Warning Savings protection Warning The AMF and the ACPR warn the public against the activities of several entities offering investments in Forex and in crypto-assets derivatives in France without being authorized to do so

1.1 Fri 29/10/2021 - 12:00 Reference texts article 223-1 du règlement général de l’AMF Book 1 Recommendation Closing of the 2021 financial statements and financial statements examination work Closing of the 2021…

In the Sunday Book Review, Tom Fox considers books that would interest the compliance professional, the business executive, or anyone who might be curious. It could be books about business, compliance, history, leadership, current events, or anything else that might interest me. In today’s edition of the Sunday Book Review, we look at some of the top books on root cause analysis you should read. • The New Science of Fixing Things by David Hartshorne • The Root Cause Analysis Handbook by Max...By: Thomas Fox - Compliance Evangelist

One in six women in the UK has experienced financial abuse in a current or former relationship. Although it is not only women who are affected, over 9 million people, as many as the population of London, have been subject to control, exploitation or sabotage of their money and finances by an intimate partner. It affects all income brackets, sexes and age groups. And it is very often hidden, because of isolation and control by the perpetrator. Given the numbers affected, it’s likely you’ll know a friend, family member or colleague who is experiencing financial abuse, even though you may not be aware of it. Victim-survivors of such abuse are more likely to reach out to family, friends or their bank for help as a first step, before they consider reporting to the police. This means the financial services sector has a vital role to play in spotting the signs and offering support where they suspect financial abuse is happening. Why does this matter to the FCA Financial abuse can involve the manipulation of financial products and services. It can include loans taken out in the victim-survivor’s name, bank account takeover or the use of joint life insurance policies as a threat. Under our consumer protection objective, the FCA has a role in securing an appropriate degree of protection for consumers of financial services. We understand that experiencing abuse can leave those affected in vulnerable circumstances, impact their experiences of financial services, and potentially put their financial future at risk. We care about this issue and want victim survivors to experience better and more consistent treatment from their financial services providers. We have already seen great initiatives from some firms and professional bodies, and we want the sector to build on this. As a data-led regulator, we’ve looked into the evidence of harm, including experience and research from experts, like our Consumer Partnerships Network members and the Surviving Economic Abuse charity. And we’ve considered how domestic financial abuse manifests across the sectors we regulate. Working with others to secure improvements We’ve taken that knowledge to engage with government, trade associations, firms and fellow regulators to drive improvement. We’ve looked at practice both here and in other countries, to help set priorities for focused action. This is a complex problem and there is no simple or quick fix, but we are seeing firms working to improve consumer outcomes, including: Innovative new approaches to help affected customers recover. We have seen examples of banks providing safe spaces for victim-survivors to ask for help, or in some cases going above and beyond by providing access to small ‘flee funds’ for victim-survivors. Close work with specialist organisations to find ways to give victim-survivors back control of their accounts, including the ability to block abusive messages sent alongside payments. New initiatives from industry bodies like UK Finance, the ABI and CII to improve awareness and understanding of issues across members, as well as highlighting best practice and monitoring progress. There is more that can be done to raise awareness and support consistent treatment of victim-survivors. This includes staff training to recognise the signs, referring victim-survivors to specialist support, and tools that can help consumers regain control. We talk about some of this best practice in our Guidance for Treatment of Customers in Vulnerable Circumstances. Raising expectations of action The Consumer Duty sets higher and clearer standards of consumer protection across financial services, requiring firms to put their customers’ needs first. Looking through this lens we encourage firms to be alert to the possibility of coercion and financial control to reduce foreseeable harm. When a report is made, firms should treat the victim-survivor appropriately, so they do not experience further avoidable harm. This could include how firms treat repayment of any debts and how they are recorded. We signalled our expectations when we wrote to lenders about this in March 2024. We are embedding awareness of issues around domestic financial abuse throughout the FCA with internal activity and training. We will continue to work with the Financial Ombudsman Service, government, domestic abuse charities and trade associations, to understand how firms are identifying and managing harm for victim survivors of domestic financial abuse. We will also look at whether there’s, any further action need to help the victim-survivors as they rebuild their lives. If you think you may be experiencing abuse or know someone who is, please reach out for support here.

