THE MARKETS IN FINANCIAL INSTRUMENTS DIRECTIVE 2014/65/EU AND REGULATION (EU) NO 600/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 15 MAY 2014 ON MARKETS IN FINANCIAL INSTRUMENTS AND AMENDING REGULATION (EU) NO 648/2012 (TOGETHER, MIFID), THE ONSHORING OF MIFID BY THE UNITED KINGDOM AS A RESULT OF BREXIT AND OTHER IMPORTANT INFORMATION AND UPDATES

Background

MiFID impacts the majority of European Economic Area (EEA) financial services providers (including National Australia Bank Limited, London Branch (NAB London) and the way in which they provide investment services to United Kingdom (UK), EEA and non-EEA clients.

As you will be aware, at 11pm GMT on 31 January 2020, the UK ceased to be a member of the European Union (EU) and a transition period came into effect. Such transition period came to an end at 11pm on 31 December 2020 and as of such time the UK became a third country under EU law. A body of retained EU law has been created in the UK which is based on the EU law that applied to the UK prior to this date.

As of 11pm 31 December 2020, UK MiFID now applies to NAB London and NAB Europe Limited.

UK MiFIR means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 as it forms part of retained EU law as defined in the European Union (Withdrawal) Act 2018 (as amended).

UK MiFID means UK MiFIR together with the Markets in Financial Instruments Directive 2014/65/EU, as implemented in the UK by the Financial Conduct Authority in its FCA rules.

This site contains information regarding NAB London’s and NAB Europe Limited’s UK MiFID responses and reports in relation to the different areas of UK MiFID. Please note that each of these documents and disclosures are currently being updated. Until such update, as of 11pm GMT 31 December 2020:

(a) in respect of NAB London and NAB Europe Limited, references in these documents and disclosures to European Provisions shall be read as references to the equivalent or substantially similar UK Provisions unless the context or applicable rules otherwise require; and

(b) references in these documents and disclosures to the EEA, EU or UK shall be interpreted in light of the end of the transition period on 31 December 2020, taking into account that the UK is no longer part of the EU and the effect of UK Provisions.

Where:

“European Provisions” means collectively any EU directive, regulation, decision or tertiary legislation including references to definitions or designations deriving from such provisions; and

“UK Provisions” means collectively those provisions of UK domestic law or regulation which implement, adopt or set out provisions substantially similar to the European Provisions as they form part of retained EU law as defined by the European Union (Withdrawal) Act 2018 (as amended).

Notwithstanding the above, as of 1 January 2021, all references to the EEA in any policies applicable to NAB London and NAB Europe Limited shall be read as continuing to include the UK (unless the context requires otherwise).

Documents and disclosures relating exclusively to earlier time periods are not affected by the above.

More Information about NAB London’s and NAB Europe Limited’s UK MiFID Response

If you have any questions about our response to UK MiFID, please contact cordd.london@eu.nabgroup.com.

Important disclosures

NAB London Data Protection Notice

The European Union General Data Protection Regulation (EU GDPR) establishes a uniform data protection law across the European Economic Area (EEA) and aims to protect the privacy and use of EEA resident’s personal data in an increasingly digital world. As such, we (National Australia Bank) are required to comply with the EU GDPR since we process personal data relating to EEA residents.

National Australia Bank Limited which has its UK branch (number BR001924) at 52 Lime Street, London EC3M 7AF ('NAB', 'we' or 'us') provides banking services to businesses. The EU General Data Protection Regulation 'Privacy statement (UK)' tells you how we collect, use, store and share personal information when we provide these services and the appropriate measures we undertake to ensure that we can engage securely with and for customers.

Please familiarise yourself with the NAB European General Data Protection Regulation (EU GDPR) statement.

NAB European General Data Protection Regulation (EU GDPR)

NAB London Complaints Procedure

Complaints procedure

NAB places great importance on providing the highest standards of service to our customers.

If you feel that on this occasion we have not met the high standards we strive to achieve then we encourage you to let us know. Your feedback is important as it allows us to improve our services and the products that we offer.

We aim to get your complaint resolved as quickly as possible by the appropriate staff with the experience, knowledge and authority to handle your complaint efficiently and effectively.

We therefore aim to:

  • make it easy for you to raise your complaint;
  • listen to your complaint;
  • consider your suggestions in putting matters right;
  • ensure you are satisfied with how your complaint was handled;
  • be polite, efficient and fair in all of our dealings with you.

This procedure explains what to do if you have a complaint about any of our services or products. It also outlines the timescales you should expect for resolving complaints and who to contact if you are not satisfied with our response.

