the 2024 European Financial Stability and Integration Review. She underscored the need to build resilience in the sector and the tools that can be employed to mitigate the effects of shocks and increase resilience. These tools include enhanced reporting for AIFMs, which will also be extended to UCITS management companies, and a harmonised set of liquidity management tools introduced by the AIFMD and UCITS Directive reviews. 

She also stressed that reporting is an important topic for the Irish fund sector and a significant component of the revisions to the AIFMD and UCITS Directive Reviews. Specifically, providing information on delegation arrangements related to portfolio and risk management will be crucial throughout the life cycle of a management company. The CBI is currently conducting thematic work in this specific area. 

DORA, AIFMD and UCITS Directives: implementation plans 

“There is naturally a body of work to do to achieve smooth implementation of ongoing regulatory initiatives.” 

Dunne explained that in the context of the AIFMD and UCITS Directives, the CBI is actively working on implementation plans to align with the revised Directives. They are heavily involved in the ESMA workstreams to develop Level 2 measures. She noted that ESMA recently published a consultation on liquidity management techniques, and the CBI plans to engage with the industry through a public consultation on regulatory requirements later this year. 

Regarding the DORA, effective from January 2025, Dunne stated that the expectations placed on firms by DORA are not new and have been in place for quite some time under various forms. She added that the CBI has established a dedicated team to collaborate with internal and external stakeholders to ensure readiness to supervise all sectors for compliance with DORA obligations by January next year. 

In conclusion, Dunne emphasised the focus on achieving regulatory objectives to provide investors with a choice of products that fulfill their investment needs while supporting private finance and the ambitions of the capital markets union. 

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Singapore banks to phase out OTPs for digital token users 

The Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) have announced that major retail banks in Singapore will phase out the use of One-Time Passwords (OTPs) for bank account logins by customers who use digital tokens over the next three months. 

This move aims to enhance security and protect customers against phishing attempts. 

Some context 

OTPs were introduced as a multi-factor authentication method to enhance online security. However, technological advancements and more sophisticated social engineering tactics have made it easier for scammers to phish for OTPs. The new measure will strengthen the authentication process, making it more challenging for scammers to access a customer’s account and funds fraudulently. 

Key takeaways 

Customers who have activated their digital tokens on their mobile devices will now be required to use their digital tokens for bank account logins via the browser or mobile banking app, eliminating the need for an OTP that could be compromised. Customers who have not yet activated their digital tokens are strongly encouraged to do so to reduce the risk of falling victim to phishing attacks. 

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