On 17 May 2024, the European Banking Authority (EBA) issued a consultation paper containing draft guidelines on acquisition, development and construction (ADC) exposures to residential property. Article 126a of the Capital Requirements Regulation (CRR) introduces under the standardised approach for credit risk a new category of exposures called ADC exposures within the class of exposures secured by mortgages on immovable property. These exposures are associated with heightened risk and may attract a risk-weight of 150%. Institutions may, however, apply a risk weight of 100% to ADC exposures to residential property when, besides engaging in sound originating and monitoring standards, certain conditions reducing the credit risk of the exposure are met. These conditions are listed in Article 126a(2) of the CRR, which refer to a significant proportion of total contracts must be pre-sale and pre-lease contracts with substantial cash deposit or sale and lease contracts (or where the financing is ensured in an equivalent manner) and/or an appropriate amount of obligor-contributed equity to the residential property value upon completion. The draft guidelines in the EBA’s consultation paper specify the terms under Article 126a of the CRR related to the credit risk reducing conditions that must be met to apply the 100% risk weight for ADC exposures to residential property. The guidelines also take into account the specificities of institutions’ lending to public housing or not-for profit entities across the EU that are regulated by national law and that exist to serve social purposes and to offer tenants long-term housing. The deadline for comments on the consultation paper is 19 August 2024. A public hearing will take place via conference call on 20 June 2024 from 9.30 to 11.00 CEST.

The European Banking Authority (EBA) today launched a public consultation on its draft Guidelines (GLs) under the Capital Requirements Regulation (CRR3) regarding acquisition, development and construction (ADC) exposures to residential property. These Guidelines specify the credit risk-mitigating conditions that allow institutions to assign a risk weight of 100% instead of 150% for ADC exposures to residential property. Furthermore, the Guidelines also address the specificities of institutions’ lending to public housing or not-for profit entities. The consultation runs until 19 August 2024.

17 May 2024 The Hong Kong Environmental, Social and Governance (ESG) ratings and data products providers Voluntary Code of Conduct Working Group (VCWG), with Secretariat provided by the International Capital Market Association (ICMA) and with the support and sponsorship of the Hong Kong Securities and Futures Commission (SFC), has today launched a consultation to develop a voluntary Code of Conduct for ESG Ratings and Data Products Providers.The working group’s aim has been to develop and promote a globally consistent, interoperable, and proportionate voluntary code of conduct for ESG ratings and data products providers who deliver goods and/or services in Hong Kong (VCoC). As such, the working group has taken into account the recommendations from the International Organization of Securities Commissions’ (IOSCO) report on “Environmental, Social and Governance Ratings and Data Products Providers”, as well as existing industry standards.The consultation period will run up to 17 June 2024. The proposed Code of Conduct and related documentation are available for download in English and Chinese. Interested stakeholders are invited to submit their comments via email to vcwgsecretariat@icmagroup.org.Download the draft Code:ENGLISH VERSION | CHINESE VERSIONBryan Pascoe, Chief Executive of ICMA, said “ESG ratings and data products are essential resources for the sustainable finance market. We are pleased to coordinate this important working group sponsored by the SFC to develop and promote a voluntary code of conduct. We will continue to contribute our considerable experience in bringing about industry-led standards and our global expertise in sustainable finance.”Julia Leung, the SFC’s Chief Executive Officer added “We are deeply encouraged by the progress made by the industry-led working group under the leadership of ICMA. The code, together with the self-attestation document, will be vital in fostering greater transparency, quality and reliability of ESG information, as well as comparability of products.”

on 29 april 2024, the eu published in the official journal the new directive (eu) 2024/1226 which criminalises the violation and circumvention of eu sanctions (the sanctions offences directive). the sanctions offences directive in turn seeks to establish uniform definitions for criminal offences and minimum penalties for violations of eu sanctions in an effort to harmonise the position across the eu. the sanctions offences directive will take effect on 19 may 2024 and eu member states must transpose it into their national laws by 20 may 2025. for a detailed overview of the measures and additional requirements of the sanctions offences directive, please refer to our earlier post, here. you can find the version of the sanctions offences directive published in the official journal here.

