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A-Team Insight Briefs

DSB Expands Regional Expertise of Technology Advisory Committee Working on UPI

The Derivatives Service Bureau (DSB) has fulfilled plans to expand regional representation of its Technology Advisory Committee (TAC) working on the development of the Unique Product Identifier (UPI). A new two-year term of the TAC begins today, under the auspices of new chair Chris Pulsifer, a software development manager from Bloomberg, and including six members based in Asia, one in the Middle East and North Africa region, 10 in North America, and 13 in Europe. The UPI has, to date, been acknowledged by regulators including the CFTC and ESMA. More are expected to follow in coming months.

Morgan Stanley Slapped with $10m in Fines

The US Securities and Exchange Commission has issued Morgan Stanley with a $5 million penalty, citing violations of Regulation SHO, the regulation governing short sales. “Morgan Stanley hedged synthetic exposure to swaps by purchasing or selling the securities referenced in the swaps, and it separated its hedges into two aggregation units—one holding only long positions, and the other holding only short positions,” said the SEC. Morgan Stanley was therefore able to sell its hedges on the long swaps and mark them as “long” sales without concern for Reg SHO’s short sale requirements.

Morgan Stanley neither admitted nor denied the findings, but has accepted the fine and consented to a cease-and-desist order. Separately, the bank also this week received a $5 milion fine from the Commodity Futures Trading Commission for failing to comply with swap data reporting obligations.

ESMA Appoints New Chair of CCP Supervisory Committee

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has formally appointed Klaus Löber as Chair of the CCP Supervisory Committee and Nicoletta Giusto and Froukelien Wendt as Independent Members. “The new organisational set-up of the CCP Supervisory Committee will strengthen ESMA’s role in enhancing the safety and efficiency of CCPs both in the EU and in third countries,” said Chairman Steven Maijoor.

The Chair and Independent Members will play an important role in light of the additional regulatory powers granted to ESMA, regarding the supervision of third country CCPs and convergence in the supervision of EU CCPs.

ESMA to Recognise Three UK CCPs Post Brexit

In the latest Brexit news, ESMA has confirmed that the three central counterparties (CCPs) in the UK – ICE Clear Europe, LCH and LME Clear – will be recognised as third country CCPs eligible to provide services in the EU after December 31, 2020. The EC has adopted an equivalence decision that will make the UK CCPs equivalent for 18 months. The equivalence decision is the first of several conditions to be met for recognising a third country CCP under EMIR, including the establishment of cooperation arrangements with home supervisors.

AML Specialist SmartSearch Slams FinCen Leak

John Dobson, CEO at AML experts SmartSearch, has expressed outrage at the revelations contained in the FinCEN files of criminal cash being moved around by the world’s biggest financial institutions, including the UK’s HSBC. “This is nothing short of a betrayal for all those thousands of businesses doing their bit in the global fight against money laundering and financial fraud,” he said.

“If these documents can be believed, one of the world’s biggest banks has effectively turned a blind eye and enabled criminals to take full advantage. These revelations couldn’t have come at a worse time of course, with so many businesses reeling from the ongoing affects of the Covid 19 pandemic, and the extra security threats that has created. Events like these are hugely damaging for the banks involved but also for all the other banks who are trying to stamp out money laundering, and it cannot go unpunished.”

AxiomSL Expands in Europe with New Confinale Partnership

AxiomSL has partnered with Confinale, an IT consulting and software development company specializing in the banking sector, in a move intended to expand the firm’s presence in Switzerland, Germany and Liechtenstein. The collaboration will provide clients including the Swiss National Bank, Financial Markets Authority Liechtenstein, and Bank Centrale du Luxembourg with AxiomSL’s end-to-end risk and regulatory reporting solutions via Confinale’s integration ecosystem. The announcement comes just a few days after VP Bank, one of Liechtenstein’s largest banks, selected AxiomSL’s ControllerView platform as the foundation for compliance across its key centres of operation: Liechtenstein, Luxembourg, Singapore and Switzerland.

SEC Approves Final Rules on Proxy Advisors

The US Securities and Exchange Commission has voted to adopt new rules requiring proxy advisors to provide companies with access to their voting advice at the same time as shareholders, following a protracted battle over the regulation of investment firms that has spanned several years. According to the SEC the new rules – which also tighten disclosure requirements for proxy advisors – will ensure that shareholders have “reasonable and timely access to more transparent, accurate and complete information on which to make voting decisions.”

SIX Launches Fully Delegated SFTR Reporting for Swiss Repo Market

The Swiss Stock Exchange’s SFTR reporting services is now live in synchronisation with the introduction of the SFTR regulation. Over 170 clients stand to benefit from this offering. The Swiss Stock Exchange automates the way it provides Unique Transaction Identifiers (UTI) creating a scale offering featuring SFTR-compliant and fully delegated reporting. For the delegated reporting, SIX has partnered with UnaVista, London Stock Exchange Group’s trade repository.

As SFTR is a European regulation, SIX partnered with Comyno, a consultancy firm based in Frankfurt. 

SmartSearch Launches US Operations

UK-based anti-money-laundering (AML) firm SmartSearch on July 14 launched operations in the US, following a period of sustained growth. According to CEO John Dobson: “We have developed a bespoke product for the American market so that US firms using SmartSearch have the same absolute confidence as those in the UK, that their AML checks are up-to-date and fully compliant with relevant legislation at all times.

The firm’s KYC and AML platform enables clients to perform full electronic ID verification and screening in just two seconds, and provides ongoing monitoring to alert users to any change in a client’s status. The platform has also recently incorporated biometric facial recognition for additional security, and promises “well-advanced plans” for further enhancements.

TriOptima Extends Collaboration with DTCC on SFTR

TriOptima, an infrastructure service that helps to lower costs and to mitigate risk in OTC derivatives markets, has extended data connectivity between The Depository Trust & Clearing Corporation (DTCC) Global Trade Repository (GTR) service and TriOptima’s triResolve platform to help market participants validate their reported securities financing transactions as they prepare for SFTR compliance. Through the initiative, firms are able to compare and align DTCC GTR trade records with their reported data fields in triResolve, allowing them to identify and address any discrepancies, as well as amend reporting faster.

Under SFTR, set to come into effect for phase-one and two reporting on July 13, market participants are fully responsible for the accuracy of information when reporting their repo and securities lending transactions to trade repositories either directly, or through a delegated third party.