Anti-money laundering / Combating the financing of terrorism (AML / CFT)
EU publishes Commission Implementing Regulation (EU) 2021/369 of 1 March 2021 establishing the technical specifications and procedures required for the system of interconnection of central registers referred to in Directive (EU) 2015/849
On 2 March 2021, Commission Implementing Regulation (EU) 2021/369 of 1 March 2021 establishing the technical specifications and procedures required for the system of interconnection of central registers referred to in Directive (EU) 2015/849 of the European Parliament and of the Council, was published in the OJ.
Member States are required to interconnect their national central beneficial ownership registers via the European Central Platform. The Beneficial Ownership Registers Interconnection System (‘BORIS’) shall be established as a decentralised system interconnecting the central national beneficial ownership registers and the European e-Justice Portal through the European Central Platform . BORIS shall serve as a central search service making available all information related to beneficial ownership.
European Commission announces the launch of an initiative to amend the list of high risk third countries for the purpose of anti-money laundering and countering terrorist financing
On 5 March 2021, the European Commission announced the launch of an initiative to amend the list of high risk third countries for the purpose of anti-money laundering and countering terrorist financing. The purpose is to update the EU list based on latest available FATF list (October 2020).
No document is available for this initiative (05/03/2021). An update should be released in the coming days.
Capital Markets Union (CMU) Action Plan
EBF responses to EU Consultation on the establishment of a European single access point (ESAP) for financial and non-financial information publicly disclosed by companies
Why is ESAP needed?
1. Currently published data are not always easily accessible, or easy to find, which increases the cost of access;
2. Increase visibility of some entities (SMEs, non-listed) that need to attract financing and create new investment opportunities for investors;
3. Help building the ESG data based on EU legislation and voluntary fillings.
ESAP is seen as:
1. A tool to centralize public disclosures, required by the EU legislation or voluntary filled in;
2. Opportunity for entities not in the scope of EU Regulation or information not mandatory required to be reported on a voluntary basis.
ESAP should not:
1. Impose new disclosure obligations or timelines. New disclosure obligations need to be introduced in the EU legislation first (make sure EU legislation is fit for purpose and mandatory public disclosure are useful ) It is therefore important to get the scope of any EU legislation right in the first place;
2. Impose any new significant burden (information should only be reported once.
1. Start small, think big:
- Initially limited number of key EU legislation in scope (e. g. Transparency Directive, Accounting Directive, Prospectus Directive, revised Non-Financial Reporting Directive and data required Sustainability-Related Disclosure Regulation and Taxonomy Regulation)
- Adopt “look through” approach for legislation in scope in case the datapoints should be further limited in the initial phase (e.g. key ratios or KPIs from NFRD or other regulations)
- At a later stage, product information (prospectus in particular) should also be made available on the ESAP but this should not be a priority in the short term
2. Pull in existing public registers (interconnect existing MS databases);
3. Ensure information is easily accessible in user friendly format;
4. Ensure information quality in a comparable and machine-readable manner including those provided on a voluntary basis (common standards and structure);
5. Provide access to raw data;
6. Include data source;
7. Be publicly funded and governed as it is a public good. In this spirit, we believe that access to ESAP should be free for end-users.
Central Securities Depositary Regulation (CSDR)
EC consults on review to assess EU rules on central securities depositories
On 8 March 2021, the European Commission published a consultation to review how the EU rules on central securities depositories (CSDs) are working, especially:
- how CSDs are able to operate in different countries across the EU
- how requests to use their services are handleda
- whether there are other substantive barriers to competition in this sector that need to be addressed.
Experience with the application of CSDR until now seems to indicate that there may be a need to adapt and simplify certain requirements, thereby reducing the burden imposed on stakeholders involved and improving the efficiency of the rules. Likewise, there are stakeholders that point to a need to review the framework applicable to the cross-border provision of services within the EU in order to ensure a true single market for CSDs.
Depending on its findings, the Commission may propose certain changes to the rules.
The feedback period ends on 5 April 2021.
EFAMA publish joint association letter regarding implementation of CSDR Settlement Discipline Regime
On 11 March 2021, the European fund and Asset Management Association (EFAMA) published joint association letter regarding implementation of CSDR Settlement Discipline Regime.
The CSDR sets out an objective to improve efficiency and safety in European capital markets. This aspiration is shared by members of the Joint Associations. As described in our respective submissions to the recent targeted review of CSDR, whilst the associations agree that many features of the Settlement Discipline regime will drive greater settlement efficiency and improved operational processes, the mandatory buy-in regime, as currently conceived by CSDR, requires thorough reassessment as to its appropriateness.
A key concern is that the current legislative timetable requires market participants to proceed with a major implementation exercise without any indication of the scope or timing of the Review process - noting that some revisions to the mandatory buy-in regime are essential.
At best this will result in ongoing implementation efforts and investment being rendered redundant; at worst it will mean repeating the exercise. Creating such uncertainty around a regulatory implementation project of this profile and scale is damaging to the development and reputation of the EU’s financial markets.
The joint associations suggest that a far more robust approach would be to make the required revisions to the CSDR mandatory buy-in regime before attempting implementation. We see no reason why this should affect the implementation of other aspects of the Settlement Discipline regime in February 2022, assuming no fundamental changes thereto are proposed as a result of the Review.
ESMA updated CSDR Q&As
On 31 March 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers (Q&As) on the Central Securities Depositories Regulation (CSDR).
The purpose of the CSDR is to harmonise certain aspects of both the settlement cycle and the general settlement discipline, and to provide a set of common requirements for CSDs operating securities settlement systems across the EU.
The revised ESMA Regulation (Article 16b(5)) specifies that ESMA transfers queries which interpret Union law to the European Commission (EC). The latest Q&As on the CSDR contain answers provided by the EC that relate to:
- The provision of CSD services in other Member States: (i) the first Q&A further clarifies that Article 23 of CSDR applies to all types of financial instruments, as defined under MIFID II, whether or not admitted to trading, or traded, on trading venues; (ii) the second Q&A clarifies that, for the purpose of Article 23(2) of CSDR, the “law under which the securities are constituted” should by default be the standard law of the issuance of the securities and/or, if determined by the issuer, the national law of the issuer; and
- The exemption from the application of cash penalties and the buy-in requirements for settlement fails relating to transactions involving CCPs: the third Q&A clarifies that only settlement fails relating to transactions for which a CCP interposes itself between the counterparties (i.e. transactions cleared by the concerned CCP) should be captured by the exemption under Article 7(11) of CSDR.
COVID-19 Regulatory Measures
ESMA decided not to renew its decision for notification of net short positions imposed in 2020 due to increased market volatility
On 15 March 2021, the European Securities and Markets Authority (ESMA) decided not to renew its decision to require holders of net short positions in shares traded on a European Union regulated market, to notify the relevant national competent authority if the position reaches, exceeds or falls below 0.1% of the issued share capital. The measure, which has applied since 16 March 2020, will expire on 19 March 2021.
The overall level of net short positions is decreasing across the EU, reducing the risk that selling pressures could initiate or exacerbate potential negative developments connected with the evolution of the pandemic.
ESMA, in coordination with NCAs, will continue to monitor developments in financial markets as a result of the COVID-19 pandemic, and is prepared to use its powers to ensure the orderly functioning of markets, financial stability and investor protection.
European Market Infrastructure Regulation (EMIR)
EC consults on a draft delegated regulation extending the transitional period referred to in Article 89(1), first subparagraph, of Regulation (EU) No 648/2012 of the European Parliament and of the Council
On 16 March 2021, the European Commission launched a consultation on a draft delegated regulation extending the transitional period referred to in Article 89(1), first subparagraph, of Regulation (EU) No 648/2012 of the European Parliament and of the Council.
Under EU rules (Regulation 648/2012), entities can receive a temporary exemption from their central clearing obligation for pension scheme arrangements, given its potential impact on pensioners’ retirement incomes.
The Commission may extend the temporary exemption twice, each time for a maximum of 1 year, as is the case with this initiative. The European Commission proposes that the transitional period laid down in Article 89(1), first subparagraph, of Regulation (EU) No 648/2012 is extended until 18 June 2022.
The consultation runs until 13 April 2021.
ESMA updated EMIR validation rules
On 29 March 2021, the European Securities and Markets Authority (ESMA) updated the European Markets Infrastructure Regulation (EMIR) validation rules relating to the reporting of Variation margin received.
From 30 April onwards trade repositories (TRs) should not reject derivatives reports where field “Variation margin received” (1.30) is left blank for derivatives that are reported by the reporting counterparty as “Uncollateralised”.
ESMA updates EMIR Q&As
On 31 March 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers document on practical questions regarding reporting issues under the European Markets Infrastructure Regulation (EMIR).
This Q&A document aims to ensure that the supervisory activities of the competent authorities under the Regulation converge along the lines of the responses adopted by ESMA. It should also help investors and other market participants by providing clarity on EMIR requirements.
The updated Trade Repository (TR) Q&A 51 provides further clarifications on two aspects related to intragroup transactions (IGT) reporting exemption:
- Reporting of details of derivatives when the IGT reporting exemption ceases to be valid; and
- Location of parent undertaking for purposes of the IGT reporting exemption. The answer to this question is provided by the European Commission in accordance with Article 16b(5) of the ESMA Regulation.
European Single Access Point for financial and non-financial information (ESAP)
ESMA submits its response to the European Commission targeted consultation on the European Single Access Point (ESAP)
On 2 March 2021, the European Securities and Markets Authority (ESMA) published its response to the European Commission targeted consultation on the European Single Access Point (ESAP).
ESMA recommends a phased approach, which should prioritize financial and non-financial information of public companies.
A single access point for information about companies is one of the key missing components of the Capital Markets Union. ESMA is fully supportive of the ambition to set up the ESAP as it will increase investor trust in companies across the EU and lower the costs of capital.
ESMA is ready to take up a central role in setting up and running the ESAP as suggested by the CMU High Level Forum and the European Parliament.
ESMA also believes that full benefit of the ESAP can be reaped only if information included in the single database is comparable in terms of content and rendered in a structured, machine readable format. Therefore, ESMA supports an increased use of structured data formats whenever appropriate. However, in light of the complexity of the project, ESMA encourages the EC to carefully weight the scope of the ESAP versus feasibility and operability considerations.
ESMA’s position is aligned with the final recommendations of the High Level Forum on the Capital Markets Union on the ESAP and by the European Parliament Resolution on the CMU.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
ESMA presents the results of the 2020 Common Supervisory Action (CSA) on UCITS liquidity risk management
On 24 March 2021, the European Securities and Markets Authority (ESMA) published the results of the 2020 Common Supervisory Action (CSA) on UCITS liquidity risk management (LRM). The CSA showed that the overall level of compliance with the applicable rules is satisfactory in most cases, but there is scope for improvement in liquidity management for some UCITS analysed. The exercise also highlighted areas where ESMA will work to further promote convergence across National Competent Authorities (NCAs).
This exercise was launched on 30 January 2020. Its purpose was for all NCAs to conduct coordinated supervisory activities to assess whether UCITS managers comply with their LRM obligations. The CSA was also an opportunity to strengthen the ongoing exchange of supervisory knowledge and experience among NCAs.
To further improve the quality of LRM processes, market participants should critically review their LRM frameworks to ensure that none of these adverse supervisory findings exist in their frameworks. More generally, they should also ensure ongoing compliance with all relevant UCITS regulatory requirements, and associated EU and national guidance.
NCAs supervised the LRM practices of UCITS managers in their respective Member States with a high degree of convergence. Despite this, ESMA has identified the need for further convergence work with respect to NCAs follow-up actions, including enforcement actions where appropriate.
ESMA updates UCITS Q&As
On 30 March 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers on the application of the Undertakings for Collective Investment in Transferable Securities Directive (UCITS Directive).
ESMA has added two new Q&As on the ESMA’s guidelines on performance fees in UCITS and certain types of AIFs (“the guidelines”).
The Q&As provides clarification on the crystallisation of the performance fees and on the timeline of the application of the performance reference period.
The purpose of this Q&A document is to promote common supervisory approaches and practices in the application of the guidelines.
ESMA updates AIFMD Q&As
On 30 March 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers on the application of the Alternative Investment Fund Managers Directive (AIFMD).
ESMA has added two new Q&As on the ESMA’s guidelines on performance fees in UCITS and certain types of AIFs.
The Q&As provides clarification on the crystallisation of performance fees, on the timeline of the application of the performance reference period and the scope of the guidelines in respect of ELTIFs.
The purpose of this Q&A document is to promote common supervisory approaches and practices in the application of the guidelines.
Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)
ESMA clarifies application of position limits pending MiFID II change
On 19 March 2021, the European Securities and Markets Authority (ESMA) issued a public statement on its supervisory approach to position limits for commodity derivatives.
The purpose is to clarify the application of position limits and coordinate the supervisory actions of National Competent Authorities (NCAs), pending the legislative change introduced by the MiFID II Recovery Package for commodity derivatives. This legislative change will start to apply in early 2022.
Position limits, under the amended legal provisions, will only continue to apply to agricultural commodity derivatives and critical or significant commodity derivatives. In addition, positions that are objectively measurable as resulting from transactions entered into to fulfil obligations to provide liquidity on a trading venue will be exempted from position limits.
ESMA appreciates that position limits, which the co-legislators have decided to delete to help the recovery from the COVID-19 pandemic, may restrain the development of commodity derivative markets in the European Union, but ESMA cannot disapply the law.
However, considering the upcoming legislative change and other potential impacts on existing position limits, ESMA expects NCAs to not prioritize:
- supervisory actions towards entities holding positions in commodity derivatives, other than agricultural commodity derivatives, with a net open interest below 300,000 lots; and
- supervisory actions towards positions that are objectively measurable as resulting from transactions entered into to fulfil obligations to provide liquidity on a trading venue as per MiFID II.
EU publishes Commission Delegated Regulation (EU) 2021/527 of 15 December 2020 amending Commission Delegated Regulation (EU) 2017/565 as regards the thresholds for weekly position reporting
On 26 March 2021, the Commission Delegated Regulation (EU) 2021/527 of 15 December 2020 amending Commission Delegated Regulation (EU) 2017/565 as regards the thresholds for weekly position reporting was published in the Official Journal of the European Union (OJ).
The amendments are:
- As regards the open interest threshold, weekly position reports should be published where the total combined open interest in spot contracts and other months’ contracts is equal to, or exceeds, 10 000 lots.
- For contracts where there are fewer than five position holders in a given category of persons, the aggregate long and short positions, changes thereto since the previous report, the percentage of the total open interest in that category and the number of position holders in that category shall not be published.
EU publishes Commission Delegated Regulation (EU) 2021/529 of 18/12/20 establishing RTS as regards adjustment of liquidity thresholds & trade percentiles used to determine the size specific to the instrument applicable to certain non-equity instruments
On 26 March 2021, the Commission Delegated Regulation (EU) 2021/529 of 18 December 2020 establishing regulatory technical standards amending Delegated Regulation (EU) 2017/583 as regards adjustment of liquidity thresholds and trade percentiles used to determine the size specific to the instrument applicable to certain non-equity instruments was published in the Official Journal of the European Union (OJ).
The amendments aim to move to stage S2 for determining bonds for which there is a liquid market and for the size specific to the instrument for bonds.
- For determining the bonds for which there is not a liquid market, the approach for the liquidity criterion “average daily number of trades” shall be taken applying the “average daily number of trades” corresponding to stage S2 (10 daily trades).
- For determining the size specific to the bond-type financial instrument, the approach for the trade percentile to be applied shall be used applying the trade percentile corresponding to the stage S2 (40th percentile).
Considering that for other non-equity instruments than bonds ESMA’s first annual transparency calculations have only been published this year, there was not enough evidence to move to stage S2 for other classes of financial instruments, therefore:
- For determining the size specific to the other classes of financial instruments, the approach for the trade percentile to be applied shall be used applying the trade percentile corresponding to the stage S1 (30th percentile).
ESMA updates Q&As on inducements
On 29 March 2021, the European Securities and Markets Authority (ESMA) published updated Questions and Answers on the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).
The Q&As on MiFID II and MiFIR investor protection and intermediaries’ topics includes one new Q&A concerning one of the conditions specifying when an inducement can be considered as designed to enhance the quality of the relevant service to the client.
In particular, the new Q&A provides guidance on the application of three important elements contained in Article 11(2)(a) of the MiFID II Delegated Directive, notably the condition that the inducement is justified by the provision of:
- an additional or higher-level service,
- to the relevant client,
- proportional to the level of inducements received.
ESMA advices the European Commission (EC) on the application of administrative and criminal sanctions under MiFID II/MiFIR
On 29 March 2021, the European Securities and Markets Authority (ESMA) published its advice to the European Commission (EC) on the application of administrative and criminal sanctions under MiFID II/MiFIR.
The technical advice addresses the application of administrative and criminal sanctions, and particularly the need to further harmonise the administrative sanctions set out for infringements of MiFID II/MiFIR requirements.
ESMA’s technical advice includes proposals to:
- amend the MIFID II requirements for National Competent Authorities (NCAs) to disclose and report information on sanctions and measures;
- amend the MIFID II requirement for NCAs to liaise with judicial authorities to gather information on criminal sanctions;
- include settlement powers among the range of sanctions and measures of Member States’ national NCAs to increase the efficiency of their enforcement proceedings; and
- amend the current requirements on MiFID II precautionary measures.
ESMA proposes amendments to MIFIR transactions and reference data reporting regimes
The reporting requirements of Regulation No 600/2014 on markets in financial instruments (MiFIR) introduces a uniform and standardized EU-wide reporting regime. MiFIR applies to investment firms, credit institutions that provide investment services and/or perform investment activities, and market operators that includes any trading venues they operate. Also within the scope of MiFIR are financial counterparties, central clearing counterparties (CCPs) and third-country firms that provide investment services or activities in the EU with or without a branch (following an applicable equivalence decision by the European Commission).
On 24 September 2020, the European Securities and Markets Authority (ESMA) published a Consultation Paper seeking stakeholders’ views on some suggested amendments to the respective MiFIR Level 1 texts. The consultation period ended on 20 November 2020.
On 30 March 2021, based on the consultation feedback received, ESMA published a final report for the European Commission that contained recommendations and possible legislative amendments to the MiFIR transaction reporting regime. ESMA’s recommendations are particularly relevant for trading venues, systematic internalizers, investment firms, data reporting service providers, and asset management companies.
ESMA’s recommendations are particularly relevant for asset management companies.
To ensure a level playing field between MiFID investment firms and AIFM/UCITS management companies, ESMA has proposed to extend the scope of reporting requirements under Article 26 of MiFIR to UCITS and AIFM firms if they provide at least one MiFID service to third parties. Therefore, the proposed change should only affect AIFM/UCITS management companies providing one or more MiFID services that would trigger the obligation to report transactions under Article 26 of MiFIR. The proposed change will not cover transactions stemming from other activities conducted by AIFM/UCITS firms.
ESMA also proposes additional adjustments to the reporting framework that are specifically relevant to trading venues, systematic internalizers, investment firms and data reporting service providers, including:
- The replacement of the trading on a trading venue (TOTV) concept with the systematic internalizer (SI) approach for over-the-counter (OTC) derivatives;
- The removal of the short sale indicator;
- The alignment with reporting regimes such as the Market Abuse Regulation (MAR), the European Market Infrastructure Regulation (EMIR) and the Benchmark Regulation;
- The reliance on international standards, including legal entity identifiers (LEIs), international securities identification numbers (ISINs) and classification of financial instruments (CFIs); and
- The inclusion of three additional data elements to harmonize the way they are reported and avoid inconsistent and duplicate reporting of the same information at the national level. In particular, these are indicators for:
- Buyback programs;
- Information on MiFID II client categories; and
- Transactions pertaining to aggregated orders.
The European Commission is expected to adopt legislative proposals based on these recommendations. ESMA is ready to provide any additional technical advice on the legislative amendments suggested in the report.
ESMA promotes coordinated action on the suspension of best execution reports
On 31 March 2021, the European Securities and Markets Authority (ESMA) publishes a Public Statement to promote coordinated action by National Competent Authorities (NCAs) under MiFID II. The statement relates to the temporary suspension of the obligation on execution venues to make available to the public data related to the quality of execution of transactions on their venues (RTS 27 Reports).
The Directive amending MiFID II, under the Capital Markets Recovery Package, states that these reports are rarely read and do not enable investors and other users to make any meaningful comparisons on the basis of the information they contain. Following the adoption of this Directive on 16 February 2021, ESMA and NCAs have observed a lack of clarity among market participants on the application date of the suspension of the obligation to publish RTS 27 reports.
ESMA therefore publishes this statement to provide clarity on the application date of the suspension. Moreover, in light of the rationale of the suspension, ESMA expects NCAs not to prioritise supervisory actions towards execution venues relating to the obligation to publish the RTS 27 reports, until the date on which the national transposition measures apply.
ESMA publishes final guidelines on disclosure requirements under the EU Prospectus Regulation (EU) 2017/1129
On 4 March 2021, the European Securities and Markets Authority (ESMA) published final guidelines on disclosure requirements under the EU Prospectus Regulation (EU) 2017/1129. The guidelines provide guidance to financial market participants regarding the disclosure of financial and non-financial information in a prospectus. The purpose of the guidelines is to ensure that market participants have a uniform understanding of the relevant disclosure required in the various annexes included in Commission Delegated Regulation (EU) 2019/980.
AFME sets out the selling restrictions for equity transactions
On 8 March 2021, the Association for Financial Markets in Europe (AFME) sets out the selling restrictions for equity transactions for use in documentation for offerings or admissions taking place from January 2021 onwards.
These selling restrictions have been drafted on the basis that the implementation period under the UK EU Withdrawal Agreement has ended. AFME will continue to monitor any relevant developments and the policy of the UK Government and review whether any changes to these selling restrictions may be required.
The EEA selling restriction wording reflects the application in the EEA of Regulation EU 2017/1129 of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market. As a Regulation, it is binding in its entirety and directly applicable in all EEA Member States. Given this, no implementing measures were required at a national level. Therefore, there should be no need for additional or alternative Prospectus Regulation selling restrictions in relation to public offers in EEA jurisdictions, although there may be a need for additional selling restrictions to address other local requirements.
