On 12 April 2021, the European Central Bank (ECB) published an article on the use of DLT in post-trade processes. 

Focusing on current use cases for equities and bonds, the report describes different types of securities issuance and post-trade processes. These are categorised according to different “models” depending on how DLT is used in each instance. The report also assesses the implications of using DLT on the basis of identified market practices.

The report concludes that the adoption of DLT-based solutions could be driven by projected cost savings and efficiency gains. Nevertheless, the use of DLT would entail similar challenges to those faced by solutions relying on conventional technology (such as fragmentation and interoperability issues) and would potentially create new ones (for instance relating to the legal validity of tokens). 

On 28 April 2021, the European Parliament voted with a large majority in favour of granting its consent to the agreement setting the rules of the future EU-UK relationship.

The consent decision was adopted by 660 votes for, five against and 32 abstentions, while the accompanying resolution, setting out Parliament’s evaluation of and expectations from the deal, passed by 578 votes, with 51 against and 68 abstentions. The vote took place on Tuesday, with results announced on Wednesday.

On 24 December 2020, EU and UK negotiators had agreed on the Trade and Cooperation Agreement establishing the terms for future EU-UK cooperation. To minimise disruption, the agreement has been provisionally applied since 1 January 2021. Parliament’s consent is necessary for the agreement to enter into force permanently before its lapse on 30 April 2021.

With Parliament’s consent, the agreement will enter into force once Council has concluded it by 30 April.

On 27 May 2021, the Council of the EU published declaration on the alignment of certain countries concerning restrictive measures against serious human rights violations and abuses. 

On 22 March 2021 the Council adopted Decision (CFSP) 2021/481, amending Council Decision 2020/1999.

The Council Decision adds 11 persons and 4 entities to the EU sanctions list of natural and legal persons, entities and bodies subject to restrictive measures set out in the Annex to Decision (CFSP) 2020/1999.

The Candidate Countries the Republic of North Macedonia, Montenegro and Albania and the EFTA countries Iceland and Norway, members of the European Economic Area, align themselves with this Council Decision.

They will ensure that their national policies conform to these Council Decisions.

On 12 April 2021, the European Commission published its report to the European Parliament (EP) and the Council on whether trades that directly result from post-trade risk reduction services (PTRR services) should be exempted from the clearing obligation for over-the-counter (OTC) derivatives under the European Markets Infrastructure Regulation (EMIR).

The statutory basis of the report is Article 85(3)(c) of EMIR (as amended by EMIR REFIT) which mandates the Commission to report to the EP and Council on whether trades that directly result from PTRR services, including portfolio compression, should be exempt from the clearing obligation referred to in Article 4(1) of EMIR. The report should take into account the extent to which those services mitigate risk, in particular counterparty credit risk and operational risk, the potential for circumvention of the clearing obligation and the potential disincentive to central clearing.

The report takes into account input received from a report by the European Securities and Markets Authority (ESMA), responses by stakeholders to ESMA’s public consultation and discussions with stakeholders. ESMA’s report was adopted on 10 November 2020; it was prepared in cooperation with the European Systemic Risk Board (ESRB), and takes into account the results of a public consultation.

In its report the Commission concludes that whilst ESMA has undertaken an extensive and thorough analysis of PTRR services important open questions remain. In particular, the Commission feels that the following issues need further attention:

• The definition of PTRR services, e.g. how different types of PTRR could be defined more concretely.
• The possible interlinkages between PTRR services and the impact of their combined use on the aspects raised in the report.
• The materiality of the risk of the circumvention of the clearing obligation, especially possible market practices that could be used to conduct such a circumvention.
• Possible conditions limiting the risk of such misuse of a possible exemption from the clearing obligation.
• The incentives to centrally clear taking into account a possible exemption from the clearing obligation.
• Evaluation of potential liquidity shifts from centrally cleared to uncleared space.

The Commission states that further work on the above issues could feed into the general EMIR assessment report which should be submitted to the European Parliament and the Council by 18 June 2024.

On 7 April 2021, the Joint Committee of the European Supervisory Authorities (ESAs) – EBA, EIOPA and ESMA – published its 2020 Annual Report, providing a detailed account of all the joint work completed over the past year.

Under the EBA Chairmanship, the Joint Committee played a pivotal role in 2020 to ensure close cooperation among the Authorities in the context  of the COVID-19 pandemic. As part of the ESAs' continued efforts in overseeing market developments and cross-sectoral risks, the Joint Committee also prepared the first cross-sectoral COVID-19 risk assessment.

In the past year, the Joint Committee also adapted to the amended scope of issues under its remit, as laid down in the revised ESAs’ Founding Regulation. Consumer protection remained a key priority with the finalisation of the Report including advice to the Commission under the PRIIPs Regulation. In addition, the Joint Committee delivered a substantial contribution to the development of the sustainable finance framework, namely by delivering on the mandates stemming from the Sustainable Finance Disclosure Regulation, the joint work on disclosure and the joint input to the Non-Financial Reporting Directive consultation.

Technological Innovation and cybersecurity also became prominent topics in 2020 and the ESAs strengthened their efforts to facilitate cooperation and coordination on digital finance more generally. The Joint Committee continued to work also in the areas of securitisation and financial conglomerates.

On 6 April 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers regarding market structures issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

ESMA has introduced changes to one of its Q&A on tick sizes to reflect the amendment introduced in Article 49(1) of MiFID II which excludes Large in Scale transactions from the mandatory tick size regime.

The purpose of ESMA’s Q&As on market structures issues is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR. They provide responses to questions posed by the general public and by market participants in relation to the practical application of level 1 and level 2 provisions to transparency and market structures issues.

ESMA will continue to develop these Q&As in the coming months and will review and update them where required.

On 21 April 2021, the European Commission adopted a Delegated Regulation correcting Delegated Regulation (EU) 2017/565 as regards organisational requirements and operating conditions for investment firms.

The amendments:

• clarifies that Article 1 paragraph 1 of Delegated Regulation (EU) 2017/565 requires the application of Articles 64(4) and 65 and Chapter VIII instead of Articles 59(4) and 60 and Chapter IV; and
• correcting cross-references in Annex I under ‘client assessment’, ‘order handling’, ‘client order and transactions’, ‘reporting to clients’, ‘communication with clients’ and ‘organizational requirements’

The Regulation will enter into force on the twentieth day following its publication in the Official Journal.

On 6 April 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers related to reporting under the Securities Financing Transactions Regulation (SFTR).

The updated set of Q&A complements ESMA’s guidance on reporting under SFTR. The Q&As were updated to simplify reporting of SFTs when an external portfolio manager is used.

This document aims to ensure that the supervisory activities of the competent authorities under the Regulation converge along the lines of the responses adopted by ESMA. It should also help investors and other market participants by providing clarity on SFTR requirements.

The purpose of the Q&A document is to promote common supervisory approaches and practices in the application of SFTR. It provides responses to questions posed by the general public, market participants and competent authorities in relation to the practical application of the Regulation.

On 13 April 2021, the European Securities and Markets Authority (ESMA) updated its statement on the implementation of LEI requirements for third-country issuers under the SFTR reporting regime.

The updated LEI statement maintains ESMA position as described on 6 January 2020 and provides an extended timeline for the reporting of LEIs of third-country issuers of securities used in Securities Financing Transactions (SFTs) until 10 October 2022. The updated statement also sets out the expectations towards Trade Repositories and counterparties, as well as the relevant supervisory actions to be carried out by authorities.

On 27 April 2021, the International Securities Lending Association (ISLA) published its updated Institutional Investor Guide to Securities Lending.

Produced in association with Finadium, the Institutional Investor Guide to Securities Lending aims to provide both active and prospective lending institutions with a definitive handbook to the industry, including the simple mechanics of the market, the various actors across the value chain, and the benefits that lending can bring to the buyside as well as the broader capital markets. It also covers a myriad of other topics, including regulatory drivers, prudential risk management and factors to consider when selecting an agent lender.

On 6 April 2021, the European Union published Regulation (EU) 2021/557 of the European Parliament and of the Council of 31 March 2021 amending Regulation (EU) 2017/2402 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation to help the recovery from the COVID-19 crisis.

The key amendments are the following:

• Securitization special purpose entities (SSPEs) should only be established in third countries that are not listed by the Union on the EU list of non-cooperative jurisdictions for tax purposes, or in the list of high-risk third countries which have strategic deficiencies in their regimes on anti-money laundering and counter terrorist financing. 
• To reinforce the capability of national authorities in countering tax avoidance, an investor should notify the competent tax authorities of the Member State in which it is resident for tax purposes whenever it is due to invest in an SSPE established, after the date of application of this Regulation, in a jurisdiction with a harmful tax regime. This information may be used to assess whether the investor derives a tax benefit.
• The risk-retention requirement aligns the interests of originators, sponsors and original lenders that are involved in a securitization with those of investors.
• For NPE securitization, the competent authorities should review the application of sound standards for selection and pricing of the exposures.
• As a minimum, the originator, sponsor or original lender should retain, on an ongoing basis, a material net economic interest in the securitizations of not less than 5 %. Higher risk retention ratios might be justifiable and have already been observed in the market.
• Certain performance-related triggers should determine the application of sequential amortization in order to ensure that tranches providing credit protection have not already been amortized when significant losses occur at the end of the transaction, thereby ensuring that significant risk transfer is not undermined.
• Originators of STS securitizations’ should also have the option to disclose specific information regarding the consideration of adverse impacts on sustainability factors, giving particular attention to climate and other environmental, social and governance-related impacts. 
• To harmonize information disclosure and to ensure consistency, the ESAs should develop regulatory technical standards, building as much as possible on their work in the context of Regulation (EU) 2019/2088 and adapting it, where necessary and relevant, to the specificities of securitizations.

On 9 April 2021, the European Securities and Markets Authority (ESMA) published the interim templates for STS synthetic securitisation notifications. 

The interim templates allow originators to notify ESMA of synthetic securitisations that meet the STS criteria.

The amended SECR was published in the Official Journal of the European Union on 6 April and enters into force on 9 April 2021. The amended SECR extends the STS framework to synthetic securitisations. As with traditional securitisations, only those synthetic securitisations that meet pre-defined STS requirements will be published on ESMA’s website.

Until the date of the application of the Regulatory Technical Standards (RTS) specifying the content and the format of STS notifications for synthetic securitisations, originators can make the necessary information available to ESMA in writing during the interim period. ESMA makes available, on its website, interim STS synthetic notification templates that originators can use to ensure consistency across all STS notifications.

The interim STS notification templates may be used by originators on a voluntary basis which may be subject to possible changes following the entry into force of the RTS.

On 26 April 2021, the European Securities and Markets Authority (ESMA) announced that it has reached the last stage in the assessment process of applications received from Securitisation Repositories (SRs) under the Securitisation Regulation (SECR).

The obligation to report securitisation transactions to an SR under the SECR will apply as soon as one SR is formally registered. ESMA will inform market participants when the registration of the first SR(s) is completed.  ESMA has 40 working days in which to finalise its assessment of the registration and, if favourable, the entity will be registered as a SR five working days after the registration decision is adopted.

ESMA encourages reporting entities to take all necessary preparatory measures to comply with their reporting obligations to a SR.  

On 1 April 2021, the Federation of European Risk Management Associations (FERMA) released the first guide specifically for European risk managers on sustainability risks.

The guide will support risk managers as by showing how a sustainability risk management process can be linked to strategic goals and risk appetite. It also includes:

• a sample risk register/catalogue incorporating sustainability-related risks, such as environment, social and governance (ESG) issues
• possible approaches to risk assessment
• guidance on risk communication, reporting and disclosure

On 21 April 2021, the European Commission (EC) adopted an ambitious and comprehensive package of measures to help improve the flow of money towards sustainable activities across the European Union.

