EU publishes Digital Services Act
On 27 October 2022, Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market for Digital Services and amending Directive 2000/31/EC (Digital Services Act) was published in the Official Journal.
The aim of the Regulation is to contribute to the proper functioning of the internal market for intermediary services by setting out harmonised rules for a safe, predictable and trusted online environment that facilitates innovation and in which fundamental rights enshrined in the Charter, including the principle of consumer protection, are effectively protected.
The Regulation lays down harmonised rules on the provision of intermediary services in the internal market. In particular, it establishes:
- a framework for the conditional exemption from liability of providers of intermediary services;
- rules on specific due diligence obligations tailored to certain specific categories of providers of intermediary services;
- rules on the implementation and enforcement of this Regulation, including as regards the cooperation of and coordination between the competent authorities.
The Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union, i.e. 16 November 2022.
The Regulation shall apply from 17 February 2024.
However, Article 24(2), (3) and (6), Article 33(3) to (6), Article 37(7), Article 40(13), Article 43 and Sections 4, 5 and 6 of Chapter IV shall apply from 16 November 2022.
Digital Markets Act (DMA)
EU publishes Digital Markets Act
On 11 October 2022, Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) was published in the Official Journal.
Since the objective of this Regulation, namely to ensure a contestable and fair digital sector in general and core platform services in particular, with a view to promoting innovation, high quality of digital products and services, fair and competitive prices, as well as a high quality and choice for end users in the digital sector, cannot be sufficiently achieved by the Member States, but can rather, by reason of the business model and operations of the gatekeepers and the scale and effects of their operations, be better achieved at Union level, the EU may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 Treaty on European Union . In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.
The new Regulation will put an end to unfair practices by companies that act as gatekeepers in the online platform economy. It was proposed by the European Commission in December 2020 and agreed by the European Parliament and the Council in record-time, in March 2022.
This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union, i.e. 1 November 2022.
It shall apply from 2 May 2023.
However, Article 3(6) and (7) and Articles 40, 46, 47, 48, 49 and 50 shall apply from 1 November 2022 and Article 42 and Article 43 shall apply from 25 June 2023.
Nevertheless, if the date of 25 June 2023 precedes the date of application referred to in the second paragraph of this Article, the application of Article 42 and Article 43 shall be postponed until the date of application referred to in the second paragraph of this Article.
Central Securities Depositary Regulation (CSDR)
EU publishes Commission Delegated Regulation 2022/1930 amending the RTS laid down in Delegated Regulation 2018/1229 as regards the date of application of the provisions related to the buy-in regime
On 13 October 2022, Commission Delegated Regulation (EU) 2022/1930 of 6 July 2022 amending the regulatory technical standards laid down in Delegated Regulation (EU) 2018/1229 as regards the date of application of the provisions related to the buy-in regime was published in the Official Journal of the European Union (OJ).
Delegated Regulation (EU) 2018/1229 is amended as follows:
in Chapter IV, Final provisions, the following Article 41a is inserted:
Until 2 November 2025, a central counterparty in a Member State that provides clearing services for shares shall ensure that procedures are in place that comply with all of the following requirements:
(a) where a natural or legal person who sells shares is not able to deliver the shares for settlement within four business days after the day on which settlement is due, procedures are automatically triggered for the buy-in of the shares to ensure delivery for settlement;
(b) where the buy-in of the shares for delivery is not possible, an amount is paid to the buyer based on the value of the shares to be delivered at the delivery date plus an amount for losses incurred by the buyer as a result of the settlement failure;
(c) the natural or legal person who fails to settle, reimburses all amounts paid pursuant to points (a) and (b).’;
Article 42 is amended as follows:
(i) the title is replaced by the following:
‘Entry into force and application’;
(ii) the following subparagraph is added:
‘The settlement discipline measures set out in Articles 21 to 38 shall, however, not apply until 2 November 2025.’.
The Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union, i.e. 2 November 2022.
European Market Infrastructure Regulation (EMIR)
ESMA temporarily amends CCP collateral requirements to provide liquidity relief on energy derivatives markets
On 14 October 2022, European Securities and Markets Authority (ESMA) published the report on draft amended RTS regarding emergency measures on collateral requirements (Article 46(3) EMIR).
ESMA, the EU’s financial markets regulator and supervisor, today proposed measures to alleviate the liquidity pressure on non-financial counterparties (NFCs) active on gas and electricity regulated markets cleared in EU-based CCPs.
ESMA’s Final Report provides draft regulatory technical standards (RTS) which temporarily expand for a period of 12 months the pool of CCP eligible collateral to uncollateralised bank guarantees for NFCs acting as clearing members and to public guarantees for all types of counterparties.
The report published today follows ESMA’s earlier response to the Commission and is accompanied by a Q&A clarifying the eligibility of bonds and commercial paper as collateral for CCPs.
As outlined in its letter, ESMA will continue to work on other potential measures to respond to the extreme volatility in the energy markets.
The Final Report was sent to the European Commission for endorsement and will then be subject to a scrutiny procedure by the European Parliament and the Council.
ESMA updates ESMA guidelines tracker (05/10/2022)
On 5 October 2022, European Securities and Markets Authority (ESMA) updated ESMA guidelines tracker (05/10/2022).
In the excel file, ESMA lists all the guidelines and related information and documentation (date of application, compliance table etc.).
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
Opinion of the ECB was published on AIFMD II
On 3 October 2022, the European Union (EU) published in its Official Journal (OJ) the opinion of the European Central Bank of 9 August 2022 on a proposal for a directive as regards delegation arrangements, liquidity risk management, supervisory reporting, provision of depositary and custody services and loan origination by alternative investment funds.
As a general observation, the ECB welcomes the proposed directive’s principal aims to fill certain regulatory gaps in the functioning of the AIFMD to ensure a coherent supervisory approach to the risks that Alternative Investment Funds (AIFs) pose to the financial system and to provide a high level of investor protection, while facilitating their integration into the EU financial market.
The ECB also supports the proposed directive’s general aim to better align the requirements of the AIFMD and the Undertakings for the Collective Investment in Transferable Securities Directive on issues equally relevant to both directives, such as delegation arrangements and custodial services.
As the ECB further elaborates below, it would have welcomed that the proposed directive also covered issues that are not addressed by the AIFMD, such as the operationalisation and development of macroprudential tools applied ex ante as a means of reducing risks to the financial system that are posed by AIFs, as well as ensuring that detailed data on individual AIFs are made available to the ECB and other relevant ESCB central banks.
As such, the ECB's specific observations relate to:
- Liquidity management and macroprudential tools,
- European System of Central Banks (ESCB) access to detailed data on the AIF sector.
EU legislators reached a provisional agreement on the review of the Regulation on European long-term investment funds (ELTIF)
On 19 October 2022, Council of the EU published the provisional agreement reached on European long-term investment funds (ELTIF).
The EU is making further progress on the capital markets union (CMU), a plan to create a single market for capital in order to get investments and savings flowing across all member states for the benefit of citizens, businesses and investors. Today, negotiators from the Council and the European Parliament reached a provisional agreement on the review of the regulation on European long-term investment funds (ELTIF) in order to make these investment funds more attractive.
The ELTIF regulatory framework sets out detailed fund rules on eligible assets and investments, diversification and portfolio composition, leverage limits and marketing. ELTIFs are the only type of funds dedicated to long-term investments that can be distributed on a cross-border basis to both professional and retail investors. However, since the adoption of the regulation in 2015 only a few ELTIFs have been launched due to significant constraints in the distribution process (demand-side) and stringent rules on portfolio composition (supply-side). The ELTIF industry is relatively small and concentrated in a handful of member states. There is an untapped potential to channel more capital towards long-term projects.
Since ELTIFs are designed to channel long-term investments, they are well placed to help finance inter alia the green and digital transitions. They can be an important vehicle for channelling financing to small and medium-sized enterprises (SMEs) and long-term projects such as transport and social infrastructure, sustainable energy generation or distribution.
In their agreement, the co-legislators intend to overcome a number of supply-side and demand-side limitations. They clarified in particular the scope of eligible assets and investments, the portfolio composition and diversification requirements, the conditions for borrowing and lending of cash and other fund rules, including sustainability aspects. The package also includes rules to make it easier for retail investors to invest in ELTIFs while ensuring strong investor protection.
Following technical and legal revision, the finalised text will be submitted for the adoption by the Council and the European Parliament.
New EMIR reporting technical standards to apply from 29 April 2024
New EMIR reporting technical standards to apply from 29 April 2024
On 7 October 2022, Delegated Acts on reporting, data quality, data access and registration of trade repositories under the European Markets Infrastructure Regulation (EMIR) have been published in the Official Journal of the European Union.
Delegated Acts introduce important amendments to EMIR reporting standards and templates to improve the clarity of the reporting framework and ensure coherence with internationally agreed standards – notably by introducing a common XML template in accordance with the ISO 20022 methodology.
The global legal entity identifier (LEI) system is now fully implemented. Therefore, each counterparty to a derivative or entity responsible for reporting should only use LEI to identify a legal entity in a report.
In accordance with globally agreed standards, counterparties shall report derivatives using both Unique Product Identifier (UPI) and Unique Trade Identifier (UTI).
Among other changes, specific rules have been introduced to determine the direction of the derivative as well as the reporting of collateralisation for a given derivative.
Entities responsible for reporting should establish specific arrangements to notify competent authorities of relevant errors and omission in reporting.
Financial counterparties that are reporting the details of over-the-counter (OTC) derivative contracts on behalf of non-financial counterparties should also have dedicated arrangements as prescribed by the new standards.
Importantly, the new rules require counterparties to report/update the details of all outstanding derivatives in accordance with the currently applicable requirements.
To enable counterparties and trade repositories to take all necessary action to adapt to the new requirements, the date of application of the Delegated Acts is deferred by 18 months; hence, new reporting requirements shall apply from 29 April 2024.
Regulation on Markets in Crypto-Assets (MiCA)
Council of the EU publishes draft final compromise text on proposal for MiCA
On 5 October 2022, Council of the EU published draft final compromise text on Proposal for a Regulation of the European Parliament and of the Council on Markets in Crypto-assets, and amending Directive (EU) 2019/1937 (MiCA).
Crypto-assets are defined as digital assets that may depend on cryptography and exist on a distributed ledger. A basic taxonomy distinguishes between:
- payment tokens (means of exchange or payment)
- investment tokens (have profit rights attached) and
- utility tokens (enable access to a specific product or service).
The Commission is of the view that, where crypto-assets are not covered by EU financial regulation, the absence of applicable rules to services related to such assets leaves consumers and investors exposed to substantial risks. In addition, the fact that some Member States have put in place bespoke rules at national level for crypto-assets that fall outside current EU regulation, leads to regulatory fragmentation, which distorts competition in the Single Market, makes it more difficult for crypto-asset service providers to scale up their activities cross-border and gives rise to regulatory arbitrage. Lastly, the crypto asset subset of 'stablecoins' can raise additional challenges if it becomes widely adopted by consumers.
The initiative aims to support innovation and fair competition by creating a framework for the issuance, and provision of services related to crypto-assets. In addition, it aims to ensure a high level of consumer and investor protection and market integrity in the crypto-asset markets, as well as address financial stability and monetary policy risks that could arise from a wide use of crypto-assets and DLT-based solutions in financial markets.
Following the Permanent Representatives’ Committee meeting of 5 October 2022 which endorsed the final compromise text with a view to agreement, delegations are informed that the Presidency has sent the attached letter, together with its Annex, to the Chair of the European Parliament Committee on Economic and Monetary Affairs.
Sustainable Finance / Green Finance
ESBG publishes Joint letter to EC Commissioner on the EFRAG consultation regarding its first set of draft ESRSs
On 5 October 2022, European Savings and Retail Banking Group (ESBG) published Joint letter to EC Commissioner on the EFRAG consultation regarding its first set of draft ESRSs.
On 27 September, the ESBG, together with the European Banking Federation (EBF), the European Association of Co-operative Banks (EACB), Insurance Europe, Accountancy Europe, Business Europe and European Issuers, has submitted a joint industry letter to Commissioner Mairead McGuinness regarding the European Financial Reporting Advisory Group (EFRAG) public consultation on its first set of draft European Sustainability Reporting Standards (ESRS).
In the letter, ESBG strongly emphasized the necessity to phase-in the submission of the disclosure requirements from EFRAG to the Commission. In this respect, it is considered that EFRAG should deliver a limited set of crucial ESRS by November 2022. After this, EFRAG and the Commission should agree on a detailed plan to deliver the rest of the first set of standards and all the other deliverables required by the Corporate Sustainability Reporting Directive (CSRD). All these will constitute the minimum requirements to be delivered within the pre-set deadlines by the Commission.
EU publishes Commission Notice on the interpretation of certain legal provisions of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation on the reporting of eligible economic activities and assets
On 6 October 2022, EU published in the Official Journal of the European Union (OJ) Commission Notice on the interpretation of certain legal provisions of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation on the reporting of eligible economic activities and assets.
This frequently asked questions (FAQs) document aims to clarify the content of the Disclosures Delegated Act under Article 8 of the EU Taxonomy Regulation (‘Disclosures Delegated Act’) to aid its implementation.
The FAQs contained in this document clarify the provisions already contained in the applicable legislation. The FAQs are merely intended to assist financial and non-financial undertakings in the implementation of the relevant legal provisions.
On 20 December 2021, the Commission published 22 FAQs on how financial and non-financial undertakings should report taxonomy-eligible economic activities and assets in accordance with the Disclosures Delegated Act. This document complements the existing FAQs.
The Commission Notice is a clarifying document that does not create any new obligations to relevant stakeholders. Given the importance of the topic, it is expected new updates and additional FAQs.
EC publishes draft Commission Delegated Regulation amending SFDR Level 2 RTS to include disclosures on investments in taxonomy-aligned gas and nuclear economic activities
On 31 October 2022, the European Commission published draft Commission Delegated Regulation amending and correcting the regulatory technical standards laid down in Delegated Regulation (EU) 2022/1288 as regards the content and presentation of information in relation to disclosures in pre-contractual documents and periodic reports for financial products investing in environmentally sustainable economic activities.
The amendments are based on ESAs report where they proposed to add specific disclosures to provide transparency about investments in taxonomy-aligned gas and nuclear economic activities. These disclosures, which are in line with the definitions in the Complementary Climate Delegated Act, will help investors make informed decisions.
Specifically, the disclosures:
- add a yes/no question in the financial product templates of the SFDR Delegated Regulation to identify whether the financial product intends to invest in such activities; if the answer was yes, a graphical representation of the proportion of investments in such activities would be required; and
- implement minor technical revisions to the Delegated Regulation to correct inconsistencies observed after its publication.
The ESAs consider the existing disclosures in the SFDR Delegated Regulation sufficient for fossil gas or nuclear energy investments by financial products that are not covered by the EU Taxonomy.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
AMF updates its policy to facilitate the introduction of liquidity management tools / L'AMF met à jour sa politique pour faciliter l'introduction d'outils de gestion de la liquidité
On 6 October 2022, the Autorité des marchés financiers (AMF) updated its doctrine to facilitate the introduction of liquidity management tools.
Following the public consultation conducted in February 2022 on strengthening requirements for liquidity management tools, the AMF has published an update of its doctrine to clarify its requirements on the operation of these tools in undertakings for collective investment (UCIs).
- Incentive for the introduction of a mechanism for capping buy-back requests (gates): the AMF is introducing a transitional period until 31 December 2023. During this period, the introduction of gates may be the subject of information to holders by any means, for example, on the portfolio management companies website, subject to compliance with certain conditions..
- Swing pricing and adjustable rights acquired: swing pricing can already be introduced by portfolio management companies with information by any means for certain UCIs, where the introduction of acquired adjustable rights provides for the transmission of specific information to holders and a free exit. The AMF's doctrine is thus modified to rebalance the asymmetry between the two types of liquidity management tools by aligning the procedures for introducing acquired adjustable rights with those provided for swing pricing.
- Streamlining the Gate Doctrine: The framework of gates (definition of activation thresholds, etc.) was dealt with by the AMF doctrine in separate documents depending on the UCIs. With a view to generalizing this tool, work has been carried out to simplify and clarify the doctrine. From now on, instruction DOC-2017-05 provides a framework for the use of this mechanism for all the UCIs concerned. It also covers practices specific to Real Estate Collective Investment Schemes and certain private equity funds open to subscriptions and redemptions at the request of investors (known as "FCPR Evergreen").
- Changes made on other topics: the AMF is also clarifying its doctrine on dedicated AIFs, which can be dedicated to up to 20 holders or to a category of investors. In addition, in a context of redeployment of monitoring actions, the AMF deletes certain declarations sent annually by AIFs' AMPs to the AMF for statistical purposes and according to a standardised template appearing on its website.
Subject to the approval of amendments to the AMF General Regulation, a second update of the AMF doctrine may soon be published. The purpose of this publication will be to outline the other requirements that were the subject of the public consultation, in particular those relating to the accountability of managers and the rebalancing of information asymmetries for UCIs that do not plan to introduce a mechanism of gates, swing pricing or acquired adjustable rights.
Le 6 octobre 2022, l'Autorité des marchés financiers (AMF) a mis à jour sa doctrine pour faciliter la mise en place des outils de gestion de la liquidité.
Suite à la consultation publique menée en février 2022 sur le renforcement des exigences relatives aux outils de gestion de la liquidité, l'AMF a publié une mise à jour de sa doctrine afin de préciser ses exigences sur le fonctionnement de ces outils dans les organismes de placement collectif (OPC).
- Encouragement à la mise en place d'un mécanisme de plafonnement des demandes de rachat (gates) : l'AMF met en place une période transitoire jusqu'au 31 décembre 2023. Pendant cette période, la mise en place des gates pourra faire l'objet d'une information des porteurs par tout moyen, par exemple sur le site internet des sociétés de gestion de portefeuille, sous réserve du respect de certaines conditions...
- Swing pricing et droits acquis ajustables : le swing pricing peut déjà être introduit par les sociétés de gestion de portefeuille avec toutes les informations qu'il faut pour certains OPC, où l'introduction de droits acquis ajustables prévoit la transmission d'informations spécifiques aux possesseurs et une sortie libre. La doctrine de l'AMF a été aussi modifiée pour rééquilibrer l'asymétrie entre les deux types d'outils de gestion de la liquidité en alignant les modalités d'introduction des droits acquis ajustables sur celles prévues pour le swing pricing.
- Rationalisation de la doctrine des gates : L'encadrement des gates (définition des seuils d'activation, etc.) était traité par la doctrine de l'AMF dans des documents differents selon les OPC. Dans un souci de généralisation de cet outil, un travail de simplification et de clarification de la doctrine a été mené. Désormais, l'instruction DOC-2017-05 encadre l'utilisation de ce dispositif pour l'ensemble des OPC concernés. Elle couvre également les pratiques spécifiques aux Organismes de Placement Collectif Immobilier et à certains fonds de capital-investissement ouverts aux souscriptions et rachats à la demande des investisseurs (dits " FCPR Evergreen ").
