The document outlines regulatory updates and guidelines from March 2018, focusing on MIFID II, EMIR, and PSD2, among other topics. It includes new Q&A regarding systematic internalizers, enhanced due diligence measures for high-risk third countries in light of Brexit, and updates on sustainable finance recommendations. Additionally, it highlights ESMA's supervisory focus areas, including data, Brexit implications, and cyber security for the coming year.

1. Regulatory News – Mars 2018
For internalu se only
1
Q&A Update : MiFID II market structure and transparency
The Q&A includes new Q&As on the new SI regime, including:
- the level at which the firm must perform the calculation
- which transactions should be exempted from, and included in, the calculation
- at which level of asset class the calculation should be performed for derivatives, bonds
and structured finance products; and
- how SIs in non-equity instruments can comply with some of their quoting obligations.
ESMA has also updated its Q&A document on market structures with new questions.
Publication of data for the Systematic internalizer calculations.
ESMA has published the total number of trades and total volume over the period July-December
2018 for the purpose of the systematic internaliser (SI) calculations for 16,690 equity and
equity-like instruments and for 417,288 bonds.
Opinion and Q&A on disclosure standards under securitization regulation
ESMA has expanded the ability for reporting entities to use the ‘No Data’ options in the
respective disclosure templates, in particular in the templates for asset-back commercial paper
securitization.
ESMA has also adjusted the content of certain fields in the templates, where it considered that
this could more appropriately address the EC’s request. ESMA has also clarified the templates
to be used to provide any inside information as well as information on significant events
affecting the securitization.
Statement regarding transaction reporting in the case of no deal Brexit
- Reporting by CCPs and counterparties,
- Reconciliation and recordkeeping by trade reporsitories
- Access by EU27 authorities
- Portability and aggregation by trade repositories.
Q&A Update on EMIR
The amendments to the existing TR Q&A 34 on Contracts with no maturity date confirms that
counterparties may report a derivative with Action Type “P” if the derivative is included in a
position on the same day that it is reported.
The amendments to the existing TR Q&A 38 further clarifies when reports should be submitted
with Action Type “N” and when with Action Type “P” in relation to reporting derivatives that
are terminated before the reporting deadline.

2. Regulatory News – Mars 2018
For internalu se only
2
Guidelines on supervisory reporting for credit rating agencies
• Differentiated reporting calendars for entities depending on required level of
supervisory engagement
• Individual reporting instructions for each reporting item which have been elaborated
and expanded in areas where ESMA has identified a supervisory need
• Standardising reporting templates for specific reporting items.
IOSCO consults on sustainable finance recommendations
Based on the IOSCO’s Growth and Emerging Markets Committee (GEMC), the consultation
proposes the following recommendations:
- Integration by issuers and regulated entities of ESG-specific issues in their overall risk
appetite and governance, investment analysis, strategies and overall governance of
institutional investors
- ESG-specific disclosures and reporting
- Definition and taxonomy of sustainable instruments
- Specific requirements regarding sustainable instruments
- Building capacity and expertise for ESG issues
Report following consultation concerning amendments to the PRIIPs KID
The ESAs have decided that it is not appropriate to propose substantive amendments to the
PRIIPs Delegated Regulation at this time. Instead, the ESAs have initiated work to provide input
to a review of PRIIPs Delegated Regulation during 2019. This Final Report sets out how the ESAs
plan to conduct this work.
At the same time, the ESAs are of the view that an immediate supervisory response is needed in
relation to the issues discussed in the CP concerning the expectations that the performance
scenarios may provide to retail investors and the current practices to address this issue.
EBA working group on APIs under PSD2
The working group on API under PSD2 (WG-API) will be chaired by the EBA and composed of
representatives from a variety of external stakeholders, which the EBA, the national authorities,
the EC and the ECB will consult to identify issues that emerge as the industry is preparing for
the application date of the RTS on strong customer authentication and common and secure
communication under PSD2 (RTS on SCA&CSC).
EBA publishes Handbook on valuation for purposes of resolution
The Handbook intends to bridge the resolution regulatory approach with the valuation
practices, by providing concrete guidance on the steps of the valuation process, on the valuation
criteria applicable to the various resolution tools.
EC adopts MLD4 Delegated Regulation on high risk third countries