By enabling investors to re-orient investments towards more sustainable technologies and businesses, these measures will be instrumental in making Europe climate neutral by 2050.

1. EU Taxonomy Climate Delegated Act: Commission Delegated Regulation supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives

• The Delegated Act will be formally adopted at the end of May once translations are available in all EU languages.
• Once formally adopted, the EU Taxonomy Climate Delegated Act will be scrutinized by the European Parliament and the Council (four months and extendable once by two additional months).

2. Proposal for a Corporate Sustainability Reporting Directive (CSRD): Directive amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting, which would amend the existing reporting requirements of the NFRD. The proposal:

• extends the scope to all large companies and all companies listed on regulated markets (except listed micro-enterprises)
• requires the audit (assurance) of reported information
• introduces more detailed reporting requirements, and a requirement to report according to mandatory EU sustainability reporting standards
• requires companies to digitally ‘tag’ the reported information, so it is machine readable and feeds into the European single access point envisaged in the capital markets union action plan

Regarding the CSRD Proposal, the Commission will engage in discussions with the European Parliament and Council.

3. Six amending Delegated Acts on investment and insurance advice, fiduciary duties, and product oversight and governance: will be scrutinized by the European Parliament and the Council (three month periods and extendable once by three additional months) and are expected to apply as of October 2022.

On 2 April 2021, the Decree No. 2021-375 of 1 April 2021 modifying the missions and organization of the TRACFIN national service was published on the Official Journal. 

The decree completes Article D. 561-33 of the Monetary and Financial Code, which defines the overall missions of the TRACFIN national unit by recalling those relating to cooperation between financial intelligence units and by including those relating to its activity as a specialized intelligence unit. It also amends the provisions relating to the organization of the department, in particular by adding a deputy legal advisor who, like the incumbent, is able to issue opinions on the characterization of the facts contained in the information notes sent to the judicial authority.

This decree applies to the TRACFIN service, natural and legal persons subject to the fight against money laundering and terrorist financing, and foreign counterpart financial intelligence units.

Version française

Le 2 avril 2021, le Décret no. 2021-375 du 1er avril 2021 portant modification des missions et de l’organisation du service à compétence nationale TRACFIN a été publié au Journal Officiel. 

Le décret complète l’article D. 561-33 du code monétaire et financier qui définit de manière globale les missions du service à compétence nationale TRACFIN en rappelant celles relatives à la coopération entre cellules de renseignement financier et en reprenant celles liées à son activité de service spécialisé de renseignement. Il modifie, en outre, les dispositions relatives à l’organisation du service, en particulier par l’ajout d’un adjoint au conseiller juridique en capacité d’émettre, comme le titulaire, des avis qui portent sur la caractérisation des faits figurant dans les notes d’information transmises à l’autorité judiciaire.

Le décret s’applique au service TRACFIN, personnes physiques et morales assujetties à la lutte contre le blanchiment de capitaux et le financement du terrorisme, cellules de renseignement financier homologues étrangères.

On 4 April 2021, the Decree No. 2021-387 of 2 April 2021 on the fight against the anonymity of virtual assets and reinforcing the national system for combating money laundering and terrorist financing was published in the Official Journal.

The decree determines the procedures for verifying the identity of customers of the persons mentioned in Article L. 561-2 of the Monetary and Financial Code when entering into a business relationship. It specifies the obligation for gaming operators to record trading transactions above a certain threshold. It clarifies the prohibition on the use of anonymous electronic money for the purchase of digital assets. It also imposes on digital asset service providers an obligation to identify their customers prior to any occasional transaction. The decree then extends the scope of action of the supervisory authorities of persons subject to AML/CFT to the implementation of European measures to freeze assets and prohibit the making available of funds. 

It designates the department of the Ministry of the Economy responsible for receiving information from these authorities on possible violations of the asset freeze measures. It specifies the internal organization and procedures that persons subject to the LCB-FT must put in place in order to comply with their obligations with regard to the freezing of assets and the prohibition on making them available. 

It clarifies the scope of the information that these persons transmit to the Ministry of the Economy when they implement asset freezing measures. It specifies the conditions for authorizing government officials responsible for preparing and implementing asset freezing and non-disposal measures to access certain tax administration files directly. Finally, it establishes the specific terms and conditions for the control of the AML/CFT obligations of chartered accountants by the Conseil supérieur de l'ordre des experts comptables.

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Le 4 avril 2021, le Décret no. 2021-387 du 2 avril 2021 relatif à la lutte contre l’anonymat des actifs virtuels et renforçant le dispositif national de lutte contre le blanchiment de capitaux et le financement du terrorisme a été publié au Journal Officiel. 

Le décret détermine les procédures de vérification de l’identité des clients des personnes mentionnées à l’article L. 561-2 du code monétaire et financier lors de l’entrée en relation d’affaire. Il précise l’obligation pour les opérateurs de jeux d’enregistrer les opérations d’échanges supérieurs à un certain seuil. Il clarifie l’interdiction de recourir à la monnaie électronique anonyme pour l’achat d’actifs numériques. Il impose par ailleurs aux prestataires de services sur actifs numériques une obligation d’identification de leurs clients préalablement à toute transaction occasionnelle. Le décret étend ensuite le périmètre de l’action des autorités de contrôle des personnes assujetties à la LCB-FT à la mise en œuvre des mesures européennes de gel des avoirs et d’interdiction de mise à disposition.

Il désigne le service du ministère de l’économie chargé de recevoir de ces autorités les informations portant sur de possibles violations des mesures de gel des avoirs. Il précise l’organisation et les procédures internes que doivent mettre en place les personnes assujetties à la LCB-FT pour respecter leurs obligations en matière de gel des avoirs et d’interdiction de mise à disposition. 

Il clarifie la portée de l’information que ces personnes transmettent au ministère de l’économie lorsqu’elles mettent en œuvre les mesures de gel des avoirs. Il précise les conditions d’habilitation des agents des services de l’Etat chargés de préparer et de mettre en œuvre les mesures de gel des avoirs et d’interdiction de mise à disposition pour accéder directement à certains fichiers de l’administration fiscale. Il établit enfin les modalités spécifiques du contrôle des obligations LCB-FT des experts comptables par le Conseil supérieur de l’ordre des experts comptables.

On 6 April 2021, the Association Française de Gestion (AFG) informed the annual AML-CFT internal control report to be submitted to the AMF deadline is set for the 30 April 2021.

This report, in addition to its objective of ensuring that the management and supervisory bodies of asset management companies are properly informed about the operation of the AML-CFT internal control system put in place, is an essential element for the AMF to monitor financial risks. money laundering and terrorist financing to which management companies are exposed.

In addition to the recommendations previously transmitted by the Autorité des marchés financiers, the AMF recommends this year to provide a few lines on the management of the COVID crisis which, depending on the activity / size of the asset management company, could in particular integrate the following points:

• How did the teams go to full distance?
• Have the KYC / Compliance processes been reviewed: pause in subscriptions, pause in updates, switch to entries in remote relationship etc?
• Have new threats been identified (IT risk, scam) etc?

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Le 6 avril 2021, l'AFG a informé que le rapport annuel de contrôle interne LCB-FT à remettre à l'AMF est fixé au 30 avril 2021.

Ce rapport, outre son objectif d’assurer la bonne information des organes d’administration et de surveillance des SGP sur le fonctionnement du dispositif de contrôle interne LCB-FT mis en place, constitue un élément essentiel pour l’AMF de suivi des risques de blanchiment et de financement du terrorisme auxquels les sociétés de gestion se trouve exposées.

Outre les préconisations transmises précédemment par l’Autorité des marchés financiers (reproduites ci-dessous), l’AMF recommande cette année de prévoir quelques lignes sur la gestion de la crise Covid qui, suivant l’activité/ la taille de la SGP, pourraient notamment intégrer les points suivants

• Comment s’est passé le passage des équipes en full distance ?
• Les process de KYC / Conformité ont-ils été revues : pause dans les souscriptions, pause dans les mises à jour, passage aux entrées en relation à distance etc ?
• De nouvelles menaces ont-elles été identifiées (risque IT, escroquerie) etc ?

On 1 April 2021, the Autorité des marchés financiers (AMF) provided for 2019 key figures for asset management.

This document compiles the six letters containing all of the 2019 key figures for asset management. Several subjects are covered such as information on players in the management industry through an overview of management companies, their profiles, the assets they manage, their activity, their profitability by analyzing their financial data. , their control system but also their own funds.

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Le 1 avril 2021, l'Autorité des marchés financiers (AMF) a fourni les  chiffres clés 2019 de la gestion d'actifs.

Ce document compile les six lettres reprenant l’ensemble des chiffres clés 2019 de la gestion d’actifs. Plusieurs sujets sont traités tels que les informations sur les acteurs de l’industrie de la gestion à travers un panorama des sociétés de gestion, leurs profils, les encours qu’elles gèrent, leur activité, leur rentabilité par l’analyse de leurs données financières, leur dispositif de contrôle mais aussi leurs fonds propres.

On 15 April 2021, the Autorité des marchés financiers (AMF) identified five areas requiring in-depth review to enable financial markets to finance economic recovery.

1. Provide support for the development of individual shareholding

In 2020, the number of individual shareholders surged in many countries including France, where the AMF identified some 60 million stock market transactions by individuals, compared with 25 million in previous years. In the AMF's view, for this increase to be sustainable, it must be achieved without excessive risk-taking, either through highly leveraged products or through seemingly attractive pricing. It must also be accompanied by good-quality advice when advice is given. It is with this in mind that last year the AMF carried out a series of short thematic inspections on the suitability of the products recommended to clients based on their profile.

2. Functioning of markets and shareholder dialogue

Trust in the proper functioning of markets is a necessary condition for them to be attractive, especially for individual shareholders. Subsequently, one of the AMF's top priorities is to defend market integrity. This is reflected in the emphasis placed on the need for transparency in relation to listed companies, which the AMF supported as fully as possible during the health crisis, reminding them of the rules on ongoing information. This requirement helps to prevent market abuse. The AMF is also committed to developing shareholder dialogue, which can help avoid unnecessary conflicts. In April 2020, the AMF made proposals along these lines and last month announced changes to its policy. 

3. Progressing towards a more sustainable finance

Despite the health situation, the AMF pushed ahead with its priorities, such as its commitment to sustainable finance. In its annual report, it looks back over some of its actions over the past year, including the publication of a first doctrine on the marketing of collective investment products incorporating non-financial approaches to avoid greenwashing. The AMF also contributed to the European debate by taking part in the European Commission's consultations on its renewed sustainable finance strategy, on the revision of the directive on non-financial information for issuers, and by proposing, along with its Dutch counterpart, a framework for providers of non-financial ratings and data.

4. Adapt the asset management regulatory and supervisory framework

2020 was a year of very mixed results for the asset management sector, with the continued creation of asset management companies, bringing their number to 680 in France, and an upsurge in liquidity and valuation risks. The AMF stepped up its monitoring system to collect daily data on the activation of liquidity management tools and on subscription and redemption flows. Difficulties in the valuation of certain unlisted assets led to the suspension of some employee savings funds and certain funds of the management company H20.

5. Develop the financial sovereignty of the European Union

Nearly five years after the announcement of the UK's exit from the European Union, the Capital Markets Union has made little progress. The European Commission, however, presented a very concrete action plan in September 2020, with the aim of fostering access of companies to market financing in the form of shares, promoting European savers' access to secure long-term products, and closer integration of the 27 national markets of the European single market. There are many ongoing and future projects, which will culminate in the French Presidency of the EU in the first half of 2022. While the objective of this action plan is to make the EU financial market more efficient, the emergence of European players of international dimension must also be encouraged in order to strengthen its independence in financial matters.