The UK selling restriction wording reflects the UK version of the Prospectus Regulation as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.
EU publishes Commission Delegated Regulation (EU) 2021/528 of 16/12/2020 on the minimum information content of the document to be published for a prospectus exemption in connection with a takeover by means of an exchange offer, a merger or a division
On 26 March 2021, the Commission Delegated Regulation (EU) 2021/528 of 16 December 2020 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council as regards the minimum information content of the document to be published for a prospectus exemption in connection with a takeover by means of an exchange offer, a merger or a division was published in the Official Journal of the European Union (OJ).
To ensure that investors are provided with the necessary information to take an informed investment decision, a more comprehensive exemption document should be required in case of a takeover by means of an exchange offer when, in that case, the equity securities offered are not fungible with existing securities already admitted to trading on a regulated market prior to the takeover and its related transaction, or the takeover is considered to be a reverse acquisition transaction.
- The expanded content of the exemption document in such situations is specified.
- To limit unnecessary costs for issuers, an exemption document will be lighter where, in connection with a transaction, the equity securities offered to the public or to be admitted to trading on a regulated market are fungible with equity securities already admitted to trading on a regulated market, and represent a small percentage of those equity securities.
- To simplify drafting and to reduce costs of producing an exemption document, issuers will be allowed to incorporate by reference into that document certain information that already has been published in electronic form, provided such information is easily accessible and is written in the same language as the exemption document.
- Issuers will be obliged to describe in the exemption document their complex financial history or the effects on the issuer or on the issuer’s business of the significant financial commitment undertaken.
Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT Regulation)
EP publishes draft report on the proposal for a regulation of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology
On 11 March 2021, the European Parliament published a draft report on the proposal for a regulation of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology.
As part of its Digital Finance package, the European Commission published a draft Regulation regarding a pilot regime for market structures based on distributed ledger technology (the “DLT Pilot Regime”).
The proposed Regulation aims at providing a mechanism for allowing market infrastructures to experiment with certain restricted use of DLT. More specifically, firms already authorised to operate specific market infrastructures would be allowed to apply for specific temporary exemptions from certain restrictions and requirements in financial services legislation, and thus be permitted to restructure their activities making use of DLT.
The experience and understanding gained by supervisory authorities regarding the application of current EU financial services legislation to DLT-based market infrastructures is expected to inform future legislative developments
Securities Financing Transactions Regulation (SFTR)
ESMA publishes Guidelines on reporting under Articles 4 and 12 SFTR
On 29 March 2021, the European Securities and Markets Authority (ESMA) published Guidelines on reporting under Articles 4 and 12 SFTR.
These guidelines aim to clarify a number of provisions of SFTR and to provide practical guidance on the implementation of some of those provisions. The Guidelines will contribute to the reduction of costs along the complete reporting chain - the counterparties that report the data, the TRs which put in place the procedures to verify the completeness and correctness of data, and the authorities, defined in Article 12(2) SFTR, which use the data to supervise risks to financial stability. The guidelines provide clarity as to the following aspects:
a. the reporting start date when it falls on a non-working day.
b. the number of reportable SFTs;
c. the population of reporting fields for different types of SFTs;
d. the approach used to link SFT collateral with SFT loans;
e. the population of reporting fields for margin data;
f. the population of reporting fields for reuse, reinvestment and funding sources data;
g. the generation of feedback by TRs and its subsequent management by counterparties, namely in the case of
(i) rejection of reported data and
(ii) reconciliation breaks;
and h. the provision of access to data to authorities by TRs.
This publication concerns the official translation publishes by ESMA.
ESAs publish Q&As on cross-sectoral aspects of the Securitisation Regulation
On 26 March 2021, the European Supervisory Authorities (ESAs) published Questions and Answers (Q&As) on cross-sectoral aspects of the Securitization Regulation.
The Q&As clarify topics in relation to the application of the Securitization Regulation to help market participants comply with their obligations and to foster cross-sectoral consistency in the implementation of the securitization requirements in the EU.
In particular, the Q&As clarify:
- the content and the format of the information of a securitization transaction that should be disclosed by the originator, sponsor and SSPE;
- the transaction documentation of a Simple, Transparent and Standardized (STS) securitization that should be made publicly available to facilitate investors’ compliance with its due diligence requirements; and
- the type of STS certification services that can be provided by Third Parties Verifiers to the securitization parties.
Sustainable Finance / Green Finance
ESMA proposes rules for Taxonomy-alignment of non-financial undertakings and asset managers
On 1 March 2021, the European Securities and Markets Authority (ESMA) published its Final Report on advice under Article 8 of the Taxonomy Regulation, which covers the information to be provided by non-financial undertakings and asset managers to comply with their disclosure obligations under the Non-Financial Reporting Directive (NFRD).
The recommendations define the Key Performance Indicators (KPIs) disclosing how, and to what extent, the activities of businesses that fall within the scope of the NFRD qualify as environmentally sustainable under the Taxonomy Regulation. The key recommendations relate to the definitions to be used by non-financial undertakings for the calculation of the turnover KPI, the CapEx KPI and the OpEx KPI, and the KPI that asset managers should disclose.
EC publishes reports on development of EU sustainability reporting standards
On 8 March 2021, the European Commission publishes two reports on development of EU sustainability reporting standards.
These reports, which were prepared at the request of the Commission following an invitation from the Economic and Financial Affairs Council, are an important step in the development of corporate sustainability reporting across the EU. Both reports recognise the importance of coordinating the development of EU sustainability reporting standards with existing and emerging global initiatives. EU sustainability standards are necessary to meet the political ambition and urgent timetable of the European Green Deal. They are also necessary to ensure consistency of reporting rules at the heart of the EU’s sustainable finance agenda , especially the existing Sustainable Finance Disclosure Regulation, the Non-Financial Reporting Directive (NFRD), the Taxonomy Regulation, as well as with the requirements of forthcoming legislation on sustainable corporate governance and due diligence.
The first report proposes a roadmap for the development of a comprehensive set of EU sustainability reporting standards. It was prepared by a multistakeholder task force established by the European Financial Reporting Advisory Group (EFRAG).
A second report proposes reforms to EFRAG’s governance structure to ensure that future EU sustainability reporting standards are developed using an inclusive and rigorous process. It sets out, for example, how national and European authorities will be involved, while ensuring that the process also draws upon the expertise of the private sector and civil society.
EFAMA publishes Market Insights No 4 on ESG investing in the UCITS market
On 10 March 2021, the European fund and Asset Management Association (EFAMA) published Market Insights No 4 on ESG investing in the UCITS market.
This Market Insights looks at the trends in the ESG UCITS market and specifically:
- contrasts the growth of ESG funds to that of non-ESG funds in the UCITS market since 2016;
- sheds light on the performance and ongoing charges of these two categories of funds;
- analyses the resilience of ESG funds both in terms of investor demand and performance following the market turbulence caused by the COVID-19 pandemic.
EC publishes the advice on financing the transition provided by the Platform on Sustainable Finance
On 19 March 2021, the European Commission published the advice on financing the transition provided by the Platform on Sustainable Finance.
The Commission will consider the advice when finalizing the draft delegated act on climate mitigation and climate adaptation, in the context of the Taxonomy Regulation, and when preparing its Renewed Sustainable Finance Strategy and other sustainable-finance related initiatives.
The Platform makes recommendations that fall into three broad categories:
(i) Maximize inclusiveness but maintain the integrity of the current Taxonomy framework
- Communicate (more) about how the taxonomy already supports transition finance
- Ensure that reporting requirements enable companies, financiers and investors to communicate their transition plans
- Include more enabling activities in the Taxonomy
- Recognize activities that are part of an activity-specific investment plan to meet the Taxonomy criteria, through CapEx, OpEx and related finance
- Provide clarity to stakeholders on when new activities will be considered for inclusion in the Taxonomy and how they can engage with the Platform
- Update the Climate Delegated Act to recognize similar activities across different sectors
(ii) Opportunities to develop the future Taxonomy framework
- Develop criteria for activities with no significant impact
- Develop criteria for activities that cause significant harm
- Support and define improvements in performance levels between substantial contribution and significant harm
- Include activities that enable companies to stop performing significantly harmful activities
(iii) Utilize other (non-Taxonomy) policies and tools to further support transition finance
- Financial product labelling
- Establish activity-specific transition pathways based on Taxonomy criteria
- Utilize metrics and tools outside the Taxonomy, including the Climate Transition Benchmark.
Here are three publications from the NGFS concerning Sustainable Finance
Here are three publications from the NGFS concerning Sustainable Finance.
1. On 31 March 2021, the Network for Greening the Financial System (NGFS) published dashboard on scaling up green finance.
It is The dashboard on scaling up green finance is based on a set of ideal indicators that makes it possible to track and understand the greening of national financial systems. It is a first attempt to catalogue desirable series that allow the evolution, change and trend of a phenomenon (rather than its absolute level) to be analysed.
Furthermore, while the dashboard is presented at an aggregate level, it is intended for use at the jurisdictional level. To this end, the dashboard includes graphs for aggregate regions on the left and basic metadata on the right that describe the country coverage and provide sources where these data and further breakdowns can be found, i.e. links to mostly interactive websites.
Possible sources of data were identified, at least partially, for 21 indicators. Moreover, the dashboard is accompanied by a note that introduces the dashboard and highlights data gaps, in particular; i.e. “must-have” indicators for which sources have not yet been identified. This is the case for 9 additional indicators.
The dashboard including metadata with the charts as separate graphics files and a structured Excel file with the source data for the charts is self-containing.
2. On 31 March 2021, the Network for Greening the Financial System (NGFS) published Annual report 2020. It provides a detailed overview of the various steps taken by the Network in 2020 and lists in particular all the highlights of the year.
3. On 31 March 2021, the Network for Greening the Financial System (NGFS) published a report entitled “Sustainable Finance Market Dynamics: an overview”. It presents an overview of the market dynamics for mobilizing sustainable finance and identifies three main channels through which financial markets can help steer the necessary transformation of the real economy towards higher levels of sustainability: disclosure, risk management, and the mobilization of capital. Hence, the report provides key takeaways on the need for improvement for further consideration by policymakers and market participants.
Alternative investment fund managers Directive (AIFMD)
AMF publishes its position regarding the AIFMD review / L'AMF publie sa position concernant la révision de l'AIFMD
On 17 March 2021, the Autorité des marchés financiers (AMF) publishes its position regarding the Alternative Investment Fund Managers Directive (AIFMD) review.
The regulator outlines its recommendations for a more effective supervision of alternative investment fund managers.
In order to promote a more effective supervision that is better adapted to key risks such as liquidity risks, the AMF advocates an improved and harmonised regulatory framework for asset management, through amendments to the AIFMD which could also be reflected in amendments to the UCITS Directive with the objective of reducing unnecessary differences between the two directives. In this context, the AMF supports the following proposals:
- in situations where supervision is fragmented between several authorities due to the use of the management passport, a leading supervisory role should be given to the competent authority in charge of supervising the fund manager to monitor its activities across the EU. This would include a comprehensive access to relevant supervisory information on all funds managed by this entity;
- while acknowledging the benefits of delegation to structure businesses and source expertise, as highlighted by ESMA, certain types of extensive delegation arrangements – such as those where fund managers solely provide middle and back-office services without retaining any portfolio management expertise – should be scrutinized to ensure AIFM and UCITS managers remain ultimately in charge of the key business functions and decisions;
- a thorough examination of the current reporting requirements is necessary to enhance regulators’ capacity to supervise investment funds and monitor the different types of risks that may arise from their activities, from both a micro and macro perspective;
- a common EU framework is needed in order to make the use of LMTs available in all EU jurisdictions with gates becoming a mandatory LMT;
- further harmonisation and consistency should be introduced between AIFMD, UCITS and MIFID to reduce unnecessary differences in obligations between entities providing the same services.
Regarding this last proposal, the AMF recommends a common set of rules for asset managers in areas such as conflicts of interest, reporting, delegation, liquidity risk management as well as the definition of leverage.
Le 17 mars 2021, l'Autorité des marchés financiers (AMF) a publié sa position concernant la révision de l'AIFMD.
Le régulateur fait part de ses recommandations pour une supervision plus efficace des gestionnaires de fonds d’investissement alternatif.
Dans l’objectif de promouvoir une supervision plus efficace et mieux adaptée aux risques clés tels que les risques de liquidité, l’AMF prône un cadre réglementaire amélioré et harmonisé pour la gestion d’actifs, via des amendements à la directive AIFM, qui pourraient être répercutés également dans la directive UCITS lorsque cela permet de réduire les différences inutiles entre les deux directives. Dans ce contexte, l’AMF soutient les propositions suivantes :
- dans les situations où la supervision est fragmentée entre plusieurs autorités du fait du recours au passeport gestion, un rôle de supervision prépondérant devrait être donné à l’autorité compétente en charge de la supervision du gestionnaire de fonds pour contrôler l’ensemble de ses activités dans l’UE. Cela comprendrait un accès à toute information pertinente à la supervision de cette entité pour tous les fonds gérés ;
- tout en reconnaissant les bienfaits de la délégation en matière d’organisation et d’expertise, il conviendrait, comme le souligne l’ESMA, d’examiner certains types de délégation extensive – comme ceux qui conduisent les gérants à déléguer l’intégralité de la gestion de portefeuille pour fournir uniquement des services de middle et back-office – afin de vérifier que les gestionnaires AIFM et UCITS restent bien responsables des fonctions et décisions clés ;
- un examen détaillé des règles de reporting est nécessaire pour améliorer la capacité des régulateurs à superviser les fonds d’investissements et à surveiller les différents types de risques liés à leurs activités, à la fois au niveau micro et macro ;
- un cadre européen devrait être mis en place pour permettre l’usage des outils de gestion de liquidité dans toutes les juridictions de l’UE et imposer la possibilité de recourir au mécanisme de plafonnement des rachats (gates) ;
- une harmonisation et une cohérence plus poussées devraient être introduits entre les directives AIFM, UCITS et MIF afin de minimiser les écarts de règles non justifiés pour les entités fournissant les mêmes services.
Concernant cette dernière proposition, l’AMF recommande des règles communes pour les gestionnaires d’actifs en matière de gestion des conflits d’intérêts, de reporting, de délégation, de gestion du risque de liquidité et de définition du levier.
France publishes Decree 2021-262 on the eligibility of securities in unit-linked life insurance policy following the Brexit / La France publie le Décret no.2021-262 sur l’éligibilité des titres au contrat d’assurance vie en unités de compte suite au Brexi
On 11 March 2021, the Decree 2021-262 of 9 March 2021 on the eligibility of securities in unit-linked life insurance policies following the withdrawal of the United Kingdom from the European Union was published in the Official Journal.
The withdrawal of the United Kingdom from the European Union will make certain UK securities (units or shares of UCITS) ineligible for units of account offered in French life insurance policies. The decree ensures the continuity of existing contracts prior to the date of the UK's withdrawal from the European Union in order to protect the interests of savers. The securities concerned will no longer be eligible for new subscriptions or new arbitration choices in existing contracts.
Le 11 mars 2021, le Décret no.2021-262 du 9 mars 2021 relatif à l’éligibilité des titres aux contrats d’assurance vie en unités de compte à la suite du retrait du Royaume-Uni de l’Union européenne a été publié au Journal Officiel.
Le retrait du Royaume-Uni de l’Union européenne entraîne l’inéligibilité de certains titres britanniques (parts ou actions d’OPCVM) aux unités de comptes proposées dans les contrats d’assurance-vie en France. Le décret assure la continuité des contrats existants préalablement à la date de retrait du Royaume-Uni de l’Union européenne afin de protéger les intérêts des épargnants. Les titres concernés ne pourront plus faire l’objet de nouvelles souscriptions ou de nouveaux choix d’arbitrage dans le cadre de contrat existants.
AMAFI publishes an associations' joint letter concerning the conflicting applications of EU and UK DTOs / L'AMAFI publie une lettre jointe des associations concernant les applications contradictoires des DTO de l'UE et du Royaume-Uni
On 26 March 2021, the Association Française des Marchés Financiers (Amafi) published an associations' joint letter concerning the conflicting applications of EU and UK DTOs.
The associations propose statistics on flows to EU venues. While flows to EU venues have increased post-Brexit, the market share and competitiveness of EU intermediaries strongly suffer from the conflicting applications of EU and UK DTOs.
Le 26 mars 2021, l'Association Française des Marchés Financiers (Amafi) a publié une lettre conjointe des associations concernant les applications contradictoires des DTO de l'UE et du Royaume-Uni.
Les associations proposent des statistiques sur les flux vers les lieux de l'UE. Bien que les flux vers les lieux de l'UE ont augmenté après le Brexit, la part de marché et la compétitivité des intermédiaires de l'UE souffrent fortement des applications conflictuelles des DTO de l'UE et du Royaume-Uni.
COVID-19 Regulatory Measures
France publishes Decree no.2021-255 of 9/3/21 extending the period of application of order no.2020-321, 2020-418, 2020-629 / La France publie le Décret no.2021-255 du 9/3/21 prorogeant la durée d’application des décrets no.2020-321, 2020-418 et 2020-629
On 6 March 2021, the Decree no. 2021-255 of 9 March 2021 extending the period of application of order no. 2020-321 of 25 March 2020, decree no. 2020-418 of 10 April 2020 and decree no. 2020-629 of 25 May 2020 was published in the Official Journal.
The Decree aims at extending until 31 July 2021 the period of application of the amended Order n° 2020-321 of 25 March 2020 adapting the rules of meeting and deliberation of the assemblies and governing bodies of legal persons and entities without legal personality under private law due to the covid-19 epidemic, Decree no. 2020-418 of 10 April 2020, as amended, adapting the rules for meetings and deliberations of the assemblies and governing bodies of legal persons and entities without legal personality under private law due to the COVID-19 epidemic, and Article 1 of Decree no. 2020-629 of 25 May 2020, as amended, relating to the operation of the bodies of provident institutions and the joint guarantee fund provided for in Article L. 931-35 of the Social Security Code.
The decree applies to legal persons and entities without legal personality under private law; certain provisions specifically concern limited liability companies and certain joint stock companies, assemblies of holders of certain types of securities, certain persons governed by the Insurance Code, and certain persons governed by the Social Security Code.
Le 6 mars 2021, le Décret no 2021-255 du 9 mars 2021 prorogeant la durée d’application de l’ordonnance no 2020-321 du 25 mars 2020, du décret no 2020-418 du 10 avril 2020 et du décret no 2020-629 du 25 mai 2020 a été publié au Journal Officiel.
Le décret proroge jusqu’au 31 juillet 2021 de la durée d’application de l’ordonnance no 2020-321 du 25 mars 2020 modifiée portant adaptation des règles de réunion et de délibération des assemblées et organes dirigeants des personnes morales et entités dépourvues de personnalité morale de droit privé en raison de l’épidémie de covid-19, du décret no 2020-418 du 10 avril 2020 modifié portant adaptation des règles de réunion et de délibération des assemblées et organes dirigeants des personnes morales et entités dépourvues de personnalité morale de droit privé en raison de l’épidémie de covid-19, et de l’article 1er du décret no 2020-629 du 25 mai 2020 modifié relatif au fonctionnement des instances des institutions de prévoyance et au fonds paritaire de garantie prévu à l’article L. 931-35 du code de la sécurité sociale.
Le décret s’applique aux personnes morales et entités dépourvues de personnalité morale de droit privé ; certaines dispositions concernent spécifiquement les sociétés à responsabilité limitée et certaines sociétés par actions, les assemblées de porteurs de certains types de valeurs mobilières, certaines personnes régies par le code des assurances, ainsi que certaines personnes régies par le code de la sécurité sociale.
European Long-Term Investment Funds (ELTIF)
AMF publishes its proposals for the review of the regulation on ELTIF / L'AMF publie ses propositions pour la révision de la réglementation sur ELTIF
On 29 March 2021, the Autorité des marchés financiers (AMF) published its proposals for the review of the regulation on European long-term investment funds (ELTIF).
The AMF is making proposals to enhance the attractiveness of this type of European fund for many investors while maintaining a protective framework for retail investors.
The AMF position paper proposes to:
- raise the market capitalisation threshold of listed issuers in which ELTIFs are allowed to invest from €500 million to €1 billion;
- clarify the eligibility of financial undertakings such as acquisition holding companies and SPVs, in order to allow investment in private-equity schemes;
- authorise ELTIFs dedicated only to professional investors, providing them with a more flexible structure including, for example, the possibility of using derivatives or creating master-feeder structures;
- remove the minimum entry threshold of €10,000 per retail investor, while maintaining the regulatory requirements to advise and conduct suitability tests prior to any marketing to retail investors;
- maintain the closed-ended nature of ELTIFs to ensure consistency between the redemption policy and the liquidity profile of underlying assets, but consider periodic liquidity mechanisms and promote trading venues that are likely to offer secondary markets for ELTIFs;
- should the co-legislators decide to allow ELTIFs to offer more frequent redemptions and therefore switch from closed-end to open-end fund status, provide for strict liquidity management requirements and entrust the supervision of ELTIFs to ESMA.
Le 29 mars 2021, l'Autorité des marchés financiers (AMF) a publié ses propositions sur la revue du règlement sur les fonds européens d’investissement à long terme (ELTIF).