- Modifications apportées sur d'autres sujets : l'AMF précise également sa doctrine sur les FIA dédiés, qui peuvent être dédiés à un maximum de 20 possesseurs ou à une catégorie d'investisseurs. Par ailleurs, dans un contexte de redéploiement des actions de contrôle, l'AMF supprime certaines déclarations transmises annuellement par les CHA des FIA à l'AMF à des fins statistiques et selon un modèle standardisé figurant sur son site internet.
Sous réserve de l'approbation des modifications du règlement général de l'AMF, une deuxième mise à jour de la doctrine de l'AMF pourrait être publiée prochainement. Cette publication aura comme finalité de présenter les autres exigences qui ont fait l'objet de la consultation publique, notamment celles relatives à la responsabilisation des gestionnaires et au rééquilibrage des asymétries d'information pour les OPC qui n'envisagent pas d'introduire un mécanisme de gates, de swing pricing ou de droits acquis ajustables.
AMF updates its policy on UCIs management fees / L'AMF met à jour sa politique sur les frais de gestion des OPC
On 6 October 2022, the Autorité des marchés financiers (AMF) updated its policy on UCIs management fees.
The AMF modernises the arrangements applicable to the presentation, content and levying of administrative costs external to the management company of UCITS and certain AIFs.
Until now, the maximum financial management costs and administrative management costs external to the UCIs management company could be presented in two ways in prospectuses: either as a lump sum covering both types of costs, or in two separate blocks, each with a maximum, with a levy of external administrative management costs on the basis of actual costs. This includes UCITS, general purpose investment funds, funds of hedge funds, general purpose professional funds, employee savings funds and specialised professional funds.
The AMF is modernizing this regime to make fee presentations in prospectuses more flexible:
- The list of fees that can be displayed within the second block has been expanded and renamed "operating costs and other services". This list is no longer exhaustive, but examples of fees allowed or not allowed to appear in this category have been added in order to best guide collective societies in the presentation of these fees. The management company must in any case specify exhaustively the costs concerned in the prospectus.
- Management companies now have the choice, as regards "operating costs and other services", between a levy on the basis of actual costs (existing modality) or on the basis of a predefined lump sum, in both cases within the limit of the maximum rate provided for in the prospectus.
In order to allow management companies to adapt the presentation of fees in the prospectus of the UCIs concerned, the AMF doctrine is amended so as not to require specific information or a free exit if the changes in the presentation of fees do not lead to an increase in the total costs of the UCIs concerned (for example, in the event of a change from a one-block presentation to two blocks and vice versa if the total management fee is equal to or lower than the previously displayed maximum rate, or concomitant deletion of another expense item, e.g. movement commissions).
UCIs existing on 6 October 2022 may nevertheless choose to keep the fee structure under the conditions of the AMF position-recommendation DOC-2011-05 in force on 6 October 2022 and continue to use the terminology "administrative costs external to the management company" under item 2 or "financial management fees and administrative costs external to the management company". The conditions for informing shareholders or unit-holders of the UCIs are those provided for in Article 8 of Instructions DOC-2011-19, DOC-2011-20 and DOC-2011-21 in force before the same date.
Le 6 octobre 2022, l'Autorité des marchés financiers (AMF) a mis à jour sa politique relative aux frais de gestion des OPC.
L'AMF modernise le dispositif applicable à la présentation, au contenu et à la perception des frais administratifs externes à la société de gestion des OPCVM et de certains FIA.
Jusqu'à présent, les frais de gestion financière et les frais de gestion administrative externes à la société de gestion de l'OPC pouvaient être présentés de deux manières dans les prospectus : soit sous la forme d'un montant forfaitaire couvrant les deux types de frais, soit sous la forme de deux blocs distincts, chacun avec un maximum, avec un prélèvement des frais de gestion administrative externes sur la base des frais réels. Sont concernés les OPCVM, les fonds d'investissement à vocation générale, les fonds de fonds alternatifs, les fonds professionnels à vocation générale, les fonds d'épargne salariale et les fonds professionnels spécialisés.
L'AMF modernise ce régime afin de rendre plus souple la présentation des frais dans les prospectus :
- la liste des frais pouvant être affichés dans le deuxième bloc a été élargie et renommée " frais de fonctionnement et autres services ". Cette liste n'est plus exhaustive, mais des exemples de frais autorisés ou non à figurer dans cette catégorie ont été ajoutés afin de guider au mieux les sociétés de gestion dans la présentation de ces frais. La société de gestion doit en tout état de cause préciser de manière exhaustive les frais concernés dans le prospectus.
- les sociétés de gestion ont désormais le choix, en ce qui concerne les " frais de fonctionnement et autres services ", entre un prélèvement sur la base des coûts réels (modalité existante) ou sur la base d'un forfait prédéfini, dans les deux cas dans la limite du taux maximum prévu dans le prospectus.
Afin de permettre aux sociétés de gestion d'adapter la présentation des frais dans le prospectus des OPC concernés, la doctrine de l'AMF est modifiée afin de ne pas exiger une information spécifique ou une sortie libre si les changements de présentation des frais n'entraînent pas une augmentation des coûts totaux des OPC concernés (par exemple, en cas de passage d'une présentation en un bloc à deux blocs et inversement si le total des frais de gestion est égal ou inférieur au taux maximum précédemment affiché, ou suppression concomitante d'un autre poste de frais, par exemple les commissions de mouvement).
Les OPC existants au 6 octobre 2022 peuvent néanmoins choisir de conserver la structure des frais dans les conditions de la position-recommandation de l'AMF DOC-2011-05 en vigueur au 6 octobre 2022 et de continuer à utiliser la terminologie " frais administratifs externes à la société de gestion " au point 2 ou " frais de gestion financière et frais administratifs externes à la société de gestion ". Les conditions d'information des actionnaires ou porteurs de parts sur les OPC sont celles prévues à l'article 8 des instructions DOC-2011-19, DOC-2011-20 et DOC-2011-21 en vigueur avant cette même date.
AFG updates technical note on AIFM / UCITS leverage metrics / L'AFG met à jour une note technique sur les mesures de l'effet de levier des gestionnaires de fonds alternatifs et des OPCVM
On 3 October 2022, the Association Française de Gestion (AFG) updated its technical note on AIFM / UCITS leverage metrics.
The AIFM and UCITS Directives require portfolio management companies to calculate and disseminate leverage figures. The methodologies for calculating these metrics are particularly complex and depend on the nature of the financial instruments on the assets side of the funds. Historically, the AFG has always been a driving force on these subjects, within its working group and during on-site work with regulators at national and European level. As early as 2015, the AFG issued a technical note whose objective was to provide practical assistance to these members on these complex issues.
This year, each European regulator must provide a summary of these metrics to ESMA, as part of the European Systemic Risk Supervision, in accordance with Article 25 of the AIFMD.
On this occasion, the AFG decided to update and republish this note, the result of the work of the Leverage and Stress Tests Committee, within the Financial Management and Risk Management Commission.
The objective of this document is therefore firstly to summarize the different calculation methods, the variability of the results depending on the methods and secondly to propose a common approach concerning the treatment of forward contracts (futures) on short rates.
Le 3 octobre 2022, l'Association Française de Gestion (AFG) a mis à jour sa note technique sur les mesures de l'effet de levier AIFM / OPCVM.
Les directives AIFM et OPCVM imposent aux sociétés de gestion de portefeuille de calculer et de diffuser les chiffres de rentabilité d’une société. Les méthodologies de calcul de ces métriques sont particulièrement complexes et dépendent de la nature des instruments financiers à l'actif des fonds. Historiquement, l'AFG a toujours été force de proposition sur ces sujets, au sein de son groupe de travail et lors des travaux sur place avec les régulateurs au niveau national et européen. Dès 2015, l'AFG a publié une note technique dont l'objectif était d'apporter une aide pratique à ces membres sur ces questions complexes.
Cette année, chaque régulateur européen doit fournir un résumé de ces mesures à l'ESMA, dans le cadre de la supervision du risque systémique européen, conformément à l'article 25 de l'AIFMD.
A cette occasion, l'AFG a décidé de mettre à jour et de republier cette note, fruit des travaux du Comité Leverage and Stress Tests, au sein de la Commission de gestion financière et de gestion des risques.
L'objectif de ce document est donc d'abord de résumer les différentes méthodes de calcul, la variabilité des résultats en fonction des méthodes et ensuite de proposer une approche commune concernant le traitement des contrats à terme (futures) sur taux courts.
AMF invites investment fund custodians to strengthen mechanisms for entering into relations and monitoring management companies / L'AMF invite les dépositaires d'OPCVM à renforcer leurs mécanismes de mise en relation et de suivi des sociétés de gestion
On 12 October 2022, the Autorité des marchés financiers (AMF) published a summary of SPOT controls on the obligations incumbent on depositaries of collective investment schemes when entering into contact with their client management companies and in the context of their follow-up.
During a series of short audits of professionals' practices carried out on five collective investment depositaries, the AMF noted significant differences in the quality of the arrangements examined. In a position paper, it reports on good and bad practices.
For this series of SPOT checks, the AMF has selected five UCITS and AIF depository institutions of all sizes for which it has analysed the system for entering into contact and monitoring client management companies.
The AMF focused on: the organization and governance of the depositary's activity; the steps prior to the acceptance of a new management company and the establishment of an agreement governing relations with this management company; the diligence carried out as part of the monitoring and control of management companies; the due diligence carried out in matters of conflicts of interest and independence prior to entering into a relationship and throughout the relationship with management companies, with particular attention when the management company and the depositary belong to the same group; and the control device.
Several years after the entry into force of the European UCITS V and AIFM Directives, the AMF noted that the compliance of the supervised institutions remains perfectible, with significant differences in the quality of the devices analyzed. It thus noted differences in the robustness of the procedural body of the panel's custodians. It also identified a frequency and quality of the due diligence implemented that varied from one entity to another, which may however have been affected by the context of the health crisis. The regulator has also observed a very uneven use of the alert system implemented in response to the anomalies found. Finally, for the majority of the institutions audited, the AMF observed shortcomings in the application of the rules on independence and prevention of conflicts of interest where there is a group link between the management company and the depositary.
With the aim of encouraging fund custodians to strengthen their arrangements, the AMF publishes a summary of its observations, outlining the good and bad practices identified.
Le 12 octobre 2022, l'Autorité des marchés financiers (AMF) a publié une synthèse des contrôles SPOT sur les obligations des dépositaires d'OPCVM collectifs lors de la prise de contact avec leurs sociétés de gestion clientes et dans le cadre de leur suivi.
Lors d'une série d'audits courts des pratiques des professionnels réalisés auprès de cinq dépositaires d'investissements collectifs d'OPCVM, l'AMF a constaté des différences significatives dans la qualité des dispositifs examinés. Dans une note de synthèse, elle fait état des bonnes et mauvaises pratiques.
Pour cette série de contrôles SPOT, l'AMF a sélectionné cinq établissements dépositaires d'OPCVM et de FIA de toutes tailles pour lesquels elle a analysé le dispositif de mise en relation et de suivi des sociétés de gestion clientes.
L'AMF s'est intéressée : à l'organisation et à la gouvernance de l'activité du dépositaire ; aux étapes préalables à l'acceptation d'une nouvelle société de gestion et à l'établissement d'une convention régissant les relations avec cette société de gestion ; aux diligences effectuées dans le cadre du suivi et du contrôle des sociétés de gestion ; aux diligences effectuées en matière de conflits d'intérêts et d'indépendance avant l'entrée en relation et tout au long de la relation avec les sociétés de gestion, avec une attention particulière lorsque la société de gestion et le dépositaire appartiennent au même groupe ; au dispositif de contrôle.
Plusieurs années après l'entrée en vigueur des directives européennes OPCVM V et AIFM, l'AMF a constaté que la conformité des établissements contrôlés reste perfectible, avec des différences importantes dans la qualité des dispositifs analysés. Elle a ainsi constaté des différences dans la robustesse du corps procédural des dépositaires du panel. Il a également identifié une fréquence et une qualité des diligences mises en œuvre variables d'une entité à l'autre, qui peuvent toutefois avoir été affectées par le contexte de la crise sanitaire. Le régulateur a également constaté une utilisation très inégale du dispositif d'alerte mis en place en réponse aux anomalies constatées. Enfin, pour la majorité des établissements contrôlés, l'AMF a constaté des insuffisances dans l'application des règles d'indépendance et de prévention des conflits d'intérêts lorsqu'il existe un lien de groupe entre la société de gestion et le dépositaire.
Dans le but d'inciter les dépositaires d'OPCVM à renforcer leur dispositif, l'AMF publie une synthèse de ses observations, faisant ressortir les bonnes et mauvaises pratiques identifiées.
AMF publishes its recommendations and the results of its financial statement review work in the run-up to the 2022 financial statements / L'AMF publie ses recommandations et les résultats de ses travaux d'examen des comptes à l'approche des comptes 2022
On 28 October 2022, the Autorité des marchés financiers (AMF) published its recommendations and the results of its financial statement review work in the run-up to the 2022 financial statements.
Main points of attention are the following:
- In addition to the results of its reviews of the financial statements conducted between October 2021 and September 2022, the AMF presents some practical cases aimed at illustrating in a more specific and detailed manner cases encountered and considered representative. It also reviews the first year of application of the ESEF format.
Climate issues: The issue of financial impacts related to climate change continues to grow in importance. The AMF encourages companies to further detail the judgments and assumptions used to assess the effects, or lack thereof, of these risks in their financial statements.
To support companies in taking this new challenge into account, the AMF will publish in autumn 2022 a new edition of the overview of the information provided in the 2021 financial statements on the effects of climate change and the commitments made by a sample of companies.
- Russia's invasion of Ukraine: Faced with companies disengaging from Russia and the lack of visibility on the evolution of the war in Ukraine and its impact on the economy, the AMF presents a series of points of attention, in line with the ESMA press release of 16 May 2022, particularly in terms of impairment tests of non-financial assets and classification as assets held for sale.
- Macroeconomic context: A final part was devoted to the risks and effects associated with current macroeconomic conditions (rising interest rates, inflationary pressures, rising energy and commodity costs, exchange rates). It is stressed the importance of detailing the material recognized effects and possible impacts in the financial statements (impairment tests, long-term and loss-making contracts, financial instruments including coverage and expected credit losses).
The AMF recalls that it is at the disposal of companies and their auditors to discuss structuring financial matters before the closing of the accounts.
Le 28 octobre 2022, l'Autorité des marchés financiers (AMF) a publié ses recommandations et les résultats de ses travaux d'examen des comptes dans la perspective de la clôture des comptes 2022.
Les principaux points d'attention sont les suivants :
- De plus a les résultats de ses travaux d'examen des comptes réalisés entre octobre 2021 et septembre 2022, l'AMF présente quelques cas pratiques visant à illustrer de manière plus précise et détaillée des cas rencontrés et jugés représentatifs. Elle dresse également le bilan de la première année d'application du format ESEF.
Les enjeux climatiques : La question des impacts financiers liés au changement climatique continue de prendre de l'importance. L'AMF encourage les sociétés à détailler davantage les jugements et hypothèses utilisés pour évaluer les effets, ou l'absence d'effets, de ces risques dans leurs états financiers.
Afin d'accompagner les sociétés dans la prise en compte de ce nouvel enjeu, l'AMF publiera à l'automne 2022 une nouvelle édition du panorama de l'information fournie dans les comptes 2021 sur les effets du changement climatique et les engagements pris par un échantillon de sociétés.
- L'invasion de l'Ukraine par la Russie : Face au désengagement des entreprises en Russie et au manque de visibilité sur l'évolution de la guerre en Ukraine et son impact sur l'économie, l'AMF présente une série de points d'attention, dans la lignée du communiqué de presse de l'ESMA du 16 mai 2022, notamment en matière de tests de dépréciation des actifs non financiers et de classification en actifs destinés à être cédés.
- Le contexte macro-économique : Une dernière partie a été consacrée aux risques et effets liés aux conditions macroéconomiques actuelles (hausse des taux d'intérêt, pressions inflationnistes, hausse des coûts de l'énergie et des matières premières, taux de change). Il est souligné l'importance de détailler les effets significatifs reconnus et les impacts possibles dans les états financiers (tests de dépréciation, contrats à long terme et déficitaires, instruments financiers y compris la couverture et les pertes de crédit attendues).
L'AMF rappelle qu'elle est à la disposition des entreprises et de leurs commissaires aux comptes pour discuter des questions financières structurantes avant la clôture des comptes.
Sustainable Finance / Green Finance
AMF and the ACPR publish the third report on the monitoring and evaluation of the climate commitments / L'AMF et l'ACPR publient leur troisième rapport sur le suivi et l'évaluation des engagements climatiques des acteurs de la Place de Paris
On 25 October 2022, the Autorité des marchés financiers (AMF) and the Autorité de contrôle prudentiel et de résolution (ACPR) published their third report on the monitoring and evaluation of the climate commitments of Paris market players.
While the last two reports focused on assessing all the climate commitments made by financial institutions, this edition focuses on the governance of these commitments. The two authorities also review the findings made in terms of fossil fuel policies.
The ACPR and the AMF call on stakeholders to strengthen the proper management of their climate commitments through an appropriate governance framework. The two authorities highlight several areas for improvement. Monitoring indicators, particularly for the financing of fossil fuels, therefore require further clarification and precision. Periodic inspections could also be strengthened and the intermediate objectives, which are still few in number, could be further developed.
This report also presents an analysis of the fossil fuel policies of the main players while providing new estimates on the exposure of the Place to coal, oil and gas, based, as in previous editions, on both declarative data and supervision databases.
The results of this analysis remain mixed and progress in transparency and governance should be amplified.
While the commitment of a significant number of financial institutions within the carbon neutrality alliances grouped within the "Glasgow Alliance" is positively noted, coal financing is decreasing at an uneven rate according to financial actors and the ambition of sectoral policies on other fossil fuels does not show a significant inflection.
In the end, the approaches are still heterogeneous, the operational implementation of the commitments remains insufficient and many of the recommendations, formulated during the two previous editions, can thus be renewed again.
In order to meet the reporting obligations of regulatory texts such as the European Regulation on the provision of information on the integration of sustainability criteria (Sustainable Finance Disclosure Directive or SFDR) and Article 29 of the Energy and Climate Law, but also with regard to future texts, the Authorities therefore encourage financial institutions to strengthen their work. The aim is to report more robustly, transparently and homogeneously on their exposure to fossil fuels and to close the gap between the current level of transparency on the implementation of voluntary commitments and the requirements arising from these regulations as soon as possible.
Le 25 octobre 2022, l'Autorité des marchés financiers (AMF) et l'Autorité de contrôle prudentiel et de résolution (ACPR) ont publié leur troisième rapport sur le suivi et l'évaluation des engagements climatiques des acteurs de la place de Paris.
Alors que les deux derniers rapports s'attachaient à évaluer l'ensemble des engagements climatiques pris par les institutions financières, cette édition se concentre sur la gouvernance de ces engagements. Les deux autorités reviennent également sur les constats effectués en matière de politiques relatives aux énergies fossiles.
