Regulations Round Up – September 2020

Global markets continued to rise in August as investors reflected on lower interest rates, quantitative easing, and the rising optimism of a coronavirus deal. At the same time, regulators were hard at work dealing with some of the most complex behind-the-scenes issues. As a leading financial services agency, our team has rounded up the top regulation updates that happened in August and what lies ahead for September 2020.

ASIC eases measures for companies going public

In a statement in August, the Australian Securities and Investments Commission (ASIC) said that it was easing the process for companies going public. The goal of the new measures are to reduce regulatory costs and improving efficiency. The new relief measures focused on voluntary escrow agreements among issuers, professional underwriters, and lead managers.

It also focused on facilitating non-promotional communications to security holders and employees of companies going through an IPO. In a statement, Cathie Armour, a commissioner at ASIC said:

‘Given the significant costs involved in undertaking an IPO, our new legislative relief will help reduce the regulatory costs for companies considering going public, while upholding an orderly and transparent market’.

FCA focuses on mortgage borrowers

Early this year, as the coronavirus pandemic spread, the Financial Conduct Authority (FCA) came up with measures aimed at providing relief to mortgage borrowers and their companies. In August, the regulator came up with more measures to provide more support to people being affected by the pandemic.

In the statement, the regulator urged firms to use a range of different short and long-term support options to reflect  the conditions of their customers. For example, it recommended that firms should offer arrangements for no or reduced payments to enable their companies get back on track. It also urged firms to prioritise borrowers who were most at risk.

SEC expands who can invest in certain assets

In a statement in August, the Securities and Exchange Commission (SEC) said that it would allow more people to invest in hedge funds and private equity. Before the new rules, only accredited investors with at least $1 million in net assets or at least $200,000 in annual income would participate in the industry. These rules were made to protect individual investors from investing in assets they didn’t understand well. In a statement, Jay Clayton, the head of the SEC said:

“Individual investors who do not meet the wealth tests, but who clearly are financially sophisticated enough to understand the risks of participating in unregistered offerings, are denied the opportunity to invest in our private markets.”

ESMA postpones CSDR settlement discipline

In August, most ESMA commissioners were in their summer holiday. As such, the only major announcement the regulator made was about Commission Delegated Regulation (CSDR). These rules were supposed to go into effect in September this year. However, because of disruption caused by the virus, ESMA said that it would postpone the implementation to February next year. The statement said:

“Having regard to the severe impact of the COVID-19 pandemic on the overall implementation of regulatory and IT projects by CSDs and their participants as well as by other financial market infrastructures, it appears that it would be extremely difficult for these market stakeholders to comply with the requirements of the RTS on settlement discipline by 1 February 2021.”

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