Article Post on 30 March 2020

Episode 3 - COVID-19 Webcast - Legal & Regulatory Developments Coming from ESMA (Part 2 of 2)

_This is the third episode of our COVID-19 webcast series. Partner Mark Shaw wants to turn to the regulatory developments coming from European Securities and Markets Authority. In this episode he speaks on call recording under MiFID II, their IFRS 9 guidance and the implementation delays to SFTR and tick size regime.

Transcription of the video:

Call Recording

On 20 March ESMA took steps to clarify issues regarding the MiFID II telephone call recording requirements while BCP plans have been invoked in response to COVID-19. There is a note covering this in more detail on our website, but the key point to note is that COVID-19 represents a unique BCP challenge. ESMA recognises that firms may not be fully equipped to transact through mobile telecommunications while also meeting the recording obligations. As such, it offers temporary relief under these rules as long as care is taken in the documenting and monitoring of verbal communications.

Less important, perhaps, but also on 20 March, ESMA announced a four-week extension to the response date for all ongoing consultations with a closing date on, or after, 16 March.

SFTR & Tick Size Regime

Elements of the Securities Finance Transaction Reporting regime and the Tick Size Regime for systematic internalisers are due to come into force imminently, and ESMA has announced that it expects competent authorities not to prioritise their supervisory actions towards entities that are subject to these regimes.


  • strict enforcement for compliance against the Tick Size Regime has been delayed from 26 March until 26 June, and
  • compliance under SFTR has been delayed from 13 April until 13 July. ESMA went on to clarify yesterday that includes any SFT transactions concluded between 13 April and 13 July and also SFTs that are subject to backloading under SFTR.

For both of these delays, ESMA state that it expects NCAs to generally apply their risk-based approach in the exercise of supervisory powers in their enforcement of legislation in these areas in a proportionate manner.


On 25 March, ESMA issued a public statement on the accounting implications of the economic support and relief measures adopted by EU Member States in response to the COVID-19 outbreak.

The focus is the financial reporting aspects for EU issuers in relation to the application of IFRS9 in light of the measures that have been taken by national governments and EU bodies to address the adverse systemic impact of the COVID-19 pandemic.

Such measures include payment holidays or moratoria stemming from public or industry payment relief initiatives.

ESMA believes that IFRS 9 includes flexibility to reflect the circumstances of the policy measures in response to the COVID-19 outbreak.

However, issuers and their auditors will need to consider the accounting treatment given to the application of these measures.

This is a point for issuers to discuss with their auditors.

However, from a regulatory perspective, issuers also need to consider their transparency obligations as regards the disclosure of any relevant significant information concerning the impacts of COVID-19 on their fundamentals, prospects or financial situation in accordance with their transparency obligations under MAR.

If you are in any doubt as to how to handle the legal issues arising out of the COVID-19 pandemic, please do use our helpline or visit our COVID-19 toolkit.

In the next episode we will look at the temporary changes to Luxembourg Company and Tax law as a result of COVID-19.

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