L'ACPR et l'AMF appellent les acteurs à renforcer la bonne gestion de leurs engagements climatiques à travers un cadre de gouvernance approprié. Les deux autorités soulignent plusieurs axes d'amélioration. Ainsi, les indicateurs de suivi, notamment en matière de financement des énergies fossiles, méritent d'être clarifiés et précisés. Les contrôles périodiques pourraient également être renforcés et les objectifs intermédiaires, encore peu nombreux, pourraient être approfondis.
Ce rapport présente également une analyse des politiques des principaux acteurs en matière d'énergies fossiles tout en fournissant de nouvelles estimations sur l'exposition de la Place au charbon, au pétrole et au gaz, basées, comme dans les éditions précédentes, à la fois sur des données déclaratives et des bases de données de supervision.
Les résultats de cette analyse restent mitigés et les progrès en matière de transparence et de gouvernance devraient être amplifiés.
Si l'on note positivement l'engagement d'un nombre important d'institutions financières au sein des alliances pour la neutralité carbone regroupées au sein de la " Glasgow Alliance ", le financement du charbon diminue à un rythme inégal selon les acteurs financiers et l'ambition des politiques sectorielles sur les autres énergies fossiles ne montre pas d'inflexion significative.
Au final, les approches restent hétérogènes, la mise en œuvre opérationnelle des engagements reste insuffisante et nombre de recommandations, formulées lors des deux précédentes éditions, peuvent donc être à nouveau reconduites.
Afin de répondre aux obligations de reporting des textes réglementaires tels que le règlement européen relatif à la fourniture d'informations sur l'intégration de critères de durabilité (Sustainable Finance Disclosure Directive ou SFDR) et l'article 29 de la loi sur l'énergie et le climat, mais aussi au regard des textes à venir, les Autorités encouragent donc les institutions financières à renforcer leurs travaux. L'objectif est de rendre compte de manière plus robuste, transparente et homogène de leur exposition aux énergies fossiles et de combler dès que possible l'écart entre le niveau actuel de transparence sur la mise en œuvre des engagements volontaires et les exigences découlant de cette réglementation.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
The Federal Council of Ministers approved a draft royal decree on the modalities of operation of the UBO register
The Federal Council of Ministers approved a draft royal decree on the modalities of operation of the UBO register
On 7 October 2022, the Federal Council of Ministers approved a draft royal decree on the modalities of operation of the UBO register.
Specifically, these are:
- make a number of clarifications and additions to the definitions,
- aligning the regulatory framework for the digital functioning of the register,
- make improvements to the provisions on the procedure for imposing, recovering and enforcing administrative fines,
- complete the procedure for requests for access to the UBO register on the basis of a legitimate interest,
- regulate access to registers by authorities and entities subject to them with regard to their own consultations,
- make some legislative changes.
In addition, the Royal Decree of 30 July 2018 is supplemented by the necessary provisions on access to the register.
The draft is sent to the Council of State for its opinion.
Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)
Germany publishes Regulation implementing Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations
On 26 October 2022, Germany published in the Deutsches Bundesgesetzblatt (BGBL) the Regulation implementing Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations.
Investment firms manufacturing and distributing financial instruments should consider sustainability factors in the product approval process of each financial instrument and in the other product governance and oversight arrangements for each financial instrument that is intended to be distributed to clients seeking financial instruments with a sustainability-related profile.
Considering that the target market should be set at a sufficient granular level, a general statement that a financial instrument has a sustainability-related profile should not be sufficient. Investment firms manufacturing and distributing financial instruments should rather specify to which group of clients with sustainability related objectives the financial instrument is supposed to be distributed.
To ensure that financial instruments with sustainability factors remain easily available also for clients that do not have sustainability preferences, investment firms should not be required to identify groups of clients with whose needs, characteristics and objectives the financial instrument with sustainability factors is not compatible.
The sustainability factors of a financial instrument should be presented in a transparent manner to enable the distributor to provide the relevant information to its clients or potential clients.
Regarding these elements, section 11 and section 12 respectively for investment firms manufacturing and distributing financial instruments, have been amended in the Ordinance on the Concretisation of the Rules of Conduct and Organisational Requirements for Investment Services Companies (Investment Services Conduct and Organisation Ordinance - WpDVerOV).
Sustainable Finance / Green Finance
Federal Ministry of Finance publishes G7 Finance Ministers and Central Bank Governors´ Statement on Climate Issues
On 12 October 2022, Bundesfinanzministerium (Federal Ministry of Finance) published G7 Finance Ministers and Central Bank Governors´ Statement on Climate Issues.
G7 recognises the significant impact of climate change and the transition to net zero on macroeconomic outcomes and fiscal sustainability and acknowledge the uneven impacts for many low and middle-income countries and for vulnerable groups in all countries. G7 will continue its work to reflect these impacts in its analyses and consider the impact on its economic, financial and monetary decision-making, in line with its mandates. G7 welcomes work by various institutions, including international organisations and central banks, on the effectiveness of mitigation policies, their economic impact and the implications of heterogeneous policy mixes across different economies. G7 acknowledges that different policy levers can have different impacts on mitigation effectiveness as well as different economic impacts, e.g. through cross-border and spill-over effects. G7 commits to further improve our understanding of macroeconomic effects of climate change and to continue our intensive technical collaboration, especially between G7 central banks, on integrating climate risks and aspects into its macroeconomic analysis and modelling toolkit. G7 commits to pursue these efforts also in collaboration and with support of other partners, including from the G20, the Coalition of Finance Ministers for Climate Action (CFMCA) and the Network for Greening the Financial System (NGFS).
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
Hong Kong updates Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615)
On 3 October 2022, Hong Kong updated the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).
The changes relate to Part 5A Regulation of Trust or Company Service Providers and Schedule 1 Interpretation:
- accounting professional means— (a) a certified public accountant as defined by section 2(1) of the Professional Accountants Ordinance (Cap. 50), or a certified public accountant (practising) as defined by section 2(1) of the Accounting and Financial Reporting Council Ordinance (Cap. 588); (Replaced L.N. 66 of 2022); (b) a corporate practice as defined by section 2(1) of the Accounting and Financial Reporting Council Ordinance (Cap. 588); or (Amended L.N. 66 of 2022); (c) a CPA firm as defined by section 2(1) of the Accounting and Financial Reporting Council Ordinance (Cap. 588);(Replaced L.N. 66 of 2022).
- AFRC means the Accounting and Financial Reporting Council continued under section 6 of the Accounting and Financial Reporting Council Ordinance (Cap. 588); (Added L.N. 66 of 2022).
- regulatory body, in relation to— (a) an accounting professional—means— (Amended L.N. 66 of 2022) (iii) (for the purposes of section 7(1), (2) and (3)) the HKICPA as overseen by the AFRC under section 9(b) of the Accounting and Financial Reporting Council Ordinance (Cap. 588); (Amended L.N. 66 of 2022)
- the Registrar may disclose information to (viiia) the AFRC; (Added L.N. 66 of 2022).
Hong Kong updates Securities and Futures (Miscellaneous) Rules (Cap. 571U)
On 3 October 2022, Hong Kong updated the Securities and Futures (Miscellaneous) Rules (Cap. 571U).
The amendment concerns the precision of persons prescribed as auditors for purposes of section 179 of Ordinance. It can be a person appointed (whether or not he remains so appointed) to be an auditor of a relevant corporation for the purposes of any enactment of a place outside Hong Kong which imposes on such person responsibilities comparable to those imposed on an auditor by the Companies Ordinance (Cap. 622). (28 of 2012 ss. 912 & 920; L.N. 66 of 2022).
Hong Kong updates Securities and Futures Ordinance (Cap. 571)
On 19 October 2022, Hong Kong updated Securities and Futures Ordinance (Cap. 571).
The amendments relate to the following points:
- Part III Exchange Companies, Clearing Houses, Exchange Controllers, Investor Compensation Companies and Automated Trading Services
- Part XIII Market Misconduct Tribunal
- Part XIV Offences Relating to Dealings in Securities and Futures Contracts, etc.
- Part XIVA Disclosure of Inside Information
- Part XVI Miscellaneous
- Schedule 1 Interpretation and General Provisions
- Schedule 5 Regulated Activities
HMKA publishes circular on the enhanced competency framework on compliance
On 27 September 2022, the Hong Kong Monetary Authority (HKMA) published a circular on the enhanced competency framework on compliance (ECF-Compliance).
The ECF-Compliance is a collaborative effort of the HKMA, the Hong Kong Institute of Bankers (HKIB) and the banking industry in establishing a set of common and transparent competency standards for raising the professional competence of relevant practitioners working in the compliance function of authorised institutions (AIs). Details of the ECF-Compliance, including its scope of application, competency standards, qualification structure, modular exemption, certification and grandfathering arrangements, as well as continuing professional development (CPD) requirements are set out in the Guide to ECF-Compliance attached to the circular.
The importance of ensuring continuing competence of staff members is emphasised in the Supervisory Policy Manual module CG-6 ‘Competence and Ethical Behaviour’. In this respect, the HKMA strongly encourages AIs to adopt the ECF-Compliance as part of their efforts in supporting their employees’ on-going professional development and expects AIs to adopt appropriate measures to monitor and maintain the competence levels of their staff.
As part of supporting trainings and examinations that meet the ECF certification, the HKMA advises AIs to keep proper records of the relevant training and qualification of their staff and to provide them with the necessary assistance in their applications for grandfathering and certification, and fulfilment of CPD training under the ECF-Compliance.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
Hong Kong updates the Limited Partnership Fund Ordinance (Cap. 637)
On 17 October 2022, Hong Kong updated the Limited Partnership Fund Ordinance (Cap. 637).
The update relates to Part 3 Operation of Limited Partnership Funds:
- Duty to appoint auditor. (2) No person may be appointed as an auditor of a limited partnership fund unless the person is a practice unit as defined by section 2 (1) of the Accounting and Financial Reporting Council Ordinance (Cap. 588). (Amended L.N. 66 of 2022).
SFC publishes Circular on virtual asset futures exchange traded funds
On 31 October 2022, the Honk Kong Association of Banks (HKAB) published Circular on virtual asset (VA) futures exchange traded funds (ETFs).
This circular sets out the requirements under which the SFC would consider authorising ETFs that obtain exposure to virtual assets primarily through futures contracts (VA Futures ETFs) for public offering in Hong Kong under sections 104 and 105 of the Securities and Futures Ordinance (SFO).
VA Futures ETFs seeking SFC authorization for public offering in Hong Kong should meet the applicable requirements in the Overarching Principles Section (Overarching Principles Section) and the Code on Unit Trusts and Mutual Funds (UT Code) in the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products (SFC Handbook).
VA Futures ETFs is seeking SFC authorization for public offering in Hong Kong should meet the additional requirements set out in this circular. The requiremnts concern the following points:
- Management companies
- Eligible futures
- Investment strategy
- Investor education.
The SFC understands that this is the first time that VA Futures ETFs may seek authorization from the SFC.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
CBI publishes revised Monthly Client Asset Report template and accompanying Guidance Note
On 5 October 2022, Central Bank of Ireland published revised Monthly Client Asset Report template and accompanying Guidance Note.
As part of the enhancements to the Irish client asset regime and following the publication of the revised Client Asset Requirements in July 2022, the Central Bank of Ireland (Central Bank) has today published a revised Monthly Client Asset Report (MCAR) template in excel format.
Investment firms should begin preparations to ensure that they can report the new and enhanced client asset information required by the revised MCAR template.
Investment firms are not required to commence using this template for the purpose of MCAR reporting at this time, and should continue to submit the existing MCAR until further notice.
The Central Bank has also published a Guidance Note to accompany the revised MCAR template.
CBI publishes the Forty-Fifth Edition of the Central Bank AIFMD Q&A Document
On 5 October 2022, Central Bank of Ireland published the Forty-Fifth Edition of the Central Bank AIFMD Q&A Document.
On 5 October 2022, the Central Bank issued the 45th Edition of the Central Bank AIFMD Q&A, which includes two new Q&A’s, ID 1154 and 1155:
- ID 1154 relates to QIAIFs which invest more than 50% of net assets in another investment fund and the circumstance where the reference to “net assets” can be understood to refer to committed capital.
- ID 1155 relates to the leverage limits for loan originating QIAIFs and addresses the circumstance where reference to “net asset value” can be understood to refer to committed capital.
Sustainable Finance / Green Finance
CBI publishes process clarifications for UCITS and AIFs pre-contractual documentation updates in relation to the Level 2 measures in relation to the Sustainable Finance Disclosure Regulation
On 5 October 2022, Central Bank of Ireland published process clarifications for UCITS and AIFs pre-contractual documentation updates in relation to the Level 2 measures in relation to the Sustainable Finance Disclosure Regulation.
The SFDR requires financial market participants and financial advisers, which includes UCITS management companies and Alternative Investment Fund Managers (AIFMs), to make precontractual and ongoing disclosures to end investors with regard to the integration of sustainability risks, the consideration of adverse sustainability impacts, the promotion of environmental or social characteristics and sustainable investment.
The SFDR Level 1 requirements came into force on 10 March 2021, whilst the SFDR Level 2 requirements will apply from 1 January 2023. This will result in updates to pre-contractual documentation for UCITS, RIAIFs and QIAIFs (“AIFs”).
Central Bank approach
To facilitate orderly implementation of these requirements, the Central Bank has established a streamlined filing process for pre-contractual document updates based on the SFDR Level 2 requirements, under which both UCITS management companies and AIFMs (‘Managers’) will be required to certify compliance with the requirements via an attestation.
The responsibility rests with the relevant Manager to ensure compliance with the applicable requirements. Importantly, the streamlined regime should not be seen as providing scope for a lesser quality of disclosures than would otherwise be produced. Please be aware that, whilst a noting / confirmation of receipt will issue following the submission of each update, the Central Bank intends to undertake a review of a sample of the submissions received and will engage with selected applicants on a bilateral basis where queries arise in respect of the applications that fall within the sample. As such, notwithstanding the noting / confirmation issued, the Central Bank may require revisions to documentation to be made at a later date.
CBI clarifies incorporation by reference in a prospectus of annual financial reports prepared in accordance with the ESEF Regulation
On 5 October 2022, Central Bank of Ireland clarified incorporation by reference in a prospectus of annual financial reports prepared in accordance with the ESEF Regulation.
On 5 October 2022, the Central Bank confirmed the permissibility of incorporating by reference annual financial reports prepared in accordance with the European Single Electronic Format (ESEF) Regulation in a prospectus.
The ESEF Regulation introduced a single electronic reporting format for the annual financial reports of issuers with securities admitted to trading on EU regulated markets. It applies to annual financial reports containing financial statements for financial years beginning on or after 1 January 2021.
The Central Bank (Investment Market Conduct) Rules generally require that documents to be incorporated in a prospectus by reference be submitted in portable document format (pdf). However, annual financial reports required to be prepared in the format prescribed by the ESEF Regulation may also be incorporated by reference in a prospectus in that format and submitted to the Central Bank for that purpose.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
Banca d'Italia publishes communication on combating AML/CFT
On 20 October 2022, Banca d'Italia published communication on combating AML/CFT.
The Bank of Italy publishes a Communication on combating money laundering and terrorist financing. The document outlines the plan to expand information to support AML supervisory activities and announces the upcoming launch of a survey for data collection that will involve a sample of supervised intermediaries.
Central Securities Depositary Regulation (CSDR)
Italy publishes order on application to Italian entities participating in the CREST UK system of the provisions of Legislative Decree no. 210 of 12 April 2001, as amended, pursuant to Article 10, paragraph 5, of the same decree
On 18 October 2022, Italy published in the Gazzetta Ufficiale order of the 5th October on application to Italian entities participating in the CREST UK system managed by Euroclear UK & International, governed by English law, of the provisions of Legislative Decree no. 210 of 12 April 2001, as amended, pursuant to Article 10, paragraph 5, of the same decree.
Considering that, pursuant to the aforementioned Withdrawal Agreement, the United Kingdom has ceased to be part of the Union since 1 February 2020 European Union and from 1 January 2021, the end date of the transition period referred to in part four of the same agreement, on
European Union law - including Directive 98/26 / EC on the finality of orders entered into a payment system or of securities settlement, implemented in Italy with the aforementioned legislative decree no. 210/2001 - ceased to apply to the United Kingdom.
Considering the need to ensure the protections provided for by Legislative Decree no. 210/2001 to transactions entered by Italian entities participants in the CREST UK system, in order to contain the legal and financial risks associated with the participation and their possible risks implications in terms of systemic risk, while preserving the conditions for access by Italian entities on an equitable and unequal basis discriminatory.
The provisions of the legislative decree 12 April 2001, n. 210, and subsequent amendments, are applied, pursuant to and for the purposes of referred to in art. 10, paragraph 5, of the same decree, to the Italian entities that participate directly in the CREST UK system managed by Euroclear UK & International, governed by English law.
Listing / Trading rules
Borsa Italiana publishes amended Market Regulation and related instructions
On 3 October 2022, Borsa Italiana published amended Market Regulation and related instructions.
On 22 September 2022, Borsa Italiana published amendments to the Market Rules and to the related Instructions.
The changes related to Borsa Italiana's listing process are aimed at simplifying the listing process and requirements, revising the system of responsibilities placed on the various players involved in the admission process, and reducing the preparation time and inquiry burdens associated with listing.
Specifically, the areas of intervention cover the following areas:
- Documentary simplification for issuers;
- Competences of Borsa Italiana in admission matters;
- Role and responsibilities of the Sponsor;
- Discipline of the specialist operator.
The overall structure is thus more aligned with the regulation of other EU markets. The simplification of the listing process is part of the broader effort made by Euronext to facilitate access to capital markets, attract local and international issuers to its markets, and encourage access to financial resources through access to public capital markets.
On 21 September 2022, CONSOB published resolution No. 22455 on approval of amendments to the Regulations of markets organized and managed by Borsa Italiana spa.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
Luxembourg Tax Authority publishes circular N° 768-25 / L'administration fiscale luxembourgeoise publie la circulaire N° 768-25
On 31 October 2022, Luxembourg Tax Authority published Circulaire N° 768-25.
The circular outlines the following:
- The situation in Ukraine
- Jurisdictions with substantial and strategic deficiencies in the fight against money laundering and terrorist financing (“AML/CFT”) and which are the subject of a call by the FATF to its members and to other jurisdictions to apply countermeasures
- Jurisdictions whose anti-money laundering and counter-terrorist financing regime is not satisfactory+Z13:Z412
Luxembourg government publishes vote on the law on the procedure of administrative dissolution without liquidation / Le gouvernement luxembourgeois publie le vote de la loi sur la procédure de dissolution administrative sans liquidation
On 18 October 2022, Luxembourg government published vote on the law on the procedure of administrative dissolution without liquidation.
On 18 October 2022, Bill 6539B establishing the procedure for administrative dissolution without liquidation was adopted in the Chamber of Deputies.
This new law aims to introduce a simplified procedure which aims to eliminate the many commercial companies under Luxembourg law which have for several years been non-compliant with the applicable law (and which therefore fulfil the condition for opening a compulsory liquidation), and which moreover have neither assets nor employees.
