2019 FinReg Outlook: The Calm Before the Storm

A Flurry of EU Rule Changes Will be Finalized EU policymakers face a tight deadline to get all open legislative proposals approved ahead of the EU Parliamentary elections in May 2019. Any proposals that are not approved in time will have to go back to square one after the new Parliament is formed. A similar situation occurred in 2014 and led to the so-called Super Tuesday where a slew of financial regulations were approved all at once. These regulations had wide-ranging implications for the asset management industry that are still being felt today. While asset managers are not facing nearly the same scale of new regulations this time around, there are some key open issues they should be tracking. These include updates to the UCITS and AIFMD frameworks, a proposed Environmental, Social, and Governance (ESG) framework, the creation of a Pan-European Personal Pension Product, and changes to the European Market Infrastructure Regulation. In the push to finalize the proposals ahead of the deadline, there will be a number of parallel conversations happening among the EU Commission, Parliament, and Council. The drive to the deadline could also lead to hasty compromises, which usually manifest as implementation challenges down the line. Arguably, the issues with the Packaged Retail Investment and Insurance-based Products (PRIIPs) and MiFID 2 transaction cost calculations are a result of imperfect decisions made in the run up to Super Tuesday. It is important that the industry pay close attention to the developments because decisions made today will become implementation challenges tomorrow. 2019 FinReg Outlook: The Calm Before the Storm    5