Regulatory Strategy 2015

As one of Europe’s leading diversified exchange groups, London Stock Exchange Group is an active participant in international and domestic regulatory debates.

This page contains links to recent submissions and responses on behalf of the Group, or certain entitites within the Group.

September 2015

LSEG Response to HM Treasury consultation on the Transposition of the Markets in Financial Instruments Directive II

  • LSEG supports the proposal to maintain the UK’s current third country regime.
  • LSEG agrees that the activities undertaken by data reporting services are fundamentally different from investment activities which are covered by the general prohibition in FSMA
  • LSEG supports the need for a harmonised, post-trade tape to allow investors to understand the quality of their execution.  However, there is no real definition or description of what the Consolidated Tape should be, apart from all trades in all instruments subject to a 3 month allowance for trading on a new venue.
  • While the powers for the FCA to set position limits themselves seem to reflect the regime in MiFID, we suggest that the regulation could provide a more useful definition of “commodity derivative” instead of reciting the MiFID II definition.
  • Recognised Investment Exchange  (RIE)senior managers/directors should not be subject to the Approved Person regime (or, in the future, the Senior Managers and Certification Regime) as this is used for investment firms providing investment services to clients, as opposed to the operators of a trading venue/Regulated Market which are covered by the RIE regime.
  • “Close of working day” definition should be taken to mean 11:59 for the purpose of transaction reports.

LSEG response to the European Commission consultation on the review of the Prospectus Directive

  • LSEG welcomes the Review of the Prospectus Directive.  We believe that reforms to the PD will substantially increase the EU’s capital raising capabilities alongside necessary market reform such as reducing the fiscal bias against equity and developing SME financing ecosystems within member states. 
  • There should be no prospectus requirement of any kind (‘light’ or otherwise) for SME Growth Markets (SME-GM).
  • The prospectus requirement should be removed altogether for secondary issues, where these are fungible with existing securities.
  • The trigger threshold in Art.3 (2)(b) should be adjusted from 150 to 500 investors consistent with similar requirements under the US JOBS Act and allowing companies to enter public markets with a wider shareholder base.  Existing shareholders and employees should not be counted towards the calculation for the definition of a “public offer”.
  • The €100k retail/wholesale bond distinction should be abolished. The current threshold has resulted in limiting a company’s investor base to only the wholesale market.  This restricts liquidity in corporate debt and bars participating from retails investors, contrary to the objective of Capital Markets Union project.

August 2015

LSEG Response to the European Commission’s EMIR Review

  • Central bank liquidity should be provided to CCPs at all times, but banking authorisation should not be required for access.  CCP authorisation under EMIR should satisfy access requirements and EMIR references to CCP authorisation under the Capital Requirements Regulation 4 (CRD4) should be removed, as well as minor conforming amendments to CRD4.
  • The Commission should clarify and further develop CCP portfolio margining and regulatory capital rules.
  • Transaction reporting rules should not be changed but operational requirements developed further to meet objectives.  The Commission should create harmonised EMIR definitions of commodity, credit and currency derivatives.  ESMA should develop detailed position level reporting and public data aggregation rules.  Trade Repository (TR) supervisory fees should be further refined.

LCH.clearnet Group provided a separate response to this consultation.

May 2015

LSEG Response to the European Commission Green Paper on Building a Capital Markets Union

  • We support the Commission’s aims to diversify funding sources, reduce the cost of SME risk capital, and address the fiscal bias against equity. The Green Paper pulls together a number of disparate issues, providing a much needed opportunity to make real progress for the benefit of the Single Market.
  • We believe the key is the development of a new investor environment that will increase the supply of long term patient equity and debt investment. The EU is not short of capital - it saves €2.7 trillion a year (20% of GDP, compared to $2.8 trillion or 17% of GDP in the US). However, in the EU, citizens tend to invest in property or bank deposits, not use the capital markets to save for their future. CMU must focus on delivering a broader investor base, able to invest long term across the EU. To support this, a recalibration of regulatory risk frameworks (e.g. Pensions, Solvency II) is needed to support public and private markets, together with recognition of the value of intermediaries that can be trusted to market products across borders.
  • The demand side framework for public and private issuers (equity and debt) is largely already in place and no major structural changes are required. Reviewing existing legislative frameworks and ensuring the proportionate implementation of incoming legislation has a role to play to ensure they support efficient, transparent and liquid markets (e.g. SME Growth Markets). However, the challenge is a cultural issue in terms of issuer aspirations, capabilities and access to advisory ecosystems (e.g. ELITE). These challenges are different across member states, so success should be measured by increasing market depth in all countries (and ex-EU investment), not only by internal cross-border investment.
  • A stronger, internationally competitive supervisory convergence approach is required to ensure consistent application of existing rules. ESMA should focus on driving through supervisory convergence across the EU. To achieve this ESMA itself will need an enhanced ability to initiate and lead peer reviews across the EU and to ensure compliance by National Competent Authorities. To support the necessary recalibration of the investor environment, ESMA should also be given an international competitiveness objective.

March 2015

LSEG response to ESMA's Consultation Paper on MiFID II/MiFIR draft RTS

LSEG submission - Amended RTS 15

LSEG submission - Amended RTS 24

(2 Mar 2015) London Stock Exchange Group has provided a response to ESMA’s Consultation Paper on its draft Regulatory Technical Standards in MiFID II/MiFIR, including views on: pre and post-trade transparency of markets; liquidity; non-discriminatory access to trading venues and CCPs; microstructural issues (e.g. market making, algorithmic trading and tick sizes); data disaggregation and consolidated tape; market data reporting; commodity derivatives and post-trade issues, together with suggested amendments on RTS 15 and RTS 24.