Good afternoon everyone,It’s a pleasure to be here with you all today. Let me first extend my thanks to the BPFI, for organising and hosting today’s event – Brian, Gillian and Leah and all your teams. It’s great to see the mounting interest in a possible digital euro as a form of retail payment. I’d also like to thank our speakers, for your commitment and willingness to share your knowledge, experience and diverse views on this topic.And to you, our audience, for being with us today, we hope you find the discussions insightful and very much look forward to an engaging session ahead. The case for a Digital EuroGlobally, a high percentage of Central Banks are exploring Central Bank Digital Currencies (CBDC), with some now live. The underlying motivations vary from jurisdiction to jurisdiction, as too does each Central Bank’s core CBDC design principles. In the Eurosystem context, the ECB is wholly committed to ensuring the highest possible standards are met in terms of privacy and security standards, fraud protections whilst also designing a retail means of payment that is inclusive and resilient. These principles are distinguishing characteristics of the ongoing work throughout both the previous investigation and current preparation phases and are reflective of our shared values to our people, and our role in the financial system.   I’ll start by recapping on the ‘case’ for a digital euro. Central banks provide the economy and financial system with the safest and most liquid asset: public (central bank) money. Publicly-issued cash in circulation, along with central bank reserves, anchor the monetary and financial system. They play a pivotal role in a well-functioning payment system, and in economic and financial stability. Ultimately, they underpin trust in money, which the whole systems depends on. Globally, a high percentage of Central Banks are exploring Central Bank Digital Currencies (CBDC), with some now live. The underlying motivations vary from jurisdiction to jurisdiction, as too does each Central Bank’s core CBDC design principles. In the Eurosystem context, the ECB is wholly committed to ensuring the highest possible standards are met in terms of privacy and security standards, fraud protections whilst also designing a retail means of payment that is inclusive and resilient. These principles are distinguishing characteristics of the ongoing work throughout both the previous and current phases and are reflective of our shared values to our people, and our role in the financial system.   The widest-accepted means of retail payment in Europe is euro cash, with its unique properties: it is guaranteed by the central bank; it is widely available; it is accepted everywhere in the euro area; it is free of charges; it provides instant settlement of payment obligations and high privacy protection; and it is financially inclusive. But, with technological advances and changes in societal preferences, cash payment transactions across the euro area have been steadily declining . The Eurosystem is acutely aware that the role of public money must continue to evolve, to retain its stabilising – trusted - force in the economy and financial system, and also ensure that consumers can continue to pay in the most efficient manner. So, the ECB and National Central Banks (including the Central Bank of Ireland) are preparing for the possible issuance of a digital form of cash – that is, trusted public money in electronic form, for making payments.A digital euro would complement, and not replace, physical cash. Its design would offer the unique benefits of cash – that is, high levels of privacy, financial inclusion, wide acceptability instant settlement and ability to pay offline.It would co-exist with other private payment means (cards, contactless, account-to-account payments). It would be the truly pan-European means of digital retail payment. To be a success, the digital euro must be trusted, and must bring added value to users, businesses and society alike. Under the current proposed approach: The use of basic payment services will be free to users (public good). Payment Service Providers (PSPs) will be incentivised, proportionately, to distribute the digital euro, and the Eurosystem will bear the costs of production.It will be guaranteed for acceptance everywhere in the euro area – it will have legal tender status, alongside cash. You won’t have to second guess whether your payment method is accepted, and it will be interchangeable with cash.There will be ability to pay even without access to the internet (the ‘offline’ option), using devices within proximity of each other.It will promote financial inclusion, with the possibility to pay even without a bank account.The technological specifications for digital euro components reflect the highest standards of anti-fraud and privacy, while being technologically resilient. This ‘privacy by design’ is intended to make the digital euro the most secure and private form of electronic payments.Banks and other payment service providers will obviously have the key role in the distribution of the digital euro, given their customer relationships. We see the digital euro as offering a platform for innovation – payment providers could achieve pan-euro