How and where to complain

If you are dissatisfied with any aspect of our service or products, there are several ways in which you can choose to raise a complaint. You can advise us in person, in the first instance by contacting your usual business contact. If the issue is not resolved please email our Complaints Officer Simon Nye at simon.z.nye@eu.nabgroup.com.

What we will do

We aim to resolve all complaints promptly and will acknowledge your complaint upon receipt. Our acknowledgement will outline the steps we propose to take in order to resolve your complaint. Sometimes, due to the nature of the issue we will need time to investigate it, but we will keep you updated on our progress and the anticipated timescales for responding to you.

Where we are unable to resolve your complaint after three business days, we will write to you or email you to acknowledge your complaint and to explain the action that we intend to take and who will be dealing with your complaint.

What to do if you are unhappy with our response

If you are not satisfied with our final response, you have the right to take legal action if you consider this necessary.

Summary of NAB’s Conflicts of Interest Policy

Please familiarise yourself with NAB’s Conflicts of Interest Policy.

NAB Group's corporate governance framework plays a key role in supporting our business operations. It provides clear guidance on how authority is exercised within the group.

As a fundamental element of our culture and business practices, our corporate governance framework provides guidance for effective decision making in all areas of the Group through:

  • strategic and operational planning
  • risk management and compliance
  • financial management and external reporting
  • succession planning and culture
  • managing customer experiences and outcomes.

You can read about the key aspects of our corporate governance framework and practices for 2020 in the Corporate Governance Statement (PDF, 2.7MB). For information on our compliance with the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, see 2019 Appendix 4G (PDF, 102KB).

More documents and policies that form part of our corporate governance framework and highlight the Group's significant commitment to corporate governance can be viewed in the Conflicts of Interest Policy.

Overview

The National Australia Bank Group (NAB) operates in many jurisdictions across the globe, providing a wide range of financial services to a broad customer base. NAB faces actual, potential or perceived conflicts of interest during its normal business activities.

NAB has internal policies and procedures in place to identify and manage conflicts of interest and prevent those that can’t be managed. This document provides a summary of those policies and procedures.

Identification of conflicts of interest

Conflicts may arise in many circumstances in the course of NAB’s business, including where:

  • NAB’s interests conflict with those of its customers
  • the interests of NAB’s directors, offices, employees and secondees or contract hires of NAB (a “NAB Person”) conflict with those of its customers
  • the interests of NAB and a NAB Person conflict
  • the interests of differing NAB entities conflict
  • conflicts of interest may occur between different customers of NAB.

Management of conflicts of interest

NAB’s policies and procedures describe the methods NAB may use to manage actual, potential or perceived conflicts of interest. These include (but are not limited to) physical, technological and organisational arrangements to protect customer interests and manage actual, potential or perceived conflicts of interest. Most importantly, NAB Persons who undertake different business activities must do so with an appropriate degree of independence.

NAB also maintains certain arrangements that prevent or control the flow of information between NAB Persons performing particular roles involving a risk of a conflict of interest, where the exchange of information may harm the interests of one or more of NAB’s customers.

In certain instances, where NAB determines that a conflict cannot be adequately managed, NAB will decline to proceed with the proposed service or transaction. Alternatively, NAB may determine that it’s possible to proceed, but that additional disclosure regarding conflicts is required.

Disclosure

There may be occasions when NAB’s procedures and controls are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of a customer will be prevented. Should this occur, and in accordance with applicable regulatory requirements, NAB shall clearly disclose the following before undertaking business on a customer’s behalf:

  • the general nature and sources of the potential conflict
  • steps taken to mitigate the potential conflict, in enough detail to help the customer make an informed decision
  • in appropriate circumstances, NAB may obtain the customer’s written consent before proceeding.

Further information

Detailed internal NAB policy documents and operating procedures may not be fully represented in this summary. If you would like further information regarding NAB’s conflicts of interest policies and procedures, please get in touch with your usual NAB contact.

Information on risks, costs and charges for financial instruments offered from NAB London

Please familiarise yourself with the information (including Risks, Costs and Charges) related to the MiFID II regulation.

Systematic Internaliser Commercial Policy - NAB London

Execution Policy - NAB London

Please refer to our Execution Policy (PDF, 488KB)

National Australia Bank Ltd RTS 28 Top 5 Execution Venues

NAB London branch does not select execution venues in the manner contemplated by RTS 28 (Commission Delegated Regulation (EU) 2017/576). On client transactions, the execution venue is always determined by the manner in which our client engages with us.