The procedure of administrative dissolution without liquidation is an administrative procedure, initiated by the Public Prosecutor's Office, but managed by the manager of the Trade and Companies Register, which makes it possible to evacuate efficiently and quickly these "empty shells" from the Trade and Companies Register without incurring significant costs for the State and without having to go through a traditional judicial liquidation procedure.
This new procedure is important in the context of the fight against money laundering to prevent these "empty shells" from being diverted to illegal purposes in the future, and to maintain Luxembourg's good reputation.
Le 18 octobre 2022, le gouvernement luxembourgeois a publié le vote de la loi sur la procédure de dissolution administrative sans liquidation.
Le 18 octobre 2022, le projet de loi 6539B établissant la procédure de dissolution administrative sans liquidation a été adopté à la Chambre des députés.
Cette nouvelle loi vise à mettre en place une procédure simplifiée qui a pour but d'éliminer les nombreuses sociétés commerciales de droit luxembourgeois qui sont depuis plusieurs années non conformes au droit applicable (et qui remplissent donc la condition d'ouverture d'une liquidation judiciaire), et qui par ailleurs n'ont ni actifs ni employés.
La procédure de dissolution administrative sans liquidation est une procédure administrative, initiée par le Ministère public, mais gérée par le gestionnaire du Registre du Commerce et des Sociétés, qui permet d'évacuer efficacement et rapidement ces " coquilles vides " du Registre du Commerce et des Sociétés sans amener de coûts importants pour l'Etat et sans devoir passer par une procédure de liquidation judiciaire classique.
Cette nouvelle procédure est importante dans le cadre de la lutte contre le blanchiment d'argent pour éviter que ces "coquilles vides" ne soient détournées à l'avenir à des fins illégales, et pour maintenir la bonne réputation du Luxembourg.
Luxembourg Tax Authority publishes RR and RC identification form and AML/CFT Questionnaire for AIFs / L'administration fiscale luxembourgeoise publie un formulaire d'identification RR et RC et un questionnaire LBC/FT pour les fonds alternatifs
On 12 October 2022, Luxembourg Tax Authority published RR and RC identification form and AML/CFT Questionnaire for AIFs.
The Registration Duty, Estate and VAT Authority (“AED”), as the supervisory authority of the other financial institutions (autres établissements financiers) according to the articles 2-1 (8), 1 (3a) e) and 2 (1) 7 of the law of 12 November 2004 on the fight against money laundering and financing of terrorism, as amended (“AML/CFT Law”), has launched a campaign to invite all AIFs on 12th October 2022 to fill in and transmit the “AIF RC RR Identification Form” regarding the appointment of a RC and RR for each AIF, pursuant to their adequate internal management requirements in accordance with article 4 (1) of AML/CFT Law.
In that respect, the AED published a “Frequently Asked Questions” (hereafter “FAQ”) on the requirements of article 4 (1) of AML/CFT Law that requires professionals to appoint:
i) a person among the members of their management bodies, responsible for compliance with the professional obligations as regards the fight against money laundering and terrorist financing (the original French version of the law refers to a “responsable du respect des obligations” and thus, the acronym “RR” will be used hereafter), and
ii) if the size and nature of the activity so require, a compliance officer at appropriate hierarchical level (the original French version of the law refers to a “responsable du contrôle du respect des obligations” and thus, the acronym “RC” will be used hereafter).
The AED would like to recall that every AIF subject to its AML/CFT supervision, is legally required to appoint, both a RR and RC.
The FAQ provides additional guidelines and sets forth supplementary conditions in relation to the aforementioned appointments.
In this context, the AED invites you to consult the FAQ and return to the AED the duly completed “AIF RC RR Identification Form”.
If the board of directors (or any governing body depending on the legal structure of the AIF) appoints one of its members as RR of the AIF, this member cannot be appointed also as RC of the same AIF.
If the board of directors (or any governing body depending on the legal structure of the AIF) is jointly appointed as RR of the AIF, one of its members can be appointed as RC of the same AIF.
The form must be transmitted to the AED without delay on the following situations:
- Initial appointment of the RC and/or RR of the AIF; and
- Change of the RC and/or RR.
Moreover, there is a requirement to provide the Luxembourg Tax authority with the signed legal documentation (minutes of board meeting or circular resolutions of the governing body of the AIF acting for and on behalf of the AIF) related to any appointment of the RC and/or RR of the AIF.
The in scope entities should provide required documentation based on the forms. In addition FAQ provides clarifications on the matter.
Le 12 octobre 2022, l'Administration fiscale luxembourgeoise a publié le formulaire d'identification RR et RC et le questionnaire AML/CFT pour les fonds alternatifs.
L'Autorité des droits d'enregistrement, des domaines et de la TVA ("AED"), en tant qu'autorité de surveillance des autres établissements financiers conformément aux articles 2-1 (8), 1 (3a) e) et 2 (1) 7 de la loi du 12 novembre 2004 relative à la lutte contre le blanchiment d'argent et le financement du terrorisme, telle que modifiée ("Loi LAB/CFT"), a lancé une campagne pour inviter tous les fonds alternatifs le 12 octobre 2022 à remplir et à transmettre le "Formulaire d'identification du RC RR du FIA" concernant la nomination d'un RC et d'un RR pour chaque fonds alternatif, conformément aux exigences de leur gestion interne adéquate conformément à l'article 4 (1) de la Loi LAB/CFT.
A cet égard, l'AED a publié une "Foire aux questions" (ci-après "FAQ") sur les exigences de l'article 4 (1) de la loi LAB/CFT qui impose aux professionnels de désigner :
i) une personne parmi les membres de leurs organes de direction, responsable du respect des obligations professionnelles en matière de lutte contre le blanchiment de capitaux et le financement du terrorisme (la version originale française de la loi fait référence à un "responsable du respect des obligations" et donc, l'acronyme "RR" sera utilisé ci-après), et
ii) si la taille et la nature de l'activité l'exigent, un responsable du contrôle du respect des obligations à un niveau hiérarchique approprié (la version originale française de la loi fait référence à un "responsable du contrôle du respect des obligations" et donc, l'acronyme "RC" sera utilisé ci-après).
L'AED tient à rappeler que chaque fonds alternatif soumis à son contrôle LBC/FT est légalement tenu de nommer un RR et un RC.
Le FAQ fournit des lignes directrices supplémentaires et énonce des conditions supplémentaires en ce qui concerne les nominations susmentionnées.
Dans ce contexte, l'AED vous invite à consulter la FAQ et à renvoyer à l'AED le "Formulaire d'identification du RC RR d'un fonds alternatif" dûment complété.
Si le conseil d'administration (ou tout organe de direction en fonction de la structure juridique du fonds alternatif) nomme un de ses membres en tant que RR du fonds alternatif, ce membre ne peut pas être nommé également en tant que RC du même fonds alternatif.
Si le conseil d'administration (ou tout organe de direction en fonction de la structure juridique du fonds alternatif) est désigné conjointement comme RR du fonds alternatif, un de ses membres peut être désigné comme RC du même fonds alternatif.
Le formulaire doit être transmis sans délai à l'AED dans les situations suivantes :
- Nomination initiale du RC et/ou RR du fonds alternatif ; et
- Changement de RC et/ou RR.
D'ailleurs, est nécessaire de fournir à l'autorité fiscale luxembourgeoise la documentation juridique signée (procès-verbal de la réunion du conseil d'administration ou résolutions circulaires de l'organe directeur du fonds alternatif agissant pour et au nom du fonds alternatif) relative à toute nomination du RC et/ou RR du fonds alternatif.
Les entités du champ d'application doivent fournir la documentation requise sur la base des formulaires. En outre, la FAQ fournit des clarifications sur le sujet.
Luxembourg publishes Regulation N° 537 amending law related to the fight against ML/TF / Le Luxembourg publie le règlement n° 537 modifiant la loi relative à la lutte contre le blanchiment d'argent et le financement du terrorisme
On 26 October 2022, Grand-ducal regulation of 25 October 2022 modifying the modified grand-ducal regulation of 1 February 2010 specifying certain provisions of the modified law of 12 November 2004 relating to the fight against money laundering and the financing of terrorism was published in Legilux (Journal Officiel du Grand-Duché de Luxembourg).
The amended Grand-Ducal regulation of February 1, 2010 clarifying certain provisions of the amended law of November 12, 2004 on the fight against money laundering and terrorist financing is amended as follows:
1° In Article 5, paragraphs 2 and 3 are deleted;
2° Article 6 is reinstated, worded as follows:
“ Art. 6. Execution of due diligence measures by third parties
For the application of Article 3-3 of the Law, it is up to each professional to apply a risk-based approach which takes into account the information available on the level of risk linked to the countries in which the third parties are established. ".
This Grand-Ducal regulation enters into force on the day of its publication in the Official Journal of the Grand-Duchy of Luxembourg.
Le 26 octobre 2022, le règlement grand-ducal du 25 octobre 2022 modifiant le règlement grand-ducal modifié du 1er février 2010 précisant certaines dispositions de la loi modifiée du 12 novembre 2004 relative à la lutte contre le blanchiment de capitaux et le financement du terrorisme a été publié dans Legilux (Journal Officiel du Grand-Duché de Luxembourg).
Le règlement grand-ducal modifié du 1er février 2010 clarifiant certaines dispositions de la loi modifiée du 12 novembre 2004 relative à la lutte contre le blanchiment et le financement du terrorisme est modifié comme suit :
1° A l'article 5, les paragraphes 2 et 3 sont supprimés ;
2° L'article 6 est rétabli, libellé comme suit :
" Art. 6. Exécution des mesures de vigilance par les tiers
Pour l'application de l'article 3-3 de la loi , il appartient à chaque professionnel d'appliquer une approche fondée sur le risque qui tient compte des informations disponibles sur le niveau de risque lié aux pays dans lesquels les tiers sont établis. ".
Le présent règlement grand-ducal entre en vigueur le jour de sa publication au Journal officiel du Grand-Duché de Luxembourg.
CSSF publishes Circular CSSF 22/822 on FATF statements / La CSSF publie la circulaire CSSF 22/822 sur les déclarations du GAFI
On 27 October 2022, Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 22/822 on FATF statements concerning high-risk jurisdictions on which enhanced due diligence and, where appropriate, counter-measures are imposed and jurisdictions under increased monitoring of the FATF.
The Circular addresses FATF statement on:
- as high risk and subject to a call to action, or
- as being subject to enhanced FATF surveillance.
1) High-risk jurisdictions require the enhanced due diligence measures and, where appropriate, countermeasures. High-risk jurisdictions are indicated as the jurisdictions that the FATF considers to have significant strategic deficiencies in their anti-money laundering, counter-terrorist financing and counter-proliferation financing regimes. In relation to these countries, the FATF calls on all its members and invites all jurisdictions to apply enhanced due diligence measures. In the most serious cases, the FATF calls on countries to implement countermeasures to protect the international financial system against the risks of money laundering, terrorist financing and proliferation financing from these countries.
2) Jurisdictions subject to the FATF enhanced scrutiny are those that are actively working with the FATF to address strategic deficiencies in their anti-money laundering, anti-terrorist financing and anti-proliferation financing regimes. The countries commit to the FATF to promptly address, their within an agreed timeframe, their identified strategic deficiencies.
Le 27 octobre 2022, la Commission de Surveillance du secteur financier (CSSF) a publié la Circulaire CSSF 22/822 relative aux déclarations du GAFI concernant les juridictions à haut risque auxquelles sont imposées des obligations de vigilance renforcée et, le cas échéant, des contre-mesures, ainsi que les juridictions faisant l'objet d'une surveillance accrue de la part du GAFI.
La circulaire traite de la déclaration du GAFI sur :
- comme étant à haut risque et faisant l'objet d'un appel à l'action, ou
- comme faisant l'objet d'une surveillance accrue du GAFI.
1) Les juridictions à haut risque exigent des mesures de diligence raisonnable renforcées et, le cas échéant, des contre-mesures. Les pays à haut risque sont ceux que le GAFI considère comme présentant des lacunes stratégiques importantes dans leurs régimes de lutte contre le blanchiment d'argent, le financement du terrorisme et le financement de la prolifération. En ce qui concerne ces pays, le GAFI appelle tous ses membres et invite toutes les juridictions à appliquer des mesures de diligence raisonnable renforcées. Dans les cas les plus graves, le GAFI appelle les pays à mettre en œuvre des contre-mesures de protection du système financier international contre les risques de blanchiment de capitaux, de financement du terrorisme et de financement de la prolifération émanant de ces pays.
2) Les juridictions soumises à l'examen approfondi du GAFI sont celles qui collaborent activement avec le GAFI pour remédier aux lacunes stratégiques de leurs régimes de lutte contre le blanchiment d'argent, le financement du terrorisme et le financement de la prolifération. Les pays s'engagent auprès du GAFI à remédier rapidement, dans les délais convenus, aux lacunes stratégiques qu'ils ont identifiées.
Luxembourg government publishes communication on FATF assessment / Le gouvernement luxembourgeois publie une communication sur l'évaluation du GAFI
On 31 October 2022, Luxembourg government published communication on FATF assessment.
As part of the fourth round of mutual evaluations, the Financial Action Task Force (FATF) is carrying out an evaluation of Luxembourg. The FATF (Financial Action Task Force) is an intergovernmental body that develops international standards in the fight against money laundering, the financing of terrorism and the proliferation of weapons of mass destruction (AML / CFT) and promotes the application of effective legislative, regulatory and operational measures in this regard. Mutual evaluations enable the FATF to monitor the implementation of these standards in member countries and to assess the overall effectiveness of their AML/CFT systems. The scope of the assessments includes two interrelated components:
The assessment of technical compliance covers the obligations contained in each of the 40 FATF Recommendations, in particular those relating to the legal and institutional framework of the country, and the powers and procedures of the competent authorities .
The effectiveness assessment looks at the whole AML/CFT system of the country and how it operates in order to achieve “immediate results” .
The mutual evaluation process consists of different stages :
The first stage consists in the selection of the experts forming the evaluation team;
Assessed country provides all necessary laws and regulations for technical compliance assessment;
The evaluators carry out the analysis of the technical compliance of the evaluated country based on the laws and regulations provided;
The evaluators identify the areas that deserve increased or reduced attention during the on-site visit;
The evaluators travel to the country. During the on-site visit, the assessment team should examine the level of effectiveness of the country against the set of defined results. To this end, they meet with public and private sector actors;
A mutual evaluation report covering both technical compliance as well as effectiveness is drafted;
At the FATF Plenary in June 2023, the results, including ratings and recommended actions, are discussed and the final report is adopted;
The final report including an in-depth analysis and recommendations for the country to strengthen its AML/CFT measures is published In this case, the coordination of the exercise is ensured by the Department "Fight against money laundering and against the financing of terrorism" of the Ministry of Justice.
During the review process, countries are not permitted to communicate details of an ongoing review. Indeed, the confidentiality requirements apply both to the country assessed, to the assessment team, to the FATF secretariat and to all the countries of the FATF global network.
Le 31 octobre 2022, le gouvernement luxembourgeois a publié une communication sur l'évaluation du GAFI.
Dans le cadre du quatrième cycle d'évaluations mutuelles, le Groupe d'action financière (GAFI) procède à une évaluation du Luxembourg. Le GAFI (Groupe d'action financière) est un organisme intergouvernemental qui élabore des normes internationales en matière de lutte contre le blanchiment d'argent, le financement du terrorisme et la prolifération des armes de destruction massive (AML / CFT) et promeut l'application de mesures législatives, réglementaires et opérationnelles efficaces à cet égard. Les évaluations mutuelles permettent au GAFI de surveiller la mise en œuvre de ces normes dans les pays membres et d'évaluer l'efficacité globale de leurs systèmes de LBC/FT. Le champ d'application des évaluations comprend deux composantes interdépendantes :
L'évaluation de la conformité technique couvre les obligations contenues dans chacune des 40 recommandations du GAFI, en particulier celles relatives au cadre juridique et institutionnel du pays, ainsi qu'aux pouvoirs et procédures des autorités compétentes .
L'évaluation de l'efficacité porte sur l'ensemble du système de LBC/FT du pays et sur son fonctionnement afin d'obtenir des " résultats immédiats " .
Le processus d'évaluation mutuelle se compose de différentes étapes  :
La première étape consiste en la sélection des experts formant l'équipe d'évaluation ;
Le pays évalué fournit toutes les lois et réglementations nécessaires à l'évaluation de la conformité technique ;
Les évaluateurs effectuent l'analyse de la conformité technique du pays évalué sur la base des lois et règlements fournis ;
Les évaluateurs identifient les domaines qui méritent une attention accrue ou réduite lors de la visite sur place ;
Les évaluateurs se rendent dans le pays. Pendant la visite sur place, l'équipe d'évaluation doit examiner le niveau d'efficacité du pays par rapport à l'ensemble des résultats définis. À cette fin, ils rencontrent des acteurs des secteurs public et privé ;
Un rapport d'évaluation mutuelle couvrant à la fois la conformité technique et l'efficacité est rédigé ;
Lors de la plénière du GAFI en juin 2023, les résultats, y compris les notations et les actions recommandées, sont discutés et le rapport final est adopté ;
Le rapport final comprenant une analyse approfondie et des recommandations pour que le pays renforce ses mesures de LBC/FT est publié.
Dans ce cas, la coordination de l'exercice est assurée par le Département "Lutte contre le blanchiment d'argent et contre le financement du terrorisme" du Ministère de la Justice.
Pendant le processus d'examen, les pays ne sont pas autorisés à communiquer les détails d'un examen en cours. En effet, les exigences de confidentialité s'appliquent à la fois au pays évalué, à l'équipe d'évaluation, au secrétariat du GAFI et à tous les pays du réseau mondial du GAFI.
Data protection / General Data Protection Regulation (GDPR) / ePrivacy Regulation (ePR)
CNPD publishes its Annual Report 2021 / La CNPD publie son rapport annuel 2021
On 14 October 2022, Commission nationale pour la protection des données (CNPD) published its Annual Report 2021.
First decisions by the CNPD on the outcome of investigations
In 2021, the CNPD issued its first decisions following investigations initiated since the entry into force of the GDPR (General Data Protection Regulation). In total, no less than 49 cases had been closed. 37 investigations resulted in corrective measures (e.g. issue warnings or reprimands, bring into compliance, impose a temporary or definitive limitation including a ban on processing, etc.), including 25 with fines.
In total, 48 decisions related to national cases, with an overall amount of 319,500 euros in administrative fines and one decision was taken within the European cooperation and consistency mechanism against Amazon Europe Core Sàrl, with an administrative fine of 746 million euros.
The majority of decisions (25 in total) were taken as part of the thematic campaign on the role of the Data Protection Officer. There were 20 decisions on video surveillance and geolocation. Finally, 4 decisions were on various topics, including one on the unlawful use of the JU-CHA database in the context of a procedure for the recruitment of a state employee in the judicial administration.
The rapid emergence and development of new technologies such as artificial intelligence, machine learning, smart sensors and blockchain is a major regulatory challenge.
The CNPD, like its European counterparts in the European Data Protection Board (EDPB), monitors new and emerging technologies, as well as their potential impact on fundamental rights and citizens’ daily lives. The EDPB has already developed or is preparing guidance on the use of biometric data, the use of facial recognition, blockchain and other technologies as part of its biannual work programme.