Le papier de position de l’AMF met en avant les propositions suivantes :
- relever de 500 millions à 1 milliard d'euros le plafond de capitalisation boursière des émetteurs cotés dans lesquels les ELTIF sont autorisés à investir ;
- clarifier l’éligibilité au portefeuille des entreprises financières telles que les holdings d’acquisition et les SPV, afin de permettre l’investissement dans les montages propres au capital-investissement ;
- autoriser des fonds ELTIF qui seraient dédiés uniquement aux investisseurs professionnels, en les dotant d’une structure plus souple incluant par exemple la possibilité de recourir aux dérivés ou de constituer des structures maîtres - nourriciers ;
- supprimer le seuil minimum d'entrée de 10 000 € par épargnant, tout en maintenant le devoir de conseil et le questionnaire d’adéquation préalablement à toute commercialisation aux investisseurs de détail ;
- maintenir le caractère fermé des ELTIF, afin d’assurer la cohérence entre la politique de rachat et le profil de liquidité des actifs sous-jacents, mais envisager des mécanismes de liquidité périodique et promouvoir les plateformes susceptibles d’offrir un marché secondaire pour les fonds ELTIF ;
- si toutefois les co-législateurs décidaient d’autoriser les ELTIF à offrir des rachats plus fréquents et donc à basculer d’un statut de fonds fermés à celui de fonds ouverts, prévoir des exigences strictes de gestion de la liquidité et confier la supervision des fonds ELTIF par l’ESMA.
European Single Electronic Format (ESEF)
AMF updates instruction on the filing arrangements of the universal registration documents / L'AMF met à jour son instruction sur les modalités de dépôt des documents d’enregistrement universels
On 26 March 2021, the Autorité des marchés financiers (AMF) updated its instruction on the filing arrangements of the universal registration documents.
AMF instruction DOC-2019-21 on the procedures for filing and publishing universal registration documents (DEU) and prospectuses was updated in January 2021. These changes were made following the entry into force of the Delegated Regulation (EU) 2019/815 of 17 December 2018 relating to the single electronic information format and the commissioning of the new ESMA portal. The AMF reminds the financial market participants of the procedures for submitting DEUs which are subject to a posteriori control.
Le 26 mars 2021, l'Autorité des marchés financiers (AMF) a mis à jour son instruction sur les modalités de dépôt des documents d’enregistrement universels.
L’instruction de l’AMF DOC-2019-21 sur les modalités de dépôt et de publication des documents d’enregistrement universels (DEU) et des prospectus a été mise à jour en janvier 2021. Ces modifications ont été apportées à la suite de l’entrée en vigueur du Règlement Délégué (UE) 2019/815 du 17 décembre 2018 relatif au format d’information électronique unique et de la mise en service du nouveau portail de l’ESMA. L’AMF rappelle les modalités de dépôt des DEU qui font l’objet d’un contrôle a posteriori.
AMAFI publishes a summary of the requirements let down in Regulation (EU) 2021/337 of 16 February 2021 amending the Prospectus Regulation / L'AMAFI publie une synthèse des obligations du Règlement (UE) 2021/337 modifiant le Règlement Prospectus
On 29 March 2021, the Association Française des Marchés Financiers (Amafi) published a summary of the requirements let down in Regulation (EU) 2021/337 of 16 February 2021 amending the Prospectus Regulation .
The purpose of this document is to present, in summary form, the various contributions of Regulation (EU) 2021/337 of 16 February 2021 amending Regulation (EU) 2017/1129 (the "Prospectus Regulation") as regards the Union's relaunch prospectus and targeted adjustments for financial intermediaries and Directive 2004/109/EC as regards the use of the single electronic reporting format for annual financial reports, in order to support the recovery from the COVID-19 crisis. Annex 1 to this document sets out in "consolidated" form the new provisions introduced by Regulation (EU) 2021/337 ("the new Regulation") published in the OJEU (Official Journal of the European Union) on 26 February 2021.
Le 29 mars 2021, l'Association Française des Marchés Financiers (Amafi) a publié une synthèse des obligations du Règlement (UE) 2021/337 modifiant le Règlement Prospectus.
Le présent document a pour objet de présenter, sous forme synthétique, les différents apports du Règlement (UE) 2021/337 du 16 février 2021 modifiant le modifiant le règlement (UE) 2017/1129 (le « Règlement Prospectus ») en ce qui concerne le prospectus de relance de l’Union et des ajustements ciblés pour les intermédiaires financiers et la directive 2004/109/CE en ce qui concerne l’utilisation du format d’information électronique unique pour les rapports financiers annuels, afin de soutenir la reprise après la crise due à la COVID-19. L’annexe 1 du présent document, présente sous une forme « consolidée », les nouvelles dispositions apportées par le Règlement (UE) 2021/337 (« le nouveau Règlement ») publié au JOUE (Journal officiel de l’Union européenne) le 26 février 2021.
AFTI publishes "European Letter" no. 32 on financial markets' developments from November 2020 to January 2021 / L'AFTI publie la "Lettre européenne" n° 32 sur l'évolution des marchés financiers de novembre 2020 à janvier 2021
On 4 March 2021, the Association Française des Titres (AFTI) published an "European Letter" no. 32 on financial markets' developments from November 2020 to January 2021.
The Letter covers the topics below:
- Euralia - Brexit: Financial services, the poor relation of the trade agreement?
- AIFMD: on the way to the revision of the directive
- CSDR: REFIT review on track for 2021
- EMIR: ESMA proposes new RTS and ITS
- Central counterparties: resolution and recovery framework finally adopted Benchmarks: EU ready for LIBOR to disappear
- New European Commission strategy for an open, strong and resilient European financial and economic system: market infrastructures at the heart of the European Commission's ambitions
- Waiting for MiFID III
- Fund managers must be better prepared for adverse shocks, says ESMA
- Taxonomy: first hurdles for European Commission's delegated acts.
Le 4 mars 2021, l'Association Française des Titres (AFTI) a publié la "Lettre européenne" n° 32 sur l'évolution des marchés financiers de novembre 2020 à janvier 2021.
La lettre couvre les sujets suivants:
- Euralia - Brexit : les services financiers, parent pauvre de l'accord commercial ?
- AIFMD : en route vers la révision de la directive
- CSDR : la révision REFIT en marche pour 2021
- EMIR : l'ESMA propose de nouvelles RTS et ITS
- Contreparties centrales : le cadre de résolution et de redressement enfin adopté Indices de référence : l'UE prête pour la disparition du LIBOR
- Nouvelle stratégie de la Commission européenne pour l'ouverture, la solidité et la résilience du système économique et financier européen : les infrastructures de marché au cœur des ambitions de la Commission européenne
- En attendant MiFID III
- Les gestionnaires de fonds doivent mieux se préparer aux chocs négatifs selon l'ESMA
- Taxonomie : les premières difficultés se présentent pour les actes délégués de la Commission européenne.
France publishes Decree No.2021-318 of 25 March 2021 relating to the State guarantee for 2021 / La France publie le Décret no 2021-318 du 25 mars 2021 relatif à la garantie de l’Etat pour 2021
On 26 March 2021, the Decree n ° 2021-318 of 25 March 2021 relating to the State guarantee provided for in article 209 of the finance law n ° 2020-1721 of 29 December 2020 for 2021 was published in the Official Journal.
The decree sets the conditions for the implementation of the state guarantee provided for in Article 209 of the Finance Act No. 2020-1721 of 29 December 2020.
The latter applies to small and medium-sized enterprises, intermediate-sized enterprises, credit institutions, finance companies, alternative investment funds and institutional investors.
Le 26 mars 2021, le Décret no 2021-318 du 25 mars 2021 relatif à la garantie de l’Etat prévue à l’article 209 de la loi no 2020-1721 du 29 décembre 2020 de finances pour 2021 a été publié au Journal Officiel.
Le décret fixe les conditions de mise en œuvre de la garantie de l’Etat prévue à l’article 209 de la loi no 2020-1721 du 29 décembre 2020 de finances pour 2021.
Ce dernier s’applique aux petites et moyennes entreprises, entreprises de taille intermédiaire, établissements de crédit, sociétés de financement, fonds d’investissements alternatifs, investisseurs institutionnels.
France publishes an order on the internal control of banks, payment and investment services subject to ACPR supervision / La France publie l'arrêté sur le contrôle interne des banques, services d’investissement et paiement sous contrôle de l’ACPR
On 6 March 2021, the Order of 25 February 2021 amending the order of 3 November 2014 on the internal control of undertakings in the banking, payment services and investment services sector subject to supervision by the Autorité de contrôle prudentiel et de résolution was published in the Official Journal.
This order updates the order of 3 November 2014 on internal control in order to take into account certain provisions that have been adopted at both international and European level and to adapt to certain market practices. In particular, it clarifies the different levels of control that may exist and specifies the obligations that must be complied with in terms of both data aggregation and IT risk management. Compliance with the provisions on IT risk management is without prejudice to the other provisions of this order and must be consistent with the overall organisation of internal control prescribed in this order.
The order applies to the banking sector, payment and investment services firms subject to supervision by the Autorité de contrôle prudentiel et de résolution.
Le 6 mars 2021, l'Arrêté du 25 février 2021 modifiant l’arrêté du 3 novembre 2014 relatif au contrôle interne des entreprises du secteur de la banque, des services de paiement et des services d’investissement soumises au contrôle de l’Autorité de contrôle prudentiel et de résolution a été publié au Journal Officiel.
Le présent arrêté vise à mettre à jour l’arrêté du 3 novembre 2014 en matière de contrôle interne afin de prendre en compte certaines dispositions ayant été adoptées tant au niveau international qu’au niveau européen et de s’adapter à certaines pratiques de place. Il clarifie notamment les différents niveaux de contrôle qui peuvent exister et précise les obligations qui doivent être respectés tant en matière d’agrégation des données que de gestion du risque informatique. Le respect des dispositions relatives à la gestion du risque informatique est sans préjudice des autres dispositions de cet arrêté et doit se faire en cohérence avec l’organisation globale du contrôle interne prescrite dans cet arrêté.
Cet arrêté s’applique aux entreprises du secteur de la banque, des services de paiement et des services d’investissement soumises au contrôle de l’Autorité de contrôle prudentiel et de résolution.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
AMF updates its policy on performance fees / L'AMF met à jour sa doctrine relative aux commissions de surperformance
On 16 March 2021, the Autorité des marchés financiers (AMF) updated its policy on performance fees.
After incorporating the ESMA's guidelines on performance fees in UCITS and certain types of AIFs (ESMA34-39-992) into its new position DOC-2021-01, the AMF has updated its policy on UCITS and AIFs.
Position - Recommendation AMF DOC-2012-12 has been amended to clarify the rules applicable to performance fees depending on the type of collective investment managed by a French asset management company.
Changes made to "product" instructions and their appendices
AMF Instructions DOC-2011-19, DOC-2011-20 and DOC-2011-21 and their appendices relating to the standard template for KIIDs, prospectuses or regulations, have been updated to include the information requested by ESMA in Guideline 5 on the information needed to enable investors to properly understand the performance fee model, the computation method and the potential impact on investment returns. This has been done with a focus on providing guidance and education.
Amendments made to the Guide to Drafting Collective Investment Marketing Materials
Position-Recommendation DOC-2011-24 has also been adjusted, also with a view to providing guidance and education, to include a reference to the ESMA guidelines, which contain specific provisions on the content of promotional marketing materials.
Reminder of the timetable of implementation of guidelines
The guidelines entered into force on 5 January 2021. Accordingly, for any new collective investment schemes that fall within the scope of these guidelines, the regulatory and marketing materials will have to include the new details on performance fees. Existing collective investment schemes that fall within the scope of these guidelines that were already charging performance fees have a transition period and their regulatory documents should be updated before the beginning of the accounting period starting six months after the date of application of the guidelines.
Le 16 mars 2021, l'Autorité des marchés financiers (AMF) a mis à jour sa doctrine relative aux commissions de surperformance.
A la suite de l’intégration dans la nouvelle position DOC-2021-01 des orientations publiées par l’ESMA concernant les commissions de surperformance dans les organismes de placement collectif en valeurs mobilières et certains types de fonds d’investissement alternatifs (ESMA34-39-992), l’AMF a actualisé sa doctrine relative aux OPCVM et FIA.
La position-recommandation AMF DOC-2012-12 est modifiée afin de clarifier quelles sont les règles applicables en matière des commissions de surperformance selon le type de placement collectif gérés par une société de gestion de portefeuille française.
Modifications apportées aux instructions « produits » et leurs annexes
Les instructions AMF DOC-2011-19, DOC-2011-20 et DOC-2011-21 ainsi que leurs annexes relatives au plan type de DICI, de prospectus ou de règlement, sont actualisées afin d’intégrer, dans une logique d’accompagnement et de pédagogie, les mentions demandées par l’ESMA dans l’orientation n° 5 relatives aux informations nécessaires pour permettre aux investisseurs de comprendre correctement le modèle de commission de surperformance, la méthode de calcul ou encore leur incidence potentielle sur le rendement des investissements.
Modifications apportées au Guide de rédaction des documents commerciaux des placements collectifs
Egalement dans une logique d’accompagnement et de pédagogie, la position-recommandation AMF DOC-2011-24 est ajustée afin d’y insérer un renvoi vers les orientations de l’ESMA qui prévoient des dispositions particulières concernant le contenu de la documentation promotionnelle.
Rappel du calendrier d’entrée en application des orientations
Les orientations sont entrées en application le 5 janvier 2021. Ainsi, pour tout nouveau placement collectif relevant du champ d'application de ces orientations, les documents règlementaires et commerciaux devront comporter les nouvelles précisions en matière de commissions de surperformance. Les placements collectifs existants relevant du champ d'application de ces orientations qui appliquaient déjà des commissions de surperformance disposent d'une période de transition et les documents règlementaires devront être actualisés avant le début de l’exercice comptable commençant six mois après la date d'application des orientations.
Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)
Markets in financial instruments Directive and Regulation (MiFID II / MiFIR) / L'AMF publie la synthèse SPOT sur l’adéquation des instruments financiers recommandés aux clients non-professionnels
On 11 March 2021, the Autorité des marchés financiers (AMF) published the summary of its short thematic inspections on the suitability of the financial instruments recommended to retail clients.
During these inspections, the AMF focused on:
- the scope and procedures for collecting client information;
- the procedures for implementation of the suitability test;
- verification by the institution of the existence of other equivalent financial instruments which could correspond to the client's profile, taking into consideration their cost and complexity;
- the submission and content of the suitability report summarising the advice given to the client; and
- the control system on the topic of suitability.
In its summary document, while the AMF stresses numerous good practices, it still notes significant shortcomings in complying with the required due diligence regarding suitability.
1) Collection of information on the client and assessment of their knowledge
The collection of information on the client's situation is essential in order to provide appropriate advice.
Among the good practices observed, the summary stresses the fact of providing for measures allowing the client to increase their knowledge concerning a financial instrument while restricting investment in it, temporarily and in the client's interest. The use of scenarios presenting the risk/return ratio, or again the assessment of the client's reaction to a potential market downturn in order to assess their risk tolerance, were also highlighted.
2) The suitability test
To assess the institutions' implementation of the suitability test, the regulator tested a sample of transactions performed. In this context, cases of unsuitability were noted. Some of these cases of unsuitability can be explained by late implementation of the MiFID II provisions in the model questionnaires and/or tools used to assess clients.
3) The suitability report
Although the four institutions do indeed have procedures concerning the submission of a suitability report and the long-term monitoring of suitability, the summary shows that two of them did not always submit this report. Moreover, certain institutions provided no explanation concerning the appropriateness of the investment recommendation for the client's circumstances, considering that this obligation was implicitly fulfilled by carrying out the suitability test. Good practices noted by the regulator include the use of different model suitability reports depending on the type of recommendation issued (investment, arbitrage or holding propositions).
4) The compliance control system
Regarding the compliance control system, the summary underlines an insufficient coverage of the scope of suitability, for two entities. This can be explained by a failure to verify the quality of the recommendations issued via the IT tool. The existence of a tool dedicated to the recording and traceability of the control results and the possibility of adapting control points marginally depending on the risks identified by the institution, without ever making the control level less demanding, constitute good practices.
Le 11 mars 2021, l'Autorité des marchés financiers (AMF) a publié la synthèse de ses contrôles courts thématiques sur l’adéquation des instruments financiers recommandés aux clients non-professionnels.
Durant ces contrôles, l’AMF a porté son attention sur :
- le périmètre et les modalités de recueil des informations du client ;
- les modalités de mise en œuvre du test d’adéquation ;
- la vérification par l’établissement de l’existence d’instruments financiers équivalents susceptibles de correspondre au profil du client, en tenant compte de leur coût et de leur complexité ;
- la remise et le contenu du rapport d’adéquation synthétisant les conseils prodigués au client ;
- le dispositif de contrôle sur le thème de l’adéquation.
Dans son document de synthèse, si l’AMF souligne de nombreuses bonnes pratiques, elle relève encore des insuffisances significatives dans le respect des diligences requises en matière d’adéquation.
1) Le recueil de l’information client et l’évaluation de ses connaissances
Le recueil des informations sur la situation du client est indispensable pour délivrer un conseil adéquat.
Parmi les bonnes pratiques observées, la synthèse souligne le fait de prévoir des mesures permettant au client d’accroître sa connaissance sur un instrument financier tout en encadrant, temporellement et dans l’intérêt du client, la souscription de cet instrument. Le recours à des scénarios présentant le couple rendement/risque ou encore l’appréciation de la réaction du client face à une baisse potentielle des marchés pour évaluer sa tolérance au risque ont également été mis en exergue.
2) Le test d'adéquation
Pour évaluer la mise en œuvre du test d’adéquation par les établissements, le régulateur a testé un échantillon des transactions réalisées. Dans ce cadre, des cas d’inadéquation ont été relevés. Une partie de ces cas d’inadéquation s’explique par une mise en œuvre tardive des dispositions de MIF 2 dans les modèles de questionnaire ou dans les outils utilisés pour évaluer les clients.
3) Le rapport d’adéquation
Si les quatre établissements disposent effectivement de procédures concernant la remise d’un rapport d’adéquation et le suivi de l’adéquation dans la durée, la synthèse montre que deux d’entre eux ne remettaient pas systématiquement ce rapport. Par ailleurs, certains établissements ne fournissaient pas d’explication sur le caractère adapté de la recommandation d’investissement à la situation du client, estimant cette obligation implicitement remplie par la réalisation du test d’adéquation. Parmi les bonnes pratiques, le régulateur relève l’utilisation de différents modèles de rapport d’adéquation selon le type de recommandation délivrée (propositions d’investissement, d’arbitrage ou de conservation).
4) Le dispositif de contrôle de la conformité
S’agissant du dispositif de contrôle de conformité, la synthèse souligne une couverture insuffisante du périmètre de l’adéquation, pour deux entités. Celle-ci peut s’expliquer par l’absence de vérification de la qualité des recommandations délivrées par le biais de l’outil informatique. L’existence d’un outil dédié à l’enregistrement et à la traçabilité des résultats des contrôles ainsi que la possibilité d’adapter à la marge des points de contrôle en fonction des risques identifiés par l’établissement, sans jamais abaisser le niveau d’exigence, constituent de bonnes pratiques.
AMF amends its policy on real estate investment companies, forestry investment companies and forestry investment groups / L'AMF modifie sa doctrine sur les SCPI, les SEF et les GFI
On 5 March 2021, the Autorité des marchés financiers (AMF) amended its policy on real estate investment companies (SCPI), forestry investment companies (SEF) and forestry investment groups (GFI) in order to clarify how investors are to be informed about multiple directorships held by supervisory board members. The amendment also takes into account the extension in French law of the concept of a public offer after work carried out on the Prospectus Regulation.
Rules on information about multiple directorships held by members of the Supervisory Board
The AMF takes a stance on the information given to investors as to the directorships held in other real estate investment companies, forestry investment companies and forestry investment groups by candidates to the supervisory boards of these collective investments. The number of directorships held by supervisory board members must therefore be stated in the convening notice to the general meeting when the agenda includes the appointment of the supervisory board. If the complete list of directorships is not given in the notice, it must be stated in the notice that this list is placed at the disposal of shareholders on the management company's website.
To this end, candidates must first inform the management company under their responsibility whether or not they hold other mandates as supervisory board members and if this is the case, send the list to the management company. If the candidate does not provide this information, the management company will refuse their application.
Taking into account of the extension of the concept of public offer in instruction DOC-2019-04
The European Prospectus Regulation (EU Regulation 2017/1129 of 14 June 2017) gives a new definition of the public offer. This offer now comprises all offers, including private placements, some of which are exempted from the obligation to publish a prospectus. Until now, French law considered that certain offers did not constitute a public offer and therefore did not require a prospectus. In practice, the outcome is the same for an issuer regarding the obligation to publish a prospectus or not.
Although real estate investment companies, forestry investment company and forestry investment groups do not fall within the scope of this regulation, they are still concerned by the concept of public offers.
Management companies that manage real estate investment companies, forestry investment companies and forestry investment groups whose offering documents have been approved by the AMF as from 23 October 2019 (date on which Order No. 2019-1067 came into force) are obliged to update the background regulations mentioned in the approvals of these offering documents, in accordance with this update of instruction DOC-2019-04, when they are next updated, and by 1 September 2021 at the latest.
Le 5 mars 2021, l'Autorité des marchés financiers (AMF) modifié sa doctrine relative aux sociétés civiles de placement immobilier (SCPI), aux sociétés d’épargne forestière (SEF) et aux groupements forestiers d’investissement (GFI) afin, d’une part, de préciser l’information des investisseurs sur le cumul de mandats des membres du conseil de surveillance, et, d’autre part, de prendre en compte l’extension en droit français de la notion d’offre au public suite aux travaux relatifs au règlement Prospectus.
Encadrement de l’information sur le cumul des mandats des membres du conseil de surveillance
L’AMF prend une position relative à l’information des investisseurs quant aux mandats occupés les cinq dernières années dans d’autres SCPI, SEF ou GFI par les candidats au conseil de surveillance de ces placements collectifs. Le nombre de mandats de membre de conseil de surveillance doit ainsi être mentionné dans la convocation à l’assemblée générale dont l’ordre du jour comporte la désignation du conseil de surveillance. Si la liste exhaustive des mandats n’est pas mentionnée dans la convocation, cette dernière précise que cette liste est mise à disposition sur le site internet de la société de gestion.
Pour ce faire, les candidats indiquent au préalable à la société de gestion sous leur responsabilité s’ils occupent ou non d’autres mandats de membre de conseil de surveillance et, le cas échéant, lui en transmettent la liste. A défaut d’une communication préalable de ces informations, la société de gestion refuse la candidature du candidat.