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Le 15 avril 2021, l'Autorité des marchés financiers (AMF) a identifié cinq axes à revisiter en profondeur pour permettre aux marchés financiers d’assurer le financement de la reprise.

1) Accompagner la montée de l’actionnariat individuel

2020 a vu la montée en puissance des actionnaires individuels dans de nombreux pays, dont la France où l’AMF a recensé environ 60 millions de transactions boursières de particuliers, contre 25 millions les années précédentes. Pour l’AMF, cette montée en puissance, pour être durable, doit se faire sans prises de risques excessifs, que ce soit via des produits à fort effet de levier ou en raison de tarifications qui pourraient apparaitre attractives. Elle doit, par ailleurs, s’accompagner d’un conseil de qualité lorsqu’une recommandation est formulée. L’AMF a illustré les progrès qui restent à accomplir dans la synthèse de ses contrôles courts, dits SPOT, sur le thème de l’adéquation des instruments financiers recommandés à la situation particulière des clients, publiée en mars dernier.

2) Fonctionnement des marchés et dialogue actionnarial

La confiance dans le bon fonctionnement des marchés est une condition nécessaire à leur attractivité, tout particulièrement pour l’actionnariat individuel. Défendre l’intégrité du marché est donc au cœur des priorités de l’AMF. Cela se traduit par l’accent mis sur une exigence de transparence vis-à-vis des sociétés cotées, que le régulateur a accompagnées au mieux dans la crise sanitaire en rappelant les règles en matière d’information permanente. Cette exigence permet de prévenir les abus de marché. L’AMF s’est également engagée en faveur d’un développement du dialogue actionnarial qui peut permettre d’éviter les conflits inutiles. L’AMF a fait, en avril 2020, des propositions en ce sens et a annoncé, le mois dernier, des modifications de sa doctrine.  

3) Progresser en direction d’une finance plus durable

Malgré le contexte sanitaire, l’AMF a poursuivi ses priorités, à l’exemple de son engagement en faveur d’une finance durable. Dans son rapport annuel, le régulateur revient sur certaines de ses actions durant l’année écoulée, parmi lesquelles la publication d’une première doctrine en matière de commercialisation des produits de gestion collective intégrant des approches extra-financières pour éviter le greenwashing. L’AMF a également contribué au débat européen, en participant aux consultations de la Commission européenne sur sa stratégie renouvelée en matière de finance durable, sur la révision de directive sur l’information extra-financière des émetteurs et en proposant avec son homologue néerlandais un encadrement des fournisseurs de notations et de données extra-financières.

4) Adapter le cadre réglementaire et de supervision de la gestion d’actifs

L’année 2020 a été une année très contrastée pour le secteur de la gestion d’actifs avec la poursuite des créations de sociétés de gestion, portant à 680 leur nombre en France, avec une recrudescence des risques de liquidité ou de valorisation. L’AMF a renforcé son dispositif de suivi pour collecter au quotidien les éventuelles activations d’outils de gestion de la liquidité et les flux des souscriptions et rachats. Les difficultés de valorisation de certains actifs non cotés ont conduit à la suspension de certains fonds d’épargne salariale et de certains fonds de la société de gestion H20. 

5) Développer la souveraineté financière de l’Union européenne

Près de 5 ans après l’annonce de la sortie du Royaume-Uni de l’Union européenne, l’Union des Marchés de Capitaux a peu progressé. La Commission européenne a cependant présenté un plan d’actions très concret en septembre 2020, visant à favoriser l’accès des sociétés au financement par le marché sous forme d’actions, à favoriser l’accès des épargnants européens à des produits de long terme sécurisés et à intégrer plus étroitement les 27 marchés nationaux du marché unique européen. De nombreux chantiers en cours et à venir culmineront ainsi avec la présidence française de l’UE au premier semestre 2022. Si ce plan d’actions a bien pour objectif d’accroître l’efficacité du marché financier de l’Union, l’émergence d’acteurs européens de dimension internationale doit également être favorisée pour conforter son indépendance en matière financière.

On 7 April 2021, the Autorité des marchés financiers (AMF) published the results of a new series of thematic inspections of the cybersecurity systems and processes of asset management companies.

As part of a new series of thematic short inspections (SPOT), the AMF analysed the operational practices of five mid-sized asset management companies in order to address the risk of malicious attack on the availability, integrity, confidentiality and traceability of their information systems. Its findings have been enhanced with observations from a standard inspection performed upon a sixth asset management company, specialised in private equity.

The regulator’s main points of attention targeted:

• organisation and governance of cybersecurity systems and processes;
• coordination of sensitive IT service providers;
• cybersecurity incidents management;
• supervision of processes for remote access to the information system.

In its summary, the AMF observes that asset management companies have reinforced their cybersecurity organisation and governance. Among the good practices noted appear the appointment of a dedicated manager from the executive committee to handle cybersecurity topics, the implementation of regular awareness-raising campaigns for employees, and the inclusion of cyber risks into risk mapping and control plans.

However, progressive cybersecurity strategy formalization, already observed in 2019, remains incomplete due to non-prioritization of sensitive data / critical systems classification and mapping. Furthermore, regarding the raising volume and sophistication of cyberattacks observed by the AMF, the management and control of interactions between asset management companies and their external IT service providers must remain a priority when defining security measures. 

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Le 7 avril 2021, l'Autorité des marchés financiers (AMF) a publié la synthèse d’une nouvelle série de contrôles thématiques sur les dispositifs de cybersécurité des sociétés de gestion.

A l’occasion d’une nouvelle série de contrôles thématiques courts (SPOT), l’AMF a analysé les pratiques opérationnelles de 5 sociétés de gestion de taille moyenne pour faire face au risque d’une atteinte malveillante à la disponibilité, l’intégrité, la confidentialité et la traçabilité de leurs systèmes d’information. Ses constats ont été enrichis des observations faites à l’occasion d’un contrôle classique réalisé auprès d’un sixième établissement, spécialisé dans le capital-investissement.

Les points d’attention du régulateur ont porté sur :

• l’organisation et la gouvernance du dispositif de cybersécurité ;
• le pilotage des prestataires informatiques sensibles ;
• la gestion des incidents d’origine cyber ;
• la supervision des processus d’accès à distance au système d’information.

Dans son document de synthèse, le régulateur constate un renforcement de l’organisation et de la gouvernance des dispositifs de cybersécurité au sein des sociétés de gestion. Parmi les bonnes pratiques observées, le régulateur a, par exemple, relevé la prise en charge du sujet par un cadre dédié au sein du comité exécutif, la mise en œuvre de campagnes de sensibilisation régulières des collaborateurs et la prise en compte des risques d’origine cyber dans les cartographies des risques et les plans de contrôle.

En revanche, le travail de formalisation progressive d’une stratégie de cybersécurité, déjà observé en 2019, demeure inabouti sans l’élaboration, au préalable, d’une classification et d’une cartographie des données sensibles et des systèmes critiques. En outre, compte tenu de la multiplication et de la sophistication croissante des attaques observées par le régulateur, le pilotage et le contrôle des interactions entre les sociétés de gestion et leurs prestataires informatiques externes doivent rester des priorités au moment de définir, en amont, les efforts de sécurisation.   

On 21 April 2021, the Association Française des Marchés Financiers (Amafi) published two new guides on DAC6.

Market operators are concerned by the reporting obligation, which is primarily aimed at the intermediary and, in certain situations, the taxpayer concerned. In order to facilitate the implementation of their reporting obligations by its members, the Association wished to provide them with a reading grid of the DAC 6 regulation in the form of a Professional Guide. 

• -Volume 1 presents the legislative, regulatory and doctrinal framework of the DAC 6 system. 
• Volume 2 proposes a common interpretative basis for the typical activities of financial market participants with regard to DAC 6. 

This analysis is based on the work of the AMAFI working groups dedicated to DAC 6 and supervised by the Tax Committee.

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Le 21 avril 2021, l'Association Française des Marchés Financiers (Amafi) a publié deux nouveaux guides sur DAC6.

Les opérateurs de marché sont concernés par l'obligation déclarative qui vise principalement l'intermédiaire et, dans certaines situations, le contribuable concerné. Afin de faciliter la mise en œuvre de leurs obligations déclaratives par ses membres, l'Association a souhaité mettre à leur disposition une grille de lecture du règlement DAC 6 sous la forme d'un Guide professionnel. 

• Le volume 1 présente le cadre législatif, réglementaire et doctrinal du système DAC 6
• Le volume 2 propose une base commune d'interprétation des activités typiques des acteurs des marchés financiers au regard du DAC 6

Cette analyse s'appuie sur les travaux des groupes de travail de l'AMAFI dédiés au DAC 6 et supervisés par le Comité fiscal.

On 9 April 2021, the Autorité des marchés financiers (AMF) informed on its priorities for Action and Supervision 2021.

1) Priorities for action

Be fully engaged to overcome the health and economic crisis

The AMF will assist issuers in their financial operations and disclosure to ensure that investors are properly informed and ensure high-quality shareholder dialogue. The AMF will contribute to the regulatory changes made in response to the market turmoil of spring 2020. Remaining fully engaged also means ensuring that investors are educated, supported and protected against the risks associated with the new market environment.

Participate in the reforms that will shape future financial regulation

The AMF will contribute to the Capital Markets Union and the planned legislative reviews with the threefold objective of investor protection, financing of the economy, and ensuring increased European competitiveness following the withdrawal of the UK from the European Union. It is against this post-Brexit backdrop that AMF will monitor market developments to support market participants and make any necessary adjustments to the regulatory framework. Lastly, AMF will continue to foster innovative European digital finance markets.

Accelerate the transition to sustainable finance

AMF will support the French financial centre in implementing the regulatory framework and in mastering the integration of sustainable finance and climate challenges. This will also consist in helping issuers to improve the quality of non-financial information and contribute to improving the robustness of European regulations on non-financial information, while facilitating innovative approaches to sustainable finance.

Continue rolling out the objectives of the strategic plan related to supervision

At the same time, AMF will pursue our internal objectives of reducing time frames and maintaining the effectiveness of our enforcement procedures. AMF plans to intensify our monitoring of asset management companies, with streamlined procedures and easier information exchange through the ROSA extranet, and to generalise the risk-based approach to supervision through increased data use.

2) Supervisory priorities

In 2021, our thematic monitoring and oversight priorities will concern:

• For asset management companies: implementation of best selection and best execution obligations, the system for preventing market abuse in asset management companies, setting and transparency of costs and fees in collective investment management, valuation and liquidity of real estate funds, monitoring and control of asset management companies by depositaries;
• For market intermediaries: security of market infrastructure information systems, implementation of post-trade transparency requirements on bonds, product governance by financial instrument producers, application of the European regulation for simple transparent and standardised securitisation, cross-border operations, transition plans towards benchmarks indices;
• For marketing players: supervision of financial investment advisors, compliance with the rules for assessing the appropriateness and suitability of investment services providers.

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Le 9 avril 2021, l'Autorité des marchés financiers (AMF) a informé des priorités d'action et de supervision 2021.

1)  Priorités d’action

Se mobiliser pleinement pour surmonter la crise sanitaire et économique

L’AMF accompagnera les émetteurs dans leurs opérations et leurs communications financières pour permettre la bonne information des investisseurs et en veillant à la qualité du dialogue actionnarial. L’AMF contribuera aux évolutions réglementaires en réponse aux turbulences de marché connues au printemps 2020. Rester pleinement engagés, c’est aussi veiller à la pédagogie, à l’accompagnement et à la protection des épargnants face aux risques liés au nouveau contexte de marché.

