The Coronavirus pandemic continued to spread around the world in March. The number of confirmed cases will soon cross the 1 million mark. Meanwhile, markets saw the return of volatility, with the CBOE Volatility Index (VIX) tripling in the month. The Dow Jones Industrial Average had its worst and best single-day performance in history too. As this happened, regulators were working behind the scenes to ensure that markets remained safe for both retail and institutional investors. As an agency specialising in financial marketing, our team has rounded up the top regulation changes from the past month. Here’s our Regulations Roundup – April 2020.
ESMA guidance on financial reporting
The COVID-19 pandemic has led to disruption of many companies. Many in Europe had their employees working from home. As a result, since the quarter has ended, some companies may find it impossible to release their financial reports on time. ESMA released guidance asking the National Competent Authorities (NCAs) to work with companies who may need to delay the publication of financial reports beyond a deadline.
ESMA also published guidance on accounting implications for the economic relief or stimulus that was adopted by many European economies. The guidelines were in line with another statement by the European Banking Authority. In general, the guidelines are about how loan default is classified, accounting treatment, and the identification of exposures.
In addition, as markets fell in Europe, a number of countries banned short selling. This is a trading practice where people profit when an asset fall. ESMA responded to these countries by issuing positive reports and its assessment.
FCA guidance on financial statements
As the COVID-19 pandemic spread, the Financial Conduct Authority (FCA) asked companies to delay the publication of these reports by about two weeks. In the statement, the authority said that the operating environment was changing and that companies may report inaccurate information. Additionally, the agency provided relief to companies that were having problems releasing their information. The agency said:
The FCA believes the practice of issuing preliminary financial statements in advance of the full audited financial statements is adding unnecessarily to the pressure on companies and the audit profession at this moment.
SEC waives deadlines on reporting
As with the FCA and ESMA, the Fed announced that it was extending the conditional exemptions from reporting and proxy delivery for public companies and investment advisors. The agency provided these companies with a 45-day extension to issue these disclosures. Another key point was that the SEC amended exemptions from investment advisor registration for people advising rural business investment companies. The goal of this change was to make it easy for qualified financial advisors to do business in rural America.
AFSA changes bankruptcy law
The COVID-19 pandemic will have serious implications to Australians, especially those whose jobs will end. For this reason, AFSA changed the law to provide relief to affected people. The new guidelines increased the minimum amount that can trigger bankruptcy from $5,000 to $20,000. Also, it extended the time an individual has to respond to bankruptcy notice from 21 days to 6 months. It also introduced a temporary debt protection to individuals.
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