Prise en compte de l’extension de la notion d’offre au public dans l’instruction DOC-2019-04
Le règlement européen Prospectus (règlement (UE) 2017/1129 du 14 juin 2017) donne une nouvelle définition de l’offre au public. Celle-ci englobe désormais toutes les offres, y compris les placements privés, certaines étant dispensées de l'établissement d'un prospectus. Le droit français considérait jusque-là que certaines offres ne constituaient pas une offre au public et qu'à ce titre, ne donnaient pas lieu à un prospectus. En pratique, la conséquence est la même pour un émetteur concernant l'obligation d'établir ou non un prospectus.
Si les SCPI, les SEF et les GFI ne rentrent pas dans le champ de ce règlement, le concept d’offre au public les concerne toutefois.
Les sociétés de gestion qui gèrent des SCPI, des SEF ou des GFI dont les notes d’information ont été visées par l’AMF à compter du 23 octobre 2019 (date d’entrée en vigueur de l’ordonnance n° 2019-1067) sont tenues d’actualiser les textes de référence mentionnés dans les visas de ces notes d’information, conformément à la présente mise à jour de l’instruction DOC-2019-04, à l’occasion de leur prochaine mise à jour et au plus tard le 1er septembre 2021.
AMF informs on the information to disclose to investors concerning preferential subscription rights / L'AMF informe sur les informations à communiquer aux investisseurs concernant les droits préférentiels de souscription
On 1 March 2021, the Autorité des marchés financiers (AMF) informed on the information to disclose to investors concerning preferential subscription rights.
In a securities transaction, an account keeper can bring forward the closing date of the subscription period. However, investors must be adequately informed. How should account keepers provide this information to investors, including non-shareholders, wishing to participate in a capital increase?
If the timing of a securities transaction changes, account keepers must alert each investor who may participate in the transaction. To do so, the implementation of a "pop-up", i.e. an alert window on its website, visible as soon as the DPS is acquired, as was done by this account holder, seems to be a good practice. In this way, anyone interested in purchasing the PSDs would have immediate access to the information.
Of course, this information does not exclude the information that must be delivered personally to shareholders through the notice of securities transaction that is sent to them.
Moreover, it is up to investors to pay attention to the warning messages that appear, since it is this modified timetable that is intended to apply instead of the one initially set by the company.
Le 1 mars 2021, l'Autorité des marchés financiers (AMF) a publié une communication sur les informations à communiquer aux investisseurs concernant les droits préférentiels de souscription.
Lors d’une opération sur titres, un teneur de comptes peut anticiper la date de clôture de la période de souscription. Cependant, les investisseurs doivent être informés de façon adéquate. De quelle façon les teneurs de comptes doivent-ils fournir cette information aux investisseurs, y compris non actionnaires, souhaitant participer à une augmentation de capital ?
En cas de changement du calendrier d’une opération sur titres, les teneurs de comptes doivent en alerter chaque investisseur susceptible de participer à celle-ci. Pour ce faire, la mise en place d’un « pop-up », c’est-à-dire d’une fenêtre d’alerte sur son site, visible dès l’acquisition du DPS, comme cela été fait par ce teneur de comptes, me semble être une bonne pratique. En effet, de cette façon, toute personne intéressée par l’achat des DPS aura immédiatement accès à l’information.
Bien entendu, cette information n’exclut pas celle qui doit être personnellement délivrée aux actionnaires au travers de l’avis d’opération sur titres qui leur est adressé.
Par ailleurs, il incombe aux investisseurs d’être attentifs aux messages d’alerte qui s’affichent puisque c’est ce calendrier modifié qui a vocation à s’appliquer en lieu et place de celui initialement arrêté par la société.
Shareholders' Rights Directive (SRD II)
AMF amends its doctrine on shareholder activism / L'AMF modifie sa doctrine sur l'activisme actionnarial
On 17 March 2021, the Autorité des marchés financiers (AMF) announced the amendment of its doctrine on shareholder activism.
In its communication on shareholder activism of 28 April 2020, the AMF proposed several targeted measures to improve market transparency, promote dialogue between issuers and shareholders, and increase its reaction capacities. After consulting its advisory committees, the AMF approved several changes to its policy.
1) Communication from issuers during the "quiet period" in response to activist shareholders
The AMF indicated that it: "will amend its doctrine in order to specify that, subject in particular to the regulations relating to market abuse, issuers may provide any information necessary to the market, even in during the "quiet period", in response to public statements concerning them. "
In line with this proposal, the AMF has decided to amend paragraph 1.6.1 of the AMF's guide on permanent information and the management of inside information.
2) Fairness and equity of exchanges in the context of activist campaigns
The AMF stated that: "in order to promote fairness in the debate between issuers and activist investors, the AMF will also supplement its doctrine by recommending that any shareholder who initiates a public campaign should immediately provide the issuer concerned with the substantial information (such as white papers) that it sends to other shareholders. "
Following this proposal, the AMF has decided to supplement its guide to ongoing disclosure and management of inside information by adding several different developments.
3) Recommendation to fund managers on the repatriation of loaned securities at general meetings and the effective exercise of their voting rights
The AMF's communication on shareholder activism stated that: "With regard to securities lending, the AMF notes that the use of this practice by activist shareholders to destabilise the general meetings of French issuers is marginal. However, the AMF intends to issue a recommendation to remind fund managers of the good practice of repatriating loaned securities and exercising their voting rights. "
This "good practice" was included in the third point of Recommendation 12 of the 2005 Mansion Report, in the following form: "Fund managers are recommended to repatriate the securities they have loaned at general meetings and to exercise the related voting rights.
4) Special vigilance by shareholders in their declarations in the event of a public offer
The AMF indicated that it was considering: "amending Article 231-36 of its General Regulation, which applies during a takeover bid, to extend the obligations set out in this provision to the shareholders (and their representatives or agents) of the bidder or target company, in particular the obligation to be particularly vigilant in their disclosures. Experience shows that shareholders, especially activists, can play a significant role in the conduct of takeover bids, so it would seem appropriate to subject their disclosures in this specific context to the same due diligence requirements as "persons affected by the bid" within the meaning of the AMF General Regulation.
Following discussions within the consultative commissions, the AMF decided not to propose any changes to its General Regulation at this stage, but to include a recommendation to this effect in the AMF's doctrine.
5) Recommendations on shareholder dialogue
In its communication on shareholder activism, the AMF emphasised that: "the existence of a transparent, regular and open dialogue between an issuer and its shareholders is one of the keys to preventing the excesses of activist campaigns and, if necessary, reducing their potentially destabilising effect". The AMF also noted that "many issuers already attach great importance to this dialogue and sometimes devote significant resources to it. In this regard, some of the above-mentioned reports recommend clarifying the principles and rules that may govern such dialogue".
In this regard, the AMF indicated that it would complete its doctrine "in order to add developments and recommendations on shareholder dialogue. "
The AMF is making changes in the following areas:
- Reminder of existing recommendations on ongoing dialogue between shareholders and issuers
- Recommendation on dialogue between the board and shareholders
- Recommendations on the presentation materials prepared for roadshows and on the appropriateness of a communication in the event of a contested vote at a general meeting.
Le 17 mars 2021, l'Autorité des marchés financiers (AMF) a annoncé la modification de sa doctrine sur l'activisme actionnarial.
Dans sa communication sur l'activisme actionnarial du 28 avril 2020, l’AMF avait proposé plusieurs mesures ciblées afin d’améliorer la transparence du marché, de promouvoir le dialogue entre émetteurs et actionnaires, et d’accroître ses capacités de réaction. Après avoir consulté ses commissions consultatives, l’AMF a approuvé plusieurs évolutions de sa doctrine.
1) Communication des émetteurs en cours de « quiet period » en réponse à des actionnaires activistes
Dans sa communication sur l'activisme actionnarial, l’AMF indiquait qu’elle : « amendera sa doctrine afin de préciser que, sous réserve notamment de la réglementation relative aux abus de marché, les émetteurs peuvent apporter toute information nécessaire au marché, même en cours de « quiet period », en réponse à des déclarations publiques les concernant. »
Dans la lignée de cette proposition, l’AMF a décidé d’amender comme suit le paragraphe 1.6.1 du guide de l’information permanente et de la gestion de l’information privilégiée.
2) Caractère loyal et équitable des échanges dans le cadre des campagnes activistes
La communication de l’AMF sur l'activisme actionnarial indiquait que : « dans le but de favoriser le caractère loyal et équitable du débat entre émetteurs et investisseurs activistes, l’AMF complétera également sa doctrine en recommandant à tout actionnaire qui initie une campagne publique de communiquer sans délai à l’émetteur concerné les informations substantielles (type « white paper ») qu’il adresse aux autres actionnaires. »
Suivant cette proposition, l’AMF a décidé de compléter son guide de l’information permanente et de la gestion de l’information privilégiée, en ajoutant différents développements.
3) Recommandation à l’attention des gérants de fonds concernant le rapatriement, à l’occasion des assemblées générales, des titres prêtés et l’exercice effectif de leur droit de vote
La communication de l’AMF sur l'activisme actionnarial indiquait que : « s’agissant des prêts de titres, l’AMF constate que le recours à une telle pratique par les actionnaires activistes en vue de déstabiliser les assemblées générales d’émetteurs français est marginale. Cependant, l’AMF entend rappeler, dans le cadre d’une recommandation, la bonne pratique que constitue pour les gérants de fonds, le rapatriement des titres prêtés et l’exercice effectif de leur droit de vote. »
cette « bonne pratique » figurait au 3e point de la recommandation n°12 du rapport Mansion de 2005, sous la forme suivante : « Il est recommandé aux gérants de fonds de rapatrier, à l'occasion des assemblées générales, les titres qu'ils ont prêtés et d’exercer les droits de vote y afférents ».
4) Vigilance particulière des actionnaires dans leurs déclarations en cas d’offre publique
L’AMF indiquait qu’elle envisageait : « d’amender l’article 231-36 de son règlement général applicable en période d’offre publique, afin d’étendre aux actionnaires (ainsi qu’à leurs représentants ou mandataires) de l’initiateur ou de la société visée les obligations prévues par cette disposition, en particulier une obligation de vigilance particulière dans les déclarations. L’expérience montre, en effet, que les actionnaires, notamment activistes, peuvent exercer un rôle significatif sur le déroulement des offres publiques, de sorte qu’il paraît judicieux de soumettre leur communication, dans ce contexte précis, à une même obligation de vigilance que « les personnes concernées par l’offre » au sens du règlement général de l’AMF ».
Au terme des échanges intervenus au sein des commissions consultatives, l’AMF a décidé de ne pas proposer, à ce stade, de modification de son règlement général mais d’introduire une recommandation en ce sens dans la doctrine de l’AMF.
5) Recommandations sur le dialogue actionnarial
Dans sa communication sur l'activisme actionnarial, l’AMF avait souligné que : « l’existence d’un dialogue transparent, régulier et ouvert entre un émetteur et ses actionnaires constitue l’une des clés pour prévenir les excès des campagnes activistes et, le cas échéant, réduire leur effet potentiellement déstabilisateur ». L’AMF a relevé également que de « nombreux émetteurs attachent d’ores et déjà une place importante à ce dialogue et y consacrent des moyens parfois significatifs. A cet égard, une clarification des principes et des règles susceptibles d’encadrer un tel dialogue est préconisée par certains des rapports précités ».
En ce sens, l’AMF avait indiqué qu’elle complèterait sa doctrine « afin d’y ajouter des développements et recommandations sur le dialogue actionnarial. »
L’AMF effectue des changements dans les secteurs suivants :
- rappel des recommandations existantes sur le dialogue permanent entre actionnaires et émetteurs
- recommandation sur le dialogue entre le conseil et les actionnaires
- recommandations sur les supports de présentation établis à l’occasion des « roadshows » et sur l’opportunité d’une communication en cas de vote contesté en assemblée générale.
Sustainable Finance / Green Finance
Ministère de l'Economie launches a reform of the Socially Responsible Investment (SRI) / Le Ministère de l'Economie lance une réforme du label Investissement Socialement Responsable (ISR)
On 25 March 2021, the Ministère de l'Economie launched a reform of the Socially Responsible Investment (SRI).
In order to launch the process of renovating the Socially Responsible Investment (SRI) label, the Minister of the Economy, Finance and Recovery and the Secretary of State for the Social and Responsible Economy are launching a consultation on the evolution of the governance of the SRI label. This consultation will be followed, in April, by the launch of a call for expressions of interest (AMI) aimed at market structures specialising in the consideration of ecological, social and governance (ESG) criteria that might be interested in hosting the team that will form the secretariat of the SRI label committee. This label contributes to the evolution of financial management towards socially responsible and more transparent management.
It follows the conclusions of the review and prospective analysis mission on the SRI label submitted by the General Inspectorate of Finance (IGF) in January 2021 and examined on 9 March 2021 by the SRI label committee chaired by Nicole Notat. The IGF report stresses the need to continue to strengthen the label's requirements in order to meet the expectations of savers and investors and to accentuate its action in terms of directing savings towards financing a more sustainable economy.
The report submitted by the IGF proposes twenty recommendations to pursue the development of the SRI label and thus contribute to the enrichment of the responsible savings offer while meeting the expectations of savers. These objectives imply, in particular, renovating the functioning of its governance and continuing to improve the specifications over the next twelve months.
Le 25 mars 2021, le Ministère de l'Economie a lancé une réforme du label Investissement Socialement Responsable (ISR).
Afin de lancer le processus de rénovation du label Investissement Socialement Responsable (ISR), le ministre de l’Economie, des Finances et de la Relance et la secrétaire d’État chargée de l’Economie sociale, solidaire et responsable, engagent aujourd’hui une consultation sur l’évolution de la gouvernance du label ISR. Cette consultation sera suivie, en avril, du lancement d’un appel à manifestation d’intérêt (AMI) destiné aux structures de place spécialisées dans la prise en compte de critères écologiques, sociaux et de gouvernance (ESG) qui pourraient être intéressées à accueillir l’équipe qui constituera le secrétariat du comité du label ISR. Ce label contribue à l'évolution de la gestion financière vers une gestion socialement responsable et plus transparente.
Il fait suite aux conclusions de la mission de bilan et d’analyse prospective sur le label ISR remis par l’Inspection générale des finances (IGF) en janvier 2021 et examiné le 9 mars 2021 par le comité du label ISR présidé par Nicole Notat. Le rapport de l’IGF souligne la nécessité de continuer à renforcer les exigences du label, de manière à répondre aux attentes des épargnants et des investisseurs et à accentuer son action en termes d’orientation de l’épargne vers le financement d’une économie plus durable.
Le rapport remis par l’IGF propose vingt recommandations pour poursuivre le développement du label ISR et ainsi, contribuer à l’enrichissement de l’offre d’épargne responsable tout en répondant aux attentes des épargnants. Ces objectifs impliquent notamment de rénover le fonctionnement de sa gouvernance et de poursuivre l’amélioration du cahier des charges dans les douze prochains mois.
Banque de France launches its Center on Climate Change and publishes its 3rd Responsible Investment (SRI) report / La Banque de France lance son Centre sur le Changement Climatique et publie son 3ème rapport Investissement Responsable (ISR)
On 30 March 2021, the Banque de France launched its Center on Climate Change and publishes its 3rd Responsible Investment (SRI) report.
The Center will play the role of hub for all the actions undertaken by the various Directorates-General in the field of the fight against climate change and will ensure their coordination. In particular, in the context of the Construire Ensemble 2024 plan (a new corporate strategic plan recently announced), the aim is to strengthen the effectiveness of the Banque de France's action by relying on dedicated expertise and contributing to the development of synergies. The Center will also ensure the coordination of initiatives with the priorities of the Network for Greening the Financial System (NGFS), an international initiative for which the Banque de France has provided the secretariat since its launch in December 2017.
The Center, which uses the current resources of the Sustainable Finance Service (SFD), is placed within the Financial Stability Pole (PSF), common to the General Directorate of Financial Stability and Operations (DGSO) and to the Authority of Prudential Control and Resolution (ACPR), and attached to the Financial Stability Department (DSF).
In 2020, the Banque de France achieved all of the objectives it set for itself, improved its climate and ESG performance, and strengthened its strategy :
- Objectives achieved : equity portfolio dedicated to equity aligned with 2 ° C, TEE (Ecological and Energy Transition) investments of more than 1.7 billion euros, 20% ESG exclusions (Environmental, Social and Governance issues) , attendance rate at general meetings of 90%.
- Improving the climate and ESG performance of portfolios : for example, with regard to the equity side of the portfolio dedicated to equity, -51.5% of tonnes of carbon equivalent per million euros invested and -41.4% of exposure to fossil fuels.
- Strengthening of the strategy : tightening of exclusions in terms of fossil fuels with in particular the announcement of an exit from coal by 2024 at the latest, analysis for the first time of the biodiversity impact of portfolios, strengthening of the social component of the strategy.
Le 30 mars 2021, la Banque de France a lancé son Centre sur le Changement Climatique et publie son 3ème rapport Investissement Responsable (ISR).
Le Centre jouera le rôle de hub pour l’ensemble des actions engagées par les différentes directions générales dans le domaine de la lutte contre le changement climatique et assurera leur coordination. En particulier, dans le contexte du plan Construire Ensemble 2024 (nouveau plan stratégique d’entreprise récemment annoncé), il s’agit de renforcer l’efficacité de l’action de la Banque de France en s’appuyant sur une expertise dédiée et en contribuant au développement des synergies. Le Centre veillera également à l’articulation des initiatives avec les priorités du Network for Greening the Financial System (NGFS), initiative internationale dont la Banque de France assure le secrétariat depuis son lancement en décembre 2017.
Le Centre, qui reprend les moyens actuels du Service de Finance Durable (SFD), est placé au sein du Pôle de Stabilité Financière (PSF), commun à la Direction Générale de la Stabilité Financière et des Opérations (DGSO) et à l’Autorité de Contrôle Prudentiel et de Résolution (ACPR), et rattaché à la Direction de la Stabilité Financière (DSF).
En 2020, la Banque de France a atteint l’ensemble des objectifs qu’elle s’était fixés, amélioré ses performances climatiques et ESG, et renforcé sa stratégie :
- objectifs atteints : poche actions du portefeuille dédié aux fonds propres alignée 2°C, investissements TEE (Transition écologique et énergétique) de plus de 1,7 mds d’euros, 20% d’exclusions ESG (Enjeux environnementaux, Sociaux et de Gouvernance), taux de présence en assemblées générales de 90%.
- amélioration des performances climatiques et ESG des portefeuilles : par exemple, s’agissant de la poche actions du portefeuille dédié aux fonds propres, -51,5% de tonnes d’équivalent carbone par millions d’euros investis et -41,4% d’exposition aux énergies fossiles.
- renforcement de la stratégie : durcissement des exclusions en matière d’énergies fossiles avec notamment l’annonce d’une sortie du charbon en 2024 au plus tard, analyse pour la première fois de l’impact biodiversité des portefeuilles, renforcement du volet social de la stratégie.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
NBB informs on the update of the section of the Bank’s website devoted to AML/CFT
On 4 March 2021, the Banque nationale de Belgique (BnB) published communication to inform the public that the section of the Bank’s website devoted to anti-money laundering and counter-terrorist financing (AML/CFT) has been updated to reflect the amendments to the Anti-Money Laundering Law of 18 September 2017 introduced by the Law of 20 July 2020, which was published in the Belgian Official Gazette of 5 August 2020. As part of this update, changes were made to numerous pages of the site containing comments and recommendations from the NBB on various topics. Among other things, the NBB clarified the guidelines for its supervisory actions.
NBB publishes Circular NBB_2021_007 / Periodic questionnaire on combating money laundering and terrorist financing
On 9 March 2021, the Banque nationale de Belgique (BnB) published Circular NBB_2021_007 / Periodic questionnaire on combating money laundering and terrorist financing.
Through this circular, the National Bank of Belgium seeks to obtain standardized information from the financial institutions in order to strengthen its risk-based approach in exercising its legal supervisory powers in the fight against money laundering and terrorist financing.
The answers to the periodic questionnaire must be submitted though OneGate by 30 June 2021 at the latest. The electronic form in which the requested information is to be furnished will be available in OneGate from 1 May 2021.
Sustainable Finance / Green Finance
FSMA publishes Communication FSMA_2021_06 on sustainability-related disclosures in the financial services sector
On 9 March 2021, the Financial Services and Markets Authority (FSMA) published Communication FSMA_2021_06 on sustainability-related disclosures in the financial services sector. This communication informs companies of the entry into force of European Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector.
It clarifies the rules that apply both to companies and to products, as well as the expectations of the FSMA in this regard. These rules enter into force on 10 March 2021.
The FSMA has been designated the competent authority to supervise compliance with the provisions of the Regulation. Its task is to ensure that the information published by companies on sustainability are accurate, clear, not misleading, adequate and transparent, so as to avoid any risk of ‘greenwashing’.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
Germany publishes Law to strengthen the fight against money laundering by means of criminal law
On 17 March 2021, Germany published Law to strengthen the fight against money laundering by means of criminal law in the Deutsches Bundesgesetzblatt (BGBL).
This Law implements in German Criminal Law the Directive (EU) 2018/1673. The Directive necessitated a reform of money laundering criminal law, as certain predicate offences for money laundering included in the Directive were previously not covered by German law.
The heart of the law is the waiver of a selective catalog of predicate offences and that in the future, every crime can be a predicate offence to AML.
European Crowdfunding Service Providers (ECSP) Regulation
German Federal Government submits draft law on crowdfunding service providers
On 9 March 2021, the German Federal Government submitted a draft law on the accompanying implementation of Regulation (EU) 2020/1503 and the transposition of Directive (EU) 2020/1504 for regulating crowdfunding service providers (Crowdfunding Accompanying Act) and other EU financial markets provisions‘ to the German Bundestag.
Crowdfunding service providers enable large numbers of investors to invest in particular crowdfunding projects that are offered via an internet-based crowdfunding platform. The aim of the EU regulation is to facilitate the cross-border provision of such services.
