October 2020
Regulatory Round-up - Q3 2020

In this edition we cover: 

United Kingdom

  • First Firms using the Regulatory Data Collection Platform
  • Consultation on the Regulation of International Firms
  • MAR Notice on Corrado Abbattista
  • Financial Conduct Authority consults new rules on open-ended Property Funds
  • Certification Regime extended to March 2021
  • Sustainable Finance Disclosure Regulation ("SFDR") postponement


United States

  • FINRA warns member firms of a targeted phishing campaign



First Firms using the Regulatory Data Collection Platform

The first Firms were moved from Gabriel to RegData for regulatory reporting in mid-October with all Firms to be moved across over the coming months. Firms will be notified of their moving date via email at 3 weeks, 5 days and 1 day before they are moved across. Firms will not be able to access RegData until they and their users’ data has been moved across from Gabriel and until then Firms should continue to use Gabriel for regulatory reporting.


User guide videos and step by step instructions for RegData can be found at: https://www.fca.org.uk/firms/regdata/resources

Consultation on the Regulation of International Firms

The Financial Conduct Authority (“FCA”) has launched a consultation on its approach to authorisation and supervision of international Firms operating in the UK. This will be relevant to EEA Firms which intend to seek authorisation in the UK in the near future, those entering the Temporary Permissions Regime as well as Firms from non-EEA countries that have applied/intend to apply/are already authorised in the UK.


The consultation can be found at: https://www.fca.org.uk/publications/consultation-papers/cp20-20-our-approach-international-firms

MAR Notice on Corrado Abbattista

The Financial Conduct Authority (“FCA”) has published a Decision Notice in respect of Corrado Abbattista, of Fenician Capital Management LLP, for market abuse imposing a fine of £100,000 and prohibiting him from performing any functions in relation to regulated activity. 


Mr Abbattista was accused of repeatedly placing in the market large, misleading orders for Contract for Differences which he did not intend to execute. At the same time, he placed smaller orders that he did intend to execute on the opposite side of the order book to the misleading orders. Thus falsely representing to the market his intention to buy or sell when his true intention was the opposite. This created a misleading impression of the true supply of and demand for the shares in question to other market participants, to the extent that it could be construed as market manipulation. Mr Abbattista has challenged the Notice.


The FCA’s Decision Notice can be seen in full at: https://www.fca.org.uk/publication/decision-notices/corrado-abbattista-2020.pdf

FCA consults new rules on open-ended Property Funds

The Financial Conduct Authority (“FCA”) is consulting on proposals to reduce the potential for harm to investors from the liquidity mismatch in open-ended property funds. The proposed new rules would require investors to give notice of up to 180 days before their investment is redeemed.


At present investors in these funds can buy and sell units on a frequent – often daily- basis but the underlying property in which these funds invest cannot be bought and sold at the same frequency.  This creates a liquidity mismatch. If multiple investors were to simultaneously redeem investments a fund manager may need to suspend dealings in the units of the fund because of the liquidity mismatch between the fund units and the underlying property assets. The illiquid nature of property also means that a reliable price is not always available and therefore cannot always be priced with confidence, leading to a need to suspend dealings in fund units. The FCA is seeing increasing suspensions of funds for these reasons which, they believe, may be symptomatic of a wider problem.  It has therefore put forward the new proposals for consultation in order to allow fund managers to plan sales of property assets and better protect all investors.

Certification Regime extended to March 2021

The deadline for solo-regulated Firms to have undertaken the first assessment of the fitness and propriety of their Certified Persons has been delayed from 9th December 2020 to 31st March 2021.  This will give Firms significantly affected by the coronavirus pandemic time to make the changes they need. However, where Firms are able to certify staff earlier than March 2021 they should do so and Firms should not wait to remove staff who are not fit and proper from certified roles.

Sustainable Financial Disclosure Regulation (“SFDR”) postponement

The website ESG Clarity, is reporting that a leaked letter from the European Commission has suggested there will be a delay to the implementation of part of the Sustainable Financial Disclosure Regulation (SDFR).  The rules of Financial Market Participants to make declarations on their website on how they integrate sustainability considerations (Level 1) is still expected to come into effect in March 2021, however, the second layer requiring more detailed disclosures (the Regulatory Technical Standards, Level 2) is likely to be postponed until the end of 2021. The reason for this potential delay is that the coronavirus pandemic has delayed the public consultation on the proposed regulation.


The European Commission has not, however, confirmed a delay.

FINRA warns member firms of a targeted phishing campaign

FINRA has warned Registered Investment Advisors (“RIAs”) and Exempt Reporting Advisors (“ERAs”) of a widespread, ongoing phishing campaign that involves fraudulent emails purporting to be from FINRA asking member firms to complete a survey. The email was sent from the domain “@regulation-finra.org” and was preceded by “info” followed by a number (e.g. info5@regulation-finra.org).


FINRA is advising firms to delete any emails received from this domain as it is not connected to FINRA and reminds firms of the need to verify the legitimacy of any suspicious emails prior to responding to them, opening any attachments or clicking on any embedded links.


Additional information on FINRA’s suggested approach to cyber-security is available here: www.finra.org/sites/default/files/Cybersecurity_Report_2018.pdf