Participer aux réformes qui définiront la réglementation financière de demain

L’AMF contribuera à l’Union des marchés de capitaux et à la revue des textes avec un triple objectif de protection des investisseurs, de financement de l’économie et de compétitivité européenne à l’heure où l’Union voit sortir le Royaume-Uni. C’est dans ce contexte post-Brexit que l’AMF suivra les évolutions de marché pour accompagner les acteurs et identifier les adaptations nécessaires du cadre réglementaire. Enfin, l’AMF va poursuivre leur implication en faveur de marchés européens innovants en matière de finance numérique.

Accélérer la transition vers la finance durable

L’AMF va accompagner la Place dans la mise en œuvre du cadre règlementaire et dans la maîtrise de l’intégration des enjeux relatifs à la finance durable et au climat. Il s’agit aussi d’aider les émetteurs à progresser vers une information extra-financière de qualité et de contribuer à rendre plus robuste la réglementation européenne sur le sujet, tout en facilitant les approches innovantes en matière de finance durable.

Poursuivre le déploiement des objectifs du plan stratégique concernant la supervision

Parallèlement, en interne, l’AMF poursuivra leurs objectifs de réduction des délais et de maintien de l’efficacité des procédures de notre filière répressive. L’AMF prévoie de renforcer le suivi des sociétés de gestion, avec des procédures allégées et des échanges d’informations facilités grâce à l’extranet ROSA, et de généraliser l’approche de la supervision par les risques grâce à une utilisation plus importante de la donnée.

2) Priorités de supervision

En 2021, les priorités thématiques de suivi et de contrôle de l’AMF porteront sur :

• pour les sociétés de gestion : la mise en œuvre des obligations de meilleure sélection et de meilleure exécution, le dispositif interne de prévention des abus de marché, l’établissement et la transparence des coûts et frais dans la gestion collective, la valorisation et la liquidité des fonds immobiliers, le suivi et le contrôle des sociétés de gestion par les dépositaires ;
• pour les intermédiaires de marché : la sécurité des systèmes d’information des infrastructures de marché, la mise en œuvre des obligations de transparence post-négociation sur les instruments obligataires, la gouvernance des produits par leurs producteurs, la mise en œuvre du règlement européen pour une titrisation simple, transparente et standardisée, les activités transfrontières, la transition des indices de référence ;
• pour les acteurs de la commercialisation : la supervision des conseillers en investissements financiers, le respect des règles d’évaluation du caractère approprié et de l’adéquation des PSI.

On 19 April 2021, the Autorité des marchés financiers (AMF) published the Appendices of its Annual Report 2020.

The appendices to the AMF Annual Report include additional information on savings management and service providers, visas issued, investigations and legal proceedings, and international cooperation. They also include the AMF's objectives and performance indicators.

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Le 19 avril 2021, l'Autorité des marchés financiers (AMF) a publié les annexes de son rapport annuel 2020.

Les annexes du Rapport annuel de l'AMF comportent des informations complémentaires sur la gestion de l'épargne et les prestataires, les visas délivrés,  les enquêtes et les suites judiciaires, la coopération internationale. Elles comportent également les objectifs et les indicateurs de performance de l'AMF.

On 22 April 2021, the Order of 29 March 2021 approving amendments to the general regulations of the Autorité des marchés financiers was published in the Official Journal.

The  amendments to the General Regulation of the Autorité des marchés financiers, the text of which is attached to this order, are hereby approved. 

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Le 22 avril 2021, l'Arrêté du 29 mars 2021 portant homologation de modifications du règlement général de l’Autorité des marchés financiers a été publié au Journal Officiel.

Les modifications du règlement général de l’Autorité des marchés financiers, dont le texte est annexé au présent arrêté, sont homologuées.

On 27 April 2021, the Association Française des Marchés Financiers (AMAFI) published Position-Recommendation DOC-2013-10 Incentives and remuneration received in connection with  distribution and management under mandate of   financial instruments.

The purpose of this document is to present, in table form, a "consolidated" version of the new provisions of the Position-Recommendation DOC 2013-10 in force on April 14, 2021. 

The modifications induced by the update of the Position-Recommendation are presented in the following form following form:

• The added mentions appear in red and bold underlined
• The deleted mentions appear in red and crossed out

AMAFI has taken care to keep the same numbering for the footnotes, as the one given to them in the old and the same numbering for the footnotes as in the old and the new version of the position-recommendation 2013-10. 

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Le 27 avril 2021, l'Association Française des Marchés Financiers (AMAFI) a publié la Position-Recommandation AMF DOC-2013-10 Incitation et rémunérations reçues dans le cadre de la distribution et de la gestion sous mandat d’instruments financiers.

Le présent document a pour objet de présenter, sous forme de tableau, une version « consolidée », des nouvelles dispositions de la Position-Recommandation DOC 2013-10 en vigueur au 14 avril 2021.

Les modifications induites par la mise à jour de Position-Recommandation se présentent sous la forme suivante : 

• les mentions ajoutées apparaissent en rouge et en gras soulignées 
• les mentions supprimées apparaissent en rouge barrées.

 L’AMAFI a pris le soin de conserver la même numérotation pour les notes de bas de page, que celle qui leur est donnée dans l’ancienne et dans la nouvelle version de la position-recommandation 2013-10.

On 26 April 2021, the Autorité des marchés financiers (AMF) published a guide for the preparation of promotional documentation.

The AMF provides professionals designing commercial media relating to structured debt securities with an educational guide to assist them in implementing the applicable regulations. This tool complements the system deployed by the AMF for several years in order to prevent the risk of poor presentation of the structured financial product marketed to non-professional clients in France.

This guide aims to:

• provide an overview of the applicable regulatory framework by recalling the main texts in force;
• recall the main decisions of the AMF's Sanctions Committee on issues of marketing financial instruments and which may shed interesting light for advisers when they design promotional documentation;
• respond to recurring questions submitted to the AMF by issuers or financial intermediaries through the publication of questions and answers. These questions and answers are for educational purposes for the actors concerned;
• facilitate stakeholders' understanding and accessibility to applicable AMF procedures by grouping together in the same document the practical information and existing operating methods (procedure for filing promotional documentation, documents to be provided, request for confirmation mechanism accounts, etc.) and key contacts within the Issuers Department.

This guide is primarily intended for the compliance departments of credit institutions and the teams in charge of preparing promotional documentation. It cancels and replaces AMF position-recommendation DOC-2013-13.

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Le 26 avril 2021, l'Autorité des marchés financiers (AMF) a publié un guide pour l’élaboration des communications à caractère promotionnel relatives à des titres de créance structurés.

 L'AMF met à la disposition des professionnels concevant des supports commerciaux relatifs aux titres de créance structurés un guide pédagogique pour les aider à mettre en œuvre la réglementation applicable. Cet outil vient compléter le dispositif déployé par l'AMF depuis plusieurs années afin de prévenir le risque de mauvaise présentation du produit financier structuré commercialisé auprès de clients non professionnels en France.

Ce guide a pour objectif de :

• fournir une vue d’ensemble du cadre réglementaire applicable en rappelant les principaux textes en vigueur ;
• rappeler les principales décisions de la Commission des sanctions de l'AMF en matière de commercialisation d'instruments financiers et qui peuvent apporter un éclairage intéressant pour les conseillers lors de la conception de la documentation promotionnelle ;
• répondre aux questions récurrentes soumises à l'AMF par les émetteurs ou les intermédiaires financiers par la publication de questions-réponses. Ces questions et réponses ont un but pédagogique pour les acteurs concernés ;
• faciliter la compréhension et l'accessibilité des acteurs aux procédures applicables de l'AMF en regroupant dans un même document les informations pratiques et les modes opératoires existants (procédure de dépôt de la documentation promotionnelle, documents à fournir, demande de comptes de mécanisme de confirmation, etc.) et les contacts clés au sein du Service des émetteurs.

Ce guide est principalement destiné aux services de conformité des établissements de crédit et aux équipes en charge de l'élaboration des documents promotionnels. Il annule et remplace la position-recommandation DOC-2013-13 de l'AMF.

On 29 April 2021, the Autorité des marchés financiers (AMF) updated its policy and its general regulations with regard to the new provisions of the Commercial Code. 

Since 1 January 2021, the Commercial Code contains a new Chapter X grouping together all the provisions specific to listed companies. To take into account the change in the numbering of articles of the Commercial Code resulting from this reform, the AMF has updated its policy. On this occasion, the references to the new elements of prospectus regulation and the changes announced on shareholder activism were included.

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Le 29 avril 2021, l'Autorité des marchés financiers (AMF) a mis à jour sa doctrine et son règlement général au regard des nouvelles dispositions du code de commerce.

Depuis le 1er janvier 2021, le code de commerce contient un nouveau chapitre X regroupant l’ensemble des dispositions spécifiques aux sociétés cotées. Pour tenir compte du changement de numérotation des articles du code de commerce résultant de cette réforme, l’AMF a mis à jour sa doctrine. A cette occasion, les références aux nouveaux éléments de réglementation prospectus et les évolutions annoncées sur l’activisme actionnarial ont été intégrées.

On 1 April 2021, the Association Française des Marchés Financiers (Amafi) published an information letter on the new prudential regime for investment firms.

The implementation of the new prudential regime for investment firms (IFR / IFD) is a very important and challenging task for the Association. Regular meetings are held with the French Treasury and the ACPR to discuss the transposition of the IFD into French law and the practical details of the transition to the new regime for each category of investment firm. 

While a number of operational solutions are emerging today, various uncertainties remain with three months to go before the deadline of 26 June 2021. While some answers can only be found at the European level, it seems essential to postpone the implementation of the system by a few months.

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Le 1 avril 2021, l'Association Française des Marchés Financiers (Amafi) a publié une lettre d'information sur le nouveau régime prudentiel des entreprises d'investissement.

La mise en œuvre du nouveau régime prudentiel pour les entreprises d'investissement (IFR / IFD) est une tâche très importante et difficile pour l'Association. Des réunions régulières ont lieu avec le Trésor français et l'ACPR pour discuter de la transposition de l'IFD en droit français et des détails pratiques de la transition vers le nouveau régime pour chaque catégorie d'entreprise d'investissement. 

Si un certain nombre de solutions opérationnelles se dessinent aujourd'hui, diverses incertitudes demeurent à trois mois de l'échéance du 26 juin 2021. Si certaines réponses ne peuvent être trouvées qu'au niveau européen, il semble indispensable de reporter de quelques mois la mise en œuvre du dispositif.

On 22 April 2021, the Autorité des marchés financiers (AMF) published an amendment to the AMF's general regulations published in the Official Gazette of April 22, 2021 sets up new reporting obligations for the benefit of the regulator on ratio overruns and compensation paid to clients of asset management companies. 

The implementation of this system (format and content of reporting, start-up schedule, etc.) is still conditional on the publication of additional measures by way of AMF instruction yet to be published. 

The AMF told AFG that the first quarterly reports would probably be required on the basis of data for the third quarter of 2021.

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Le 22 avril 2021, l'Autorité des marchés financiers (AMF) a publié un amendement au règlement général de l'AMF publié au Journal Officiel du 22 avril 2021 qui met en place de nouvelles obligations de reporting au profit du régulateur sur les dépassements de ratios et les indemnités versées aux clients des sociétés de gestion. 

La mise en œuvre de ce dispositif (format et contenu du reporting, calendrier de démarrage, etc.) reste conditionnée à la publication de mesures complémentaires par voie d'instruction AMF à paraître. 