area reach and expand services and use cases, on top of the basic services. There may also be the possibility to leverage other investments –for example, on instant payments - to include digital euro.Central Banks play a pivotal role in the payments landscape - as the operator of the payments and settlement systems, and as the provider of central bank money to the economy. This, of course, is done in partnership with private sector participants. Harnessing the combined knowledge, expertise and efforts of both public authorities and private intermediaries is needed to make the digital currency a success, as well as realise the long-term benefits of innovation and resilience in general.Eurosystem Preparations for Digital Euro  The European Central Bank’s Governing Council approved the start of the 2-year investigation phase in October 2021.  The Investigation phase explored potential use cases for digital euro, and established the potential design principles, which includereplicating the unique properties of cash as much as possible, but digitally; ensuring it is a means of payment, not an investment product; establishing that digital euro holdings would not be remunerated, just like cash.     Last October, the Governing Council decided to move to the Preparation Phase, in two parts. The first part has the objective to ‘lay the foundations for the potential issuance of a digital euro and be ready, should a decision be taken to launch in the future’ .  In parallel, work has been ongoing by European co-legislators to develop a dedicated legislative framework for the Digital Euro. A decision to issue a digital euro would be taken only after this legislation has been adopted. In other words, the decision would be considered only in the event there is political backing for its issuance in Europe. So, the second part of the Preparation Phase would start when that political decision, by the European Council and European Parliament, would be made to launch digital euro, and implementation thereafter could take up to two years. The European Commission’s Legislative Proposal for Digital EuroIn June last year, the European Commission published its draft “Single Currency Package”, which set out the legislative framework for the establishment of the digital euro (as well as the legal tender status for cash). This draft proposal sets out new obligations for distributors of the digital euro, where customers will have additional rights and protections and which intermediaries will need to carefully consider, particularly the possible impact on their current business models, should the EU Council and European Parliament adopt the digital euro legal act.  The Central Bank works closely with the representatives of the Departments of Finance and Foreign affairs on the progression of the legislative discussions and closely monitors to ensure that all issues are dealt with.  There is a range of other regulatory issues in the payments space that continue to evolve - such as SEPA Inst., PSD3, eIDAS2 – and these are likely to precede any digital euro launch. But they would, crucially, constitute important building blocks for potential issuance, and success, of a digital euro.The EU Commission has not yet established any formal timeline for the finalisation or adoption of this legislation. Ultimately, commitment and timing is expected to be clearer, after the new European Parliament is constituted following the European elections next month.Digital Euro and the Financial and Payments SystemA key consideration in issuing a digital euro is around the implications of a retail central bank digital currency for the broader European financial system. As already mentioned, the digital euro will be a retail means of payment, not an investment or savings product. Digital euro accounts will have ‘holding limits’, to prevent largescale shifts away from bank deposits – our preparations are focused on ensuring that there will not be bank disintermediation.  A significant body of analysis is underway with our Eurosystem colleagues, to assess possible impacts from a digital euro, on many aspects of the financial sector and on consumer choice. Clearly, there are many variables to consider – including patterns of take-up by customers of digital euro over time, impacts on regulated financial entities and on other payment types (including cash). The body of work includes both quantitative assessments and surveys, and the Central Bank is playing its part in this analysis. A key output will be the decision on a ‘holding limit’ for digital euro wallets, but all the information will be important in ensuring that a digital euro, should it be launched, will be adopted as a new trusted, private, inclusive form of public money. Progress towards the planned milestones of the current phase, and significant areas of work include:The launch, in January of this year, of the Calls for Applications, by the ECB to the market, to establish framework agreements with potential providers of digital euro components. These framework agreements would cover aspects such as fraud, risk management, the app and software development, the secure exchange of payment information, and the ‘offline’ component. Other essential components, such as payment