Another major challenge arises from new European initiatives such as the Data Governance Act, the Digital Services Act, the Data Act, the Digital Markets Act or the Artificial Intelligence Act. The challenge is to integrate these new initiatives into existing national legislation while maintaining the same level of protection of personal data.
It will be necessary to ensure a coherent implementation of these texts and a good coordination between the national authorities to be designated by the EU Member States at both European and national level.
Le 14 octobre 2022, la Commission nationale pour la protection des données (CNPD) a publié son rapport annuel 2021.
Les premières décisions de la CNPD sur le résultat des enquêtes
En 2021, la CNPD, à la suite d'enquêtes ouvertes depuis l'entrée en vigueur du RGPD (Règlement général sur la protection des données), a rendu ses premières décisions. Finalement moins de 49 dossiers ont été clôturés. 37 enquêtes ont donné lieu à des mesures correctives (par exemple, émettre des avertissements ou des réprimandes, mettre en conformité, imposer une limitation temporaire ou définitive, y compris une interdiction de traitement, etc.), dont 25 avec des amendes.
En tout, 48 décisions concernaient des affaires nationales, pour un montant global de 319 500 euros d'amendes administratives, une décision a été prise dans le cadre du mécanisme européen de coopération et de cohérence à l'encontre d'Amazon Europe Core Sàrl, avec une amende administrative de 746 millions d'euros.
La majorité des décisions (25 au total) ont été prises dans le cadre de la campagne thématique sur le rôle du délégué à la protection des données. Il y a eu 20 décisions sur la vidéosurveillance et la géolocalisation. Enfin, 4 décisions ont porté sur des sujets divers, dont une sur l'utilisation illicite de la base de données JU-CHA dans le cadre d'une procédure de recrutement d'un agent de l'État dans l'administration judiciaire.
L'émergence et le développement rapide de nouvelles technologies telles que l'intelligence artificielle, l'apprentissage automatique, les capteurs intelligents et la blockchain constituent un défi réglementaire majeur.
Le CNPD, comme ses homologues européens du Conseil européen de la protection des données (EDPB), surveille les nouvelles et émergentes technologies ainsi que leur impact potentiel sur les droits fondamentaux et la vie quotidienne des citoyens. L'EDPB a déjà élaboré ou prépare des orientations sur l'utilisation des données biométriques, l'utilisation de la reconnaissance faciale, la blockchain et d'autres technologies dans le cadre de son programme de travail semestriel.
Un autre défi majeur découle des nouvelles initiatives européennes telles que la loi sur la gouvernance des données, la loi sur les services numériques, la loi sur les données, la loi sur les marchés numériques ou la loi sur l'intelligence artificielle. Le défi consiste à intégrer ces nouvelles initiatives dans la législation nationale existante en maintenant le même niveau de protection des données personnelles.
Il sera nécessaire d'assurer une mise en œuvre cohérente de ces textes et une bonne coordination entre les autorités nationales qui seront désignées par les États membres de l'UE, tant au niveau européen que national.
CSSF publishes Circular CSSF 22/821 revising the framework of the long form report for credit institutions / La CSSF publie la circulaire CSSF 22/821 révisant le cadre du rapport long pour les établissements de crédit
On 25 October 2022, Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 22/821 revising the framework of the long form report for credit institutions and repealing Circular CSSF 01/27.
The circular is the result of a thorough reconsideration of the objective, scope and content of the current long form report, which is a key component of CSSF’s supervision. The revision ensures that the long form report remains in line with regulatory developments and with the supervisor’s main points of focus. The framework was redesigned in a way to minimise supervisory burden. Content-wise this resulted for instance in eliminating redundancies in credit institutions’ reporting obligations while, with respect to form, the new long form report turns fully digital which allows efficient processing in line with the CSSF’s digital strategy.
The revised long form report framework comprises the following four annual deliverables, where items 3 and 4 remain as is:
- A self-assessment questionnaire (SAQ) to be filled in by credit institutions;
- Agreed Upon Procedure (AUP) report(s) to be established by the réviseur d’entreprises agréé (REA);
- The separate report on the protection of financial instruments and funds belonging to clients as required under Article 7 of the Grand-ducal Regulation of 30 May 2018 to be established by the REA;
- The separate report covering AML/CFT further to CSSF Regulation N° 12-02 to be established by the REA.
The completion and submission of the deliverables are to be done through the dedicated online portal of the CSSF (“eDesk”). The online forms will be accessible on the portal at the beginning of 2023. In the meantime, Excel versions of the SAQ and AUP templates are available for consultation only in the “Related documents” section under Circular CSSF 22/821 on the CSSF website.
Circular CSSF 01/27 also contains provisions on the scope of the statutory audit mandate as well as on the content of the reports and written comments issued by the REA in the framework of its audit of the annual accounting documents. These provisions remain relevant, will be updated and published in a separate circular in the coming weeks.
In addition, the following circulars need to be updated after the publication of Circular CSSF 22/821, namely Circular CSSF 07/325 (“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”) and Circular CSSF 19/731 (“Documents to be submitted to the CSSF and to the European Central Bank on an annual basis”).
This circular shall apply as from 31 December 2022.
Le 25 octobre 2022, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire CSSF 22/821 révisant le cadre du rapport long pour les établissements de crédit et abrogeant la circulaire CSSF 01/27.
Cette circulaire est le résultat d'un réexamen approfondi de l'objectif, du champ d'application et du contenu de l'actuel rapport détaillé, qui est un élément clé de la surveillance exercée par la CSSF. La révision permet de s'assurer que le rapport détaillé reste en phase avec les évolutions réglementaires et les principaux points d'attention de l'autorité de surveillance. Le cadre a été remanié de manière à minimiser la charge de la surveillance. Sur le plan du contenu, cela a permis, par exemple, d'éliminer les redondances dans les obligations de déclaration des établissements de crédit. Sur le plan de la forme, le nouveau formulaire long est entièrement numérique, ce qui permet un traitement efficace, conformément à la stratégie numérique de la CSSF.
Le cadre révisé du rapport détaillé comprend les quatre livrables annuels suivants, les points 3 et 4 restant inchangés :
- Un questionnaire d'auto-évaluation (SAQ) à remplir par les établissements de crédit ;
- Le(s) rapport(s) Agreed Upon Procedure (AUP) à établir par le réviseur d'entreprises agréé (REA) ;
- Le rapport distinct relatif à la protection des instruments financiers et des fonds appartenant aux clients tel que requis par l'article 7 du règlement grand-ducal du 30 mai 2018 à établir par le REA ;
- Le rapport distinct couvrant la lutte contre le blanchiment d'argent et le financement du terrorisme conforme au règlement CSSF n° 12-02 à établir par le REA.
Le remplissage et la soumission des livrables doivent être effectués via le portail en ligne dédié de la CSSF ("eDesk"). Les formulaires en ligne seront accessibles sur le portail au début de l'année 2023. Entre-temps, les versions Excel des modèles de SAQ et AUP sont disponibles pour consultation uniquement dans la section "Related documents" sous la circulaire CSSF 22/821 sur le site Internet de la CSSF.
La circulaire CSSF 01/27 contient également des dispositions sur l'étendue du mandat de contrôle légal des comptes ainsi que sur le contenu des rapports et commentaires écrits émis par le REA dans le cadre de son contrôle des documents comptables annuels. Ces dispositions restent pertinentes, seront mises à jour et publiées dans une circulaire séparée dans les semaines à venir.
En outre, les circulaires suivantes doivent être mises à jour après la publication de la circulaire CSSF 22/821, à savoir la circulaire CSSF 07/325 ("Dispositions relatives aux établissements de crédit et aux entreprises d'investissement d'origine communautaire établis au Luxembourg par le biais de succursales ou exerçant des activités au Luxembourg en libre prestation de services") et la circulaire CSSF 19/731 ("Documents à soumettre à la CSSF et à la Banque centrale européenne sur une base annuelle").
Cette circulaire est applicable à partir du 31 décembre 2022.
CSSF publishes its directory and e-mail addresses for specific mailings / La CSSF publie son annuaire et les adresses e-mail pour les envois spécifiques
On 27 October 2022, Commission de Surveillance du secteur financier (CSSF) published its directory and e-mail addresses for specific mailings.
Le 27 octobre 2022, la Commission de surveillance du secteur financier (CSSF) a publié son annuaire et ses adresses électroniques pour des envois spécifiques.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
CSSF updates FAQ regarding the AML/CFT Market Entry Form (Funds and IFMs) / La CSSF met à jour la FAQ concernant le formulaire d'entrée sur le marché AML/CFT (fonds et IFMs)
On 4 October 2022, Commission de Surveillance du secteur financier (CSSF) updated FAQ regarding the AML/CFT Market Entry Form (Funds and IFMs).
This publication refers to a list of questions/answers (FAQ) in relation to the completion of the AML/CFT Market Entry Form (Funds and IFMs) in eDesk.
The question No. 13 has been added.
Le 4 octobre 2022, la Commission de Surveillance du secteur financier (CSSF) a mis à jour les FAQ concernant le formulaire d'entrée sur le marché LBC/FT (fonds et GFI).
Cette publication se réfère à une liste de questions/réponses (FAQ) en relation avec le remplissage du AML/CFT Market Entry Form (Funds and IFMs) dans eDesk.
La question n° 13 a été ajoutée.
CSSF publishes the revised AIFMD reporting Tables of Annex 2 of ESMA Guidelines on AIFMD reporting obligation / La CSSF publie les tableaux de déclaration AIFMD révisés de l'annexe 2 des lignes directrices de l'ESMA sur l'obligation de déclaration AIFMD
On 7 October 2022, Commission de Surveillance du secteur financier (CSSF) published the revised AIFMD reporting Tables 1-7 and Tables 8-9-10 of Annex 2 of ESMA Guidelines on AIFMD reporting obligation.
Tables 1-7 can be found here: www.esma.europa.eu/sites/default/files/library/2015/11/2013-1586_aifmd_reporting_-_annex_2_-tables_1-7.xlsx
Tables 8-9-10 can be found here: www.esma.europa.eu/sites/default/files/library/2015/11/2013-1360_tables_8-9-10_of_annex_2_of_esma_guidelines_on_reporting_obligation_revised.xlsx
Le 7 octobre 2022, la Commission de Surveillance du secteur financier (CSSF) a publié les tableaux 1-7 et 8-9-10 de l'annexe 2 des lignes directrices de l'ESMA sur l'obligation de déclaration AIFMD.
Les tableaux 1-7 peuvent être consultés ici:
Tables 8-9-10 can be found here: www.esma.europa.eu/sites/default/files/library/2015/11/2013-1360_tables_8-9-10_of_annex_2_of_esma_guidelines_on_reporting_obligation_revised.xlsx
CSSF clarifies on the eligible entities for the opening of cash accounts in relation to Luxembourg AIFs / La CSSF publie une clarification sur les entités éligibles pour l'ouverture de comptes espèces en relation avec les fonds alternatifs luxembourgeois
On 18 October 2022, Commission de Surveillance du secteur financier (CSSF) published a clarification regarding eligible entities for the opening of cash accounts in relation to Luxembourg alternative investment funds (AIFs).
The CSSF has recently observed that, for a certain number of AIFs, notably AIFs that have appointed a professional depositary of assets other than financial instruments under Article 26-1 of the Law of 5 April 1993 on the financial sector, as amended (PDAOFI) as their single-depositary, the AIF or the depositary uses – or intends to use – the services of an electronic money institution (EMI) or a payment institution (PI) governed by the Law of 10 November 2009 on payment services or by the Directive (EU) 2015/2366 on payment services in the internal market, for the purpose of holding the cash accounts of such AIFs.
The CSSF hereby reminds you that all cash of an AIF has to be booked in cash accounts opened in the name of the relevant AIF, in the name of their Alternative Investment Fund Manager (AIFM) acting on behalf of the relevant AIF, or in the name of the depositary acting on behalf of the relevant AIF with an entity as specified under Article 19(7) of the Law of 12 July 2013 (the “AIFM Law”) (implementing Article 21(7) of the Directive 2011/61/EU (the “AIFMD”)). As a reminder, in relation to AIFs that have appointed a PDAOFI, none of the AIF’s cash can be held directly by the PDAOFI itself. Reference is made in this respect to CSSF FAQ on the AIFM Law under 10.J, last paragraph and point 18 of Circular CSSF 18/697.
Having regard to Article 19(7) of the AIFM Law, only central banks, EU authorised credit institutions as well as third country authorised banks (each an “Eligible Entity”), as further clarified in Article 86(a) of the Commission Delegated Regulation (EU) 231/2013 and in points (a), (b) and (c) of Article 18(1) of the Directive 2006/73/EC which it refers to, may qualify as Eligible Entities for the purpose of holding cash accounts in the relevant market where cash accounts are required for the purposes of the AIF’s operations.
In light of the above, for AIFs for which an EMI or a PI has been appointed to hold cash accounts, their designated AIFM or the appointed depositary should analyse the cash account set-up in order to ensure that as soon as possible and by no later than 30 June 2023:
- a depositary within the meaning of Article 19(3)(i) is appointed; and
- an Eligible Entity as defined above is appointed in relation to the opening of cash accounts for such AIFs.
For the avoidance of doubt, any new AIF must ensure that the cash accounts will be held by an Eligible Entity. No new sub-funds can be set up within AIFs for which the cash accounts are currently held by an EMI or a PI.
Le 18 octobre 2022, la Commission de Surveillance du secteur financier (CSSF) a publié une clarification concernant les entités éligibles pour l'ouverture des comptes espèces en relation avec les fonds d'investissement alternatifs (FIA) luxembourgeois.
La CSSF a récemment constaté que, pour un certain nombre de FIA, notamment les FIA qui ont désigné un dépositaire professionnel d'actifs autres que des instruments financiers en vertu de l'article 26-1 de la loi du 5 avril 1993 relative au secteur financier, telle que modifiée (PDAOFI) comme leur dépositaire unique, le FIA ou le dépositaire utilise - ou a l'intention d'utiliser - les services d'un établissement de monnaie électronique (EMI) ou d'un établissement de paiement (IP) régi par la loi du 10 novembre 2009 relative aux services de paiement ou par la directive (UE) 2015/2366 concernant les services de paiement dans le marché intérieur, aux fins de la tenue des comptes espèces de ces FIA.
La CSSF vous rappelle que toutes les liquidités d'un FIA doivent être comptabilisées sur des comptes espèces ouverts au nom du FIA concerné, au nom de son gestionnaire de fonds d'investissement alternatif (AIFM) agissant pour le compte du FIA concerné, ou au nom du dépositaire agissant pour le compte du FIA concerné auprès d'une entité telle que spécifiée à l'article 19(7) de la loi du 12 juillet 2013 (la " loi AIFM ") (transposant l'article 21(7) de la directive 2011/61/UE (la " AIFMD ")). Pour rappel, en ce qui concerne les fonds alternatifs qui ont désigné un PDAOFI, aucune des liquidités du fonds alternatif ne peut être détenue directement par le PDAOFI lui-même. Il est fait référence à cet égard à la FAQ CSSF sur la loi AIFM sous 10.J, dernier paragraphe et point 18 de la circulaire CSSF 18/697.
Eu égard à l'article 19(7) de la Loi AIFM, seules les banques centrales, les établissements de crédit agréés par l'UE ainsi que les banques agréées par des pays tiers (chacun étant une " Entité Eligible "), comme précisé à l'article 86(a) du Règlement Délégué (UE) 231/2013 de la Commission et aux points (a), (b) et (c) de l'article 18(1) de la Directive 2006/73/CE auquel il se réfère, peuvent être qualifiés d'Entités Eligibles aux fins de détenir des comptes espèces sur le marché concerné lorsque des comptes espèces sont nécessaires aux fins des opérations du FIA.
À la lumière de ce qui précède, en ce qui concerne les fonds alternatifs pour lesquels un IME ou un PI a été désigné pour détenir des comptes en espèces, leur gestionnaire désigné ou le dépositaire désigné doit analyser la mise en place des comptes en espèces afin de s'assurer que, dès que possible et au plus tard pour le 30 juin 2023
- un dépositaire au sens de l'article 19, paragraphe 3, point i), est désigné ; et
- une entité éligible telle que définie ci-dessus soit désignée en ce qui concerne l'ouverture de comptes en espèces pour ces fonds alternatifs.
Pour éviter toute ambiguïté, tout nouveau fonds alternatif doit s'assurer que les comptes en espèces seront détenus par une entité éligible. Aucun nouveau compartiment ne peut être créé au sein d'un fonds alternatif dont les comptes en espèces sont actuellement détenus par une IME ou une IP.
CSSF publishes feedback report on the Supervision of Costs and Fees of UCITS / La CSSF publie un rapport de rétroaction sur l'action commune de surveillance de l'ESMA concernant la surveillance des coûts et des frais des OPCVM
On 20 October 2022, Commission de Surveillance du secteur financier (CSSF) published the feedback report on ESMA Common Supervisory Action on the Supervision of Costs and Fees of UCITS.
In the course of 2021, the European Securities and Markets Authority (ESMA) performed a Common Supervisory Action (CSA) with national competent authorities (NCAs) across the EU/EEA on the supervision of costs and fees of UCITS.
On 31 May 2022, ESMA published the results of the CSA in a Final Report, including the experiences and findings of all EU/EEA NCAs (including the CSSF) participating to the exercise. ESMA informed in that context that the overall level of compliance with the applicable EU legislative framework was satisfactory for most Investment Fund Managers (IFMs), but that the exercise also showed shortcomings in some areas and the need for improvements in certain key areas.
While the overall analysis of compliance for IFMs in Luxembourg is mostly consistent with the conclusions of ESMA, the CSSF would like to inform market participants about the publication of the report “CSSF Feedback Report – ESMA Common Supervisory Action on the supervision of costs and fees of UCITS” which presents the main observations made by the CSSF in the context of the CSA together with the related recommendations for improvements in view of the applicable regulatory requirements.
The CSSF is currently engaging on a bilateral basis with certain IFMs in relation to the observations made in the context of the CSA exercise, thereby asking these IFMs to implement the necessary corrective measures for the observed shortcomings.
The CSSF asks hereby all IFMs to conduct, by the end of the first quarter 2023, a comprehensive assessment with regard to the compliance of their policy, approach and arrangements related to costs, in relation to the observations of ESMA and of the CSSF and to take, if applicable, the necessary corrective measures.
As the supervisory briefing on the supervision of costs published by ESMA in June 2020 and referenced in the Final Report applies both to UCITS and AIFs, the CSSF requires that the review of the pricing process is also performed by AIFMs for their AIFs under management.
Le 20 octobre 2022, la Commission de Surveillance du secteur financier (CSSF) a publié le rapport d'évaluation de l'action commune de surveillance de l'ESMA sur la surveillance des coûts et des frais des OPCVM.
Au cours de l'année 2021, l'Autorité européenne des marchés financiers (AEMF) a mené une action de surveillance commune (CSA) avec les autorités nationales compétentes (ANC) de l'UE/EEE sur la surveillance des coûts et des frais des OPCVM.