For our business, the only circumstances relevant to RTS 28 involve over-the-counter trading and, in those cases, NAB will always be the execution venue.

For the purposes of Article 3(3) of RTS 28, please note that for relevant transactions, NAB London branch achieves best execution by the application of its order execution policy.

NAB does not conduct MiFID business with retail clients

National Australia Bank Ltd RTS 28 Top 5 Execution Venues Year Ending 31 December 2020 (CSV, 4KB)

National Australia Bank Ltd RTS 28 Top 5 Execution Venues Year ending 31 December 2019 (CSV, 5KB)

National Australia Bank Ltd RTS 28 Top 5 Execution Venues Year ending 31 December 2018 (CSV, 5KB)

National Australia Bank Ltd RTS 28 Top 5 Execution Venues Year ending 31 December 2017 (CSV, 5KB)

NAB Europe Ltd RTS 28 Top 5 Execution Venues

NAB Europe Limited does not select execution venues in the manner contemplated by RTS 28 (Commission Delegated Regulation (EU) 2017/576). On client transactions, the execution venue is always determined by the manner in which our client engages with us.

For our business, the only circumstances relevant to RTS 28 involve over-the-counter trading and, in those cases, NAB Europe Limited will always be the execution venue.

For the purposes of Article 3(3) of RTS 28, please note that for relevant transactions, NAB Europe Limited achieves best execution by the application of its order execution policy.

NAB Europe Limited does not conduct MiFID business with retail clients

NAB Europe Ltd RTS 28 Top 5 Execution Venues Year Ending 31 December 2020 (CSV, 1KB)

NAB Europe Ltd RTS 28 Top 5 Execution Venues Year ending 31 December 2019 (CSV, 1KB)

NAB Europe Ltd RTS 28 Top 5 Execution Venues Year Ending 31 December 2018 (CSV, 1KB)

NAB Europe Ltd RTS 28 Top 5 Execution Venues Year Ending 31 December 2017 (CSV, 1KB)

NAB London Allocation Policy

Please refer to our Allocation Policy (PDF, 184KB)

Best Execution Reporting (RTS 27)

As execution venues, National Australia Bank Limited and NAB Europe Limited have the obligation to publish certain data on the quality of execution for financial instruments not subject to the trading obligation (under articles 23 and 28 of Regulation (EU) No 600/2014).

Under Regulation (EU) 2017/575 (known as RTS 27 which prescribes the data to be published by execution venues on the quality of execution of transactions), National Australia Bank Limited and NAB Europe Limited publishes information to cover the following report content:

  • Type of execution venue (table 1)
  • Type of financial instrument (table 2)
  • Price information (tables 3 and 4)
  • Likelihood of execution (table 6)
  • Additional information for request for quote (table 9)

We do not prepare and publish tables 5, 7 and 8 under RTS 27 as they are not relevant to our activities as an execution venue.

The data in the tables is prepared on a best efforts basis, but is incomplete in some respects. For example there are gaps in the capture of all quote and order data.

On the 19th March 2021 the FCA published a statement under the title “Supervisory flexibility on RTS27 reports and 10% depreciation notifications”.

The FCA noted that they are consulting on the RTS27 reporting obligation with a view to abolishing it given the concern industry’s concerns expressed around the value that the reports bring to the market and consumers. In addition, the FCA stated that they will not take action against firms who do not produce RTS 27 reports for the rest of 2021, noting that they expect to have concluded their policy considerations on the future of these reports.

Therefore, in light of the FCA’s statement and approach to firms completing RTS 27 reports, National Australia Bank Limited & NAB Europe Limited will not publish the RTS 27 quarterly reports for 2021.

However, if you would like to receive the information and details that is contained in the RTS 27 reports please contact cordd.london@eu.nabgroup.com

A copy of the FCA statement can be found at: “https://www.fca.org.uk/news/statements/supervisory-flexibility-rts-27-reports-ten-per-cent-depreciation-notifications"

Time Period 1 October 2020 to 31 December 2020

National Australia Bank Limited (ZIP, 6KB)

National Australia Bank Limited – Systematic Internaliser (MIC Code NABA) (ZIP, 81KB)

NAB Europe Limited - No transactions during the period

NAB Europe Limited – Systematic Internaliser (MIC Code NABU) (ZIP, 10KB)

Time Period 1 July 2020 to 30 September 2020

National Australia Bank Limited (ZIP, 4KB)

National Australia Bank Limited – Systematic Internaliser (MIC Code NABA) (ZIP, 92KB)