settlement, would be sourced internally from the Eurosystem. Continued experimentation and conducting further analysis on digital euro design and functionalities, as well as ensuring financial inclusion. The formulation of a digital euro scheme rulebook, which will be brought for public consultation. This Rulebook would define the set of rules, standards and procedures that supervised intermediaries would need to adhere to, in distributing the digital euro. The rulebook development phase has involved relevant finance and payment experts from across the European retail payments market, both public and private. This is the critical input for merchants and payments service providers, to give clarity on how the digital euro could impact them and how to prepare for its launch.National Payments Strategy and Digital EuroNationally, as many of you are aware, the Department of Finance is leading the development of a National Payments Strategy (NPS) for 2024-2030, which will set out the priorities that will help shape the future payment landscape in Ireland. As we said in our submission to the consultation on the NPS, Ireland’s retail payments landscape lags behind other parts of Europe in some areas, which is a priority to address. Ireland is host to a growing and innovative payments sector, and the base of a very innovative technology sector. And people have shown they are willing, and eager, to embrace new technology in payments. For consumers to have greater access to payment solutions depends on the market grasping the opportunities available. We see the digital euro as a key priority for the NPS – it would offer an additional means of payments, adding resilience and choice, value and service for consumers, merchants and businesses in the payments system. The Digital euro design features enhance privacy; they develop anti-fraud and cyber resilience, and they bring better user experience with a fast, easy and cheap payment option.   Preparing for the Digital Euro The Digital Euro is a complex, multi-year project that will represent a significant evolution in the nature of money and require a transformation in market infrastructure and payments technologies, as well as transformation from the perspective of private payments providers. I’ve spoken about the preparations underway in the Eurosystem and European Commission on the Digital Euro. What about preparations among financial sector participants? Across Europe, banks and payment providers are considering deeply the issues involved in potentially implementing a new central bank digital currency. Many have been involved in the Eurosystem’s trials and experiments on possible design choices, and have participated in market consultation groups, including the development of the Scheme Rulebook. I urge you all to deeply consider the issues from the point of view of your evolving business models, your planned investments and your customer relationships. A project of this scale takes years to design, develop and operationalise. The Central Bank will be stepping up its engagement with banks and other payment service providers (PSPs), both bilaterally and jointly, in coming months. This is an opportunity for payment providers to build their understanding of the strategic opportunities that it presents, as well as the likely obligations to be placed on you in the draft regulation. Early engagement to understand the functional and technical requirements in the Scheme Rulebook is an important investment for the future. This means that potential distributors of the digital euro will need to consider possible impacts as part of your broader digitalisation, innovation, business model and capability strategies, in order to be ready.     The Central Bank of Ireland looks forward to engaging with you and I will shortly be writing to some of you to commence these engagements.Let me conclude.  A digital euro would be the most significant development in central bank money since the euro itself was launched. It will be as cash-like as is possible for an electronic means of payments, and it will have the highest standards of privacy and anti-fraud in its design, as well as supporting financial inclusion. It represents an opportunity for a truly pan-EU, free-for-basic-use retail means of payments, giving more choice, access and resilience for customers. With all these opportunities come responsibilities, to your business and your customers, and we stand ready to engage with you to ensure that your businesses can be ready to implement this new form of currency, if/when the decision to launch is made. Thank you.