Le 31 mai 2022, l'ESMA a publié les résultats de la CSA dans un rapport final, incluant les expériences et les conclusions de toutes les ANC de l'UE/EEE (y compris la CSSF) ayant participé à l'exercice. L'ESMA a informé dans ce contexte que le niveau global de conformité avec le cadre législatif européen applicable était satisfaisant pour la plupart des gestionnaires de fonds d'investissement (GFI), mais que l'exercice a également montré des lacunes dans certains domaines et la nécessité d'apporter des améliorations dans certains domaines clés.
Alors que l'analyse globale de la conformité des GFI au Luxembourg est en grande partie conforme aux conclusions de l'ESMA, la CSSF souhaite informer les participants au marché de la publication du rapport "CSSF Feedback Report - ESMA Common Supervisory Action on the supervision of costs and fees of UCITS" qui présente les principales observations faites par la CSSF dans le cadre de la CSA ainsi que les recommandations d'amélioration en vue des exigences réglementaires applicables.
La CSSF s'engage actuellement sur une base bilatérale avec certains GFI en relation avec les observations faites dans le cadre de l'exercice CSA, demandant ainsi à ces GFI de mettre en œuvre les mesures correctives nécessaires pour les lacunes observées.
La CSSF demande à tous les gestionnaires de fonds d’effectuer, d’ici à la fin du premier trimestre 2023, un bilan global concernant la conformité de leur politique, de leur approche et de leurs accords en matière de coûts, en fonction des observations de l’ESMA et de la CSSF et de prendre, le cas échéant, les mesures correctives nécessaires.
La note d’information sur la supervision des coûts publié par l'ESMA en juin 2020 et référencée dans le rapport final s’appliquant à la fois aux OPCVM et aux FIA, la CSSF exige que l'examen du dispositif de tarification soit également effectué par les AIFM pour les AIFs qu’ils ont sous gestion.
Sustainable Finance / Green Finance
CSSF publishes sustainability disclosures for issuers / La CSSF publie des informations sur la durabilité à l'intention des émetteurs
On 26 October 2022, Commission de Surveillance du secteur financier (CSSF) published sustainability disclosures for issuers.
This is a first look on information reported under Article 8 of the Taxonomy Regulation for the transition year and the key takeaways are as follows:
- For this first reporting period, the concerned Issuers were confronted with a very short implementation period, between the publication of the regulation and its application, as well as with regulatory provisions which, at first sight, may have seemed easy to observe but which may have, during the implementation process, turned out to be more complicated than expected.
- Despite these conditions, 60% of the reviewed Issuers were able to achieve compliance with the new disclosure requirements. As regards the remaining 40%, the CSSF reminds them to comply with the requirements of Article 8 of the European Taxonomy. Sustainability data is increasingly seen as material information for issuers, in the same way as financial information. Article 8 contributes to providing relevant information in this context. Thus, faced with disclosure requirements that will continue to increase and the strong market’s expectation to be provided with such data, Issuers cannot afford to be late and must prepare as of now in order to comply with these new requirements.
- Our review has also shown the importance of providing high qualitative information to enable users to better understand the information given and to be able to compare it across Issuers, as well as across different sectors. Therefore, the CSSF recommends Issuers to improve the qualitative information provided, thus allowing a better achievement of the objective of the regulation which is to provide clear, understandable, relevant and comparable information.
- or the second year of reporting from 1 January 2023 the disclosure requirements on Taxonomy-alignment information will, in absence of detailed practical guidance and in anticipation of the awaited publication of the Environmental Delegated Act, be highly challenging for Issuers.
- As a result, the remaining months, leading up to the publication of the next reporting, are critical for Issuers in view of ensuring a smooth but successful implementation of Article 8 of the Taxonomy Regulation.
Le 26 octobre 2022, la Commission de Surveillance du secteur financier (CSSF) a publié des informations sur la durabilité à l'intention des émetteurs.
Il s'agit d'un premier aperçu des informations communiquées en vertu de l'article 8 du règlement sur la taxonomie pour l'année de transition et les principales conclusions sont les suivantes :
- pour cette première période de reporting, les Émetteurs concernés ont été confrontés à une période de mise en œuvre très courte, entre la publication du règlement et son application, ainsi qu'à des dispositions réglementaires qui, à première vue, pouvaient sembler faciles à observer mais qui ont pu, au cours du processus de mise en œuvre, se révéler plus compliquées que prévu.
- malgré ces conditions, 60% des émetteurs examinés ont pu se conformer aux nouvelles exigences de divulgation. En ce qui concerne les 40% restants, la CSSF leur rappelle de se conformer aux exigences de l'article 8 de la Taxonomie européenne. Les données sur le développement durable sont de plus en plus considérées comme des informations importantes pour les émetteurs, au même titre que les informations financières. L'article 8 contribue à fournir des informations pertinentes dans ce contexte. Ainsi, face à des exigences de divulgation qui vont continuer à augmenter et à la forte attente du marché de se voir fournir de telles données, les émetteurs ne peuvent se permettre d'être en retard et doivent se préparer dès maintenant afin de se conformer à ces nouvelles exigences.
- notre examen a également montré l'importance de fournir des informations de haute qualité pour permettre aux utilisateurs de mieux comprendre les informations données et de pouvoir les comparer entre émetteurs, ainsi qu'entre secteurs différents. Par conséquent, la CSSF recommande aux émetteurs d'améliorer l'information qualitative fournie, permettant ainsi de mieux atteindre l'objectif de la réglementation qui est de fournir une information claire, compréhensible, pertinente et comparable.
- pour la deuxième année de reporting à partir du 1er janvier 2023, les exigences de divulgation des informations relatives à l'alignement de la taxonomie seront, en l'absence d'indications pratiques détaillées et en prévision de la publication attendue de l'acte délégué environnemental, très difficiles pour les émetteurs.
- par conséquent, les mois restants, jusqu'à la publication du prochain rapport, sont critiques pour les émetteurs afin d'assurer une mise en œuvre harmonieuse mais réussie de l'article 8 du règlement sur la taxonomie.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
Federal Council publishes Ordinance on combating ML/FT / Le Conseil fédéral publie une ordonnance sur la lutte contre le blanchiment d'argent et le financement du terrorisme
On 3 October 2022, the Federal Council published the Ordinance on combating money laundering (ML) and the financing of terrorism (FT) as set out on Federal Council's communication of 31 August 2022.
This Ordinance lays down:
- the requirements governing the activity of a financial intermediary carried out on a professional basis, and
- the obligations to be complied with by financial intermediaries in the event of suspicion of money laundering.
Le 3 octobre 2022, le Conseil fédéral a publié l'ordonnance sur la lutte contre le blanchiment d'argent (LBA) et le financement du terrorisme (FT), telle qu'elle figure dans la communication du Conseil fédéral du 31 août 2022.
Cette ordonnance fixe :
- les exigences relatives à l'activité d'un intermédiaire financier exercée à titre professionnel, et
- les obligations à respecter par les intermédiaires financiers en cas de soupçon de blanchiment d'argent.
Federal Council publishes Ordinance on the last partial entry into force of the amendment of 19 March 2021 to the AMLA / Le Conseil fédéral publie l'ordonnance sur la dernière entrée en vigueur partielle de la modification du 19 mars 2021 de la LBA
On 3 October 2022, the Federal Council published Ordinance of 31 August 2022 on the last partial entry into force of the amendment of 19 March 2021 to the Money Laundering Act (AMLA), as set out on Federal Council's communication of 31 August 2022.
The provisions not yet in force of the amendment of 19 March 2021 to the AMLA enter into force on 1 January 2023.
Le 3 octobre 2022, le Conseil fédéral a publié l'ordonnance du 31 août 2022 sur la dernière entrée en vigueur partielle de la modification du 19 mars 2021 de la loi sur le blanchiment d'argent (LBA), telle qu'elle figure dans la communication du Conseil fédéral du 31 août 2022.
Les dispositions qui ne sont pas en vigueur concernant la modification du 19 mars 2021 de la LBA entreront en vigueur a partir du 1er janvier 2023.
Financial Market Infrastructure (FMI)
Federal Council commissions revision of Financial Market Infrastructure Act / Le Conseil fédéral fait réviser la loi sur l'infrastructure des marchés financiers
On 1 October 2022, the Federal Council published a communication regarding its instruction to the Federal Department of Finance (FDF) to draw up a consultation draft to amend the Financial Market Infrastructure Act (FinMIA).
The FinMIA governs the authorisation and duties of financial market infrastructures, and the conduct of financial market participants in securities and derivatives trading. It has been in force since January 2016. As already announced by the Federal Council prior to the Act's entry into force, the FDF has now carried out a comprehensive review of the FinMIA and presented its report.
In the report, the FDF concludes that the FinMIA has largely stood the test of time since it entered into force in 2016. However, it also identified a need for action in certain areas. Given the experience accumulated since the Act entered into force, and in light of national and international developments, transparency and legal certainty in some regulatory areas should be strengthened further. On that basis, the Federal Council has now instructed the FDF to prepare a consultation draft by mid-2024.
The Federal Council has also decided that the reporting duty for derivatives transactions envisaged in FinMIA will be postponed for small non-financial counterparties (e.g. industrial companies) via an ordinance amendment. It will not enter into force until 1 January 2028, to give time to Parliament to make a decision. In this way, the Federal Council is seeking to create legal certainty for the companies concerned. The reporting duties already applicable to other market participants are unaffected.
Le 1er octobre 2022, le Conseil fédéral a publié une communication concernant l'instruction donnée au Département fédéral des finances (DFF) d'élaborer un projet de consultation finalisé à modifier la loi sur l'infrastructure des marchés financiers (LIMF).
La FinMIA régit l'autorisation et les devoirs des infrastructures des marchés financiers, ainsi que le comportement des acteurs des marchés financiers dans le commerce des valeurs mobilières et des dérivés. Elle est en vigueur depuis janvier 2016. Avant de entrée en vigueur de la loi, comme déjà annoncé par le Conseil fédéral , le DFF a procédé à un examen complet de la LFINMA et présenté son rapport.
Dans ce rapport, le DFF conclut que la LFINMA a largement résisté à l'épreuve du temps depuis son entrée en vigueur en 2016. D'ailleurs, il a également identifié un besoin d'action dans certains domaines. Compte tenu de l'expérience accumulée depuis l'entrée en vigueur de la loi, et à la lumière des évolutions nationales et internationales, il convient de renforcer encore la transparence et la sécurité juridique dans certains domaines réglementaires. Sur cette base, le Conseil fédéral a chargé le DFF d'élaborer un projet de consultation d'ici à mi-2024.
Le Conseil fédéral a également décidé que l'obligation de déclarer les transactions sur dérivés prévue par la FinMIA sera reportée pour les petites contreparties non financières (p. ex. les entreprises industrielles) par le biais d'une modification d'ordonnance. Afin de laisser le temps au Parlement de se prononcer, celle-ci n'entrera en vigueur que le 1er janvier 2028. Le Conseil fédéral cherche ainsi à créer une sécurité juridique pour les entreprises concernées. Les obligations de déclaration déjà applicables aux autres acteurs du marché ne sont pas affectées.
Federal Council amends Ordinance on Securities and Derivatives Trading / Le Conseil fédéral modifie l'ordonnance sur le commerce des valeurs mobilières et des produits dérivés
On 11 October 2022, the Federal Council amended the Ordinance on Financial Market Infrastructures and Market Behaviour in Securities and Derivatives Trading.
The obligation to report to a trade repository must be completed no later than on 1 January 2028 for derivatives transactions ongoing at that time.
This Ordinance enters into force on 1 January 2023.
Le 11 octobre 2022, le Conseil fédéral a modifié l'ordonnance sur les infrastructures des marchés financiers et le comportement sur le marché dans le commerce des valeurs mobilières et des dérivés.
L'obligation de déclarer à un référentiel central doit être remplie au plus tard le 1er janvier 2028 pour les transactions sur dérivés en cours à cette date.
Cette ordonnance entre en vigueur le 1er janvier 2023.
Sustainable Finance / Green Finance
AMAS presents templates for calculating Swiss Climate Scores / L'AMAS présente des modèles pour le calcul des Scores climatiques suisses
On 4 October 2022, the Asset Management Association Switzerland (AMAS) and Sustainable Finance (SSF) have created a template that ensures a standardised calculation of the various Swiss Climate Scores (SCS) indicators and presented the results in a uniform manner. This Excel template is based on expert consensus and is available to the public.
Le 4 octobre 2022, l'Association suisse de gestion d'actifs (AMAS) et Sustainable Finance (SSF) ont créé un modèle qui garantit un calcul standardisé des différents indicateurs des Swiss Climate Scores (SCS) et qui presente les résultats de manière uniforme. Ce modèle Excel est basé sur un consensus d'experts et est à la disposition du public.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
The Netherlands publish Decree of 19 October 2022 determining the date of entry into force of the Implementation Act on registration of beneficial owners of trusts and similar legal arrangements
On 24 October 2022, Decree of 19 October 2022 determining the date of entry into force of the Implementation Act on registration of beneficial owners of trusts and similar legal arrangements and the Implementation Decree on registration of ultimate beneficial owners of trusts and similar legal arrangements was published in the Official Journal.
This Decree regulates the entry into force of Article I, part Fa, sixth paragraph, of the Implementation Act on registration of ultimate beneficial owners of companies and other legal entities. That part adds a sixth paragraph to Article 22 of the Commercial Register Act 2007 , and relates to the possibility for ultimate beneficial owners of legal entities to gain insight (on request) into the number of times that his or her data has been provided to third parties, other than government parties. The practical provisions for providing such insight are now ready so that the legal basis for this can come into effect.
This Decree also regulates the entry into force of the Implementation Act on registration of ultimate beneficial owners of trusts and similar legal arrangements (hereinafter: the Implementation Act) and the Implementation Decree on registration of ultimate beneficial owners of trusts and similar legal arrangements (hereinafter: the implementation decision). These concern the central registration of trusts and similar legal arrangements, and of the ultimate beneficial owners of trusts and similar legal arrangements. This Decree regulates the entry into force of these regulations. When it came into effect, account was taken of the technical realization of the register, in which certain information about trusts and similar legal arrangements as well as about their ultimate beneficial owners must be included.
The present Decree entering into force ensures that those parts of the Implementation Act and the Implementation Decree will enter into force on 1 November 2022 that are necessary for the first phase of the technical realization of the register. In general, it concerns the following aspects:
- There is a central register containing certain information about trusts, similar legal arrangements and their ultimate beneficial owners (see in particular Article 4 of the Implementation Act).
- There is a registration obligation (see in particular Article 11 of the Implementation Act).
- Certain information about trusts, similar legal arrangements and their beneficial owners must be registered (see in particular Article 5 of the Implementation Act and Articles 2 to 4 of the Implementation Decree).
- Trustees (and those who have a comparable position in a similar legal arrangement to a trustee in a trust) are responsible for the quality of the information included in the register (see in particular Article 12 of the Implementation Act).
- Ultimate beneficial owners must cooperate with the trustee (or the person who has a comparable position in a similar legal construction as a trustee in a trust) (see Article 26, part D, of the Implementation Act).
- There is a possibility to block certain information that is included in the register (see in particular Article 10 of the Implementation Act and Article 9 of the Implementation Decree).
- The Chamber of Commerce is responsible for developing and managing the register (see in particular Articles 13, 18 and 19 of the Implementation Act).
- Compliance with obligations related to this register is maintained (see in particular Chapter 7 and Article 27 of the Implementation Act).
DNB reminds investment firms and UCITS managers of ‘declaration no-objection’ obligations
On 11 October 2022, De Nederlandsche Bank (DNB) reminded investment firms and UCITS managers of ‘declaration no-objection’ obligations.
The new item published by DNB reminds investment firms and UCITS managers about their obligations in relation to the declaration no objection (verklaring van geen bezwaar, DNO) that holders of a qualifying holding in these regulated entities are required to obtain. It is prohibited in the Act on the Financial Supervision (Wet op het financieel toezicht) to acquire or increase a qualifying holding in an investment firm or UCITS manager without having first obtained a DNO from DNB. A (legal or natural) person is deemed to have a qualifying holding if it, directly or indirectly, holds or controls at least 10% or more of the capital or voting rights (or have an equivalent form of control) in an investment firm or UCITS manager. The primary purpose of this review is for DNB to assess the financial solidity and integrity of the parties with a qualifying holding.
DNB informs about data quality of prudential reporting of investment firms and managers of investment institutions and UCITS
On 11 October 2022, De Nederlandsche Bank (DNB) informed about data quality of prudential reporting of investment firms and managers of investment institutions and UCITS.
DNB notes that many errors are made in the prudential reports that are submitted. DNB therefore calls on all investment firms and managers to take additional measures to guarantee the quality of the reports submitted.
Investment firms and managers of investment institutions and UCITS are therefore obliged under Section 3:72 Wft to comply with the reporting obligation correctly and in a timely manner. Recent audits of the prudential reports have shown that these are frequently filled in incorrectly. For example, data is often missing that must be entered on a certain sheet. It also often happens that certain sheets are not completed at all, while they should be. In addition, the entered data often turns out to be incorrect. This applies to both the IFREP and the FINREP. DNB therefore calls on all investment firms and managers of investment institutions and UCITS to take the necessary measures to guarantee data quality. DNB will explicitly pay extra attention to data quality in the coming period.
DNB calls on funds to take a critical look at their liquidity management in the light of UK developments
On 20 October 2022, De Nederlandsche Bank (DNB) called funds to take a critical look at their liquidity management in the light of UK developments.
Due to abrupt and sizeable interest rate hikes, pension funds in the United Kingdom (UK) ran into liquidity problems. DNB notes that the situation in the UK is unique in several respects and that Dutch pension funds are not currently experiencing any liquidity problems. At the same time, developments in the UK underline the importance of adequate liquidity management by pension funds. In this light, DNB calls on funds to critically review their liquidity management in order to prepare for scenarios of acute market stress. For example, DNB is thinking of evaluating stress tests that funds perform to see which interest rate shocks they can absorb. DNB continues to closely monitor liquidity risks and will continue to pay attention to liquidity risks in its ongoing supervision.
Sustainable Finance / Green Finance
NVB publishes guidance for relevant financing, investments and action plans regarding climate risk
On 21 October 2022, the Dutch Banking Association (Nederlandse Vereniging van Banken, NVB) published guidance for relevant financing, investments and action plans regarding climate risk.
The guideline is an aid for the financial institutions when drawing up and/or adjusting the action plans. These action plans describe how they reduce the CO2 content of their investments and relevant financing in order to help achieve the Paris climate targets (in line with a maximum of 1.5°C warming).
Mexico publishes resolution that modifies the General Provisions applicable to credit institutions
On 10 October 2022, resolution that modifies the General Provisions applicable to credit institutions was published in Diario Oficial de la Federation.
It is necessary to include the rating scale of the securities rating agency Moody 's Local MX, SA de CV, Securities Rating Institution in the tables contained in Annex 1-B and Annex 1-G of the General Provisions applicable to credit institutions, so that the ratings issued by this company can be used by credit institutions in calculating capital requirements for credit risk under the standard method.