L'AMF a indiqué à l'AFG que les premiers rapports trimestriels seraient probablement exigés sur la base des données du troisième trimestre 2021.

On 29 April 2021, the Association Française de Gestion (AFG) published Activity Report 2020. 

The report provides:

• Brexit, health crisis, containment, sudden fall and recovery of the markets, economic recovery plan, AFG publishes the results of an exceptional year 2020, where management companies have been able to adapt and continue to work in the interest of their customers.
• Financing the economy, competitiveness, long-term savings, sustainable finance , financial education, diversity, these major issues have been at the heart of AFG's action.
• Major works carried out by the committees and working groups, the main events organized by AFG in 2020, its studies and publications.
• Private equity, real estate funds, retirement savings, securitization, marketing, ethics and compliance, technological innovations ... : in each area of ??expertise, the balance sheet of actions for 2020 and the outlook for 2021.
• Supporting French asset management internationally is the mission that the International division pursued in 2020.
• Financial education benefited from the strong mobilization of the Economic Studies division, which also continued its thematic surveys and analyzes.
• All the changes in the training offer offered by AFG Formation, and the many actions carried out in 2020 by the Communication department to promote the know-how of French asset management.
• Without forgetting the key figures , AFG governance and key asset management dates.

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Le 29 avril 2021, l'Association Française de Gestion (AFG) a publié son rapport d'activité 2020.

Le rapport fournit des informations sur

• Brexit, crise sanitaire, confinement, chute brutale et reprise des marchés, plan de relance de l’économie, l’AFG publie le bilan d’une année 2020 exceptionnelle, où les sociétés de gestion ont su s’adapter et continuer à travailler dans l’intérêt de leurs clients.
• Financement de l’économie, compétitivité, épargne longue, finance durable, éducation financière, diversités, ces enjeux majeurs ont été au cœur de l’action de l’AFG.
• Grands travaux menés par les commissions et groupes de travail, les principaux événements organisés par l’AFG en 2020, ses études et publications.
• Capital investissement, fonds immobiliers, épargne retraite, titrisation, commercialisation, déontologie et conformité, innovations technologiques … : dans chaque domaine d’expertise, le bilan des actions 2020 et les perspectives pour 2021.
• Accompagner la gestion d’actifs française à l’international, c’est la mission que le pôle International a poursuivie en 2020.
• L’éducation financière a bénéficié de la forte mobilisation du pôle Etudes économiques, qui a également poursuivi ses enquêtes et analyses thématiques.
• Toutes les évolutions de l’offre de formation proposée par AFG Formation, et les nombreuses actions menées en 2020 par le département Communication pour faire connaître le savoir-faire de la gestion d’actifs française.
• Sans oublier les chiffres clés, la gouvernance de l’AFG et les dates marquantes de la gestion d’actifs.

On 30 April 2021, the Association Française de Gestion (AFG) publishes list of SRI funds signatory to the AFG-FIR Transparency Code - updated at the end of April 2021.

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Le 30 avril 2021, l'Association Française de Gestion (AFG) a publié la liste des fonds ISR signataires du Code de Transparence AFG-FIR - mise à jour fin avril 2021.

On 29 April 2021, the Chambre des représentants de Belgique adopted draft law introducing various financial provisions relating to the fight against fraud.

This text aims to adapt and broaden the duty to denounce specific tax mechanisms by supervisory authorities in the banking and financial fields.

It consists of:

• a draft bill on the notification of special mechanisms by supervisors to the judicial authorities;
• amendments to the Anti-Money Laundering Act of 18 September 2017, including a provision that requires taxable entities to report differences between their investigation and the UBO registry.

On 1 April 2021, the Financial Services and Markets Authority (FSMA) published FAQ about advertisements for investment instruments when they are offered to the public, admitted to trading and distributed to retail clients. The FSMA held open consultations for these FAQs at the end of 2020.

Advertisements for investment instruments in conjunction with these operations must meet European requirements. Thus, the information in the advertisements may not be inaccurate or misleading. The advertisements may not give an imbalanced image of the information in the prospectus.

The FSMA’s Frequently Asked Questions set out good practices that contribute to compliance with these requirements. The aim is to help make the FSMA’s actions predictable and to contribute to a level playing field.

On 1 April 2021, the Financial Services and Markets Authority (FSMA) published communication FSMA_2021_08 on the Guidelines of the European Securities and Markets Authority (ESMA) on the disclosure requirements under the Prospectus Regulation and on their implementation by the FSMA. These Guidelines are now integrated in the supervision practice of FSMA.

On 15 April 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) announced that ESMA Guidelines on disclosure requirements under the Prospectus Regulation are now part of its supervisory practice.  

On 20 April 2021, the Bundesfinanzministerium published the first allocation report for its Green Federal securities issued in 2020. The “Green Bond Allocation Report 2020” provides investors with transparent and binding information on expenditures from the federal government's environmental and climate protection programmes. It lists expenditures recognised as “green” in the 2019 federal budget and allocates them to the proceeds of € 11.5 billion of Green German Federal securities issued in 2020 (allocation). The issuance proceeds are allocated to eligible green expenditures of the 2019 budget year totaling € 12.3 billion.

On 23 April 2021m the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published  Q&A on Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability?related disclosures in the financial services sector.

Question:

Are financial advisors in the scope of  Regulation (EU) 2019/2088) on sustainability-related disclosure obligations or are they subject to the optional exception implemented in Germany (Article 3) and therefore excluded?  

Answer:

Financial advisors are not considered as a credit institutions, neither as a securities services provider. They are therefore not in the scope of the Disclosure Regulation.

On 26 April 2021, the Hong Kong Monetary Authority (HKMA) published its report on key observations and good practices in the use of external information and data in AML/CFT systems.

The thematic review examined AIs’ end-to-end processes in handling and using information and data from various sources, including intelligence received from the Fraud and Money Laundering Intelligence Taskforce (FMLIT) , and how this contributed to their input into the wider AML/CFT ecosystem, such as suspicious transaction reports and interception of funds suspected to be related to fraud, as well as helping to mitigate risks both at the level of individual AIs and the sector as a whole. 

A number of key observations and good practices are provided, including how AML/CFT systems should support the integration of external information and data, the common characteristics of AIs which are successful in enhancing AML/CFT systems through the use of such information and data as well as the need to consider performance measurement. 

As stored value facility (SVF) licensees also make use of information and data from various sources including typologies from FMLIT, the key observations and good practices from the thematic review are also relevant to the sector.

AIs & SVF licensees are expected to adopt the most appropriate arrangements, commensurate with the size, business scope and risks of individual AIs/SVF licensees, to optimize the performance of their AML/CFT systems by making reference to the key observations and good practices shared from the thematic review.

On 28 April 2021, the Securities and Futures Commission (SFC) reminded licensed corporations of the “Circular to licensed corporations Data Standards for Order Life Cycles” issued on 31 July 2019.

The Data Standards for Order Life Cycles (“DS-OL”) prescribe the minimum content and presentation format of trading-related data to be submitted by In-Scope Brokers to the SFC upon request, where In-Scope Brokers are defined as licensed securities brokers whose trading turnover in SEHK-listed equities in a calendar year (2018 or beyond) reaches or exceeds 2% of that year’s total market trading volume.

Securities brokers who qualify as In-Scope Brokers for the first time are generally expected to implement system changes and make other arrangements needed for compliance with DS-OL within 15 months of the relevant calendar year end. The implementation due date for both the 2018 batch and the 2019 batch is 30 April 2021.

In recent weeks, many In-Scope Brokers have submitted their trading data to the SFC for testing purposes and made enquiries, some of a general nature and some pertaining to their specific circumstances. The SFC is encouraged by the proactive steps taken by In-Scope Brokers to ensure their DS-OL compliance before 30 April 2021. Certain In-Scope Brokers may expect to receive SFC’s request soon as the SFC plans to shortly start deploying data analytics during SFC’s inspections to identify red flags of potential trading-related misconduct or control deficiencies.    

On 27 April 2021, the S.I. No. 188 of 2021 - Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (Commencement) Order 2021 was published in the Irish Statute Book.

The Instrument provides the date that the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (No. 3 of 2021) comes into operation.

• The 23 April 2021 is appointed as the day on which the Act of 2021, other than section 8, shall come into operation. 
• The 24 April 2021 is appointed as the day on which section 8 of the Act of 2021 shall come into operation.

On 27 April 2021, the S.I. No. 194 of 2021 - European Union (Anti-Money  Laundering: Beneficial Ownership of Trusts) Regulations 2021 was published in the Irish Statute Book.

The purpose of these Regulations is to give effect to Article 31 of Directive (EU) 2015/849, as amended by Article 1(16) of Directive (EU) 2018/843 (AMLD 5).

“Beneficial owner”, in relation to a relevant trust, means any of the following: 

(a) any individual who is entitled to a vested interest in possession, remainder or reversion, whether or not the interest is defeasible, in the capital of the relevant trust property;

(b) in the case of a relevant trust other than one that is set up or operates entirely for the benefit of individuals, the class of individuals in whose interest the trust is set up or operates; 

(c) any individual who has control over the relevant trust; 

(d) the settlor; 

(e) the trustee; 

(f) the protector.

These Regulations apply to a relevant trust whose trustees are resident in the State or which is otherwise administered in the State.

The Regulations provide:

1. Obligation for trustees to compile a beneficial ownership register: 

• Trustees to obtain and hold beneficial ownership information
• Individuals reasonably believed to be beneficial owners: duty to give particular notice to them
• Other particular steps that may be taken to establish identity of beneficial owners
• Duty to keep information in register up-to-date
• Notice to individual to confirm occurrence of change
• Duty of beneficial owner (in certain circumstances) to notify his or her status as such
• Duty of individual (in certain circumstances) to notify relevant change
• Offence for failure to comply
• Duty to keep and maintain a beneficial ownership register

2. Obligation of Trustees to File Beneficial Ownership Information in Central Register

• Discharge of initial central filing obligation – construction of that expression
• Delivery of information under this Part: delivery may be effected by persons external to trust (as well as by officers or employees of it)
• Registrar of Beneficial Ownership of Trusts
• Establishment and maintenance of central register
• Obligation of trustees to deliver beneficial ownership information to Registrar and related obligations of designated person where certain discrepancies discovered
• Information which shall be delivered to Registrar
• Duty to keep information in beneficial ownership register and central register aligned and up to date
• Unrestricted access to beneficial ownership information in central register
• Restricted access to beneficial ownership information in central register.

On 27 April 2021, the S.I. No. 191 of 2021 - European Union (Restrictive Measures Against Serious Human Rights Violations and Abuses) (No. 2) Regulations 2021 was published in the Irish Statute Book.

This regulation concerns the publication of Council Implementing Regulation (EU) 2021/371 of 2 March 2021. 

A person who contravenes a provision of this Council Regulation shall be guilty of an offence. A person who is guilty of an offence shall be liable:

(a) on summary conviction, to a class A fine or to imprisonment for a term not exceeding 12 months or both, or

(b) on conviction on indictment, to a fine not exceeding €500,000 or to imprisonment for a term not exceeding 3 years or both.

On 13 April 2021, the Central Bank of Ireland (CBI) published Consultation Paper CP141 - Crowdfunding Marketing Requirements. The closing date for submissions in respect of this Consultation Paper is 13 July 2021.

The purpose of this Consultation Paper is to set out the advertising rules that the Central Bank proposes to apply to crowdfunding services provided by CSPs to Irish consumers and to receive feedback with regard to these proposals.