NAB Europe Limited - No transactions during the period

NAB Europe Limited – Systematic Internaliser (MIC Code NABU) (ZIP, 11KB)

Time Period 1 April 2020 to 30 June 2020

National Australia Bank Limited (ZIP, 9KB)

National Australia Bank Limited – Systematic Internaliser (MIC Code NABA) (ZIP, 4KB)

NAB Europe Limited - No transactions during the period

NAB Europe Limited – Systematic Internaliser (MIC Code NABU) (ZIP, 16KB)

Time Period 1 January 2020 to 31 March 2020

National Australia Bank Limited (ZIP, 7KB)

National Australia bank Limited – systematic Internaliser (MIC Code NABA) (ZIP, 123KB)

NAB Europe Limited - No transactions during the period

NAB Europe Limited – Systematic Internaliser (MIC Code NABU) (ZIP, 31KB)

Time Period 1 October 2019 to 31 December 2019

National Australia Bank Limited (ZIP, 7KB)

National Australia Bank Limited - Systematic Internaliser (MIC Code NABA) (ZIP, 122KB)

NAB Europe Limited - No transactions during the period

NAB Europe Limited - Systematic Internaliser (MIC Code NABU) (ZIP, 23KB)

Time Period 1 July 2019 to 30 September 2019

National Australia Bank Limited (ZIP, 5KB)

National Australia Bank Limited - Systematic Internaliser (MIC Code NABA) (ZIP, 140KB)

NAB Europe Limited - No transactions during the period

NAB Europe Limited - Systematic Internaliser (MIC Code NABU) (ZIP, 25KB)

Time period 1 April 2019 to 30 June 2019

National Australia Bank Limited (ZIP, 7KB)

National Australia Bank Limited - Systematic Internaliser (MIC code NABA) (ZIP, 112KB)

NAB Europe Limited - No transactions during the period

NAB Europe Limited - Systematic Internaliser (MIC code NABU) (ZIP, 26KB)

Time period 1 January 2019 to 31 March 2019

National Australia Bank Limited (ZIP, 19KB)

National Australia Bank Limited - Systematic Internaliser (MIC code NABA) (ZIP, 141KB)

NAB Europe Limited - No transactions during the period.

NAB Europe Limited - Systematic Internaliser (MIC code NABU) (ZIP, 38KB)

Time period 1 October 2018 to 31 December 2018

National Australia Bank Limited (ZIP, 24KB)

National Australia Bank Limited - Systematic Internaliser (MIC code NABA) (ZIP, 124KB)

NAB Europe Limited (ZIP, 16KB)

NAB Europe Limited - Systematic Internaliser (MIC code NABU) (ZIP, 26KB)

Time period 1 July 2018 to 30 September 2018

National Australia Bank Limited (ZIP, 162KB)

National Australia Bank Limited – Systematic Internaliser (MIC code NABA) (ZIP, 5KB)

NAB Europe Limited (ZIP, 35KB)

NAB Europe Limited – Systematic Internaliser (MIC code NABU) (ZIP, 5KB)

Time period 1 April 2018 to 30 June 2018

National Australia Bank Limited (ZIP, 364KB)

NAB Europe Limited (ZIP, 88KB)

Time period 1 January 2018 to 31 March 2018

National Australia Bank Limited (ZIP, 5MB)

NAB Europe Limited (ZIP, 2.5MB)

Placement and Underwriting information for issuer clients

European union benchmarks regulation

United Kingdom and European Union benchmark section (UK BMR / EU BMR)

Background

The Benchmark Regulation EU 2016/1011 of the European Parliament and of the Council dated 8 June 2016 (EU BMR), was introduced due to concerns about the accuracy and integrity of indices used as benchmarks in financial markets. The BMR builds upon the global standards set out in principles published by the International Organisation of Securities Commissions (IOSCO) known as the “Principles for Financial Benchmarks” and imposes certain requirements on firms that provide, contribute to or use benchmarks in the European Union (EU) as defined in the EU BMR.

Although the EU BMR came into effect on 1 January 2018, it contains transitional arrangements for existing EU and third country benchmark administrators, allowing such administrators to apply for authorisation, recognition or enforcement from the relevant EU bodies prior to a specific date. This date was originally 1 January 2020; however, on 26 February 2019, the European Council and Parliament reached a political agreement to amend EU BMR to extend the transitional provisions for critical and third country benchmarks by a further two years to 1 January 2022. As a result, significant and non-significant EU benchmarks are required to be authorised by 1 January 2022(?) for use within the EU.