In this context, the EU regulation stipulates an authorization requirement for crowdfunding service providers. It also sets out rules on internal organization, management and handling of complaints procedures. In addition, specific information and disclosure obligations are established for investor protection purposes.
The draft bill further proposes amendments to the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz - WpÜG) and related ordinances in order to abolish the objections committee and the takeover advisory board currently provided for therein.
Furthermore, the draft bill contains regulations for the implementation of the EU Regulation on a Pan-European Personal Pension Product (PEPP) where Germany, amongst other things, must determine the competent supervisory authority.
BaFin updates minimum requirements for compliance function and additional requirements governing rules of conduct, organisation and transparency
On 24 March 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) updated its Circular 05/2018 (WA) - Minimum Requirements for the Compliance Function and Additional Requirements Governing Rules of Conduct, Organisation and Transparency (MaComp).
In the special requirements in BT 3 of MaComp, BaFin has supplemented the module on the requirements for fair, unambiguous and non-misleading information pursuant to Section 63 (6) of the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG) with regard to information on indicative order values. In addition, BaFin is expanding the requirements for the content of the declaration of suitability in the special requirements of BT 6, providing sample wording and examples of unsuitable formulations.
Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)
BaFin publishes update of its FAQ on MiFID II rules of conduct according to sections 63 et seq. of the Securities Trading Act
On 1 March 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published update of its FAQ on MiFID II rules of conduct according to sections 63 et seq. of the Securities Trading Act.
The update includes a new chapter on inducements (Zuwendungen). With it, BaFin answered the questions: (i) under what conditions the granting of benefits by a third party to a board member or to an employee of an investment services enterprise constitutes an inducement within the meaning of section 70 of the WpHG; and (ii) on the organisational obligations to identify benefits and to regulate their acceptance by board members or employees.
SFC publishes Circular to to intermediaries, responsible officers and licensed representatives on Waiver of annual licensing fees
On 19 March 2021, the Securities and Futures Commission (SFC) informed that it will waive the annual licensing fees of all intermediaries and licensed individuals incurred during the period from 1 April 2021 to 31 March 2022.
The SFC will not issue the usual demands for payment for annual licensing fees which would ordinarily become payable during this one-year period. Payments of all other fees, including for license applications and transfers, will not be affected.
Listing / Trading rules
SFC publishes Circular to Licensed Corporations on the updated technical specifications for OTC derivatives trade reporting
On 23 March 2021, the Securities and Futures Commission (SFC) published Circular to Licensed Corporations on the updated technical specifications for OTC derivatives trade reporting.
The SFC informed about the updated technical specifications for over-the-counter (OTC) derivatives trade reporting under the Hong Kong Trade Repository (HKTR).
A revised version of the Administration and Interface Development Guide ("AIDG") - version 1.8 for reporting is published to update the technical specification under the over-the-counter (OTC) derivatives trade repository of the HKMA ("HKTR"). The AIDG version 1.8 will start to apply from 20 Dec 2021.
The key changes made in the revised AIDG include:
(i) updates of coding schemes supported in the HKTR reporting templates,
(ii) renaming of "Unique Trade I dentifier (UTI)" to "Unique Transaction Identifier - Unique Swap Identifier (UTI-USI)",
(iii) cessation of the outdated reporting templates and
(iv) corresponding changes in some business validation rules. Reporting entities are reminded to read the revised AIDG for the details of the changes and their obligation to report all transactions involving the updated coding schemes supported by the HKTR.
Further to this, an updated Operating Procedures for Hong Kong Trade Repository —User Manual for Participants will be published in due course for the enhanced display of the user interface and system report of the HKTR system.
The HKTR will make available a testing environment from Oct 2021 for interested reporting entities to simulate reporting on the changes made in the AIDG on a voluntary basis.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
Ireland publishes S.I. No. 91 of 2021 - Criminal Justice (Terrorist Offences) Act 2005 (Section 42) (Restrictive Measures concerning Certain Persons and Entities with a view to Combating Terrorism) Regulations 2021
On 5 March 2021, the S.I. No. 91 of 2021 - S.I. No. 91/2021 - Criminal Justice (Terrorist Offences) Act 2005 (Section 42) (Restrictive Measures concerning Certain Persons and Entities with a view to Combating Terrorism) Regulations 2021 was published in the Irish Statute Book.
These Regulations provide for the enforcement of Council Regulation (EC) No. 2580/2001 of 27 December 2001, as amended.
Section 42 of the Criminal Justice (Terrorist Offences) Act 2005 creates an offence for breach of the provisions of these Regulations, provides for appropriate penalties and empowers the Minister for Finance to make regulations providing for such incidental, supplementary and consequential provisions as appear to the Minister to be necessary.
The Regulations revoke previous domestic instruments created under Section 42 of the Criminal Justice (Terrorist Offences) Act 2005 in relation to Council Regulation (EC) No.2580/2001 of 27 December 2001, as amended.
Irish Parliament finalizes the text of Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020
On 11 March 2021, the Houses of the Oireachtas (Ireland's national parliament) published the text of Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020 which has been finalized and passed.
The Bill transposes the criminal justice elements of the Fifth EU Money Laundering Directive (EU 2018/843) and strengthens existing money laundering and terrorist financing legislation.
The Bill includes provisions to:
- improve the safeguards for financial transactions to and from high-risk third countries, setting new limits on the use of anonymous pre-paid cards;
- bring a number of new ‘designated bodies’ under the existing legislation, including virtual currency providers and dealers and intermediaries in the art trade;
- prohibit credit and financial institutions from setting up anonymous safe-deposit boxes;
- enhance the customer due diligence requirements of the existing legislation; and
- provide for Ministerial guidance to clarify domestic ‘prominent public functions’ for the purpose of identifying politically exposed persons.
Ireland publishes Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021
On 18 March 2021, the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 was published in the Irish Statute Book.
The Act aims to transpose certain elements of the AMLD5 into Irish law, which will:
- enhance the existing AML/CFT measures in place in Ireland;
- bring new 'designated persons' within the scope of the AML regime in Ireland;
- provide additional safeguards for transactions to and from high-risk countries;
- prohibit the creation of anonymous safety deposit-boxes by credit and financial institutions; and
- increase the focus on customer due diligence (CDD) requirements.
This Act shall come into operation on such day or days as the Minister for Justice and Equality may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or provisions.
CBI publishes a statement on Ireland’s Securities Settlement Market
On 18 March 2021, the Central Bank of Ireland (CBI) informed that Ireland’s Securities Settlement Market successfully migrated from the UK to Belgium, with effect from Monday 15 March 2021.
Irish market participants selected Euroclear Bank Belgium, as the preferred provider of a long-term central securities depository (CSD) for the Irish market. The Central Bank supervises key participants in the market, and the continuation of service by Euroclear is important to the ongoing trading, clearing and settlement of Irish equities post Brexit.
The migration of securities is the culmination of a unique and complex project involving stakeholders from Ireland, the EU and the UK. The CSD migration was an industry decision and industry-led project and has been actively supported over the last two and half years by the Central Bank of Ireland and the Department of Finance.
COVID-19 Regulatory Measures
CBI publishes its letter to fund management companies concerning ESRB & ESMA Liquidity risk project
On 10 March 2021, the Central Bank of Ireland (CBI) sent a letter to fund management companies that were surveyed as part of an ESMA coordinated exercise analyzing the preparedness of funds with significant exposures to corporate debt to potential future shocks, including any resumption of significant redemptions and/or an increase in valuation uncertainty.
While the letter was specific to this set of firms and a sub-set of funds they manage, the findings from the ESMA Review more broadly are important and should be noted by all firms.
In view of the findings of the Review, the CBI requires firms to now consider how liquidity risk management frameworks and fund structures should be adapted to take into account the experience and lessons learned from the market and redemption activity in 2020 and the findings of the ESMA Report. This should also consider the steps needed to increase funds’ resilience to future shocks.
The consideration of this matter should be concluded and the results presented to and approved by the Board of the fund management company no later than the end of June 2021, with an action plan to take any necessary steps promptly and in any event no later than the end of December 2021.
A copy of the report presented to the Board should be available to the CBI on request. This letter must be brought to the attention of all members of the Board of the fund management company, relevant designated persons and to the relevant responsible person(s) within delegate fund service providers.
Directive on administrative cooperation in the field of taxation (DAC 6)
Ireland publishes No. 040/21 - Updates on Tax and Duty Manual (Part 33-03-03) - EU Mandatory Disclosure of Reportable Cross-Border Arrangement
On 1 March 2021, the Office of the Revenue Commissioners of Ireland updated Tax and Duty Manual (Part 33-03-03) - EU Mandatory Disclosure of Reportable Cross-Border Arrangements.
The guidance on the specified information reporting requirements has been updated as follows:
- The practice of allowing an intermediary not to disclose information about a person to whom they made a reportable cross-border arrangement available, where the person indicated that they would not be proceeding with it, has been removed.
- Further detail has been issued on the required disclosure standard in respect of the following specified information:
(i) the summary of the content of the cross border arrangement,
(ii) the national provisions forming the basis of the cross border arrangement, and
(iii) Member State(s) likely to be concerned by an arrangement.
Ireland publishes S.I. No. 117/2021 - Financial Services and Pensions Ombudsman Act 2017 [Financial Services and Pensions Ombudsman Council] Financial Services Industry Levy Regulations 2021
On 19 March 2021, the S.I. No. 117/2021 - Financial Services and Pensions Ombudsman Act 2017 [Financial Services and Pensions Ombudsman Council] Financial Services Industry Levy Regulations 2021 was published in the Irish Statute Book.
These Regulations provide for the collection and recovery of the levy and provide for certain obligations in respect of self-assessment and record keeping by financial services providers. These Regulations also provide for the calculation of the required levy contribution payable by each category of financial services provider for the year ended 31 December 2021.
- Credit Institutions: a levy calculated at the rate of €0.594 cent per consumer as at 31 December 2019. A minimum levy of €375 is payable by each credit institution.
- Intermediaries (including Investment Product Intermediaries, Insurance/Reinsurance Intermediaries): a levy calculated on the basis of a sum no greater than 15% of the levy payable to the Bank in 2019. A minimum levy of €125 is payable by each intermediary and debt management firm.
- Investment Business Firms (other than Investment Product Intermediaries): a levy calculated on the basis of a sum no greater than 5.979% of the annual industry funding levy payable to the Bank by the financial service provider in 2019. A minimum levy of €375 is payable by each provider.
Ireland publishes Criminal Justice (Theft and Fraud Offences) (Amendment) Act 2021
On 18 March 2021, the Criminal Justice (Theft and Fraud Offences) (Amendment) Act 2021 was published in the Irish Statute Book.
The Act provides that a company shall be guilty of an offence where:
- one of the new offences is committed by a director, employee, agent or subsidiary of a company, for the benefit of a company, and
- it is attributable to the failure, by a director or other officer of the company, to exercise the requisite degree of supervision or control over the person who committed the offence.
The Act also provides that this “failure to prevent” offence will be confined to offences related to the Directive (EU) 2017/1371 and fraud against the EU’s financial interests, and does not apply to the theft and fraud offences in the 2001 Act more generally.
The attribution of corporate criminal liability for other offences under the 2001 Act will continue to be governed by the common law identification or “controlling mind” doctrine. This stands in contrast to the 2018 Corruption Act, which extends a “failure to prevent” corporate liability model to all of the major corruption offences.
This Act shall come into operation on such day or days as the Minister for Justice may by order or orders appoint either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.
Sustainable Finance / Green Finance
Irish Parliament publishes S.I. No. 146 of 2021 - European Union (sustainability-related disclosures in the financial services sector) regulations 2021
On 29 March 2021, Irish Parliament published S.I. No. 146 of 2021 - European Union (sustainability-related disclosures in the financial services sector) regulations 2021, which provides that:
- Compliance with the requirements of the SFDR by financial market participants and financial advisers shall be monitored by the Central Bank of Ireland (CBI), being the competent authority of the SFDR, other than in the case of:
(a) a pan-European personal pension product (PEPP) provider,
(b) an institution for occupational retirement provision (IORP), and
(c) a manufacturer of a pension product where the manufacturer is an institution for occupational retirement provision (IORP).
- SFDR shall, with effect from 10 March 2022, apply to:
(a) insurance intermediaries which provide insurance advice with regard to insurance?based investment products, and
(b) investment firms (within the meaning of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017) which provide investment advice, irrespective of their legal form, including natural persons and self?employed persons, that employ fewer than 3 persons.
CONSOB issues notice no. 4/21 on the preparation of accounting statements
On 15 March 2021, the CONSOB published Notice no. 4/2021 on the information to be provided as part of the financial statements relating to 2020, based on the provisions of the civil code and on the national accounting principles.
These guidelines address issuers of widespread financial instruments pursuant to art. 116 of
TUF, as well as issuers of financial instruments traded on multilateral systems of trading (MTF) and on organized trading facilities (OTF) subject to EU Regulation n. 596/2014 (MAR) and related auditing companies.
More specifically, the notice details:
- The information that issuers of financial instruments are required to report in the financial statements of 2020, with particular reference to (i) information to be included in relation to the measures adopted to tackle the COVID-19 pandemic; (ii) the impacts (including future ones) of these measures; and (iii) explanations in case the issuer relied on exceptions detailed in the civil code, as foreseen by art. 6 of Legislative Decree 8 April 2020, n. 23. These exceptions apply in case of losses that emerged in the current year, until t 31 December 2020;
- The scope of the controls to be performed by auditing companies and supervisory bodies.
CONSOB updates the requirements of competence and knowledge applicable to financial intermediaries (notice no. 21755)
On 11 March 2021, CONSOB issued a publication amending the regulation containing the implementing rules of the legislative decree 24 February 1998, no. 58, on the knowledge and competence requirements of the personnel of financial intermediaries.
More specifically, the publication clarifies which credentials financial intermediaries' operators that provide to clients advice or information concerning financial products shall demonstrate.
The credentials cover both professional experience as well as academic background. Moreover, the publication also indicate that appropriate controls shall be implemented to ensure the compliance of employees with the provisions of the regulation.
Italy issues instructions concerning supervision and transparency applied to pension funds
On 5 March 2021, Italy published the resolution of 25 February 2021 containing amendments to the Resolution of 22 December 2020 on supervisory instructions on transparency, applicable to pension funds in the Gazzetta Ufficiale.
The amendments concern to the deadline to implement some provisions of the aforementioned resolution of 22 December 2020. The amendments to the deadlines aims to facilitate the uniform / consistent implementation of the provisions by supplementary pension schemes and entities providing supplementary pension schemes.
The changes were made necessary in light of the communication of 15 February 2021, with which associations representing the industry requested the extension of the terms envisaged in the first issue of the aforementioned resolution, also considering the current period emergency.
CONSOB shares reporting obligation about sustainability in the financial sector (notice no. 4/2021)
On 4 March 2021, CONSOB issued notice no. 4/2021 concerning the reporting obligations about sustainability in financial services.
As of 10 March 2021, Regulation (EU) 2019/2088 on sustainability disclosure (hereinafter, also SFDR) in the financial services sector introduces reporting obligations towards financial market participants (FMPs) and financial advisors (FAs).
Obligations will be cover both the entity level and the "financial products" level, as defined by SFDR (see art. 2, par. 1 no. 12). Obligations will be differentiated based on the topic covered (i.e. information referring to the subject / activity - "entity level" - VS information concerning the financial product - "product level") and based on the way information is supplied (i.e. information on website, pre-contractual information or periodic information).
Pursuant to SFDR, the Regulation integrates disclosure obligations covered in the current regulations on products and services, and maintains the requirement that financial market participants and financial advisors shall act in the best interest of final investors.
For the rules of the Regulation that require additional, detailed regulations, on 4 February 2021 the ESAs published and transmitted to the European Commission the draft of the Final Report on Regulatory Technical Standards (hereinafter RTS) relating to the SFDR. The Final Report covers the topic of reporting on the main, sustainability adverse impacts related to investment decisions / advice.
The report also covers pre-contractual and periodic disclosure on the characteristics / sustainability objectives of the product, the disclosure of information on the product through the website, the pre-contractual and periodic product information models (so-called templates).
Moreover, on 25 February 2021, the ESAs also published a Supervisory Statement in which it is highlighted that operators shall refer to the RTS in order to comply with the obligations of disclosure and transparency provided for in Articles 2 bis, 4, 8, 9, and 10 of the SFDR.
CONSOB issues a Q&A concerning sustainability disclosures described by SFDR
On 4 March 2021, CONSOB published its notice no. 3/2021 concerning the entry into force of the Regulation (EU) 2019/2088 relating to the reporting obligations about sustainability in the financial sector.
Within this notice, CONSOB informed that periodic reporting towards supervisory authorities should be integrated with a information about the measures taken to comply with the provisions of the SFDR.
Following the notice, CONSOB also published a Q&A, which clarifies which documentation must be updated pursuant to art. 6 of SFDR.
The Q&A clarifies that:
- Regarding UCITS and IBIPs that have open offers as of 10 March 2021, pre-contractual documentation must be updated in order to include the information provided for by art. 6, 7, paragraphs 2, 8 and 9 of the SFDR. Therefore, for Italian UCITS and open, Italian, non-reserved AIFs, it will be necessary to update the prospectus in accordance with the provisions of articles 18 and 27 of the Issuers' Regulation. For closed, non-confidential AIFs, managed by Italian AIFMs, the information will be introduced as described in art. 13-bis, paragraph 5, of the Issuers' Regulation. For reserved AIFs managed by Italian AIFMs it will be necessary to update the offer document pursuant to art. 28 of the Issuers' Regulation.
With reference to UCIs and IBIPs whose offer will be launched from 10 March 2021 onwards, the pre-contractual documentation must be prepared in accordance with the provisions of SFDR.
Lastly, for UCITS and IBIPs with closed offers, it is not necessary to proceed with the aforementioned updates.
Sustainable Finance / Green Finance
Banca d'Italia discusses Green Bonds from a Sovereign Issuers' Perspective
On 25 March 2021, Banca d'Italia issued an article on green bonds.
After having described the characteristics of green bonds issued by sovereign states, the paper describes the evolution of the market and identifies the benefits and costs for issuers.
The performance of these securities is subsequently analyzed. With reference to the primary market, the yield when the green bond is issued, is compared with the yield of conventional sovereign bonds with similar financial characteristics.
As regards to the secondary market, the trends in the yields of green sovereign bonds of France, the Netherlands, Belgium and Ireland are examined. The results show that the performance of green bonds of sovereign issuers is broadly in line with that of conventional bonds.
However, this conclusion does not represent a disincentive to enter this market, as the choice to place securities of this type is not based exclusively on economic convenience: they are a valid tool to mitigate climate risks and to manage trade-offs, by integrating and supporting policies to contain these risks.
Borsa Italiana amends MTFs' rules
On 5 March 2021, Borsa Italiana published amendments to the MTF Regulations (multilateral negotiation systems managed by Borsa Italiana) with Notice no. 6764.
In particular, the changes concern the following aspects:
- discipline of error management;
- negotiation parameters.
More in detail, the document implements the following changes (see pages 64 and 65 of the publication):
A. Handling of errors provisions
a) with regard to the SeDeX market, a summary is being provided in table form of the minimum loss amounts, of the criteria for the determination of the theoretical reference price and the maximum divergence thresholds for the extraordinary procedure.
b) the current communication channels for engaging with Borsa Italiana regarding error handling matters are being updated for the Rules of the AIM Italia, BiT Equity MTF, ATFund, and SeDeX markets.
c) the criteria for the determination of the theoretical reference prices and the maximum divergence thresholds have also been reformulated, without any change in substance, in order to achieve the alignment of those rules for all the markets managed by Borsa Italiana.
d) within the extraordinary procedure, the rules already currently in force for the SeDeX market concerning errors made as a result of the placement of multiple orders or quotes, according to the specifications set out in the Guidance Notes, are being extended to the AIM Italia, BiT Equity MTF, and ExtraMOT markets.
This amendment represents a variation with respect to current operations.
B. Trading parameters
As part of the rationalization of the regulatory structure of the MTFs and in order to harmonize the contents of the related rules with those adopted for other markets, the quantitative and detailed-level provisions, currently contained in the MTF rules, will be moved into the Guide to the Parameters. Following these amendments, the Guide to the Parameters will also include the provisions regarding MTFs and will define the entire regulatory discipline for all the markets organized and managed by Borsa Italiana S.p.A.
In particular, the amendments to the MTFs Rules will move to the Guide to the Parameters all the technical and operational provisions currently included in the MTFs Rules, regarding:
(i) price variation limits;
(ii) limits to the quantity and countervalues of orders;
(iii) difference limits for negotiated transactions;
(iv) price and quantity provisions for RFQ orders (only for 66 ExtraMOT Rules/ExtraMOT Pro3 Segment Rules);
(v) specialists and MiFID2 Market Maker obligations; (vi) stressed market conditions discipline.
The purpose of the amendments is to harmonize the MTFs regulatory structure to the regulatory structure of all the other markets organized and managed by Borsa Italiana S.p.A.; all the quantitative and detailed-level provisions will be available in the Guide to the Parameters.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
Luxembourg publishes coordinated version of Law 10 July 2020 on the register of fiducies and trusts
On 2 March 2021, the coordinated version of Law of 10 July 2020 on the register of fiducies and trusts was published in the Legilux.
This version includes the amendments provided under the Law of 25 February 2021 which clarifies and add further detail to certain provisions of the AML/CTF Law and Gambling Law as well as to further correct three material errors which have crept into the Law of 10 July 2020 on the register of fiducies and trusts.
Luxembourg publishes coordinated version of Law of 25/03/2020 establishing centralized registries and electronic data retrieval systems to identify natural or legal persons holding or controlling payment accounts, bank accounts, and safe-deposit boxes
On 2 March 2021, the coordinated version of Law of 25 March 2020 establishing centralized registries and electronic data retrieval systems to identify natural or legal persons holding or controlling payment accounts, bank accounts, and safe-deposit boxes was published in the Legilux (Journal Officiel du Grand-Duché de Luxembourg).