A summary of the main advertising requirements from the Code that is proposed will apply to CSPs are as follows: 

• CSPs must include a regulatory disclosure statement in advertisements relating to regulated activities 
• CSPs will be required to ensure that an advertisement’s design, presentation and content is clear, fair, accurate and not misleading and does not influence a consumer’s attitude to the advertised product by ambiguity, exaggeration or omission 
• CSPs must ensure that an advertisement is designed so it can be reasonably understood to be an advertisement, the CSP’s name is shown and key information is prominent and not disguised 
• CSPs must ensure that warning statements meet certain criteria relating to presentation and should appear simultaneously with any benefits advertised 
• CSPs will be subject to specific requirements to ensure that any recommendations or commendations quoted within an advertisement are fair, accurate and not misleading and attributed to its source 
• CSPs using comparisons or contrasts in advertisements must use verified facts, or use reasonable assumptions, and be presented in a clear, fair and balanced way and not omit anything material to the comparison or contrast 
• CSPs must ensure that an advertisement which contains any acronyms states what the letters stand for.

It is proposed to require CSP advertisements to include a shortened version of the warning in the Key Investment Information Sheet (KIIS).

On 1 April 2021, the Central Bank of Ireland (CBI) published final guidance on Performance Fees of UCITS and certain types of Retail Investor AIFs, together with its Feedback Statement to Consultation Paper 134 on this guidance.

This Guidance applies only to UCITS and to Retail Investor AIFs other than those Retail Investor AIFs that are closed-ended and open-ended Retail Investor AIFs that have been established as EuVECA, EuSEF or follow venture capital, private equity or real estate strategies.

The Guidance applies at fund level. New classes within an existing in-scope fund with performance fees availing of the transition period shall continue to comply with the regulatory regime that applies to other classes within the fund.

The date of application of the Guidance is: 

a. for in-scope funds which are established or which amend or introduce a performance fee on or after 5 January 2021 the Guidance applies from the date of establishment, amendment or introduction.

b. for in-scope funds with existing performance fees as at 5 January 2021, the Guidance will apply from the beginning of the accounting period, which occurs six months after the Effective Date (5 July 2021)

The guidance provides information on:

• Performance fee calculation method
• Consistency between performance fee model and the fund’s investment objectives, strategy and policy
• Frequency for the crystallization of the performance fee
• Negative performance (loss) recovery
• Disclosure of the performance fee model

On 1 April 2021, the Central Bank of Ireland (CBI) issued the 38th edition of the Central Bank AIFMD Q&A, which includes two new Q&A’s:

• ID 1141: relates to raising capital from investors by way of a shareholder (unitholder) loan. The AIF Rulebook does not envisage or specifically permit arrangements which involve loans between an authorized AIF and its members (investors). Such arrangements would not appear to be consistent with the objective of collective investment on behalf of an authorized AIF’s members. The CBI may revisit this matter during future public consultations related to the CBI’s AIF Rulebook (and their subsequent conversion into regulations).
• ID 1142: relates to whether an authorized AIF can enter into transactions with its investors. Except as where expressly set out in relevant legislation, there appears to be no particular prohibition in the legislation or the AIF Rulebook to prevent an authorized AIF from entering into transactions with investors. However, the AIF Rulebook does not envisage that such transactions would take place. ID 1142 sets out the CBI’s expectations in this regard. The CBI may also revisit this matter during future public consultations related to the CBI’s AIF Rulebook. 

On 29 April 2021, the Central Bank of Ireland (CBI) published its statement on application of the temporary suspension of the obligation to publish RTS 27 reports.

The CBI welcomes ESMA’s statement and in line with the statement the CBI will not be prioritizing supervisory actions towards execution venues relating to the obligation to publish the RTS 27 reports until the date on which the national transposition measures of the amending Directive postpone that obligation in national law.

On 23 April 2021, the Central Bank of Ireland (CBI) published its Consultation Paper 142 on Prospectus Fees and Service Standards.

The aim of this consultation is to elicit views on the following matters: 

(i) Funding the cost of prospectus approval activities – proposals on the manner in which the CBI of Ireland (CBI) funds its prospectus approval activities in the future, including our proposal on the manner in which we will implement our strategy of moving towards full industry funding; and 

(ii) Prospectus approval service standards – proposals to revise the current prospectus approval service standards set out in the CBI’s Regulatory Service Standards Performance Report (Service Standards Report).

The consultation will remain open for 12 weeks from 23 April 2021 until 16 July 2021.

On 9 April 2021, the Central Bank of Ireland (CBI) published Consultation Paper CP140 - Cross Industry Guidance on Operational Resilience. The closing date for submissions is 09 July 2021.

The Central Bank of Ireland seeks stakeholders’ views on the proposed “Cross Industry Guidance on Operational Resilience”. In keeping with our strategic commitment of strengthening resilience throughout the financial system, it is important to continue to address existing vulnerabilities and weaknesses to ensure that it can better withstand future shocks and crises and to limit the impact of such events.

In developing these proposals we considered the responses to an Operational Resilience Maturity Assessment conducted across a sample of financial services firms in Q4 2020.    These self-assessments were designed to gain an understanding of firms’ views of their level of operational resilience preparedness.   In general, these indicated that firms need to build on existing business continuity management approaches to take an end-to-end business services approach to the operational resilience of critical or important business services.

On 12 April 2021, CONSOB announced that the temporary regime of enhanced transparency shall not be extended - this regime was introduced on 9 April 2020 and applied to Italian companies listed in Borsa, identified based on the shareholding structure (i.e. not controlled by law).

Therefore, from 14 April 2021, the ordinary legislation about transparency on changes in significant shareholdings and on statements of investment objectives will apply.

In particular, based on these ordinary provisions, the obligation to communicate changes in significant equity investments held in Italian companies listed on the Stock Exchange, it is triggered when the threshold below is met:

• 3% for enterprises qualified as "non-SMEs"
• 5% for companies qualified as "SMEs"

The obligations related to the exceeding of subsequent thresholds remain unchanged.

Regarding transparency on the investment strategy and its goals, the disclosure obligation is triggered when the threshold of 10%  is met.

On 1 April 2021, Banca d'Italia issued a communication on the governance and control process for retail banking products (so-called "POG", Product Oversight and Governance). The communication also contains a reference to financial inclusion.

The POG encourages financial intermediaries to focus on customers when elaborating commercial strategies: banks and financial intermediaries must take into account the needs and characteristics of the customers they target, at all stages of the product life cycle.

With this communication, Banca d'Italia focused on the importance of governance and control processes consistent with this objective.

In the communication, there is a reference to the recent reports of the European Banking Authority (EBA), which highlight best practices and criticalities across European countries, as well as critical aspects identified by Banca d'Italia concerning consumers' protection.

The communication also aims to spread awareness about the risks of financial exclusion of customers' segments from products and services, due, for instance, to the level of financial or digital skills.

Financial operators are also invited to take into account the needs of the most vulnerable customers' segments from the product design phase, according to the objectives set out in European legislation (EU Directive 2019/882), and to ensure the accessibility of websites and apps to customers with disabilities, in line with national legislation.

On 9 April 2021, CONSOB updated its Q&A regarding the knowledge and competence requirements of the staff of financial intermediaries, elaborated in order to achieve compliance with Article 78 of the Intermediaries Regulation, as last amended with CONSOB resolution no. 21755 of 10 March 2021.

This update was necessary following the review of the Title IX, of Part II, of Book III, of the Intermediaries Regulation, that replaced the previous regulatory provisions with the provision of ESMA's “Guidelines on assessment of knowledge and skills" (Guidelines for the assessment of knowledge and competence, ref. 2015/1886).

On 15 July 2020, the European Securities and Markets Authority (ESMA) published the final report deriving from the public consultation concerning the guidelines on disclosure requirements related to the prospectus regulation. These guidelines apply from 5 May 2021 and are addressed to the competent supervisory authorities and to market participants.

These guidelines aim to establish uniform, efficient and effective supervisory practices among the competent authorities in assessing the completeness, comprehensibility and consistency of the information contained in the prospectuses, as well as to ensure the common, uniform and consistent application of the disclosure requirements established by the Delegated Regulation (EU) 2019/980.

The guidelines update the previous CESR Recommendations (ESMA / 2013/319, in the revised version of 20 March 2013), therefore the references contained in previous CONSOB communications to the aforementioned CESR Recommendations on the prospectus are also replaced with the ESMA guidelines in question.

Since the prospectuses approved by CONSOB starting from 5 May 2021 must comply with the ESMA Guidelines, the attention of financial market participants is drawn to the need to draft prospectus complying with these Guidelines.

On 18 March 2021, CONSOB published a Q&A about ways in which listed companies can establish with shareholders (and in in particular with the controlling shareholder) information flows concerning information of a privileged nature, pursuant to market abuse regulations.

Considering the discipline related to selective information (i.e. selective disclosure), CONSOB provided guidelines about the conditions that may justify the transmission of information.

On 25 March 2021, CONSOB issued Resolution no. 21773, amending the “Manual of disclosure obligations for supervised entities”, adopted by CONSOB with Resolution no. 17297 of 28 April 2010.

Since CONSOB lost supervisory powers towards insurance companies regarding the direct distribution of insurance investment products (now covered by IVASS), with this Resolution CONSOB aims to cancel:

• Point I.13 relating to the “Reporting obligations of insurance companies"
• Annex II.14 containing "Data on the operations carried out by the insurance companies concerning the direct distribution of insurance financial products"
• Annex II.15 containing the "Report template on the procedures for distribution of insurance  financial products "
• Annex II.16 containing "Report on compliance checks on the regulations in the field of the distribution of insurance financial products.

On 1 April 2021, the Cellule de renseignement financier (CRF) published updated freezing of suspicious transactions Guideline. 

This document, applicable for all professionals subject to the AML/CFT Law, replaces the Guideline of 01.11.2018 on the freezing of suspicious transactions.

On 7 April 2021, the Chambre des députés - Luxembourg published amendments to the Draft Law 7723 transposing Directive (EU) 2019/2934 (IFD), certain provisions of Directive (EU) 2019/2177, and implementing Regulation (EU) 2019/2033 (IFR) and Article 4 of Regulation (EU) 2019/2175.

The amendments aim to:

1. Adjust the text proposed previously in order to ensure consistency between this Draft Law and the changes made to the amended law of 5 April 1993 on the financial sector by Draft Law No. 7638 implementing the CRD5/BRRD2.

2. Incorporate necessary modifications to transpose the following directives, given their short transposition deadlines: 

• Directive (EU) 2020/1504 of the European Parliament and of the Council of 7 October 2020 amending Directive 2014/65/EU on markets in financial instruments (Crowdfunding Directive) 
• Directive (EU) 2021/338 of the European Parliament and of the Council of 16 February 2021 amending Directive 2014/65/EU as regards information requirements, product governance and position limits, and Directives 2013/36/EU and (EU) 2019/878 as regards their application to investment firms, to help the recovery from the COVID-19 crisis (MiFID Quick Fix).

On 9 April 2021, the Commission de Surveillance du secteur financier (CSSF) published the CSSF Circular 21/769 regarding governance and security requirements for supervised entities to perform tasks or activities through telework.

The present circular defines the governance and security requirements with respect to the implementation and utilisation by an entity under the supervision of the CSSF of work processes based on Telework solutions.

It contributes to the sound and prudent management, the proper organisation of these Supervised Entities and the preservation of information security by providing guidance on the requirements the Supervised Entities have to comply with.

No approval by the CSSF is required in order to implement, maintain or extend Telework solutions for staff in a Supervised Entity.

This circular applies under normal general working conditions. It does not apply under pandemic situations (for example COVID-19) or in case of other exceptional circumstances having a comparable impact on the general working conditions. 