At 11pm GMT on 31 January 2020, the United Kingdom (UK) ceased to be a member of the EU and a transition period came into effect. Such transition period came to an end at 11pm GMT on 31 December 2020 and as of such time the UK became a third country under EU law, including EU BMR. A body of retained EU law has been created in the UK which is based on the EU law that applied to the UK prior to this date.

UK BMR” means EU BMR as it forms part of retained EU law as defined in the European Union (Withdrawal) Act 2018 (as amended).

Similar to EU BMR, UK BMR contains transitional arrangements for third country (non-UK) benchmark administrators, allowing such administrators to apply for recognition or enforcement from the UK’s financial conduct authority (FCA) prior to a specific date.

Third country benchmark administrators will need to be authorised under the UK’s recognition or endorsement regime by 31 December 2022, unless an equivalence declaration is given by the UK in respect to them prior to such date. The UK Government has announced that it intends to extend this deadline to 31 December 2025. As a result, third country administrators who want to continue using their benchmarks in the UK after 31 December 2025, must apply to the FCA for approval via equivalence, recognition or endorsement, before this date.

In preparation for the end of the Brexit transition period on 31 December 2020, the FCA developed a new UK Benchmarks Register. This replaced the ESMA Register for UK supervised users, and UK and third country-based benchmark administrators that want their benchmarks to be used in the UK.

UK supervised entities within the National Australia Bank Limited group of companies (together, NAB) are required to comply with the UK BMR and EU BMR, as applicable.

NAB robust written plan

Article 28.2 of the EU BMR provides, among other things, that:

EU supervised entities that use benchmarks must produce and maintain a robust written plan setting out the actions to be taken in the event that one or more benchmarks materially change or cease to be provided. Where feasible and appropriate, the plan shall nominate one or several alternative benchmarks that could be referenced to substitute the benchmarks no longer provided, indicating why such benchmarks would be suitable alternatives.

NAB has written “Financial Benchmark Fallback Plan” to address the requirement in Article 28(2) of EU BMR (the Plan). This webpage contains a high-level summary of that Plan. Following a benchmark cessation or material change to a benchmark (together, a Trigger Event), NAB will invoke its Plan.

As a first step a qualitative assessment will be conducted to determine the materiality of the impact of the Trigger Event. Based on this materiality assessment an escalation decision will be made, after which a further, detailed impact assessment may be executed. This detailed assessment will include a quantitative and qualitative assessment of the Trigger Event, including where appropriate:

  • Identification of all products, transactions and counterparties including an impact analysis in terms of notional values, risk exposures and type of legal agreements;
  • A review of affected agreements, products, counterparties and transactions including checking whether the existing contractual arrangements already contain alternative benchmarks and to what extent a benchmark event frustrates or otherwise breaches the terms of any financial contract or financial instrument; and
  • A qualitative review of the impact to internal systems, models and processes.

The overall purpose of the steps outlined above is to identify, where feasible and appropriate, a suitable and appropriate alternative benchmark that can be referenced in substitute of the existing benchmark subject to the Trigger Event. NAB will follow market standards to identify such alternative benchmarks as much as possible. For example, it is expected that for “critical benchmarks” (as defined in Article 20(1) EU BMR) the market, for example a Central Bank or working group or calculation agent, will nominate an alternative benchmark which NAB expects to include in new contractual agreements, where appropriate and relevant.

If it has not been feasible and appropriate to nominate an alternative benchmark based on market standards, a proposal of actions to be taken in relation to the affected benchmark may be prepared. The proposal will take into account the impact assessment and shall consider the replacement of that benchmark with an alternative benchmark, seeking approval or notifying a regulatory body (where relevant), amendment to contractual documentation, and notification of stakeholders.

Once the proposal has been approved, internal stakeholders will work together to implement the proposal. For example, clients may be notified or their consent may be sought to change the benchmark, and contractual documentation may be amended.

The description above is a high-level summary of the Plan only, and the process to be taken in relation to different countries, business lines or circumstances may differ. This summary only serves to provide general background information, is indicative and not necessarily complete or correct and is not intended to provide any individual, legal or other advice. The Plan and this summary are subject to change without notice.

Details of EU BMR are available at: https://ec.europa.eu/info/law/benchmarks-regulation-eu-2016-1011_en

Details of UK BMR are available at:

https://www.legislation.gov.uk/ukdsi/2019/9780111179208/contents

https://www.legislation.gov.uk/uksi/2020/628/regulation/12/made

Financial Benchmark Reform – Disclosures for Derivatives, Floating Rates Notes and Loans