This version includes the amendments provided under the Law of 25 February 2021 which clarifies and add further detail to certain provisions of the AML/CTF Law and Gambling Law as well as to further correct three material errors which have crept into the Law of 25 March 2020 on centralized registries and electronic data retrieval systems.
CSSF publishes Circular CSSF 21/767 related to recent FATF statements concerning High-risk and other monitored jurisdictions
On 3 March 2021, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 21/767 on recent FATF statements concerning:
- High-risk jurisdictions on which enhanced due diligence and, where appropriate, counter-measures are imposed.
- Jurisdictions under increased monitoring of the FATF.
ChD publishes amendments to the Draft Law 7533 transposing AMLD 6
On 22 March 2021, the Chambre des députés - Luxembourg published the latest amendments of the Draft Law 7533 transposing Directive (EU) 2018/1673 of the European Parliament and of the Council of 23 October 2018 on combating money laundering by criminal law.
The amendments aim to:
- cover the case where ML-imprisonment is pursued at the same time as the primary offense. In this case, the sentence provided for the primary offense will always be pronounced, even if this is lower than that provided for laundering, which constitutes an exception in relation to the rules of general criminal law in matters of concurrent offenses.
- cover the case where ML-imprisonment is pursued alone. In this case, if the primary offense was committed in Luxembourg, the penalty pronounced for ML-imprisonment may not exceed that provided for the primary offense. If the offense primary was committed abroad, this rule does not apply.
Here are two publications from the CSSF concerning AML/CFT
Here are two publications from the CSSF concerning AML/CFT.
1. On 11 March 2021, the Commission de Surveillance du secteur financier (CSSF) published an update of the Q&A regarding the fight against money laundering and financing of terrorism ("AML / CFT") for the attention of individuals / investors.
The three following questions were updated:
Question 5: What should be understood by "international financial sanctions ”, in particular in the context of the fight against the financing of terrorism?
International financial sanctions in the context of the fight against the financing of terrorism may consist of the prohibition or restriction of financial activities, the seizure of property, the freezing of funds, assets or other economic resources, as well as that prohibiting or restricting the provision of certain financial services. The persons, entities and groups targeted by these prohibitions and restrictive measures are, for example, persons and entities linked to the Al-Qaida network or to the Taliban.
With regard to professionals of the financial sector, the CSSF is the competent authority to monitor the implementation of these restrictive measures.
Question 7: What are the latest developments in international financial sanctions?
The law of 19 December 2020 relating to the implementation of restrictive measures in financial matters, which entered into force on 27 December 2020, sheds new light on this matter. Thus, the purpose of this law is the implementation by the Grand Duchy of Luxembourg of restrictive financial measures adopted against certain States, natural and legal persons, entities and groups. Restrictive financial measures are required:
a) To natural persons of Luxembourg nationality, who reside or operate in or from the territory of the Grand Duchy of Luxembourg or abroad; and
b) Legal persons having their registered office, a permanent establishment or their center of main interests in the territory of the Grand Duchy of Luxembourg and which operate in or from the Grand Duchy of Luxembourg or abroad; and
c) To all other natural and legal persons who operate in or from the Grand Duchy of Luxembourg. The natural and legal persons who are required to carry out the restrictive measures provided for by this law inform the Minister responsible for Finance in his or her attributions of the execution of each restrictive measure taken in with regard to a State, a natural or legal person, an entity or a group designated in accordance with this law and the implementing regulations.
The CSSF in particular is responsible for the supervision of professionals who come under its jurisdiction for the purposes of implementation of this law. To this end, it may apply all measures and exercise all powers, including sanctions, with which it is vested, in accordance with the legal and regulatory provisions applicable to them. Without prejudice to the application of the more severe penalties provided for by other legal provisions, if any, infringements of this law and the implementing regulations relating thereto are punishable by imprisonment from eight days to five years and a fine of 12,500 euros to 5,000,000 euros or one of these penalties only.
Question 9: What should a professional of the financial sector do in the event of the presence among his business relationships of a legal / natural person listed on the OFAC (Office of Foreign Assets Control) sanctions lists?
First of all, it should be noted that only the Luxembourg, European and UN lists are applicable to professionals falling under the AML / CFT supervision of the CSSF, which fall under the provisions prescribed by the law of 19 December 2020 (op. Cit.). , which are subject to mandatory information to the competent Ministry of Finance in this regard and to the CSSF in copy.
The result is that these professionals may be led (by their legal situation) to consult other lists of financial restrictive measures, as published by foreign authorities, including the OFAC lists of the United States. Consequently, it is the professional's responsibility to analyze and apply to his business relationship listed on an OFAC list, the measures that are imposed on him, if any. From an AML / CFT point of view, the professional will also have to assess the impact of this situation in terms of ML / FT risks and if in such a case, additional due diligence is required to mitigate these risks. It is emphasized that it is not for the CSSF to rule on the application of OFAC-type measures, or on the termination of the business relationship in question, which are at the personal discretion of the professional, according to the elements of information at his disposal and which emerge from his Know Your Customer (KYC) / Know Your Transaction (KYT) file.
In this context, however, it is recalled that in the event of a suspicion of money laundering / terrorist financing, the professional concerned must obligatorily submit a declaration of suspicion to the Financial Intelligence Unit (FIU).
2. On 11 March 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Q&A regarding persons involved in AML/CFT for a Luxembourg investment fund or investment fund manager supervised by the CSSF for AML/CFT purposes.
In the document, the CSSF addresses the recent amendment to Regulation 12-02. The entry into force of the CSSF Regulation n° 12-02 of 14 December 2012 on the fight against money laundering and terrorist financing as amended by CSSF Regulation n° 20-05 of 14 August 2020 does not change the content of these FAQs.
- CSSF updates Q&A regarding the fight against money laundering and financing of terrorism ("AML / CFT") for the attention of individuals / investors
- CSSF updates Q&A regarding persons involved in AML/CFT for a Luxembourg investment fund or investment fund manager supervised by the CSSF for AML/CFT purposes
CSSF publishes Circular 21/768 on the practical rules on the role of statutory auditors in investment firms and on the provisions relating to credit institutions and investment firms of EU origin established in Luxembourg
On 12 March 2021, the Commission de Surveillance du secteur financier (CSSF) published a Circular CSSF 21/768 on the practical rules concerning the role of statutory auditors in investment firms and on the provisions relating to credit institutions and investment firms of EU origin established in Luxembourg by way of branches or exercising activities in Luxembourg by way of free provision of services.
The purpose of this circular is to update the content of part 8 relating to the professional obligations in relation to the prevention of money laundering and terrorist financing of the audit summary report, as defined in CSSF Circular 03/113 relating to the practical rules concerning the task of auditors in relation to investment firms, in order to take into account the amendments made to Articles 49(2) and 49(3) of CSSF Regulation No. 12-02, as amended. It should be noted that this update of CSSF Circular 03/113 only concerns the AML/CFT component and that it is expected that the rest of CSSF Circular 03/113 will be fundamentally revised.
This circular defines part 8 of the analytical audit report and the elements to be provided in the analytical report:
- the description of the AML/CFT policy implemented by the professional and the verification of its compliance with the provisions of Chapter 5 of Part II of the Act of 5 April 1993 as amended
- an assessment of the analysis made by the professional of AML/CFT risks to which he is exposed
- a statement on the regular monitoring of compliance with the professional's AML/CFT policy by the internal audit function and the person responsible for monitoring compliance with professional obligations
- verification of employee training and awareness-raising measures on money laundering and terrorist financing
- a statistical history of detected suspicious transactions
- the percentage of fund transfers for which data on the payer or beneficiary were missing or incomplete.
The réviseur d'entreprises agréé (approved auditor) must, in particular, check whether the abovementioned investment firm complies with its obligations regarding the identification of clients and beneficial owners. The réviseur d'entreprises agréé must indicate its method of selecting the sample of files audited and the coverage rate of the population. In case of non-compliance with legal or regulatory provisions or shortcomings, the réviseur d'entreprises agréé (approved auditor) must give precise indications enabling the CSSF to assess the situation.
CSSF publishes FAQ concerning the EU Regulation No 537/2014 relating to the appointment of statutory auditor or audit firms by public-interest entities
On 24 March 2021, the Commission de Surveillance du secteur financier (CSSF) published FAQ concerning the EU Regulation No 537/2014 relating to the appointment of statutory auditor or audit firms by public-interest entities.
According to Article 31 of the Luxembourg law of 23 July 2016 relating to the audit profession (hereinafter “Lux Law”) the statutory auditor or audit firm (hereinafter auditor) shall be appointed by the general meeting or shareholders or members of the audited entity. Article 16 (2)-(5) of the Regulation (EU) No. 537/2014 (hereinafter “Regulation”) contains provisions regarding the appointment procedure of auditors by public-interest entities (hereinafter PIEs).
This document is intended for auditors, audit committees, oversight bodies, professional bodies, PIEs, and other stakeholders and includes the guidelines adopted by the CEAOB (https://ec.europa.eu/info/ceaob) on the matter of the appointment of auditors by PIEs.
The FAQs provide for a minimum standard in order to give orientation. When applying the guidelines, it is important to give due consideration to the underlying intention and spirit of Art. 16 AR. The present FAQs are to be read in conjunction with the questions and answers published by the European Commission. These questions and answers are available on the following website: ec.europa.eu/info/law/audit-directive-2006-43- ec/implementation/guidance-implementation-and-interpretation-law_en.
For the purpose of the Audit Directive and Audit Regulation, entities are defined as PIEs from the moment they fulfil the criteria of a listed company, a credit institution or an insurance undertaking as set out in Lux Law.
This FAQ issued on 24 March 2021 is based on the CEAOB guidelines (CEAOB 2021-006) adopted on 16 March 2021.
ALFI publishes Technical Guidelines on cybersecurity
On 29 March 2021, the Association of the Luxembourg Fund Industry (ALFI) published Technical Guidelines on cybersecurity. The publication is only accessible to ALFI members and can be downloaded directly on the association website.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
CSSF updates the forms for declaration of honor for legal persons/natural persons under the authorization and registration procedure of an AIFM
On 3 March 2021, the Commission de Surveillance du secteur financier (CSSF) updated 2 forms regarding the authorization and registration procedure of an AIFM:
- Form for the declaration of honor for legal persons
- Form for the declaration of honor for natural persons.
CSSF communicates on the launch of ESMA Common Supervisory Action on the supervision of costs and fees of UCITS
On 5 March 2021, the Commission de Surveillance du secteur financier (CSSF) communicated on the launch of ESMA Common Supervisory Action on the supervision of costs and fees of UCITS.
ESMA has launched a Common Supervisory Action (CSA) with national competent authorities (NCAs) on the supervision of costs and fees of UCITS across the European Union. The aim of the CSA on costs and fees is to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework and the obligation of not charging investors with undue costs. For this purpose, the NCAs will take into account the supervisory briefing on the supervision of costs published by ESMA in June 2020. This supervisory briefing is designed to provide guidance to NCAs as regards the supervision of how costs are charged to investors by UCITS and their managers. It is also meant to give market participants indications of NCAs’ expectations and compliant practices regarding the cost-related provisions of the UCITS frameworks.
The CSA will also cover entities employing Efficient Portfolio Management (EPM) techniques to assess whether they adhere to the requirements set out in the UCITS framework and ESMA Guidelines on ETFs and other UCITS issues (ESMA/2014/937).
In this context, the CSSF will launch beginning of March 2021 the first phase of the CSA by asking a sample of Luxembourg-based UCITS managers to complete a dedicated questionnaire for all UCITS managed, i.e. Luxembourg domiciled UCITS and foreign domiciled UCITS. All concerned Luxembourg-based UCITS managers will be contacted by the CSSF shortly in that context.
In order to benefit from a secured exchange platform and pre-submission data quality checks, the response questionnaire will have to be submitted by the UCITS managers through the CSSF’s eDesk Portal. For that purpose, a dedicated section to complete this questionnaire will be accessible on the eDesk Portal.
The industry will be duly informed once this section, together with additional guidance, will be available for use. Any complementary guidance from ESMA that may become available in that context will also be included in that user guide and updated accordingly.
CSSF publishes a Questionnaire and Confirmation Letters on Performance Fees for UCITS and certain types of AIFs
On 24 March 2021, the Commission de Surveillance du Secteur Financier (CSSF) published a Questionnaire on Performance Fees for UCITS.
The questionnaires aim at providing the CSSF with information about compliance with ESMA Guidelines on performance fees (ESMA34-39-992).
The AIFM confirmation letters relates to the compliance with disclosure requirements under the ESMA Guidelines on performance fees in UCITS and certain types of AIFs (ESMA42-39-992) as well as the letter concerning multi-compartment AIF.
Here are three publications from the CSSF on the Prospectus Regulation
Here are three publications from the CSSF on the Prospectus Regulation.
1. On 1 March 2021, the Commission de Surveillance du secteur financier (CSSF) announced the launch of its new application named e-Prospectus, designed for the filing of prospectuses to be published when securities are offered to the public or admitted to trading on a regulated market under Regulation (EU) 2017/1129 and the Law of 16 July 2019 on prospectuses for securities.
As from 1 March 2021, this new web application replaces the submission of such prospectuses and relating documents, as well as notification requests, to the CSSF by email. It is a further step in the CSSF’s continuous drive towards process digitalization.
The ongoing applications waiting for approval have been migrated by the CSSF to the new system and will be finalised within e-Prospectus. The Final Terms submission process remains unchanged and is not affected by the introduction of e-Prospectus.
2. On 1 March 2021, the Commission de Surveillance du secteur financier (CSSF) published e-Prospectus guidance.
In order to access e-Prospectus, you need to possess a PRIVATE or PRO LuxTrust certificate. For further information, please refer to the dedicated user guide.
For optimal navigation conditions, CSSF recommends to use one of the browsers listed below in a recent version :
- Microsoft Edge
- Google Chrome
- Apple Safari
All documents uploaded to e-Prospectus must be in PDF format.
3. On 1 March 2021, the Commission de Surveillance du secteur financier (CSSF) published FAQ on the e-prospectus platform.
This FAQ answers questions concerning the connection to the platform, issues related to LuxTrust, the persons who need to request an e-Prospectus account, etc
Sustainable Finance / Green Finance
Sustainable Finance / Green Finance
On 12 March 2021, the Commission de Surveillance du secteur financier (CSSF) published an announcement on the application of the SFDR.
The CSSF would like to bring to the attention of financial market participants and financial advisers the Supervisory Statement of the Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – hereinafter referred to as “ESAs”) on the application of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”) within the period from 10 March 2021 to the application date of the Regulatory Technical Standards (“RTS”) on the content, methodologies and presentation of sustainability-related disclosures. The Supervisory Statement has been published on 25 February 2021.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
Switzerland amends the Federal Act on Combating Money Laundering and Terrorist Financing / La Suisse modifie la loi fédérale sur la lutte contre le blanchiment d'argent et le financement du terrorisme
On 30 March 2021, the amended Federal Act on Combating Money Laundering and Terrorist Financing was published in the Official Journal.
The main changes concern the following points:
- Verification of the identity of the beneficial owner
For anti-money laundering purposes, the financial intermediary will have to verify the identity of the beneficial owner on the basis of relevant information and data from reliable sources in order to make it plausible that the designated person is the real beneficial owner. This amendment will not lead to any major changes as it already corresponds to the existing case law and practice.
- Updating of client data
Article 7 paragraph 1bis AML Act obliges financial intermediaries to ensure that customer documents are up to date and to keep them up to date. In addition, there will be no restriction on the verification of the identity of the contracting party or the beneficial owner. The financial intermediary will therefore be entitled to review the customer profile more generally (e.g. the object and purpose of the business relationship). The obligation applies to all business relationships regardless of their risk classification. Furthermore, the periodicity, scope and method of checking and updating client data will be based on a risk-based approach.
- Adapting the reporting system to MROS
- Transparency of associations with an increased risk of terrorist financing
- The advisors (those who provide certain specific services in connection with domiciliary companies or trusts) are subject to the AML Act
- Lowering the threshold for trading in precious metals and stones.
The current Act is subject to a referendum.
Version française (copy 2)
Le 30 mars 2021, la nouvelle loi fédérale sur la lutte contre le blanchiment d'argent et le financement du terrorisme a été publiée au Journal Officiel.
Les principaux changements concernent les points suivants
- Vérification de l'identité de l'ayant droit économique
L'intermédiaire financier devra vérifier l'identité de l'ayant droit économique sur la base d'informations et de données pertinentes provenant de sources fiables afin de rendre plausible que la personne désignée est le véritable ayant droit économique.
- Mise à jour des données relatives aux clients
L'article 7 alinéa 1bis LBA oblige les intermédiaires financiers à s'assurer que les documents relatifs aux clients sont à jour et à les tenir à jour. Il n'y aura aucune restriction à la vérification de l'identité du cocontractant ou de l'ayant droit économique. L'intermédiaire financier sera en droit d'examiner le profil du client de manière plus générale (objet et le but de la relation d'affaires). L'obligation s'applique à toutes les relations d'affaires, quelle que soit leur classification de risque. La périodicité, l'étendue et la méthode de vérification et de mise à jour des données sur les clients seront fondées sur une approche basée sur le risque.
- Adaptation du système de déclaration au MROS
Les banques sont tenues d'informer le Bureau de communication en matière de blanchiment d'argent (MROS) lorsqu'elles ont un "soupçon fondé" de fonds criminels. Un soupçon est considéré comme fondé si le résultat d'une clarification supplémentaire ne réfute pas le soupçon.
En l'absence de clarification dans un délai raisonnable, un "simple doute" peut déclencher une obligation de déclaration. Les intermédiaires financiers ont la possibilité de mettre fin à une relation d'affaires s'ils ne reçoivent pas de réponse du MROS dans les 40 jours suivant la communication (art. 9b).
Les autres modifications concernent :
- la transparence des associations présentant un risque accru de financement du terrorisme
- les conseillers (qui fournissent certains services spécifiques en relation avec des sociétés de domicile ou des trusts) sont soumis à la loi anti-blanchiment.
- l'abaissement du seuil pour le commerce des métaux précieux et des pierres précieuses.
La loi actuelle est soumise à référendum.
FINMA publishes a report on regulatory auditing for financial market infrastructures / La FINMA publie un rapport sur l'audit réglementaire des infrastructures des marchés financiers
On 10 March 2021, the FINMA published a report on regulatory auditing for financial market infrastructures.
The audit firm must explain all irregularities and recommendations of the reporting year and of the preceding audit period, in each case with a deadline and measures to be taken or that have been taken, as well as the status of implementation or results of the subsequent audit with regard to restoring compliance with regulatory law (only those irregularities or recommendations shall be addressed for which the audit firm had planned its own audit procedures in accordance with the audit strategy). Irregularities are not deemed to have been settled until the subsequent audits have been completed.
Le 10 mars 2021, la FINMA a publié un rapport sur l'audit réglementaire des infrastructures des marchés financiers.
La société d'audit doit expliquer toutes les irrégularités et recommandations de l'année de référence et de la période d'audit précédente, en indiquant dans chaque cas un délai et les mesures à prendre ou qui ont été prises, ainsi que l'état de la mise en œuvre ou les résultats de l'audit ultérieur en ce qui concerne le rétablissement du respect du droit réglementaire (seules les irrégularités ou recommandations pour lesquelles la société d'audit avait planifié ses propres procédures d'audit conformément à la stratégie d'audit doivent être abordées). Les irrégularités ne sont pas considérées comme réglées tant que les audits ultérieurs ne sont pas terminés.
SNB publishes its 2020 Annual Report / La BNS publie son rapport annuel 2020
On 22 March 2021, the Governing Board of the Swiss National Bank submitted its accountability report for 2020 to the Federal Assembly in accordance with art. 7 para. 2 of the National Bank Act (NBA). The report provides information about how the SNB has fulfilled its mandate pursuant to art. 5 NBA – in particular as regards its conduct of monetary policy and its contribution to the stability of the financial system. It is submitted to the Federal Council and the General Meeting of Shareholders for information purposes.
Le 22 mars 2021, la Direction générale de la Banque nationale suisse a remis à l'Assemblée fédérale son rapport de gestion pour 2020, conformément à l'art. 7, al. 2, de la loi sur la Banque nationale (LBN)
Ce Compte rendu d’activité présente l’accomplissement des tâches légales de l’institution (art. 5 LBN), en particulier la conduite de la politique monétaire et la contribution de la Banque nationale à la stabilité du système financier. Il est soumis pour information au Conseil fédéral et à l’Assemblée générale des actionnaires.
Data protection / General Data Protection Regulation (GDPR) / ePrivacy Regulation (ePR)
FDPIC informs on the new Federal Data Protection Act / Le PFPDT informe sur la nouvelle loi fédérale sur la protection des données
On 5 March 2021, the Federal Data Protection and Information Commissioner (FDPIC) informed on the new Federal Data Protection Act (FADP).
The Swiss parliament passed the fully revised Federal Data Protection Act (FADP) as well as other amended pieces of legislation on data protection in its 2020 autumn session. The referendum period expired unused on 14 January 2021. The Federal Administration is currently in the process of drafting the associated implementing ordinances, which the Federal Council is expected to put into force together with the new FADP in the second half of 2022. Until they come into effect, the private sector and federal authorities will have to adapt the processing of personal data to the new provisions. In this document, the FDPIC outlines the most important alterations that they need to take into consideration.
Le 5 mars 2021, le Préposé fédéral à la protection des données et à la transparence (PFPDT) a publié une communication sur la nouvelle loi fédérale sur la protection des données (LPD).
Lors de la session d’automne 2020, l’Assemblée fédérale a adopté la révision totale de la loi fédérale sur la protection des données (LPD) et la modification d’autres lois sur le sujet. Le délai référendaire, fixé au 14 janvier 2021, s’est écoulé sans qu’un référendum ait été déposé. L’administration fédérale est en train de rédiger les ordonnances d’exécution y afférentes. Il est prévu que le Conseil fédéral les mette en vigueur au second semestre 2022, en même temps que la nouvelle LPD. Le secteur privé et les autorités fédérales devront avoir d’ici là adapté le traitement des données personnelles aux nouvelles dispositions. Le PFPDT met en évidence ci-après les principales nouveautés dont ils devront tenir compte à cette fin.