This circular is limited to financial sector regulatory requirements. All contractual relations between supervised entities and their employees are out of scope of the present circular. It does not create any precedence for rights or obligations on whether Telework may be implemented by entities under the supervision of the CSSF. Furthermore this circular does not interfere in any legal provisions that are part of the mandatory public policy provisions (règles d’ordre public) or 

part of the Luxembourg Labour Code. It is intended solely to provide additional guidance on the governance and security requirements to be followed when implementing Teleworking solutions for employees of entities supervised by the CSSF.

On 20 April 2021, the RBE - Register of Beneficial Owners informed that the RBE will soon be implementing the administrative procedure for delisting inactive entities from the website, which aims at automatically deleting all entities registered with the Trade and Companies Register (RCS), which have not filed with the RCS during the last ten years.

However, this “administrative radiation” procedure does not target traders who are natural persons, civil societies and public establishments. 

The entities concerned will be informed in advance by letter and, if necessary and within a period of one month, may present their observations and / or regularize their situation with the RCS.

On 6 April 2021, the Chambre des députés published amendment to the Draft Law 7737 transposing Directive (EU) 2019/1160 with regard to cross-border distribution of collective investment undertakings.

The purpose of this amendment is to include an additional sentence to Article 20, paragraph 3, subparagraph 1 of the amended law of 12 July 2013 on alternative investment fund managers. 

The amendment in question aims to clarify the accounting standards that alternative investment funds (AIFs) which take the form of a special limited partnership and which are exempt from the scope of Chapter II of the amended law of 19 December 2002 concerning the trade and company register as well as the accounting and annual accounts of companies, can use in order to comply with the provisions of paragraph 3 of article 20 of the GFIA law. The amendment enshrines the principle that these AIFs can use either Luxembourg standards (LUX GAAP), international financial reporting standards (IFRS), or the equivalent accounting standards of certain third countries.

On 6 April 2021, the Commission de Surveillance du secteur financier (CSSF) updated the registration form for an alternative investment fund manager (AIFM).

This AIFM registration form aims at providing the CSSF with information about compliance with article 3 of the AIFM Law as well as any applicable laws, rules and regulations relating to the AIFMD. 

An AIFM is eligible for registration if one of the following conditions of article 3 (2) of the AIFM Law is fulfilled: 

• it is an AIFM established in Luxembourg which either directly or indirectly, through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manages portfolios of AIFs whose assets under management, including any assets acquired through use of leverage, in total do not exceed a threshold of EUR 100 million; and thus deems itself to be eligible for the exemptions permitted by Article 3 (3) and (4) of the AIFM Law
• it is an AIFM established in Luxembourg which either directly or indirectly, through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manages portfolios of AIFs whose assets under management, including any assets acquired through use of leverage, in total do not exceed a threshold of EUR 500 million whereby the portfolios of AIFs consists of Alternative Investment Funds that are unleveraged and have no redemption rights exercisable during a period of 5 years following the date of initial investment in each AIF; and thus deems itself to be eligible for the exemptions permitted by Article 3 (3) and (4) of the AIFM Law. 

On 8 April 2021, the Commission de Surveillance du secteur financier (CSSF) updated its Notification form in accordance with Circular 02/77 concerning NAV calculation errors.

Within 4 to 8 weeks after the detection of an investment breach or NAV calculation error, the form should be submitted to the CSSF, thereby ensuring that each individual field is duly completed with the relevant information (including payment date of the compensation). 

The pre-notification option foreseen in the form can only be used on an exceptional basis in duly justified cases where the calculations and compensation processes necessary to remediate and correct NAV calculation errors or non-compliances of investment rules are more complex and time-consuming and thus do not allow entities to submit the duly completed form within 4 to 8 weeks.

On 20 April 2021, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 21/771 on the application of the  guidelines of the ESMA on disclosure requirements under the Prospectus Regulation.

The purpose of this circular is to inform that the CSSF, in its capacity as competent authority, applies the Guidelines of ESMA on disclosure requirements under the Prospectus Regulation (ESMA32-382-1138). Consequently, the CSSF has integrated the Guidelines into its administrative practices and regulatory approach with a view to promote supervisory convergence in this field at European level.

The present circular shall apply to market participants, including persons responsible for the prospectus under Article 5 (1) of the Prospectus Law which implements the Prospectus Regulation.

On 14 April 2021, the Commission de Surveillance du secteur financier (CSSF) published CSSF Circular 21/770 related to ESMA guidelines on the reporting under Articles 4 and 12 SFTR. 

The CSSF draws attention to the publication of an amended version of the ESMA “Guidelines on the Reporting under Articles 4 and 12 SFTR (Ref. ESMA-70-151-2838)” (hereafter the “Guidelines”), on 29 March 2021. The Guidelines are now also available in their translated versions on the ESMA  website Guidelines on Reporting Under SFTR (europa.eu) 

Given that the CSSF had integrated the initial version of those Guidelines into its administrative practices and regulatory approach with a view to promoting supervisory convergence in this field at European level, with effect on 9 April 2020, the purpose of this present circular is to integrate the amended version of the Guidelines into the CSSF administrative practices and regulatory approach. 

The amendments introduced in the Guidelines relate notably to:

• Reporting of collateral for margin lending (paragraph 49, 310 and 329)
• Event date vis-à-vis maturity date (paragraph 86)
• Update to tables 31 and 47
• Update to cross-reference to table 66 (instead of 73) in paragraph 269
• Align paragraph 290 with table 68
• Align paragraph 326 with table 79
• Amend paragraph 373 c to indicate the correct flow of collateral
• Amend paragraph 385 to align with the RTS and update Table 99  accordingly
• Amend Table 120 to align with the xml schema
• Substitute “derivatives” with SFTs in paragraph 476

This circular enters into force on the day of its publication. 

On 1 April 2021, the FINMA published its Organisational Regulations of the Executive Board and subordinate divisions of the Swiss Financial Market Supervisory Authority FINMA.

These regulations govern the organisation, cooperation and division of tasks between the management and the subordinate levels.

Version française

Le 1 avril 2021, l'Autorité fédérale de surveillance des marchés financiers (FINMA) a publié son Règlement d'organisation de la direction et des divisions subordonnées.

Le présent règlement règle l'organisation, la collaboration et la répartition des tâches entre la direction et les échelons subordonnés.

On 19 April 2021, the Autoriteit Financiële Markten (AFM) published its annual report 2020.

While the economy collapsed due to the pandemic, the stock market was highly volatile. Many consumers turned to the stock market in the coronavirus era. The long-expected Brexit passed off smoothly. The year 2020 also saw the new pensions system taking further shape, with the AFM continuing to stress that scheme members need to be better protected.

On 29 April 2021, the Autoriteit Financiële Markten (AFM) published a letter to inform all registered managers of alternative investment institutions (light managers) of relevant regulations.

In 2021, the AFM will investigate compliance with legislation and regulations by light managers.

Light managers with a registration are exempted from the Financial Supervision Act (Wft), but different rules apply. The sector letter  pays attention to, among other things, the ongoing registration conditions. In addition, in its letter, the AFM has provided a non-exhaustive overview of other applicable legislation and regulations with further explanation, such as the Sanctions Act and the Money Laundering and Terrorist Financing Prevention Act (Wwft).

On 13 April 2021, the Autoriteit Financiële Markten (AFM) published a report on the variable benefits for pension providers.

In brief

1. Better insight into the characteristics of participants' wishes

2. Choice guidance for variable pension benefits must be improved

3. Digital choice environment can help participants with complex choices

4. Communication in the event of a benefit reduction must be earlier

5. Research results relevant to new pension system

On 15 April 2021, the Autoriteit Financiële Markten (AFM) and Dutch Central Bank (DNB) launched a consultation on Regulation on Sound Remuneration Policies (Regeling beheerst beloningsbeleid Wft 2021 - Rbb 2021). The new regulation by the AFM and DNB replaces DNB's Rbb 2017.

New prudential framework and remuneration standards for investment firms

The IFD must be transposed into national laws and regulations by 26 June 2021. The IFD and the Regulation on Prudential Requirements for Investment Firms (IFR) replace, for most investment firms, the prudential requirements established by the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD). The IFD also includes remuneration rules for these investment firms. The aforementioned remuneration rules have been partly incorporated in the Implementation Act for the Directive on Prudential Supervision of Investment Firms (Implementatiewet richtlijn prudentieel toezicht beleggingsondernemingen) and partly introduced in the (draft) Rbb 2021.

The IFD and regulation

Annex A of the Rbb 2021 contains the remuneration rules for banks and investment firms that fall or will continue to fall within the scope of the CRR. Annex B contains the remuneration rules for investment firms that fall within the scope of the IFD/IFR and Annex C contains the remuneration rules for premium pension institutions. Annex A contains some textual adjustments and corrections to better reflect the wording of the CRD. Further, the provision on state aid that was deleted in the revision of the Rbb 2017 and has been reinstated in Annex A. The reason for doing so is that, while part of this provision is implemented in the Wft, it also contains a few rules that are an addition to the Wft. Annex C has not been altered. The changes in the Rbb 2021 compared to the Rbb 2017 mainly concern the implementation of the IFD in Article 3 and the newly added Annex B. 

Responding to the consultation until and including 14th of May 2021

Interested parties are invited to respond to the proposed Rbb 2021. The consultation by the AFM and DNB is open up until and including 14th of May 2021.

On 15 April 2021, the Ministry of Finance of the Netherlands proposed to amend the Implementation Act on the Prudential Supervision of Investment Firms Directive. 

The requirements of a prudential nature will be implemented in the Prudential Rules (Financial Supervision) Decree (Besluit prudentiële regels Wft), with DNB being charged with supervising compliance. Requirements with a behavioral component or of a more general nature will be implemented in the Decree on Conduct of Business Supervision of Financial Undertakings Wft, with respect to which the AFM is charged with supervising compliance.

This approach is based on the assumption that it is always possible to clearly distinguish whether a conduct of business requirement has a prudential objective or is aimed at conduct of business supervision or more general supervision. However, as the AFM also notes, this is not always the case, for example with requirements regarding the suitability and reliability of (day-to-day) policymakers.

The Division points out that for the sake of clarity and accessibility of regulations for the addressees of standards, it is important that, regardless of the objective of a standard, coinciding or related standards are included in the same regulation, for which a single supervisor is responsible for compliance. Moreover, this avoids a problem that might otherwise arise partly as a result of the cross-sectoral and functional classification of the Wft, namely double standards that are supervised by different supervisors.

In light of the above, the Division recommends that the explanatory memorandum be amended.

On 22 April 2021, the Ministry of Finance of the Netherlands launched a consultation on the  legal framework for the resolution of banks and investment firms. The consultation closes on 3 June 2021.

This bill introduces improvements in the legal framework for the resolution of banks and investment firms. This explicitly provides that the Dutch Central Bank is authorized to assess whether a non-significant bank is failing or likely to fail. It also concerns an amendment to the bankruptcy law for these institutions, from which it follows that the interest on a higher ranked claim is paid for the principal amount of a subordinated claim.

On 22 April 2021, the Ministry of Finance of the Netherlands launched a consultation on the Implementation of the PEPP Regulation. The consultation closes on 3 June 2021.

This decision regulates the implementation of the PEPP regulation. The AFM is appointed as the supervisory authority, whereby DNB can issue binding advice on certain grounds. In addition, sanctions for violations of the regulation are regulated.

As a result of the PEPP regulation, which has independent legal force, citizens know better which pension product meets the quality requirements. Providers of a pan-European pension product benefit from the fact that citizens know that their product meets those requirements.

On 27 April 2021, the Comicion Nacional del Mercado del valores (CNMV) published conclusions of the review of the obligation to report suspicious orders or transactions in 2020. 