The Financial Services and Markets Authority (FSMA) is once again drawing the public's attention to the phenomenon of fraudulent trading platforms and their dangers. These platforms are all over the internet, trying to lure investors with promises of quick and easy earnings. However, behind these tantalizing offers, there are often sophisticated scams that can lead to significant losses.How does a fraudulent trading platform work? (flowchart)Modes of contact: Fraudsters use various techniques to contact their victims: a fake news article that mentions a celebrity, online advertisements, a fake account on social media, a dating app or even a “lost” message. In each case, the platform attracts investors by promising them very high returns in a short time, often well beyond the sorts of gains that are realistic.Registration: Interested investors register on the platform and deposit funds to their trading account. Most of the time, investors begin with a relatively small sum (e.g. €250). In some cases, the swindlers offer to help victims by taking over their computer remotely in order to make certain transfers on their behalf, which also allows them to use viruses and spyware, for example.Manipulation and pressure tactics: Once the funds have been deposited by the victim, the platform will manipulate the transactions to give the impression of significant profits. These earnings are fictitious, and the funds have not really been invested. The fraudsters then put pressure on their victims to invest more and more money (repeated phone calls, time-limited offers, threats, etc.).Withdrawals are impossible: An initial withdrawal of a small amount is sometimes possible, thereby giving victims more confidence. However, once an investor wishes to withdraw a larger amount, the fraudsters use various pretexts not to make it possible (high costs, taxes owing, etc.). In the end, the fraudulent platform disappears, taking with it all the investors’ money. The FSMA is warning today against different websites that have recently appeared:The FSMA notes that the following websites were putting consumers in touch with fraudulent trading platforms:Algo Education (http://algoeducation.io/);Bitcode Method (https://bitcode-method.com/; https://bitcodemethod.org/; https://bitcode-ai.live/);Immediate Peak (https://immediatepeak.io/; https://immediatepeak.com; https://immediatepeak.net; https://immediatefuture.io; immediate-peak.com; https://immediatepeak.org);Immediate Intal (https://immediateintal.com/; https://immediate-intal.co/; https://immediateintalai.com/);Immediate Vortex (https://immediatevortex.io; https://immediate-vortex.com/; https://immediatevortex.co/).The FSMA strongly advises against responding to any offers made by the following trading platforms:4xai (https://4xai.net/);BFTCapitals/BFTCapitalspro (http://bftcapitals.com; https://www.bftcapitalspro.com/);Bitlet (https://bitlet.net/);Bitnomics (https://bitnomics.co); BNP Groups (cloned firm) (https://bnpgroups.co.uk/);Chronovalor (https://www.chronovalor.com/); CMCapitals (cloned firm) (https://cmcapitals.com/); Coinsbit (https://coinsbit.io/); CryptoCom AI (cloned firm) (https://crypto-com.ai); DCY Markets (https://dcymarkets.com/);Easy Trade (http://easy-trade.uk/); Fortnomics (https://www.fortnomics.com/);FX Margine (https://fxmargine.com/);GMT Direct (https://gmtdirect.com/); High BTC Stock (https://www.highbtcstock.com/);Invotrade (https://invotrade.com/); Lasbert (https://lasbert.net/); Omega Capital Markets (https://omegacm.net; https://www.omega-cm.net/);Opti Market Exchange (https://ome1.vip; http://www.ome2.vip/);Parenta Financal Services Ltd (https://www.parentafinancialservicesltd.com/);Promarket AI (https://promarket-ai.com/; https://promrk-ai.com/; https://tradingacc-globalic.com/en; https://web.halving-trade.org/; https://web.hlv-trade.com/auth/login; https://pro-mrketai.com/);Quopi (https://quopi.ai/; https://quopi.app/);Sense traders (https://sense-traders.com/); Sfcap/Safecap Investments/Finalto (https://webtrader.sfcap.trade/)SkyTarget Ltd (https://www.skytargetltd.com/); Swiss-Vests (https://swiss-vests.com/);TigersFM (https://www.tigersfm.com/);Titanwealth24 (https://www.titanwealth24.com/); Tradex4u (https://tradex4u.com/);Verify Markets (www.verify-markets.com);Vourteige (https://www.vourteige.com/);XHPX (https://xhpxpro.com/).I’ve fallen victim. What should I do? Stop making any transactions and break off all contact with the platform: Do not deposit any more money and do not provide any additional personal or financial information. Break off all contact with the fraudsters. They may try to manipulate you in order to take even more money from you.Contact your bank: Inform your bank immediately if you have made any payments to the fraudulent platform.Report the fraud to the competent authorities: Contact the FSMA and file a complaint with the police.Document all the messages and transactions: Gather together all the evidence of communications with the platform, including emails, messages, account statements and screen captures of transactions. These items will be valuable when you report the fraud.Beware of 'recovery rooms': The latter is a practice that consists of contacting people who have been victims of a scam in the past and offering them services that will supposedly recover your lost money, for a fee. Often, these constitute yet another case of fraud.For more information, please consult the 'How to recognize and avoid fraud' page on the FSMA website. The site provides additional tips to help you avoid investment fraud. Please watch our awareness-raising videos as well (available in French and Dutch only).

The Swiss Financial Market Supervisory Authority FINMA is creating transparency regarding its supervisory practice on rules of conduct under FinSA. It has drafted a new, compact circular and will conduct a public consultation on this up to 15 July 2024.