Les principales nouveautés de la loi sur la protection des données entièrement révisée sont les suivantes :
1. Uniquement les données des personnes physiques : La LPD révisée vise exclusivement à protéger la personnalité des personnes physiques qui font l’objet d’un traitement de données, les données des personnes morales ne sont plus incluses dans le nouveau LPD.
2. Données personnelles sensibles : L’actuelle définition des données personnelles sensibles est étendue aux données génétiques et aux données biométriques si ces dernières identifient une personne physique de manière univoque.
3. Protection des données dès la conception et par défaut: Ces principes contraignent les autorités et les entreprises à mettre en œuvre dès la conception des projets les principes de traitement prévus par la LPD en prenant des mesures de protection techniques et organisationnelles appropriées.
4. Conseillers à la protection des données: Une entreprise privée pourra désigner un conseiller à la protection des données, lequel pourra, mais ne devra pas, être lié à elle par un contrat de travail.
5. Analyse d’impact relative à la protection des données personnelles: Si le traitement prévu est susceptible d'entraîner un risque élevé pour la vie privée ou les droits fondamentaux des personnes concernées, les responsables du traitement des données du secteur privé doivent désormais procéder à une analyse d'impact sur la protection des données.
6. Codes de conduite : La nouvelle LPD incite les associations professionnelles, sectorielles et économiques à rédiger leur propre code de conduite et à le soumettre au PFPDT afin qu’il prenne position.
7. Certifications : Les fournisseurs de systèmes ou de logiciels de traitement de données personnelles pourront eux aussi, en plus des exploitants, faire certifier leurs systèmes, leurs produits ou leurs services.
8. . Registre des activités de traitement: Les responsables du traitement et les sous-traitants tiendront chacun un registre de toutes leurs activités de traitement.
9. Communication des données personnelles à l’étranger: Les données pourront être communiquées à l’étranger si le Conseil fédéral a constaté que l’État tiers dispose d’une législation assurant un niveau de protection adéquat.
10. Devoir d’informer consolidé: Le responsable du traitement privé devra informer au préalable la personne concernée de manière adéquate, que la collecte de données soit directement effectuée auprès d’elle ou non.
11. Droit d’accès de la personne concernée: La LPD contient une liste étendue d'informations minimales que les responsables du traitement des données doivent divulguer.
12. Devoir d’annoncer les violations de la sécurité des données: Le responsable du traitement devra nouvellement annoncer au PFPDT les cas de violation de la sécurité des données entraînant un risque élevé pour la personnalité ou les droits fondamentaux de la personne concernée.
13. Droit à la portabilité des données personnelles: La personne concernée a désormais la possibilité de recevoir ses données personnelles sous un format électronique couramment utilisé.
14. Enquête sur toutes les infractions aux prescriptions de protection des données: Le PFPDT devra ouvrir d’office une enquête contre un organe fédéral ou une personne privée qui aura enfreint la nouvelle LPD.
15. Décisions: Le PFPDT pourra mener des procédures conformément à la loi fédérale sur la procédure administrative et statuer formellement à l'encontre d'organes fédéraux ou de personnes privées qui traitent ou contrôlent des données.
16. Émoluments: Le PFPDT percevra des émoluments auprès des personnes privées.
17. Sanctions : La nouvelle LPD prévoit des amendes de 250 000 francs au plus à l’encontre de personnes privées.
FINMA publishes Practical guide on the delivery of electronic data to the Enforcement division / La FINMA publie un Guide pratique sur la remise de données électroniques à la division Enforcement
On 5 March 2021, the FINMA published a Practical guide: on the delivery of electronic data to the Enforcement division.
The guidelines are aimed at natural persons and legal entities who have to provide information to FINMA's Enforcement division as part of preliminary investigations and who have to supply electronic data in the process.
It describes the technical modalities for the delivery of electronic data in as standardised a manner as possible and is based on generally used programs and data formats. The guidelines do not establish any legal claims. The right to deviate from these guidelines is reserved. The guidelines are not applicable to enforcement procedures.
Le 5 mars 2021, la FINMA a publié un Guide pratique sur la remise de données électroniques à la division Enforcement.
Ce guide s'adresse aux personnes physiques et morales qui doivent fournir des informations à la division Enforcement de la FINMA dans le cadre d'enquêtes préliminaires et qui doivent fournir des données électroniques dans ce cadre.
Elles décrivent les modalités techniques de la livraison de données électroniques de manière aussi standardisée que possible et se fondent sur des programmes et des formats de données généralement utilisés. Les directives n'établissent aucune revendication juridique. Le droit de s'écarter de ces directives est réservé. Les directives ne sont pas applicables aux procédures d'exécution.
FINMA publishes partially revised Circular on “Direct transmission” / La FINMA publie une version partiellement révisée de la circulaire «Transmission directe»
On 22 March 2021, the FINMA published the partially revised Circular on “Direct transmission”, comprising a broadened list of foreign authorities eligible for administrative assistance. The reporting process has also been clarified. The partially revised Circular will enter into force on 1 April 2021.
Based on an ex-post evaluation conducted among interested parties. FINMA made adjustments to Circular 2017/6 “Direct transmission” and made them available for consultation. The points raised in the ex-post evaluation were already comprehensively assessed in the ex-post evaluation and explanatory report. No new arguments or requests for amendments were put forward during the consultation, so that there was no further need for material changes. The partially revised Circular will enter into force on 1 April 2021.
The Circular on “Direct transmission” sets the rules for direct, legally compliant and timely exchanges of information between FINMA-supervised institutions and foreign authorities. The adjustments resulting from the ex-post evaluation include in particular an extension of the list of authorities eligible for administrative assistance to encompass those foreign authorities with which FINMA has concluded bilateral cooperation agreements meeting the standard for administrative assistance. Among other clarifications, the reporting process for planned transmissions has been clarified.
Le 22 mars 2021, la FINMA a publié une version partiellement révisée de la circulaire «Transmission directe». Celle-ci comprend une liste élargie des autorités étrangères compétentes pour l’assistance administrative ainsi que des précisions complémentaires sur la procédure d’annonce. Elle entre en vigueur le 1er avril 2021.
S’appuyant sur une évaluation ex post réalisée auprès des personnes intéressées, la FINMA a adapté la circulaire 2017/6 «Transmission directe» et l’a soumise à une procédure d’audition publique. Les points soulignés dans l’évaluation ex post ont déjà fait l’objet d’appréciations circonstanciées dans le rapport sur l’évaluation ex post et le rapport explicatif. Lors de l’audition, aucun nouvel argument ni aucun nouveau souhait de modification n'ont été formulés, si bien qu’aucune modification de fond ne s’avérait plus nécessaire. La circulaire partiellement révisée entrera en vigueur le 1er avril 2021.
La circulaire «Transmission directe» vise un échange direct, juridiquement sûr et rapide d’informations entre les assujettis et les autorités étrangères. Les adaptations résultant de l’évaluation ex post comprennent notamment un élargissement de la liste des autorités étrangères compétentes pour l’assistance administrative pour y inclure celles avec lesquelles la FINMA a conclu des accords de coopération bilatéraux adéquats pour l’assistance administrative. Outre quelques autres clarifications, elle précise surtout la procédure d’annonce des transmissions prévues.
FINMA publishes 2020 Annual Report / La FINMA publie son rapport d'activité 2020
On 25 March 2021, the FINMA published its 2020 Annual Report. FINMA notes that the financial institutions remained robust during this challenging year dominated by the COVID-19 pandemic. Besides the regulatory actions induced by the pandemic, FINMA performed its supervisory activity in full. In addition, FINMA is providing data on enforcement cases in a database as well as statistics in an Excel document on its website. FINMA has postponed the planned annual media conference until a later point in time due to the announced change in leadership.
1) Intensive supervision continued
Besides the challenges surrounding the pandemic, FINMA rigorously pursued its supervisory activity. Despite its employees working from home and the lockdown, for example, it carried out around one hundred on-site supervisory reviews at banks. That is six per cent more than in the previous year. In addition, FINMA focused on preparing the institutional and regulatory framework for the implementation of FinSA and FinIA: it authorised five supervisory organisations, three registration bodies and two reviewing bodies for prospectuses as well as pre-registering some 2,500 portfolio managers. FINMA is thus ready to process the authorisation requests that it expects to receive from portfolio managers and trustees in the coming months swiftly. FINMA also focused on carrying out checks among supplementary health insurers due to service settlements that were lacking in transparency and were in some cases unjustified.
2) Enforcement: focus remains on money laundering
In 2020, FINMA conducted 628 investigations (2019: 816) and 33 enforcement proceedings (2019: 30) (enforcement statistics). These included proceedings that were complex and international in scope in relation to combating money laundering. FINMA issued and published two rulings against Julius Baer and Banca Credinvest relating to business relationships associated with Petróleos de Venezuela S.A. (PDVSA). FINMA thus conducted proceedings against institutions and responsible managers in connection with corruption cases such as 1MDB, Petrobras and FIFA in more than twenty cases between 2016 and 2019.
3) Annual financial statements: slightly higher costs due to implementation of FinSA/FinIA
FINMA’s costs rose slightly in the year under review, having previously remained largely stable for several years. At CHF 125 million, they were CHF 3.4 million higher in 2020 than in the previous year. This is due to the additional responsibilities in connection with the implementation of FinSA and FinIA. The total costs were covered by income from supervisory fees and levies. The average number of full-time equivalent positions at the authority was 501 in 2020 and has increased slightly compared with the previous year (489) due to the aforementioned additional responsibilities.
Le 25 mars 2021, la FINMA a publié son rapport d’activité 2020. Elle constate que les établissements financiers sont restés solides tout au long de cette année difficile marquée par le COVID-19. Outre les activités de surveillance induites par la pandémie, la FINMA a exercé son activité de surveillance sans restriction. En outre, la FINMA met à disposition sur son site Internet des informations concernant les cas d’enforcement dans une banque de données ainsi que des statistiques sous forme de document Excel. La FINMA a reporté à une date ultérieure la conférence de presse annuelle à cause de l’annonce du changement au sein de son équipe de direction.
1) Poursuite de l’intense activité de surveillance
En plus des défis liés à la pandémie, la FINMA a poursuivi son activité de surveillance de manière conséquente. Malgré le télétravail et le confinement, elle a par exemple effectué une centaine de contrôles sur place auprès des banques, soit 6 % de plus que l’année précédente. En outre, la FINMA a préparé intensément les cadres institutionnels et réglementaires nécessaires à la mise en œuvre de la LSFin et de la LEFin : dans ce contexte, elle a autorisé cinq organismes de surveillance, trois organes d’enregistrement ainsi que deux organes de contrôle des prospectus et a préenregistré quelque 2 500 gestionnaires de fortune indépendants. La FINMA est ainsi prête à traiter rapidement les requêtes en autorisation des trustees et gestionnaires de fortune indépendants attendues ces prochains mois. La FINMA a par ailleurs fait une priorité du contrôle des assureurs-maladie complémentaire, en raison de décomptes de prestations opaques et parfois injustifiés.
2) Enforcement: le blanchiment d’argent reste une priorité
Dans son activité d’application du droit qu’est l’enforcement, la FINMA a conduit, en 2020, 628 investigations (2019 : 816) et 33 procédures d’enforcement (2019 : 30) (statistiques relatives à l’enforcement). La FINMA s’est une nouvelle fois intéressée à des cas complexes aux ramifications internationales dans le domaine de la lutte contre le blanchiment d’argent. Elle a rendu et publié des décisions contre Julius Baer et Banca Credinvest, concernant des relations d’affaires dans le périmètre de Petróleos de Venezuela SA (PDVSA). Entre 2016 et 2019, la FINMA a ainsi mené, dans plus d’une vingtaine de cas, des procédures contre des établissements et des dirigeants responsables en relation avec des cas de corruption, tels que 1MDB, Petrobras et FIFA.
3) Comptes annuels: légère augmentation des coûts en raison de la mise en œuvre de la LSFin et de la LEFin
Durant l’exercice sous revue, les coûts de la FINMA ont légèrement augmenté, après plusieurs années consécutives de stabilité. Les charges d’exploitation de 125 millions de francs ont ainsi progressé de 3,4 millions de francs par rapport à l’année précédente, ce qui s’explique par les dépenses supplémentaires induites par la mise en œuvre de la LSFin et de la LEFin. Les charges totales sont entièrement couvertes par les revenus des émoluments et les taxes de surveillance. En 2020, le nombre de postes à plein temps de l’autorité était en moyenne de 501 et a légèrement progressé par rapport à l’année précédente (489) en raison des tâches supplémentaires évoquées.
The Netherlands publishes Decree of 19 February 2021 amending the Financial Supervision Financing Decree 2019 in connection with the restoration of a change to the percentage distribution of the costs of the AFM
On 4 March 2021, the Ministry of Finance of the Netherlands published the Decree of 19 February 2021 amending the Financial Supervision Financing Decree 2019 in connection with the restoration of a change to the percentage distribution of the costs of the AFM.
The decree lays down the percentage distribution of the AFM's costs the different entities under the supervision of the AFM owes.
AFM consults on the Fine Allocation Policy 2021
On 25 March 2021, the Autoriteit Financiële Markten (AFM) launched a consultation of a proposed revision of the policy rule used to determine the amount of nearly all administrative fines imposed by the AFM.
The purpose of the New Policy is:
- to allow the AFM to determine a proportionate fine in each individual case taking into account all the circumstances; and
- to provide as much transparency as possible in advance about the way in which the amount of a fine is determined.
AFM reminds advisers, intermediaries and authorized agents to complete the Market Monitor and Wwft questionnaire
On 25 March 2021, the Autoriteit Financiële Markten (AFM) reminded advisers, intermediaries and authorized agents to complete the Market Monitor and Wwft questionnaire.
The AFM uses this questionnaire as a supervisory tool. It uses the information from this annual request to better understanding the market and the associated risks. This allows AFM to use its supervision in a more targeted manner and to help improve the quality of the financial market and improve confidence in this market.The questionnaire also contains questions about compliance with the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) and is therefore called 'MMAB and Wwft 2021'. Completing the questionnaire is mandatory.
Sustainable Finance / Green Finance
DNB publishes its first report on financial climate-related risks and opportunities in accordance with TCFD recommendations
On 22 March 2021, the De Nederlandsche Bank (DNB) published its first report on financial climate-related risks and opportunities in accordance with TCFD recommendations.
In the report, DNB follows the recommendations of the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD). The report discloses the steps DNB takes to identify and mitigate climate-related risks in our areas of responsibility, which are asset and liability management, supervision of the financial sector, economic advice and statistics. For example, DNB carried out a stress test to examine our balance sheet in relation to risks presented by the energy transition. In addition, DNB identified the carbon footprint of its own-account investments. In the report, DNB also describes how it encourages financial institutions subject to our supervision to manage their sustainability risks.
DNB based the progress report on the globally adopted recommendations issued by the TCFD. This makes DNB one of the first central banks in the world to report in accordance with this approach, following in the footsteps of the Bank of England. DNB plans to elaborate the report further each year to ensure that financial climate-related risks and opportunities are firmly embedded in its areas of responsibility.
COVID-19 Regulatory Measures
CNMV & Registrars association of Spain issue joint statement in relation to convened general meetings to be held exclusively by telematic means
On 18 March 2021, the Comicion Nacional del Mercado del valores (CNMV) & Registrars association of Spain issued joint statement in relation to convened general meetings to be held exclusively by telematic means.
Spanish Royal Decree-Law 5/2021, of 12 March, on extraordinary measures to support business solvency in response to the COVID-19 pandemic has amended by means of its Final Provision Eight Spanish Royal Decree-Law 34/2020, of 17 November, on urgent measures to support business solvency and the energy sector, and on tax matters, providing that, exceptionally during 2021, the board of directors of public limited companies may include in the notice of the general
meeting, even if not provided for in their articles of association, the attendance by telematic means and distance voting, as well as the holding of the meeting anywhere in Spain. In addition, in the notice of the meeting, the board of directors may agree to hold the meeting exclusively by telematic means, under the terms and conditions set out in the law itself.
As indicated in the preamble of Spanish Royal Decree-Law 5/2021, this provision is included to remove any uncertainty about the possibility of holding meetings exclusively by telematic means in 2021, with the same guarantees as those required for the use of these means during the validity of Spanish Royal Decree-Law 8/2020, of 17 March, on urgent extraordinary measures to confront the economic and social impact of COVID-19.
Insofar as there are companies which had convened general meetings providing for the possibility of holding such meetings exclusively by telematic means due to the situation caused by the COVID-19 pandemic, and depending on its evolution, such possibility shall be clearly stated, as stipulated in Spanish Royal Decree-Law 8/2020, by means of a supplementary notice served at least five days prior to the scheduled date of the meeting.
Spain publishes Law 2/2021 on urgent prevention measures, coordination to face health crisis caused by COVID-19
On 30 March 2021, Spain published Law 2/2021 on urgent prevention measures, coordination to face health crisis caused by COVID-19.
The fourth final provision concerns the holding of meetings.
It establishes in an exceptional way during 2021:
- Public Limited Companies : even if the bylaws had not provided for it, the board of directors may foresee in the call of the general meeting the attendance by telematic means and the vote to distance in the terms provided in articles 182 and 189 of Royal Legislative Decree 1/2010, of July 2, and article 521 of the same legal text, in the case of listed public limited companies, as well as the holding of the meeting anywhere in the national territory. The announcement of the call may be done electronically, with the requirements indicated
- Limited and limited liability companies : even if the statutes had not planned, they may hold the general meeting by videoconference or by multiple telephone conference, provided that all the people who have the right to attend or those who represent them have the necessary means, the secretary of the body recognizes their identity, and so expresses it in the minutes, which will be sent immediately to the email addresses
- Rest of legal persons of private law (associations, civil companies and companies cooperatives): the meetings or assemblies of associates or partners may be held by videoconference or multiple conference call as long as all the people who had right of attendance or those who represent them have the necessary means, the secretary the body recognizes its identity, and thus expresses it in the minutes, which will be sent immediately to the email addresses.
- Board of trustees of foundations : even if the statutes have not foreseen it, the meetings by video conference or multiple conference call, provided that all members of the body have the necessary means, the secretary of the body recognizes their identity, and thus express it in the minutes, which will be sent immediately to the email addresses of each of the attendees.
- Bodies of administration of associations, civil and commercial companies, and the governing council of cooperative societies:
+ They may hold their sessions by videoconference or by multiple telephone conference, even if the statutes had not provided for it, provided that all the members of the body have the necessary means, the secretary of the body recognizes their identity, and so expressed in the minutes, which will be sent immediately to the email addresses of each one of the concurrent. The same rule will apply to the delegated commissions and to the others Mandatory or voluntary commissions that it had constituted. The session will be understood held at the domicile of the legal person.
+ They may adopt resolutions by voting in writing and without a session, although the statutes do not had foreseen it, (the board of trustees of the foundations is also included), provided that decided by the president and must be so adopted when requested by at least two of the members of the organ. The same rule will apply to the delegated committees and to the others Mandatory or voluntary commissions that it had constituted. The session will be understood held at the registered office.
Banco de España publishes 2020 Supervision report
On 18 March 2021, the Banco de Espana published the 2020 Supervision report, which summarizes the functions and organization of supervision and surveillance in the Bank of Spain and allows to know the main actions carried out during the year in this area.
After integrating in 2019 the Annual report on the supervision of financial market infrastructures, has been modified the traditional title of the publication, Report on Banking Supervision in Spain , for Report of Supervision .This edition has emphasized the role of the banking sector and supervisors to alleviate the effects of the crisis triggered by COVID-19. A series of boxes are included that they collect current or particularly relevant issues.
With regard to microprudential supervision, which the Bank of Spain exercises within the Single Supervision Mechanism (SSM), the Report details the supervisory activity, which has had to redirect its efforts towards monitoring the risks associated with the pandemic, focusing on its impact on the risk profile of entities and on their operational continuity.
The Report also includes the development of the supervisory functions of the Bank of Spain on the margin of the MUS. Regarding macroprudential policy, it explains the macroprudential instruments available to you and its use during 2020. In relation to the supervision of conduct, the Report sets the actions carried out during the year, focused on monitoring the effective implementation by entities of the behavioral aspects of the approved measures to cope with the economic effects of the pandemic.
The activity of surveillance and supervision of market infrastructures has also been marked due to the exceptional situation derived from the COVID-19 crisis. The Memory describes the work carried out carried out in this area by the Bank of Spain, which has closely monitored the operations of the payment systems and instruments and of the actions taken to deal with the situation.
The Report dedicates a chapter to the exercise of the sanctioning power of the Bank of Spain. The terms of the sanctioning proceedings were suspended from March 14 to June, with the declaration of the state of alarm, during the rest of the year they have continued to open and solving files. During 2020, 12 files have been in process, of which, five are related to the transparency and protection of banking clients.
The Report is completed with a description of the participation of the Bank of Spain in the international supervisory bodies and forums, both globally and at European level, and with a reference to the main regulatory developments regarding supervision.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
UK publishes S.I. 2021 No. 392 - The Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021
On 26 March 2021, the S.I. 2021 No. 392 - The Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021 was published in the UK legislation.
- amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692) to insert as Schedule 3ZA a new UK list of high-risk third countries for the purposes of enhanced customer due diligence requirements.
- substitute the list of countries in this Schedule for the list in Commission Delegated Regulation (EU) 2016/1675 of 14th July 2016 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council by identifying high-risk third countries with strategic deficiencies.
Here are five publications from the FCA concerning Brexit
Here are five publications from the FCA concerning Brexit.
1. On 3 March 2021, the Financial Conduct Authority (FCA) published the information on what to do when firms have received their landing slot to apply for full authorization in the UK.
This information is not applicable to payments institutions, registered account information service providers and electronic money institutions in the TPR that previously passported into the UK.