3. Regulatory News – Mars 2018
For internalu se only
3
Firms are required to apply enhanced due diligence (EDD) measures when dealing with
financial operations involving customers and financial institutions from the high-risk third
countries identified by the Commission.
ESMA to recognise three UK CCPs in the event of a no-deal Brexit
ESMA announced that in the event of a no-deal Brexit, three central counterparties (CCPs)
established in the UK will be recognised to provide their services in the EU:
- LCH Limited,
- ICE Clear Europe Limited
- LME Clear Limited
ESMA has adopted these recognition decisions in order to limit the risk of disruption in central
clearing and to avoid any negative impact on the financial stability of the EU.
ESMA Supervision to focus on data, Brexit and cybersecurity in 2019
ESMA has published its 2019 Supervision Work Programme, which details the main areas of
focus for the upcoming year for ESMA’s supervision of Trade Repositories (TRs), Credit Rating
Agencies (CRAs), and the monitoring of third-country market infrastructures such as third-
country central clearing counterparties (TC-CCPs) and third-country Central Securities
Depositories (TC-CSDs).
Recommendations for the insurance sector in light of the Brexit
The recommendations include the following:
- Orderly run-off – NCAs should either introduce a legal mechanism to facilitate the
orderly run-off of UK insurance business. UK insurers should not write new contracts in
EU jurisdictions unless authorised to do so.
- Authorisation of third-country branches. NCAs must ensure that the conditions for
branches are fulfilled but may apply the principle of proportionality on the basis that the
UK was subject to Solvency II immediately before it left the EU.
- Portfolio transfers – NCAs should allow UK insurers to finalise portfolio transfers from
the UK to an EU undertaking provided that the transfer was ‘initiated’ before Brexit.
- Change in the habitual residence or establishment of the policyholder
- Distribution – UK intermediaries that wish to continue to distribute (re)insurance
products to European policyholders should be registered within the EU.
EIOPA sets out framework for identifying conduct risks
The purpose of the framework is to clarify drivers of conduct risk and their implications in the
emergence of consumer detriment.
The framework focuses on conduct risk throughout all stages of the product lifecycle, that is to
say, from the point before a contract enters into force through to the point when all obligations
under the contract have been satisfied. The risks set out in this framework cover the following
areas:
- Business model and management risks

4. Regulatory News – Mars 2018
For internalu se only
4
- Manufacturing risks
- Delivery risks
- Product management risks
ESMA publishes responses to its Consultations on Sustainable Finance
The European Securities and Markets Authority (ESMA) has published the responses received
to its Consultations on integrating sustainability risks and factors in MiFID II, and in the UCITS
Directive/AIFMD.
FCA calls on firms to act following review of costs and charges
disclosure in the investment sector
• Review on disclosure of costs by asset managers
• Review of disclosure of costs by retail intermediaries
• PRIIPs Feedback Statement
• Consultation on costs and charges disclosure
Responses to consultation on reporting guidelines under MMF regulation
draft guidelines on credit risk mitigation for institutions applying the IRB
approach with own estimates of LGD

5. Regulatory News – Mars 2018
For internalu se only
5
Guide to due diligence requirements for investing in a securitisation
position
The aim of the AMIC Securitisation Working Group is to help revive the securitisation market.
With this aim in mind, this guide to the SR due diligence requirements explains what the due-
diligence requirements are and additionally to provide potential investors with some practical
guidance as to what information should be obtained and where this information can be obtained
from.
Febelfin helps consumers make conscious choices for sustainable
investments
Febelfin has developed a quality standard for sustainable financial products, such as investment
funds. If these products meet the standard, they can obtain a sustainability label.
The ABBL is exploring a possibility of shared regulatory reporting in Luxembourg
Higher complexity, frequency and variety of reports, with more demand for granularity, often
creating data redundancies and inconsistencies, have forced banks to spend more on reporting
duties at the expense of other areas of commercial activity.
In this regard, establishing a shared regulatory reporting utility, platform, or a hub, could be a
potential solution also taking into consideration the emergence of new technologies. Key
components of mutual regulatory reporting processes are related to raw data processing on a
shared platform, joint definition of reporting models in accordance with regulation
requirements and a possibility of data multi-use covering the full spectrum of financial and
prudential reporting areas.
EFAMA statement on integrating sustainability risks and factors in the
UCITS Directive, AIFMD and MiFID I
EFAMA welcomes ESMA’s high-level-principles-based approach, which acknowledges the
principle of necessary proportionality based on the firms’ investment strategy and underlying
assets of each investment product.
It is, however, important to ensure consistent application of this high-level approach is
respected among all the current consultation processes when it comes to the integration of
sustainability risks and factors in the investment decision and distribution processes. This is
essential to ensure that all parts of the investment chain pull in the same direction.
Furthermore, a clear understanding of the notion of “sustainability risk” is critical. ”
Sustainability risk” should only be considered as a material risk to the financial performance of
an investment based on sustainability considerations and not as externality risks that may be
posed from investments to environment and society at large.
In this context, duties with regards to organizational, due diligence, conflicts of interest, risk
management and suitability requirements foreseen in the UCITS Directive, AIFMD and MiFID II
will also apply to sustainability risks, the same way they would apply for other risks. Therefore,
we do not see a merit in a further detailed description of those requirements regarding
sustainability risks.

6. Regulatory News – Mars 2018
For internalu se only
6
About Initio
Initio is a business consultancy firm
specialized in the Financial Industry.
Every day, our consultants contribute to the
successful delivery of business projects by
transferring their expertise to our client's
management and internal teams.
Initio operates in the financial sector,
servicing a wide range of clients. Our offering
is focused on business consultancy combined
with project methodology in order to assist
our clients on the whole project cycle.
We have offices in Brussels, Luxembourg &
Paris. Through close collaboration, we can
react swiftly on a wide scope of services in
order to meet client needs rapidly with the
highest industry standards.
www.initio.eu
Contact
Initio Belgium Initio Luxembourg
Boulevard Brand Whitlock, 60
Brussels, 1200
Belgium
+32 (0)2 669 77 44
brussels@initio.eu
153-155 rue du Kiem - Entrée D
8030, Strassen
Luxembourg
+352 277 239 1
luxembourg@initio.eu