On 22 April 2024, the Bank of England (BoE) published a speech by Nathanael Benjamin, its Executive Director of Financial Stability Strategy and Risk, on the private equity market and its growth in size, complexity and interconnectedness, as well as its role in financing companies. The speech outlines recent developments and asks questions about the impact of the dynamics within the sector on safe and sustainable growth. The speech is structured around four questions: How does the growth of private equity contribute to market-based finance? What makes up the private equity ecosystem? Why is the BoE focussing on this now? Why does the BoE worry about this issue? How does the growth of private equity contribute to market-based finance? As a result of the significant growth in market-based financing over the last decade, half of the funding for UK businesses now comes directly from financial markets and non-bank financial institutions. As such, Mr Benjamin highlights that the private equity sector plays a crucial role in funding UK businesses, with around £250 billion actively invested in UK companies via private equity. He also notes that the growth in private markets is contributing to greater competition within the financial sector. However, he warns that while the prominence of the sector both within the financial system and for the real economy is significant, with that comes a responsibility for the sector to ensure that its growth happens safely and sustainably. What makes up the private equity ecosystem? Mr Benjamin outlines five key ‘players’ in the private equity ecosystem, each with a different role to play: Financial ‘sponsors’, who manage the private equity funds and typically make money through management fees and carried interest. ‘Limited partners’: the investors into the private equity funds. Banks, which provide and facilitate ‘downstream’ lending to companies owned by private equity funds and ‘midstream’ lending to the private equity funds themselves, as well as having ‘upstream’ exposures where there is recourse to the limited partners. Private credit funds, which participate by lending substantially and directly to companies owned by private equity funds, thereby competing with banks, while also receiving credit from banks. Companies themselves, which are owned by private equity (as well as financed by other mechanisms such as leveraged loans or bond issuance). He notes that this ecosystem is becoming increasingly complex and interconnected, and that it therefore requires careful navigation and underscores the importance of efforts to understand these linkages more thoroughly. Why is the BoE focusing on this now? The speech then turns to the dynamics that the BoE has been observing between these players. Mr Benjamin highlights two primary areas of challenge for the sector: the difficulties that the highly-leveraged companies backed by private equity face in the higher interest rate environment, and the consequences of a lack of exit opportunities for private equity fund investments. He also noted that the sector faces an additional challenge: the drying up of traditional exit routes for private equity funds’ investments via the capital markets, leading to difficulties in achieving the return of capital sought by limited partners. Why is it concerned? The dynamics set out are causing the BoE concerns related to the financial system as a whole. Mr Benjamin warns that these developments are set against a backdrop of opacity and are resulting in growing interconnectedness. In terms of opacity, he states that there is a lack of transparency about the degree and kinds of leverage entering the system. In addition, private asset valuations are more opaque than public markets because assets are not ‘marked-to-market’ and there are material risks attached to this; for example, it could increase the chance of an abrupt re-assessment of risks or sharp and correlated falls in value, particularly if further shocks materialise. In relation to interconnectedness, Mr Benjamin reiterates that the environment is becoming more complex and interconnected; for example, banks find themselves exposed to various parts of the private equity ecosystem, pension funds and insurance companies invest in private equity sponsors (and conversely they are sometimes owned by private equity, most significantly at a global level), and there are also significant interlinkages between private credit markets, leveraged lending, and private equity activity. This intricate web of connections adds to the notable lack of transparency, making it difficult to assess financial stability risks. The speech then discusses the impact of such vulnerabilities on the provision of vital services, including: The impact on systemic institutions. The impact on interlinked markets. The impact on the real economy and employment via the provision of finance, in vital services. Mr Benjamin concludes by considering the role of the BoE and the Financial Policy Committee in dealing with this. He states that these developments could pose risks to financial stability through several transmission channels – systemic institutions, systemic markets and through the provision of funding. He emphasises the importance of assessing how a disruption to the provision of finance can impact corporates that receive financing from private equity, as well as monitoring the impact on systemic institutions and markets, given their role in underpinning a stable financial system. Mr Benjamin confirms that the BoE will continue to examine the impact of the dynamics in the private equity sector on UK corporates and the rest of the financial system, how this might play out in times of stress, and other related questions, through a combined lens of its primary and secondary objectives of financial stability and sustainable growth. A further assessment of these risks will be set out in the BoE’s June 2024 Financial Stability Report.

April 11, Chicago—NFA has ordered 50.ai Investments LLC (50.ai Investments), a former NFA Member commodity pool operator and forex firm located in Princeton, N.J., not to reapply for membership or act as a principal of an NFA Member at any time in the future.