The temporary permissions regime (TPR) is in force. The FCA started to email formal directions to firms in the TPR confirming their ‘landing slot’. This is the period when each firm can apply:
- for full (non-temporary) Part 4A permission
- to vary the firm’s existing Part 4A permission if the firm has a UK top-up permission
The direction the FCA will send to firms specifies when each firm must submit its application for either type of permission above. This can be no earlier than the opening date and no later than the closing date.
2. On 3 March 2021, the Financial Conduct Authority (FCA) provided information on how to cancel a temporary permission if the firm is in the temporary permissions regime (TPR) or the supervised run-off (SRO) regime.
Firms in the TPR and SRO that no longer have business which requires them to have UK permission can apply to the FCA to cancel their temporary/limited permission and leave UK regulation.
However, cancelling a permission will vary depending on the facts that apply to each firm. Before beginning the process, each firm may wish to seek independent legal advice on its need to be authorized in the UK.
3. On 3 March 2021, the Financial Conduct Authority (FCA) explained how the FCA supervises firms in the temporary permissions regime (TPR).
In most instances, firms in the TPR are supervised in the same way as other authorized firms. Firms within the TPR will also be subject to portfolio analysis. Where they cause harm, or pose a significant risk of causing harm, the FCA may use its regulatory tools. For example, the FCA can vary a firm’s permission or impose a requirement.
In some cases, firms in the regime are subject to different rules than applied to them when they were passporting into the UK – for example, rules in relation to safeguarding client money or custody assets, or status disclosure.
Firms may also need to contact the FCA proactively. However, generally matters which were reserved to the home state before the end of the transition period can be fulfilled by substituted compliance and so might not require reporting to the FCA.
4. On 4 March 2021, the Financial Conduct Authority (FCA) published a revised version of our Statement of Policy about the use of a temporary power that the FCA has under UK Markets in Financial Instruments Regulation (MiFIR).
In the revised Statement of Policy, the FCA sets out that the FCA is willing to use its temporary powers flexibly and amend FCA’s approach to the DVC if another jurisdiction makes an equivalence decision in respect of the UK.
5. On 24 March 2021, the Financial Conduct Authority (FCA) published a statement on the review of its approach to the UK’s derivatives trading obligation.
In the statement published on 31 December 2020, the FCA said that the FCA would keep its use of the TTP under review and consider by 31 March 2021 whether market or regulatory developments warrant a review of the FCA’s approach.
The FCA has not observed market or regulatory developments in the first quarter of 2021 that justify a change in our approach. Therefore, the FCA will continue to use the TTP to modify the application of the DTO as previously set out.
As specified in our December statement, the FCA expects firms and other regulated persons to be able to demonstrate compliance with the UK DTO.?
- FCA informs on the landing slots for firms in the TPR
- FCA informs on how to cancel a temporary permission
- FCA explains on how firms in the temporary permissions regime (TPR) are supervised
- FCA publishes a revised version of its Statement of Policy about the use of FCA's temporary power under UK MiFIR
- FCA publishes Statement on the review of its approach to the UK’s derivatives trading obligation
European Market Infrastructure Regulation (EMIR)
FCA and PRA consult on bilateral margin requirements for uncleared derivatives
On 9 March 2021, the Financial Conduct Authority’s (FCA) and Prudential Regulation Authority (PRA) launched a consultation for their proposals to establish or extend exemptions for some products subject to bilateral margining requirements, and to align implementation phases and thresholds to the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) standards.
This CP is relevant to
- PRA-authorized firms that are financial counterparties for the purposes of Article 2 of EMIR.
- all FCA solo-regulated entities and non-financial counterparties in scope of the margin requirements under UK EMIR.
This CP proposes to amend the UK bilateral margining requirements in the on-shored BTS 2016/2251 by:
- changing the implementation dates and thresholds for the phase-in of IM requirements;
- requiring the exchange of VM for physically settled foreign exchange (FX) forwards and swaps to specified counterparties only; and
- extending the temporary exemption for single-stock equity options and index options until 4 January 2024.
This consultation closes on Wednesday 19 May.
FCA publishes CP21/5: Quarterly Consultation Paper No. 31
On 5 March 2021, the Financial Conduct Authority (FCA) published Consultation paper CP21/5: Quarterly Consultation Paper No. 31.
The FCA consults on proposed miscellaneous amendments to FCA’s Handbook. These tend to be minor changes, but the FCA still wants to get feedback on the proposals.
This quarter, the FCA proposes:
- Amendments to the Compensation (COMP) rules relating to the Financial Services Compensation Scheme; and
- Changes to the Training and Competence (TC) sourcebook and list of appropriate qualifications.
Comments should reach the FCA by 30 April 2021 for Chapter 2, and 2 April 2021 for Chapter 3.
UK Government provides recommendations to the Financial Conduct Authority
On 24 March 2021, the UK Government published its letter to the Financial Conduct Authority (FCA) providing it recommendations, in particular, the government is keen to see:
- more competition in all sectors of the industry, particularly retail banking. This includes minimizing barriers to entry and growth, as well as ensuring a diversity of business models within the industry.
- a positive contribution of the financial services markets to levelling up the country and supporting sustainable economic growth in the medium and long term.
- that the UK remains an attractive domicile for internationally active financial institutions, and that London retains its position as the leading international financial center and hub for green finance.
- new methods of engaging with consumers of financial services and new ways of raising capital, maintaining the UK as a leader in the use of technology. This includes recognizing differences in the nature and objectives of business models, promoting effective competition and ensuring burdens are proportionate
- improved competition opening the UK to new ways of doing things and being seen as an attractive place to do business.
- securing better outcomes for all consumers through improved competition in the interests of consumers and having regard to the needs of different consumers who use or may use financial services
- a net-zero economy by 2050 under the Climate Change Act 2008 (Order 2019) when considering how to advance its objectives and discharge its functions.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
BoE publishes the findings of their joint survey of UK-authorized open-ended funds
On 26 March 2021, the Bank of England (BoE) published a report on the joint review by the Bank and the FCA on open-ended funds liquidity mismatch.
The survey provides several important insights into funds’ liquidity management:
- Funds have a wide range of liquidity tools available to them, but predominantly use swing pricing.
- Funds intensified and adapted their use of swing pricing during the stress period, although there were large variations in how swing pricing was applied.
- In addition to the use of liquidity management tools, funds managed their liquidity by holding liquidity buffers in the form of cash and non-cash liquid assets.
- Some funds adapted their liquidity management approaches and governance measures temporarily or permanently in response to the COVID stress.
- An indicative liquidity classification suggests that managers of corporate bond funds may be overestimating the liquidity of their holdings.
Investor protection / Consumer protection
FCA warns that younger investors are taking on big financial risks
On 23 March 2021, the Financial Conduct Authority (FCA) published research findings into better understanding investors who engage in high-risk investments like cryptocurrencies and foreign exchange.
The findings reveal there is a new, younger, more diverse group of consumers getting involved in higher risk investments, potentially prompted in part by the accessibility offered by new investment apps. However, there is evidence that these higher risk products may not always be suitable for these consumers’ needs as nearly two thirds (59%) claim that a significant investment loss would have a fundamental impact on their current or future lifestyle.
Listing / Trading rules
UK Government publishes Listing Review report
On 3 March 2021, the UK Government published Listing Review report.
The Review’s key recommendations include:
- modernizing listing rules to allow dual class share structures in the London Stock Exchange’s (LSE) premium listing segment, giving directors (in particular, founders) enhanced voting rights on certain decisions, with safeguards to maintain high corporate governance standards
- reducing free float requirements – the amount of a company’s shares that are in public hands - from 25% to 15% and allow companies to use other measures to demonstrate liquidity
- an annual report on the state of the City, and its competitive position, delivered to Parliament by the Chancellor
- rebranding and repositioning the LSE’s standard listing segment to increase its appeal to companies of all sizes and types
- a fundamental review of the prospectus regime so that in future, admission to a regulated market and offers to the public are treated separately - this will ensure it reflects the breadth and maturity of UK capital markets and the evolution in the types of business coming to market
- liberalizing the rules regarding special purpose acquisition companies (SPACs), with appropriate safeguards for investors.
FCA publishes its statement on UK Government's recommendations in Listings Review report
On 3 March 2021, the Financial Conduct Authority (FCA) published its statement on UK Government's recommendations in Listings Review report.
The FCA will publish a consultation paper for listing rules by the summer. This would be open to all stakeholders’ views and responses. Subject to consultation feedback and FCA Board approval, the FCA will seek to make relevant rules by late 2021.
The FCA support the proposal for a fundamental review of the legislative framework for the prospectus regime, with a view to better aligning documentation requirements with the type of transaction being undertaken. The FCA looks forward to working closely with the Government and market participants to discuss and develop policy options that would best achieve this to an ambitious timetable.
FCA informs on the future consultation on strengthening investor protections in Special Purpose Acquisition Companies (SPACs)
On 31 March 2021, the Financial Conduct Authority (FCA) confirmed that the FCA will be consulting shortly on amendments to its Listing Rules and related guidance to strengthen protections for investors in Special Purpose Acquisition Companies (SPACs).
The consultation will consider the structural features and enhanced disclosure, including a minimum market capitalization and a redemption option for investors, required to provide appropriate investor protection.
Subject to that process, the FCA aims to make the new rules and/or guidance by early summer.
Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)
FCA publishes equity transparency results
On 9 March 2021, the Financial Conduct Authority (FCA) published the annual equity transparency calculations. These calculations are available through FCA FITRS (Financial Instrument Transparency Reference System), the transparency calculations publications database.
The calculations include:
- the liquidity assessment
- the determination of the most relevant market in terms of liquidity (MRM)
- the determination of the average daily turnover (ADT) relevant for the determination of the pre-trade and post-trade large in scale (LIS) thresholds
- the determination of the average value of the transactions (AVT) and the related the standard market size (SMS)
- the determination of the average daily number of transactions (ADNTE) on the most relevant market in terms of liquidity relevant for the determination of the tick-size regime
Based on FCA’s calculations, the FCA assessed 497 shares and 341 equity-like instruments (a category that includes Exchange Traded Funds, depositary receipts and certificates) as having a liquid market.
FCA informs on Supervisory flexibility on RTS 27 reports and 10% depreciation notifications
On 19 March 2021, the Financial Conduct Authority (FCA) informed that the FCA has put in place temporary measures with respect to RTS 27 reports and 10% depreciation notifications while the FCA consults on changes to these requirements later this Spring. These temporary measures will be in place until the end of 2021.
1. RTS 27 reports
- Considering the upcoming consultation, the FCA will not take action against firms who do not produce RTS 27 reports for the rest of 2021.
- The FCA expects that by end of 2021, the FCA will have concluded our policy consideration of the future of these reports.
2. 10% depreciation notifications
- For the last twelve months the FCA adopted temporary coronavirus (Covid-19) measures on the requirement for firms to issue 10% depreciation notifications to investors (COBS 16A.4.3 UK).
- The FCA intends to consult on changes to the requirement later this Spring. The FCA therefore extends the temporary measures for firms until the end of 2021 while the FCA undertakes policy work on the future of the requirement.
- Firms must still pay due regards to the interests of their customers and treat them fairly (Principle 6), and pay due regard to the information needs of their clients, and communicate information to them in a way which is clear, fair and not misleading (Principle 7).
Prudential Requirements for Investment Firms Directive & Regulation (IFD / IFR)
UK Government publishes draft Capital Requirements Regulation (Amendment) (EU Exit) Regulations 2021
On 25 March 2021, the UK Government published draft Capital Requirements Regulation (Amendment) (EU Exit) Regulations 2021.
These Regulations are made in exercise of the powers in section 8 of the European Union (Withdrawal) Act 2018. Now we have left the EU, these Regulations will ensure that the on-shored Capital Requirements Regulation continues to operate effectively for UK investment firms until the introduction of the Investment Firms Prudential Regime (IFPR).
To achieve that, these Regulations extend the dates of the provision exempting UK commodities dealers from specific prudential requirements until the IFPR applies to them on 1 January 2022.
Sustainable Finance / Green Finance
FCA publishes Primary Market Technical Note 801.1: Disclosures in relation to ESG matters, including climate change
On 11 March 2021, the Financial Conduct Authority (FCA) published Primary Market Technical Note 801.1: Disclosures in relation to ESG matters, including climate change.
Listed issuers, other issuers with securities admitted to trading on regulated markets and other entities in scope of requirements under the Market Abuse Regulation (MAR) and the Prospectus Regulation (PR) are subject to a range of disclosure requirements. The purpose of these requirements is to ensure that shareholders, investors and markets more generally are enabled to make informed decisions.
The FCA noted that issuers should assess climate-related risks and opportunities and other ESG considerations carefully in informing their disclosures, both in respect of equity and non-equity securities.
This notes discuss specific FCA Handbook requirements and obligations set out in EU legislation (which will continue to apply in the UK after the end of the transition period) and how they apply in respect of ESG issues below. The examples of relevant provisions that the FCA provides are not intended to be exhaustive.
FCA publishes CP21/6: Regulating bidding for Emissions Allowances under the UK Emissions Trading Scheme
On 8 March 2021, the Financial Conduct Authority (FCA) published Consultation paper CP21/6 on Regulating bidding for Emissions Allowances under the UK Emissions Trading Scheme.
It aims to restore (with minor changes for post-Brexit jurisdiction) FCA rules for emission allowance auctions. These rules were deleted when the UK ended the Transition Period.
On 1 January 2021, the UK ETS replaced the UK’s participation in the EU emissions trading scheme (EU ETS). The legal framework required to support the UK ETS includes government legislation and amendments to the FCA Handbook and technical standards.
This consultation supports and supplements government legislation relating to bidding on the UK auction platform and trading allowances in the secondary market.
The proposed amendments will help ensure that the UK ETS functions in line with our objectives. They will maintain the role of UK MAR and MIFIR in promoting the integrity of the UK Auction Platform and the participation of firms on it being undertaken with transparency and integrity.
This applies to:
- investment firms
- trading venues
Feedback on the proposals in this CP will last until 6 April 2021.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
FATF updates on its project to study and mitigate the unintended consequences resulting from the incorrect implementation of the FATF Standards
On 17 March 2021, the Financial Action Task Force (FATF) informed that FATF launched a new project to study and mitigate the unintended consequences resulting from the incorrect implementation of the FATF Standards in February 2021.
The project will focus on four main areas:
- De-risking, or the loss or limitation of access to financial services. This practice has affected non-profit organisations (NPOs), money value transfer service providers, and correspondent banking relationships, in particular;
- Financial exclusion, a phenomenon whereby individuals are excluded from the formal financial system and denied access to basic financial services;
- Suppression of NPOs or the NPO sector as a whole through non-implementation of the FATF’s risk-based approach;
- Threats to fundamental human rights stemming from the misuse of the FATF Standards or AML/CFT assessment processes to enact, justify, or implement laws, which may violate rights such as due process or the right to a fair trial.
The FATF will conduct the project in two phases:
- Phase One: research and engagement.
- Phase Two: options the FATF could consider to prevent and mitigate these unintended consequences.
Derivative Financial Instruments (Derivatives)
ISDA updates disclosure annex for commodity derivative transactions
On 8 March 2021, the International Swaps and Derivatives Association (ISDA) published an update of the disclosure annex for commodity derivative transactions.
The annex was first published in 2013 and then in 2019.
The ISDA General Disclosure Statement for Transactions describes generally:
- the material characteristics of a wide variety of derivative transactions;
- the material risks of such transactions; and
- typical material incentives and conflicts of interest.
The ISDA General Disclosure Statement for Transactions is supplemented with product specific disclosures contained in annexes, including the ISDA Disclosure Annex for Commodity Derivative Transactions.
ISDA publishes regulatory margin self-disclosure letter – Hong Kong
On 8 March 2021, the International Swaps and Derivatives Association (ISDA) published Regulatory Margin Self-Disclosure Letter – Hong Kong.
It is intended to assist market participants with the exchange of the information necessary to determine if, and when, their trading relationship will become subject to regulatory margin requirements for uncleared swaps in Hong Kong.
ISDA publishes SBS Top-Up Protocol for SEC Dodd-Frank Rules
On 15 March 2021, the International Swaps and Derivatives Association (ISDA) launched the ISDA 2021 Security-based Swaps (SBS) Top-Up Protocol, intended to help firms comply with certain SBS rules developed by the US Securities and Exchange Commission (SEC) as part of the Dodd-Frank Act.
The new protocol builds on ISDA’s August 2012 and March 2013 Dodd-Frank protocols, which helped firms implement similar Dodd-Frank rules introduced by the Commodity Futures Trading Commission (CFTC) for swap transactions. Entities that have adhered to either of these two earlier protocols can use the SBS Top-Up Protocol to amend the terms previously included in their agreements to meet the SEC as well as CFTC requirements, leveraging the previous information exchanged and agreements established in those protocols.
The SBS Top-Up Protocol covers a variety of SEC rules, including reporting and dissemination of SBS information, business conduct standards for SBS dealers and major SBS participants, and the cross-border application of certain SBS requirements. The first deadline for registration by SBS dealers under the new SEC rules is November 1, 2021.
SEC Division of Examinations announces 2021 examination priorities
On 3 March 2021, the U.S. Securities and Exchange Commission (SEC) Division of Examinations announced its 2021 examination priorities, including a greater focus on climate-related risks. The Division will also focus on conflicts of interest for brokers (Regulation Best Interest) and investment advisers (fiduciary duty), and attendant risks relating to FinTech in its initiatives and examinations. The Division publishes its examination priorities annually to provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets.
The following is an overview of the Division’s 2021 examination priorities:
- Retail Investors, Including Seniors and Those Saving for Retirement, Through Reg. BI and Fiduciary Duty Compliance
- Information Security and Operational Resiliency
- Financial Technology (Fintech) and Innovation, Including Digital Assets
- Anti-Money Laundering Programs
- The London Inter-Bank Offered Rate (LIBOR) Transition
- Focus Areas Involving Broker-Dealers and Municipal Advisors
- Market Infrastructure
FED announces temporary and additional restrictions on bank holding company dividends and share repurchases currently in place will end for most firms after June 30, based on results from upcoming stress test
On 25 March 2021, the Federal Reserve System (FED) announced that the temporary and additional restrictions on bank holding company dividends and share repurchases currently in place will end for most firms after June 30, after completion of the current round of stress tests.
Firms with capital levels above those required by the stress test will no longer be subject to the additional restrictions as of that date. Firms with capital levels below those required by the stress test will remain subject to the restrictions.
After two rounds of stress tests last year, the Board found that large banks had strong capital levels, which provide a cushion against losses. However, due to economic uncertainty from the COVID event, the Board put temporary and additional restrictions on capital distributions. Those restrictions limit bank dividends and share repurchases to an amount based on income over the past year.
Normally, a large bank's capital distributions are restricted principally by the Board's stress capital buffer, or SCB, framework. The SCB sets a capital target for each bank based on its individual stress test results, which requires the bank to hold at least enough capital to survive a severe recession. If a firm does not meet that target, automatic restrictions are imposed.
If a bank remains above all of its minimum risk-based capital requirements in this year's stress test, the additional restrictions will end after June 30 and it will be subject to the SCB's normal restrictions.
However, a bank that falls below any of its minimum risk-based requirements in the stress test will remain subject to the additional restrictions for three extra months, through September 30. If the firm remains below the capital required by the stress test at that time, the framework of the regular SCB regime will impose even stricter distribution limitations.
For a bank that is not subject to the stress test this year and on a two-year cycle, the additional restrictions will end after June 30 and its SCB requirements based on the June 2020 stress test will remain in place.
The Board's stress tests help ensure that large banks can support the economy during economic downturns. The tests evaluate the resilience of large banks by estimating their losses, revenue and capital levels under hypothetical scenarios over nine future quarters. Results for this year's test will be released by July 1.
Sustainable Finance / Green Finance
SEC announces enforcement task force focused on climate and ESG issues
On 4 March 2021, the U.S. Securities and Exchange Commission (SEC) announced the creation of a Climate and ESG Task Force in the Division of Enforcement.
Consistent with increasing investor focus and reliance on climate and ESG-related disclosure and investment, the Climate and ESG Task Force will develop initiatives to proactively identify ESG-related misconduct. The task force will also coordinate the effective use of Division resources, including through the use of sophisticated data analysis to mine and assess information across registrants, to identify potential violations.
The initial focus will be to identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules. The task force will also analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.
This publication is produced by the Projects & Regulatory Monitoring teams as well as experts from the Legal Department and the Compliance Department of CACEIS entities, together with the close support of the Communications Department.
Gaëlle Kerboeuf, Group Legal Manager - Projects & Regulatory Monitoring
Pauline Fieni, Group Compliance - General secretary, Projects & Regulatory Monitoring
Permanent Editorial Committee
Gaëlle Kerboeuf, Group Legal Manager - Projects & Regulatory Monitoring
Pauline Fieni, Group Compliance - General secretary, Projects & Regulatory Monitoring
Corinne Brand, Group Communications Manager
Jennifer Yeboah, Team Manager Legal (Belgium)
François Honnay, Head of Legal and Compliance (Belgium)
Tania Deltchev, Head of Legal (France)
Stefan Ullrich, Head of Legal (Germany)
Georgios Frangou, Compliance Officer (Germany)
Robin Donagh, Legal Advisor (Ireland)
Razanajafy (Fara) Francois-Sim, Head of Compliance (Ireland)
Costanza Bucci, Head of Legal & Compliance (Italy)
Luciana Vertulli, Compliance Officer (Italy)
Fernand Costinha, Head of Legal (Luxembourg)
Julien Fetick, Senior Financial Lawyer (Luxembourg)
Gérald Stadelmann, Head of Legal (Luxcellence Luxembourg)
Samuel Zemp, Compliance Officer (Switzerland)
Sarah Anderson, Head of Legal (UK)
Olga Kitenge, Legal, Risk & Compliance (UK)
Michele Tuen, Head of Trustee and Legal (Hong Kong)
Henk Brink (The Netherlands)
Beatriz Sanchez Jete, Compliance (Spain)
Arrate Okerantza Elejalde, Legal (Spain)
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