In order to update the sources of information and indicators, to keep the application of the methodology used to determine the systemic nature of multiple banking institutions operationally valid, and to make the accounting criteria applicable to said institutions consistent with Financial Reporting Standard 9 (IFRS9), the resolution was made.
Financial Market Infrastructure (FMI)
Banxico publishes triennial survey of central banks on foreign exchange and bond markets non-standard derivatives (OTC) carried out by the BIS in April 2022
On 27 October 2022, Banco de México (Banxico) publishes triennial survey of central banks on foreign exchange and bond markets non-standard derivatives (OTC) carried out by the BIS in April 2022.
Banco de México participated in the thirteenth triennial survey of central banks on trading volumes in the foreign exchange markets and non-standardized derivative instruments conducted by the Bank for International Settlements (BIS).
The objective of this survey was to obtain consistent and exhaustive information on the size, structure and activity of the different foreign exchange and derivatives markets at a global level.
The key takeaway of the survey:
- The volume of operations in the foreign exchange markets at a global level increased 14% compared to the survey conducted in 2019, reaching an average daily trading volume of 7.5 billions of dollars.
- The Mexican peso ranked as the sixteenth most traded currency in the world, ranking as the third most traded currency within the set of emerging countries, behind the Chinese renminbi and the Indian rupee.
- The global trading volume of the Mexican peso increased 3% compared to the survey made in April 20194, reaching an average amount of daily operation of around 114 billion dollars. At the local level, the daily trading volume of the Mexican peso was approximately 21 billion dollars.
Mexico publishes Circular 12/2022 regarding the Amendments to Circular 8 /2014 (inclusion of BONDES denominated in national currency at a variable interest rate)
On 7 October 2022, Circular 12/2022 addressed to credit institutions, brokerage houses, investment funds, investment companies specializing in retirement funds and the National Financial Institution for Agricultural, Rural, Forestry and Fisheries Development, regarding the Amendments to Circular 8 /2014 (inclusion of BONDES denominated in national currency at a variable interest rate) was published in Diario Oficial de la Federation.
The Bank of Mexico, with the purpose of continuing to promote the healthy development of the financial system, promote the proper functioning of the payment systems and protect the interests of the public, has determined the convenience of adapting the Rules for the exchange of government securities carried out by the Bank of Mexico for its own account, contained in Circular 8/2014, with the objective of including any debt instrument issued by the Federal Government, including those at a reviewable rate, for the performance of government securities swap auctions carried out by this Central Institute, in order to promote flexibility in this type of operations and the development of the fixed income market in Mexico, without submit these modifications to public consultation, considering that they are provisions through which mechanisms are established for the implementation of monetary policy.
This Circular will enter into force the day after its publication in the Official Gazette of the Federation, with the exception of the provisions of article 23 of the Rules for the exchange of government securities carried out by the Bank of Mexico on its own account will enter into force on 10 November 2022.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
CNMV publishes statement for collective investment scheme management companies on forthcoming application of new regulations
On 4 October 2022, the Comicion Nacional del Mercado del valores (CNMV) published a statement for collective investment scheme (CIS) management companies on the forthcoming application of new regulations.
At the beginning of 2023, various European regulations affecting CIS will come into force, which may require managers to make a significant effort to adapt. In this context, it is important to plan adjustments sufficiently in advance and in sufficient detail, and to carry out an appropriate allocation of resources. The CNMV has established procedures to try to facilitate, as far as possible, the required changes and offers its cooperation to institutions to clarify any aspects they consider necessary.
Specifically, the regulations are the following:
- CNMV Circular 3/2022 on the prospectus and the key investor information document (KID) of CIS: the Circular will come into force on 1 January 2023, and establishes a period of one month from that date for institutions to send the CNMV the document containing the kKID, which must comply with the content established by PRIIPs. An important new feature is that the KID must be drawn up directly by the fund managers for each CIS managed, in accordance with the applicable European regulations. These regulations are quite detailed and incorporate some relevant changes with respect to the contents of the KID of the CIS previously in force, so the fund managers must carefully design the new KIDs and make the necessary changes and developments in their systems to have the necessary information available. Once they have been drawn up, the KIDs of the CIS managed to the CNMV for inclusion in the public register must be sent in accordance with the technical instructions already available to institutions through the CNMV's electronic site, CIFRADOC area, in the "CIS Prospectuses" (FOI) procedure. The CNMV will update the prospectuses of CIS registered on the date of entry into force of the Circular ex officio, so that fund managers will not have to take any steps in this regard.
- Annex to the prospectus of CIS promoting sustainability or aiming at sustainable investments: on 1 January 2023, the CIS referred to in articles 8 and 9 of the SFDR must have prepared and filed with the CNMV an annex to the prospectus in accordance with the rules and templates set out in Annex II and Annex IIII respectively of the Delegated Regulation. The content of these templates standardises and substantially expands the information that the CIS affected currently include in their prospectuses, so that fund managers will have to plan the necessary adjustments to comply with the new obligations in the CIS affected. With regard to the registration of this annex to the sustainability prospectus of the affected instrumentos financieros (IF), the CNMV has designed a simplified procedure for its submission and inclusion in the CNMV register, for which purpose the corresponding declaration must be attached, depending on whether the IFs are previously registered as Article 8 or 9 funds whose annex does not modify the information previously registered in the prospectus (Annex I), or are funds not previously registered in the category indicated in the annex or when the annex modifies the information in the prospectus (Annex II). The CNMV will include the sustainability annex in the register of the corresponding IF and may, where appropriate, require the management company to make such amendments, clarifications or additional obligations as it deems appropriate in order to ensure adequate investor protection, transparency of the information provided and compliance with sectoral regulations and with its own criteria or those of the European authorities.
- SICAVs that plan to be liquidated: SICAVs that have decided to adopt the dissolution and liquidation resolution and avail themselves of the tax regime established by the forty-first transitory provision of Law 27/2014 (deferral of taxation of the income derived from the liquidation of the entity), must conclude the legal acts and transactions necessary to liquidate the company until its cancellation from the register no later than 30 June 2023. Although the deadline established by the tax regulations for the cancellation of registration is long (until 30 June 2023), the CNMV wishes to draw attention to the advisability of carrying out the necessary procedures as far in advance as possible in order to allow an orderly processing and avoid delays.
Royal Decree 885/2022, of 18 October, by which modifies the Regulation of plans and funds of pensions, approved by the Royal decree 304/2004, of 20 February, for the impulse of the plans of pensions of employment
On 19 October 2022, Spain published Royal Decree 885/2022, of 18 October, by which modifies the Regulation of plans and funds of pensions, approved by the Royal Decree 304/2004, of 20 February, for the impulse of the plans of pensions of employment.
The modification introduced by RD 885/2022 consists of adding a Title VI called "Open public promotion employment pension funds" that includes articles 102 to 107, a tenth additional provision relating to the preparatory actions for the constitution of the Special Control Commission and two final provisions relating to the powers of regulatory development and entry into force.
More specifically, this is a partial regulatory development, with the main objective of developing the institutional architecture of open public promotion occupational pension funds. In this line, the following aspects are regulated:
- the organization and operation of the Promotion and Monitoring Committee of the public promotion occupational pension funds open;
- the procedure for ensuring the proper functioning and good governance of open public promotion institutions for occupational retirement provision;
- the manner in which the Special Control Commission is constituted and functioned and the procedure for the appointment and renewal of its members; and
- the remuneration regime of the managing and depository entities of open public promotion pension funds.
Upon detection of any regulatory breach or anomaly by the Promotion and Monitoring Committee in the activity of a management entity, depository entity or the Control Commission, the procedure provided for in art.104 of RD 885/2022 will be launched. First, institutions will be urged to take the necessary measures to remedy existing inaccuracies that will in no case exceed one month. If appropriate brokerage actions are not taken within the time limit set, the Commission shall inform the Directorate-General for Insurance and Pension Funds with a view to taking appropriate measures. The managing entities, depositories and external auditors shall send to the Special Control Committee and the Promotion and Monitoring Committee, on an annual basis and in the month following the preparation of the annual accounts, a report on incidents detected and proposals for improvement in the operation of public promotion funds and their governance.
As of October 20, 2022, it will be possible to proceed with the selection of the members of the Promotion and Monitoring Committee, the design and implementation of the Common Digital Platform and the selection process of management and depository entities open.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
UK publishes the Economic Crime (Transparency and Enforcement) Act 2022 (Commencement No. 4) Regulations 2022
On 12 October 2022, the Economic Crime (Transparency and Enforcement) Act 2022 (Commencement No. 4) Regulations 2022 in the UK legislation.
These Regulations bring into force on 12th October 2022 the provisions of Part 1 (aside from sections 7 and 8) of, and the Schedules to, the Economic Crime (Transparency and Enforcement) Act 2022 (c. 10) (“the Act”) that are not already in force. These regulations also bring sections 7 and 8 of the Act into force on 16th January 2023.
Financial Reporting (FINREP)
FRC publishes draft version of the 2023 Taxonomy Suite
On 21 October 2022, Financial Reporting Council (FRC) published draft version of the 2023 Taxonomy Suite.
The 2023 suite relates to the FRC’s Taxonomies: UK IFRS, FRS 101, FRS 102, UKSEF, Irish Extensions and Charities and contains taxonomy documentation (supporting documents, key information sheets and release notes). The 2023 suite of FRC Taxonomies was issued on 21 October 2021.
The 2023 suite represents the most up-to-date version of the FRC Taxonomies and as such should be used to comply with HMRC requirements to fully tag. The suite has been designed with full tagging in mind. Accounts should be fully tagged, except for consolidated UKSEF data where regulations permit minimum tagging. Filers to HMRC and Companies House should use the most-up-to-date version where possible.
The Financial Reporting Council has today published the 2023 suite of FRC Taxonomies.
The 2023 suite incorporates changes to all of the FRC’s Taxonomies - UK IFRS, FRS 101, FRS 102, UKSEF, Irish Extensions and Charities – available in English or Welsh. In addition, the suite contains taxonomy documentation, supporting documents, key information sheets and release notes.
The publication follows a consultation on a draft of the taxonomies in the summer. Though the public consultation has now closed, it is always possible to feedback to the XBRL Taxonomies Team via Yeti or email to XBRL@frc.org.uk. You can also find the Feedback Statement for the consultation on the Taxonomies webpage.
The amendments are summarised as follows, but for more detail please refer to the Taxonomies webpage, 2023 Downloads, and Guidance sections.
Key changes to the 2023 Taxonomy Suite:
- To facilitate Companies House requirements, new or improved tags and guidance have been created for initial reporting, interim reporting, medium-sized companies, and filleted accounts.
- IFRS 17 – Insurance Contracts: Following its endorsement by the UK Endorsement Board, the FRC is required to develop the content for the FRC’s XBRL taxonomies relating to the implementation of IFRS 17 Insurance Contracts, in order to facilitate the mandatory requirement of full digital tagging of any standards to HMRC. The new standard for insurance contracts has an effective date of 1 January 2023 and we welcome feedback via the above methods as issuers start to use this content.
- Alternative Performance Measures: Support has been added for reporting APMs, including a new hypercube with new dimensions.
- Diversity & Inclusion: FCA’s Diversity & Inclusion (D&I) reporting proposals have been incorporated, including new hypercubes for Gender/Sex and Ethnicity reporting.
- UKSEF: Following feedback on the efficacy of UKSEF 2022, the 2023 version of UKSEF makes use of XBRL's "multiple target document" feature, enabling relevant issuers to file one report to multiple regulators and fulfils the technical requirements for both ESEF and FRS 102/UK IFRS tagging.
- Deprecation Policy - We have formalised the steps we take when deprecating parts of the taxonomy suite into a Deprecation Policy, which can be read on the Taxonomies webpage.
UK publishes draft of The Financial Services (Miscellaneous Amendments) Regulations 2022
On 17 October 2022, draft of The Financial Services (Miscellaneous Amendments) Regulations 2022 was published in the UK legislation.
These Regulations are made in exercise of the powers in section 8(1) of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018 (c. 16) (“the 2018 Act”) in order to address deficiencies in retained EU law arising from the withdrawal of the United Kingdom from the European Union.
Part 3 of the Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019 (S.I. 2019/680) saved the effect of certain legislation in relation to Gibraltar-based firms and activities. The legislation concerned forms part of retained EU law and is otherwise revoked or amended by specified regulations made under the 2018 Act. Regulation 2 of these Regulations makes new savings, transferring certain functions from EU bodies to the Financial Conduct Authority and the Treasury in relation to Gibraltar-based firms and activities.
Regulation 3 amends Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (“the UK EMIR”). Regulation 37 of the Securitisation (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/660) (“the 2019 Regulations”) amended the exception to the clearing obligation imposed on counterparties by the UK EMIR in relation to a securitisation notified as simple, transparent and standardised (“STS”) during a temporary recognition period where the person responsible for notification is established in an EEA State. Regulation 3 extends the end of the temporary recognition period from two years after IP completion day to four years after that day; that is, the end is now 11 p.m. on 31st December 2024.
Regulation 4 amends Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (“the UK Securitisation Regulation”). Regulation 7 of the 2019 Regulations amended Article 5 of the UK Securitisation Regulation (which imposes due diligence requirements on certain institutional investors) in relation to a securitisation notified as STS during a temporary recognition period where the person responsible for notification is established in an EEA State. Regulation 4 extends the end of the temporary recognition period from two years after IP completion day to four years after that day.
It is envisaged that legislation will come into force on 31 December 2022.
UK publishes the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022
On 25 October 2022, the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022 was published in the UK legislation.
These Regulations are made in exercise of the powers conferred by section 8(1) of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018 (c. 16) to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the United Kingdom from the European Union (in particular, under paragraphs (a), (b), (c), (d) and (g) of section 8(2) of that Act).
Regulation 2 amends regulation 14(8)(b) of the Payment Services Regulations 2017 (S.I. 2017/752), which provides for the conditions for the registration as a small payment institution. Regulation 14(8)(b) contains a deficient reference to the EEA, which is to amended to refer to the UK following the UK’s withdrawal from the EU.
Regulation 3 amends Part 6 of the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (S.I. 2018/1184), which makes transitional provision in relation to the provision of clearing services in the United Kingdom by central counterparties that are established outside the United Kingdom and that are currently in the United Kingdom’s temporary recognition regime. Subject to the conditions specified in new regulation 17(5A), the services, activities or classes of financial instrument in respect of which such central counterparties are to be taken to be recognised by the Bank of England is extended beyond the conditions specified in existing regulation 17(5) to include services, activities or classes of financial instrument which such central counterparties are authorised or permitted to provide in the country in which they are established, provided that they have notified the Bank of England of their intention to offer such services in the United Kingdom.
Regulation 4 amends Part 7 of the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), which concerns the power of the regulators to give transitional directions. The period during which a transitional direction may be given is extended from two years after IP completion day to four years after that day, in respect of transitional directions relating to share trading and derivatives trading respectively, as regulated further to Articles 23(1) and 28 of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments. The time period during which transitional directions of this description may remain in effect is also extended from two years after IP completion day to four years after that day.
Regulation 5 amends Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies which is retained direct EU legislation. Article 32 of the Regulation places professional secrecy obligations on the FCA (and its staff and agents etc) not to disclose “information covered by professional secrecy”, except where necessary for legal proceedings. Article 32 is omitted, and a consequential amendment is made to Article 34. The effect is to remove barriers for such information being subject to, and shared under, confidential information provisions in section 348 of the Financial Services and Markets Act 2000 (c. 8) and the exemption under section 349.
Regulation 6 amends Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation. Regulation 18 of the Securitisation (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/660) provided temporary recognition of simple, transparent and standardised securitisations in the UK. The time period during which the temporary recognition remains in effect is extended from two years after IP completion day to four years after that day.
The regulation comes into force 15 November 2022.
FCA publishes handbook for notifications following entry into Contractual run-off and supervised run-off
On 27 October 2022, the Financial Conduct Authority (FCA) published handbook for notifications following entry into Contractual run-off and supervised run-off.
1) Notification following entry into supervised run-off (payments and e-money)
Direction covering the notification to the FCA of an EEA payments and e-money institution’s entry into the Supervised run-off regime within the UK’s financial services regime.
2) Notification following entry into Contractual run-off (payments and e-money)
Direction covering the notification to the FCA of an EEA payments and e-money institution’s entry into the contractual run-off regime within the UK’s financial services regime.
FCA publishes Handbook Notice No. 103
On 31 October 2022, the Financial Conduct Authority (FCA) published Handbook Notice No. 103.
The Handbook Notice describes the changes to the FCA Handbook and other material made by the Financial Conduct Authority (FCA) Board under its legislative and other statutory powers on 28 October 2022. Where relevant, it also refers to the development stages of that material, enabling readers to look back at developmental documents if they wish.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
FCA publishes letter on liability-driven investment funds
On 25 October 2022, Financial Conduct Authority (FCA) published letter on liability-driven investment funds (LDI).
The FCA is one of several regulators involved with this market: TPR regulates the defined benefit (DB) pension schemes. Some schemes choose to apply LDI strategies to mitigate interest rate risk. A subset of these schemes (around a tenth) does so through pooled LDI funds. Pooled LDI funds allow smaller DB schemes, which are not sufficiently large to manage their own segregated accounts, access to this mitigation strategy.
The FCA regulates the fund managers, which make investment decisions based on strategies agreed with the trustees of DB pension schemes for a segregated mandate or in a pre-agreed way for a fund. Fund managers based in the UK must be regulated by the FCA. This means they must apply to the FCA to be authorised, must demonstrate they meet minimum standards on an ongoing basis, their senior management must be approved by us, and they must adhere to our rulebook.
To ensure fund managers meet our standards, the FCA has powers to request information from those it regulates, to make requirements of them, if necessary, and, where there is evidence of serious misconduct, to take enforcement action.
Most of the funds marketed here are domiciled outside the UK, often in European Economic Area (EEA) jurisdictions. Funds’ risk management is overseen by an Authorised Fund Manager (AFM), most often based and regulated in the same jurisdiction as the fund. This AFM may delegate day-to-day portfolio management.
The FCA is responsible for supervising those portfolio managers based in the UK, including that they have adequate systems and controls to undertake their role. LDI funds are generally based in EEA countries and are typically managed in this ‘delegated’ way.
Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)
FCA publishes market watch 70
On 3 October 2022, the Financial Conduct Authority (FCA) published market watch 70.
In the Market Watch 70, the FCA outlined recent observations on the transaction reporting and instrument reference data regimes. These will be of interest to investment firms, credit institutions, trading venues, systematic internalisers, and approved reporting mechanisms. The FCA's objective is to provide firms with information necessary to uphold and improve the quality of their transaction reports and financial instrument reference data submissions.
FCA publishes response to the Taskforce on Pension Scheme Voting Implementation’s (TPSVI) report and recommendations
On 6 October 2022, the Financial Conduct Authority (FCA) published response to the Taskforce on Pension Scheme Voting Implementation’s (TPSVI) report and recommendations.
Effective investor stewardship is a key priority for the FCA. As noted in the FCA's ESG Strategy, published last November, one of the FCA target outcomes for the market is “active investor stewardship that positively influences companies’ sustainability strategies, supporting a market-led transition to a more sustainable future”.
