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Clifford Chance

Clifford Chance

Financial regulation

In-depth analysis of financial reforms

The financial sector faces unprecedented challenges as the most far-reaching set of reforms in the history of the industry are implemented.

Our expertise in international financial regulation means that we are able to work with clients to help them adapt their businesses to the new demands they face.

MIFID quick fix and what's next for the MIFID2 review

“Quick fix” amendments to MiFID2 have now been published in the Official Journal. These amendments aim to support economic recovery from the COVID-19 pandemic, including via relief from certain administrative requirements on firms. EU Member States are required to transpose the quick fix amendments into their national frameworks by 28 November 2021 and apply them by 28 February 2022. Alongside this, the scheduled MiFID2 review continues, with the Commission expected to publish a further legislative proposal towards the end of 2021. Read more about MIFID quick fix and what's next for the MIFID2 review.

Financial services remuneration update: where are we now?

As the PRA and FCA launch their consultations on rule changes to reflect CRD V, pay and remuneration regulation continue to be areas of focus for financial services firms.

Given the impact of Covid-19, the wider economic climate, the end of the Brexit transition period bringing further regulatory change andinvestor, regulator and public scrutiny of pay being at an all-time high, pay and governance-related questions need particularly careful thought and planning now. Read more about financial services remuneration.

The EU's proposals for far-reaching regulation of the digital sector

The European Commission has announced far-reaching proposals for regulation of digital platforms and online intermediaries. The Digital Markets Act (DMA) will impose on digital platforms that are designated as “gatekeepers” a long list of obligations to refrain from practices that are considered to limit competition or to otherwise be unfair. In contrast, the Digital Services Act (DSA) focuses on regulating the way that providers of online intermediary services interact with their customers and users, and their obligations in respect of harmful or illegal content, in order to create “uniform rules for a safe predictable and trusted online environment”. In combination, the two pieces of proposed legislation will create Europe’s most dramatic and interventionist sector-specific regulatory regime in decades, and would require significant changes to the business practices of digital sector players such as Google, Facebook and Apple, but also potentially smaller competitors. While it is likely to be around two years or more before these proposals result in binding obligations, they are unlikely, in our view, to be significantly watered down during the legislative process. Read more about the EU's proposals for far-reaching regulation of the digital sector.

EU financial services horizon scanner

This report provides a high level overview of ongoing and expected EU initiatives on financial services. Read more about the EU financial services horizon scanner. The horizon scanner is also available as a Topic Guide on the Financial Markets Toolkit.

Non-Financial Misconduct in Financial Services Regulation - Where do we stand?

Three new decisions from the Financial Conduct Authority (FCA) show renewed focus on “non-financial misconduct,” a term covering issues such as sexual misconduct and bullying, but a recent High Court finding against another regulator, the Solicitors Regulation Authority (SRA), potentially undermines the FCA approach.

This briefing explores, amongst other issues: when non-financial misconduct may amount to a breach of the Conduct Rules; how non-financial misconduct should be assessed; what the regulatory expectations on firms are to conduct investigations and notify the regulator; how the FCA views culture and psychological safety and links these with its objectives; and will there be a shift in stance as the High Court has recently cautioned regulators against being “dogmatic.” Read more about Non-Financial Misconduct in Financial Services Regulation - Where do we stand?.

Security Token Offerings – the shape of regulation across Asia-Pacific

Security token offerings or STOs, the issuance of digital tokens using blockchain or distributed ledger technology, are increasingly being seen as an alternative to mainstream debt and equity fundraisings. An evolution of the (supposedly) unregulated initial coin offerings or ICOs, STOs are typically structured to sit within securities law frameworks. This means much greater certainty for both fundraisers and investors, resulting in enhanced liquidity. In this report we consider how STOs are structured and some of the benefits and challenges, and explore the evolving regulatory landscape for STOs across key financial centres in Asia-Pacific. Read more about Security Token Offerings – the shape of regulation across Asia-Pacific.

Security Token Offerings - a European perspective on regulation

Security token offerings, the issuance of digital tokens using blockchain or distributed ledger technology, are increasingly being seen as an alternative to mainstream debt and equity fundraisings. An evolution of the (supposedly) unregulated initial coin offerings or ICOs, security token offerings or STOs are typically structured to sit within securities law frameworks. This means much greater certainty for both fundraisers and investors, resulting in enhanced liquidity. In this report we consider how STOs are structured and some of the benefits and challenges, and explore the evolving regulatory landscape for STOs across Europe.

This is the first in a series of reports we plan to publish over the coming months, covering STO regulation in other regions such as the US, Asia and Middle East. In the meantime, please get in touch with a member of our Fintech team should you wish to discuss any of the issues raised in further detail. Read more about Security Token Offerings - a European perspective on regulation.

Payments Industry Trends in a Hyperconnected World

The payments industry is undergoing significant changes, driven by technological innovation, new regulations and the broader macro-economic environment. We identify some key trends that are emerging.

Digital and card payments are on the rise as use of cash declines. Recent years have also seen a proliferation of fintechs offering innovative payment services and solutions. At the same time, there has been a focus on the role of competition in payment services, with Open Banking initiatives requiring payment account providers to provide account and data access to new market players. Whilst the initial focus has been on retail payments, opportunities for similar innovation in other segments of the payments market, such as with SME and wholesale clients are rapidly emerging. Read more about Payments Industry Trends in a Hyperconnected World.

A vision for the future of the UK financial system: the van Steenis report – how financial services might evolve in response to technological, social and environmental change

The Bank of England published a report in June 2019 on the future of the UK financial system and what that means for the Bank. The report, authored by Huw van Steenis, examines how financial services might evolve over the medium term in response to technological, social and environmental changes and how the Bank should respond. It sets out an ambitious vision for the future of the UK financial system and the role of the Bank as a leader of global regulatory standards supporting a global economy.

The van Steenis report identifies wide-ranging drivers of change that are shaping the UK economy, from big data and cyber-crime to climate change and an ageing population. It considers the role of finance in this changing environment and how a responsible and resilient finance industry can serve and support these changes. Finally, the report sets out recommendations for the Bank of England, identifying areas where it could take action to enable innovation, empower competition and build resilience in the financial system. Read more about the van Steenis report.

Fintech: International trends and regulatory responses

Technological innovation, the rise of fintech firms and the entry of big tech companies, such as Facebook and Amazon into financial services, are all driving the shift towards a digital economy.

As new financial products and services emerge, policy makers and regulators have to keep up with the pace of change and address new risks. At an international level, whilst they recognise the need for a coordinated response to these developments, so far, this has been largely limited to addressing money laundering and terrorist financing risks. Read more about Fintech's international trends and regulatory responses.

Transition from LIBOR and IBORs

The transition from LIBOR and other IBORs to alternative risk free rates could be the most significant change to financial markets in recent years. Our series of briefings focus on various aspects of this transition. LIBOR and the Syndicated Loans Market – Milestones and Documentation looks at recent publications such as conventions for the use of SONIA and LMA documentation. ISDA IBOR Fallbacks Supplement and Protocol: Key Considerations considers the impact of the new ISDA documentation. Further resources and information are available on our topic guides on Regulation of benchmarks and IBOR transition and new risk-free rates.