As part of the FCA work in this area, both independently and jointly with the Financial Reporting Council (FRC), The Pensions Regulator (TPR), DWP and other regulators and Government departments, we have considered the barriers to effective asset owner voting implementation highlighted by the TPSVI and assessed how well the group’s recommendations can help to improve stewardship outcomes.
FRC announces changes to AS TM1 to make pension projections more consistent and reliable
On 7 October 2022, Financial Reporting Council (FRC) announced changes to AS TM1 to make pension projections more consistent and reliable.
The changes aim to support consistent and reliable pension illustrations for defined contribution pension scheme members. The changes to AS TM1 include standardising the accumulation rate assumptions and the form of annuitisation at retirement.
The new standard is a major step change to increase consistency between pension projections once they start to be provided to pensions dashboards from October 2023.
AS TM1 will continue to apply to the Statutory Money Purchase Illustration (SMPI) statements that individuals receive each year. In addition, the Department for Work and Pensions (DWP) intends for AS TM1 to determine the illustrations of defined contribution pensions shown on pensions dashboards, from October 2023.
It is essential that pension scheme members can have confidence in the consistency and reliability of any projections from different pension providers when they are shown side by side on pensions dashboards.
UK publishes the Pension Schemes Act 2021 (Commencement No. 7 and Transitory Provision) Regulations 2022
On 13 October 2022, the Pension Schemes Act 2021 (Commencement No. 7 and Transitory Provision) Regulations 2022 was published in the UK legislation.
These Regulations bring into force provisions of the Pension Schemes Act 2021 (c. 1) (“the Act”). They are the seventh commencement regulations to be made under the Act.
Regulation 2 appoints the day for the coming into force of the following provisions of the Act so far as they are not already in force as the day after the day these Regulations are made: section 118 (qualifying pensions dashboards service); section 119 (information from occupational pension schemes); section 121 (information from personal and stakeholder pension schemes); and section 122 (the Money and Pensions Service: the pensions guidance function) partially.
Section 118 amends the Pensions Act 2004 (c .35) (“the 2004 Act”) by inserting new sections 238A (qualifying pensions dashboard service), 238B (qualifying pensions dashboard service: further provision) and 238C (sections 238A and 238B: interpretation) into that Act. The inserted sections, amongst other things, confer powers on the Secretary of State to make regulations to support the provision of pensions information to individuals by means of a pensions dashboard service.
Section 119 amends the 2004 Act by inserting new sections 238D (information from occupational pension schemes), 238E (information from occupational pension schemes: further provision), 238F (interpretation of sections 238D and 238E) and 238G (compliance) into that Act. The inserted sections make further provision relating to the giving of pensions information to individuals via certain pensions dashboard services and any pensions dashboard service provided for or on behalf of the Money and Pensions Service. Section 119(5) adds further powers to the list in Part 4 of Schedule 1 to the 2004 Act (proceedings and delegations etc) of the Pensions Regulator powers in relation to which the Secretary of State can make regulations.
Section 121 amends the Financial Services and Markets Act 2000 (c. 8) to insert new sections 137FAA (FCA general rules: pensions dashboard), 137FAB (pensions dashboard: further provision) and 137FAC (sections 137FAA and 137FAB: supplementary) into that Act. In particular, the inserted sections confer powers on the Financial Conduct Authority to make rules in relation to personal pension schemes and certain stakeholder pensions schemes concerning the provision of pensions information to individuals via certain pensions dashboard services and any pensions dashboard service provided for or on behalf of the Money and Pensions Service. They also require the Financial Conduct Authority to consult with the Secretary of State and His Majesty’s Treasury before publishing a draft of any rules.
Section 122 of the Act inserts new section 4A (specific functions included in the pensions guidance function) into the Financial Guidance and Claims Act 2018 (c. 10) (“the 2018 Act”). The inserted section, amongst other things, makes it explicit that the Money and Pension Service may, as part of its pensions guidance function, provide information about state pensions and information about basic and additional retirement pensions via a pensions dashboard.
Regulation 3 makes a transitory modification relating to the bringing into force of section 4A(2) to (6) of the 2018 Act by these Regulations. Regulation 3 ensures that section 4A(4) and (5) is modified for a transitory period, so that references to section 4A(1) (which requires the Money and Pension Service to provide, as part of its pensions guidance function, a pensions dashboard via which information is provided in response to an individual request about their pension) are read as omitted, until such time as section 4A(1) is brought into force.
- UK publishes the Pension Schemes Act 2021 (Commencement No. 7 and Transitory Provision) Regulations 2022
SEC adopts rule amendments to modernize how Broker-Dealers preserve electronic records and enhance the electronic recordkeeping requirements for security-based swap entities
On 12 October 2022, the U.S. Securities and Exchange Commission (SEC) adopted rule amendments to modernize how Broker-Dealers preserve electronic records and enhance the electronic recordkeeping requirements for security-based swap entities.
The amendments are designed to modernize recordkeeping requirements given technological changes over the last two decades and to make the rule adaptable to new technologies in electronic recordkeeping. The amendments will also facilitate examinations of broker-dealers, SBSDs, and MSBSPs.
“I am pleased to support these rule amendments because they will bring the Commission’s electronic recordkeeping requirements for intermediaries such as broker-dealers and security-based swap dealers in line with technological innovation,” said SEC Chair Gary Gensler. “Since the 1930s, recordkeeping obligations have been vital to maintain market integrity and the SEC’s work as the cop on the beat. Today’s rule amendments will facilitate the SEC’s ability to examine and inspect records consistent with modern technology. This will enhance the Commission’s ability to preserve market integrity and protect investors.”
The SEC’s broker-dealer electronic recordkeeping rule currently requires firms to preserve electronic records exclusively in a non-rewriteable, non-erasable format, known as the write once, read many format. The amendments add an audit-trail alternative under which electronic records can be preserved in a manner that permits the recreation of an original record if it is altered, over-written, or erased. The audit-trail alternative is designed to provide broker-dealers with greater flexibility in configuring their electronic recordkeeping systems so they more closely align with current electronic recordkeeping practices while also protecting the authenticity and reliability of original records. The amendments apply the same requirements to nonbank SBSDs and MSBSPs.
Among other things, to facilitate examinations and make them more efficient, the amendments also require broker-dealers and all types of SBSDs and MSBSPs to produce electronic records to securities regulators in a reasonably usable electronic format.
The adopting release will be published on SEC.gov and in the Federal Register. The final amendments will become effective 60 days after publication in the Federal Register. The compliance dates for the new requirements will be six months after publication in the Federal Register in the case of broker-dealers and 12 months after publication in the Federal Register in the case of SBSDs and MSBSPs.
SEC adopts compensation recovery listing standards and disclosure rules
On 27 October 2022, the U.S. Securities and Exchange Commission (SEC) adopts compensation recovery listing standards and disclosure rules.
The final rules require a listed issuer to file the policy as an exhibit to its annual report and to include disclosures related to its recovery policy and recovery analysis where a recovery is triggered. The Commission proposed compensation recovery rules in 2015 and reopened the comment period on the proposal in October 2021 and again in June 2022.
The new rules implement Section 10D of the Securities Exchange Act of 1934, a provision added by the Dodd-Frank Wall Street Reform and Consumer Protection Act. New Exchange Act Rule 10D-1 directs national securities exchanges and associations to establish listing standards that require a listed issuer to: (1) adopt and comply with a written policy for recovery of erroneously awarded incentive-based compensation received by its current or former executive officers in the event it is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirement under the securities laws, during the three completed fiscal years immediately preceding the date that the issuer is required to prepare an accounting restatement; and (2) disclose those compensation recovery policies in accordance with Commission rules, including providing the information in tagged data format.
Further the final rules require specific disclosure of the listed issuer’s policy on recovery of incentive-based compensation and information about actions taken pursuant to such recovery policy. The amendments also require all listed issuers to: (i) file their written recovery policies as exhibits to their annual reports; (ii) indicate by check boxes on their annual reports whether the financial statements included in the filings reflect correction of an error to previously issued financial statements and whether any of those error corrections are restatements that required a recovery analysis; and (iii) disclose any actions they have taken pursuant to such recovery policies.
The final rules will become effective 60 days following publication of the adopting release in the Federal Register. Exchanges will be required to file proposed listing standards no later than 90 days following publication of the release in the Federal Register, and the listing standards must be effective no later than one year following such publication. Issuers subject to such listing standards will be required to adopt a recovery policy no later than 60 days following the date on which the applicable listing standards become effective.
SEC adopts amendments to modernize fund shareholder reports and promote transparent fee- and expense-related Information in fund advertisements
On 27 October 2022, the U.S. Securities and Exchange Commission (SEC) adopts amendments to modernize fund shareholder reports and promote transparent fee- and expense-related Information in fund advertisements.
The rule amendments will require funds to provide concise, tailored shareholder reports that highlight key information, such as fund expenses, performance, and portfolio holdings. The instructions for the revamped reports will encourage the use of graphic and text features to make them more effective. Funds will be required to tag the information in their reports in a structured data format. Further, the rule amendments require funds to make certain information that may be more relevant to investors and financial professionals who desire more in-depth information available online and available for delivery free of charge to investors on request. That information will no longer appear in fund’s shareholder reports but will remain available to investors on a website identified in the shareholder report and must be filed semi-annually with the Commission.
In addition to modernizing fund shareholder reports, the Commission adopted amendments to investment company advertising rules to require that fee and expense presentations in registered investment company and business development company advertisements and sales literature be consistent with relevant prospectus fee table presentations and be reasonably current. The amendments also address representations of fees and expenses that could be materially misleading.
The amendments will become effective 60 days after publication in the Federal Register. The Commission is providing an 18-month transition period after the effective date of the amendments to allow mutual funds and exchange-traded funds with adequate time to adjust their shareholder report and transmission practices. The Commission is also providing an 18-month transition period after the effective date to comply with the final amendments to the advertising rules. The rule amendments that address representations of fees and expenses that could be materially misleading will apply on the effective date.
SEC proposes new oversight requirements for certain services outsourced by investment advisers
On 27 October 2022, the U.S. Securities and Exchange Commission (SEC) proposed new oversight requirements for certain services outsourced by investment advisers.
As demand for the asset management industry has grown and clients’ needs have become more complex, many advisers have engaged third-party service providers to perform certain functions or services, many of which are necessary for an adviser to provide its advisory services in compliance with the Federal securities laws. These functions can include providing investment guidelines, portfolio management, models related to investment advice, indexes, or trading services or software. Outsourcing can benefit advisers and their clients, but clients could be significantly harmed when an adviser outsources a function or service without appropriate adviser oversight.
The proposal would require advisers to satisfy specific due diligence elements before retaining a service provider that will perform certain advisory services or functions, and to subsequently carry out periodic monitoring of the service provider’s performance. The rule would apply to advisers that outsource certain “covered functions,” which include those services or functions that are necessary for providing advisory services in compliance with the Federal securities laws and that if not performed or performed negligently would result in material negative impact to clients.
Additionally, the proposal would require advisers to conduct due diligence and monitoring for all third-party recordkeepers and obtain reasonable assurances that the recordkeepers will meet certain standards. Finally, the proposal would require advisers to maintain books and records related to the new rule’s oversight obligations and to report census-type information about the service providers covered under the rule.
The proposal was published today on SEC.gov and will be published in the Federal Register. The public comment period will remain open for 60 days after the date of issuance and publication on SEC.gov or 30 days after the date of publication in the Federal Register, whichever period is longer.
Financial Market Infrastructure (FMI)
CVM publishes methodology for defining the size of large minimum lots (art. 95, § 1, of CVM Resolution 135)
On 4 October 2022, Comissão de Valores Mobiliários (CVM) published methodology for defining the size of large minimum lots (art. 95, § 1, of CVM Resolution 135).
Published on 6/10/2022, Resolution 135 now allows the establishment of specific trading segments or procedures for carrying out large lot transactions to be carried out in the exchange and over-the-counter markets. The rule also indicated the need for such operations to be carried out exclusively in environments that have trading systems that favour adequate price formation.
For disclosure purposes regarding minimum lots for trading large lots, the following criteria will be used:
- The median daily volume traded during the base calculation period, making it unnecessary to exclude the trades carried out on the first trading day of the calculation basis; and
- That the minimum number of trading sessions in which there has been trading for the purposes of meeting the eligibility criterion is 25% of the trading sessions of the base calculation period.
For the definition of shares and securities representing shares that can be trading through transactions with large lots, the table included in the news will be used.
CVM will disclose, at first, every four months, through the Circular Letter of SMI, the shares and securities representing shares that can be commercialised in operation with large lots and their respective minimum lots. In this sense, there will be a specific change in Resolution 135, which initially provided for annual disclosure.
BACEN publishes draft scans of rules related to the new Law on Foreign Exchange and International Capital
On 10 October 2022, Banco Central do Brasil (BACEN) published draft scans of rules related to the new Law on Foreign Exchange and International Capital.
The Central Bank brings to the public the draft standards on the foreign exchange and international capital markets, with the result of evaluations and discussions arising from Public Consultation No. 90 (CP 90), held between May 12 and July 1 of 2022. The drafts will be evaluated and deliberated by the BACEN on December 31, 2022, the date of the entry into force of Law No. 14,286, 2021.
In order to anticipate disclosure to the public, BACEN lists the main changes in relation to the original text of CP 90:
- greater alignment of foreign exchange operations to other operations conducted in the financial system, allowing the free format to carry out foreign exchange operations, observed requirements of the Central Bank in relation to the provision of information;
- the treatment of the transactions of deposit accounts in reais of non-residents to that of the accounts of residents held in the institutions authorized to operate in the foreign exchange market; and
- the criteria to be adopted in relation to information and supporting documents for the purpose of preventing money laundering and combating terrorist financing (PLDFT) are now contained in Circular No 3,978 of 23 January 2020, reinforcing and consolidating such commands in the standard concentrating policy provisions, procedures and internal controls to be adopted for the prevention of such illicit activities.
The minutes published also include propositions contained in the text of CP 90, such as:
- a broad review of the requirements foreseen in foreign exchange market negotiations, in particular those necessary for the purposes of supervision and production of statistics; and
- incorporation of the proportionality criterion provided for in the new law, taking into account the values of the operations and the profiles of their parties. As an example, there was a simplification of the classification of operations in general of up to US$50,000, which now have only 10 codes for indication of purpose. Today, there are more than 180 codes for this indication, regardless of the value of the operation.
With the future regulation, there will be more agility for international payments and receipts from the adoption of measures such as the simplification of the process of classifying the purpose of foreign exchange operations and the free format for carrying out these operations, in compliance with the requirements of the Central Bank.
The draft resolutions of the Central Bank released today bring improvement to the business environment in the country and direct benefits for citizens and companies that need to send or receive resources from abroad.
It is noteworthy that this disclosure does not deal with the issues relevant to public consultation notice no. 91/2022, referring to the regulation of foreign capital in the country in the modalities of foreign direct investment and foreign credit.
In 2023, a wide-ranging review of the codes used in the classification of operations above US$50,000 will be carried out. From next year will also be deepened relevant discussions on topics that can be adjusted with the new legislation in force, such as the improvement of the rules relating to the interbank foreign exchange market, the private clearing of credits in the foreign exchange market, the deadlines for operations in the foreign exchange market and the stipulation of payment in foreign currency of enforceable bonds in the national territory.
Sustainable Finance / Green Finance
ANBIMA publishes new materials guide the market in identifying sustainable funds
On 10 October 2022, Brazilian Financial and Capital Markets Association (ANBIMA) published new materials guide the market in identifying sustainable funds.
ANBIMA updates and publishes new documents to give more clarity and assist the market in understanding the rules for identifying sustainable funds. Among the new support materials is a tutorial for registering the funds, which brings from reflections that the houses must make before subjecting them to the register until the step by step for operational inclusion in the system.
The identification is self-declaratory by the institution. It registers with ANBIMA and the role of the entity is to verify that all documentation of the fund and the manager is in accordance with the sustainable commitment assumed. After the approval of the materials, the fund effectively enters the wake of supervision. From there, the constant monitoring of the portfolio framework is constantly checked to verify that it is in accordance with the mandate and policies of the fund.
Other updated materials are the ESG Guide and the question and answer document on the subject. Considering that this is a continuous process, these updates reflect new questions received from the institutions arising from the validity of the rules and that can contribute to the understanding of market professionals. One of the points clarified is the comparison between the rules of the SFDR (Sustainable Finance Disclosure Regulation), which were a benchmark for local identification, and the ANBIMA standards.
Funds that have their goal focused on sustainable investment, which can be environmental, social and/or governance, can use the Suffix IS in their names. They should have engagement and activism, which may be thematic or impact- impacted, but they are not limited to these definitions.
Those who consider ESG aspects as part of a broad investment strategy, but do not have sustainability as their primary purpose, can use a phrase of distinction in sales materials, but do not earn the term IS in the name.
In both cases, the manager must also meet criteria and requirements related to sustainability policy and governance structure.
The rules for identifying sustainable funds were created and approved by the market and for the use of the market itself. They were in public hearing from September to October 2021 and, after publication in December, came into force in January, with six months of market adaptation.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
URF publishes technical document of third-party asset managers
On 20 October 2022, Unidad de Proyección Normativa y Estudios de Regulación Financiera (URF) published technical document of third-party asset managers.
This technical document contains the justifications for the issuance of equity strengthening rules for entities that manage third-party assets, in order to provide them with soundness tools in the event of the materialization of unexpected events that may cause them significant losses.
For this purpose, a diagnosis and analysis of the regulatory background and the international and local experience on the matter is made, and based on them, homogeneous requirements to be complied with by such entities are identified, taking into account the nature of the operations that each one of them performs and the characteristics of each one of them.
Finally, the document sets out the estimated impacts of the implementation of the regulatory proposal, in order to the regulatory proposal, in order to evaluate the feasibility of its adoption and the measures that the entities are required to develop to comply with the proposal.
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 General Secretary, Legal Department
Marie Marion, Group Head of Transversal Functions, Compliance Department
Permanent Editorial Committee
Gaëlle Kerboeuf, Group General Secretary, Legal Department
Marie Marion, Group Head of Transversal Functions, Compliance Department
Corinne Brand, Group Communications Manager
François Honnay, Head of Legal and Compliance (Belgium)
Fanny Thomas, Legal Supervisor (France)
Yves Gaveau, Senior Expert Veille réglementaire AdF
Stefan Ullrich, Head of Legal (Germany)
Robin Donagh, Legal Advisor (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)
Chelsea Chan, Head of Trustee and Legal (Hong Kong)
Henk Brink (The Netherlands)
Beatriz Sanchez Jete, Compliance (Spain)
Arrate Okerantza Elejalde, Legal (Spain)
Jessica Silva, Compliance (Brazil)
Luiz Fernando Silva, Compliance (Brazil)
Libia Andrea Carvajal, Compliance (Colombia)
Daiana Garcia, Compliance (Colombia)
Karim Martínez, Compliance (Mexico)
Edgar Zugasti, Compliance (Mexico)
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