Main findings:

• In 2020, 274 transactions that could constitute market abuse were reported to the CNMV. 
• 85% of the reports received were related to equity instruments, and in more than half of cases, the rationale is possible insider dealing.
• The quality of the reports has improved, both in absolute and relative terms, and more than half of the reports received have been classified as medium or medium-high quality.

On 28 April 2021, Spain transposed directives that strengthen the prevention of money laundering, reinforce the solvency of credit institutions and improve the mechanisms for protecting competition in the internal market.

Main findings:

• The transposition of the Directive on the prevention of money laundering and terrorist financing improves the control mechanisms and improves the transparency and availability of information
• The update of the regulations on solvency and resolution of credit institutions incorporates international agreements on capital requirements and on the loss-absorbing capacity of credit institutions
• The ECN + Directive is incorporated into the Spanish legal system, which establishes more effective mechanisms for the application of competition rules to guarantee the proper functioning of the internal market

1. On the prevention of money laundering and financing of terrorism:

The Royal Decree-Law transposes Directive 2018/843 (known by its acronym in English as AMLD5) into Spanish regulations, which incorporates new measures to strengthen systems for the prevention of money laundering and terrorist financing.

One of the main novelties is the inclusion of new obligated subjects who must comply with prevention measures, must be registered and will be supervised by the authorities. These new subjects include virtual currency service providers, including virtual currency exchange services for legal tender, or vice versa, and providers of electronic wallet custody or key safeguarding services. 

In addition, the identification system of the beneficial owners of legal persons is strengthened, for which a single registry system is created in which the already existing information of the beneficial owners in the Mercantile Registry and in the notarial databases will be included.

2. Directives on solvency and resolution of credit institutions

The Royal Decree-Law also transposes the fifth Directive on Capital Requirements (known by its acronym in English as CRD-V) and the second Directive on Restructuring and Resolution of Credit Institutions and Investment Services Companies (BRDD-II), included in the so-called “banking package”.

3. Strengthening competition in the internal market

Finally, the approved Royal Decree-Law transposes Directive 2019/1 (known by its acronym in English as ECN +) whose objectives are to provide the Member States with the necessary means to reinforce the effective application of the competition rules and guarantee the correct functioning of the internal market.

On 7 April 2021, Spain published Royal Decree 243/2021 of 6 April 2021 in the Official Gazette, which establishes regulations for the implementation of Council Directive (EU) 2018/822 of 25 May 2018 (DAC6) on reportable tax arrangements. The initial law for implementing the DAC6 requirements was published on 30 December 2020, which provided for the general obligations and penalties, but without detailed regulations.

Under Royal Decree 243/2021, regulations are provided that set out the detailed rules and procedures in relation to:

• The obligations for intermediaries and relevant taxpayers to disclose information on reportable arrangements;
• The required information on reportable arrangements to be disclosed;
• The application of the hallmarks for reportable arrangements;
• The obligations for intermediaries to disclose and update information on marketable arrangements on a quarterly basis; and
• The obligations for relevant taxpayers to submit an annual declaration on the use of reportable arrangements that have had to be previously declared, which is due in the last quarter of the calendar year following the year in which the arrangement is used.

Royal Decree 243/2021 also provides certain transitory provisions regarding the initial deadlines. This includes that the following must be declared within 30 calendar days after the relevant ministerial order enters into force:

• Reportable arrangements between 25 June 2018 and 30 June 2020;
• Reportable arrangements between 1 July 2020 and the date of the entry into force of the ministerial order; and
• Reportable marketable arrangements between 1 July 2020 and 31 March 2021.
• Royal Decree 243/2021 entered into force on 8 April 2021.

On 20 April 2021, the Comicion Nacional del Mercado del valores (CNMV) announced the cessation of the obligation for companies listed on regulated markets to publish quarterly financial information.

Spanish Law 5/2021, of 12 April, shall enter into force on 3 May. This law amends the Recast Text of the Spanish Corporate Enterprises Act, approved by Spanish Royal Legislative Decree 1/2010, of 2 July, and other financial regulations, with regard to fostering the long-term involvement of listed company shareholders.

Article 6(14) of such regulation, repealing Article 120 of the Spanish Securities Market Act, stipulates that issuers whose shares are admitted to trading on a Spanish regulated market or on another regulated market domiciled in the European Union, where Spain is their Home Member State, shall no longer be obliged, as from such date, 3 May, to submit to the CNMV or publish their interim management statements or quarterly financial reports.

However, as from the aforementioned date, issuers may continue to publish quarterly information, on a voluntary basis, but as it is not regulated information, it can no longer be submitted via the CNMV Virtual Office using the IPP (periodic financial report) “Interim Financial Reports” procedure for issuers of securities admitted to trading. Issuers must use the “Other relevant information” procedure, or where appropriate, submit the information as “Inside Information”.

On 13 April 2021, Spain publishes Law 5/2021 of 12 April 2021, that transposes Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017  in with regard to promoting long-term involvement of shareholders in listed companies and developing other regulatory improvements regarding corporate governance and the operation of capital markets. 

The effective and sustainable involvement of shareholders is one of the cornerstones of the corporate governance model of listed companies and constitutes the appropriate way to help improve their financial and non-financial performance, that is, also in terms of factors environmental, social and management

The transposition of Directive 2017/828 into the Spanish legal system according to its own explanatory memorandum:

• It will improve the long-term financing received by listed companies through capital markets;
• Increase transparency in the actions of capital market agents and in relation to the remuneration of directors or the performance of operations between the company and its related parties

On 24 March 2021, the UK Government published HM Treasury Advisory Notice on Money Laundering and Terrorist Financing controls in higher risk jurisdictions, which provides that:

• At the end of the Transition Period, any amendments made by the European Union to their list of high-risk third countries do not have effect in the UK
• The UK will shortly be introducing legislation which will define high risk third countries with a specific list of countries that replicates the Financial Action Task Force’s list of Jurisdictions under Increased Monitoring and the list of High-Risk Jurisdictions subject to a Call for Action. Once this legislation takes effect HM Treasury will issue a further Advisory Notice.

On 26 April 2021, the S.I. 2021 No. 488 - The Global Anti-Corruption Sanctions Regulations 2021 was published in the UK legislation.

The purpose of this instrument is to prevent and combat serious corruption. This instrument enables the Secretary of State to impose financial sanctions and travel bans on persons involved in serious corruption.

The Regulations:

• confer a power on the Secretary of State to designate persons who are, or have been, involved in serious corruption. Designated persons may be excluded from the United Kingdom and may be made subject to financial sanctions, including having their funds or economic resources frozen. 
• provide for certain exceptions to this sanctions regime (for example to allow for frozen accounts to be credited with interest or other earnings and to allow acts done for the purpose of national security or the prevention of serious crime). 
• confer powers on the Treasury to issue licenses in respect of activities that would otherwise be prohibited under the Regulations. 
• set out the purposes under which the Treasury will issue such licenses. 
• prescribe powers for the provision and sharing of information to enable the effective implementation and enforcement of the sanctions regime. 
• make a criminal offence to contravene, or circumvent, any of the prohibitions in these Regulations and prescribe the mode of trial and penalties that apply to such offences.

Here are two UK Statutory Instruments on Global Anti-Corruption Sanctions.

1.On 29 April 2021, the S.I. 2021 No. 525 - The Global Anti-Corruption Sanctions (Overseas Territories) Order 2021 was published in the UK legislation.

This Order extends with modifications the Global Anti-Corruption (Sanctions) Regulations 2021 (S.I. 2021/488) (“the Global Anti-Corruption Regulations”) as amended from time to time to all British overseas territories except Bermuda and Gibraltar (which implement sanctions under their own legislative arrangements).

The Global Anti-Corruption Regulations, as modified and extended to the British overseas territories listed in Schedule 1 by this Order (“the modified Regulations”), 

• Provide that a person designated by the Secretary of State for being, or having been, involved in such activities, is a designated person for the purposes of the modified Regulations. Designated persons may be excluded from the territory and may be made subject to financial sanctions, including having their funds or economic resources frozen. 
• Provide for certain exceptions to this sanctions regime. The Governor may, with the consent of the Secretary of State, issue a licence in respect of activities that would otherwise be prohibited under the modified Regulations.
• Set out the purposes pursuant to which the Governor may issue such licenses. 
• Require the Governor of the relevant territory to publish an up-to-date list of designated persons
• Prescribe powers for the provision and sharing of information to enable the effective implementation and enforcement of the sanctions regime. 
• Make it a criminal offence to contravene, or circumvent, any of the prohibitions in the modified Regulations and prescribe the penalties that apply to such offences. 
• Extend to the territories for the purposes of the modified Regulations specific provisions of Part 1 of the Sanctions Act, namely provisions relating to protection for acts done for purposes of compliance, Crown application and saving for prerogative powers.

2. On 29 April 2021, the S.I. 2021 No. 526 - The Global Anti-Corruption Sanctions (Isle of Man) Order 2021 was published in the UK legislation.

This Order extends to the Isle of Man with modifications the Global Anti-Corruption Sanctions Regulations 2021 (S.I. 2021/488) (“the Global Anti-Corruption Regulations”) as amended from time to time. 

The Global Anti-Corruption Regulations, as modified and extended to the Isle of Man by this Order:

• Provide that a person designated by the Secretary of State for being, or having been, involved in such activities, is a designated person for the purposes of the modified Regulations. Designated persons may be excluded from the Isle of Man and may be made subject to financial sanctions, including having their funds or economic resources frozen. 
• Provide for certain exceptions to this sanctions regime. The Treasury of the Isle of Man may issue a license in respect of activities that would otherwise be prohibited under the modified Regulations. 
• Set out the purposes pursuant to which the Treasury may issue such licenses. 
• Require the Treasury to publish an up-to-date list of designated persons. 
• Prescribe powers for the provision and sharing of information to enable the effective implementation and enforcement of the sanctions regime. 
• Make it a criminal offence to contravene, or circumvent, any of the prohibitions in the modified Regulations and prescribe the mode of trial and penalties that apply to such offences. 
• Extend to the Isle of Man for the purposes of the modified Regulations specific provisions of Part 1 of the Sanctions Act, namely provisions relating to guidance about prohibitions and requirements, protection for acts done for purposes of compliance and saving for prerogative powers.

On 21 April 2021, the Bank of England (BoE) published the updated version of UK Money Markets Code. The updated Code has been recognized as an industry standard by the FCA.

The overarching Principles of the Code have not changed, but there have been some significant changes in the following five areas:

• Diversity and Inclusion. The updated Code recognizes and promotes the benefit of diverse and inclusive money market participants’ teams.
• Working from Home. The updated Code reflects the response to Covid-19, and emphasizes it is acceptable to work from home, provided the same level of robust systems and controls are applied.
• Environmental, Social and Governance (ESG) Criteria. ESG criteria are becoming increasingly relevant to financial markets. The updated Code adds commentary about the increasing importance of ESG.
• Electronic Trading. Electronic trading via platforms is now more widely used than in 2017, especially in the repo market. The updated Code sets out how it applies to such trading and details best practice for using electronic venues.
• Trade Settlement Discipline. The updated Code stresses the importance of high standards of settlement discipline, in response to concern in the market that the level of non-settled trades has increased.

On 29 April 2021, the Financial Conduct Authority (FCA) published Insights from the 2020 Cyber Coordination Groups.

The key insights discussed in this publication are:

1. Some of the major cyber threats and risks that CCG member firms have been faced with include: ransomware attacks, denial of service attacks, cloud security, insider threats and inadequate supply chain oversight and security.

2. CCG firms have identified Zero Trust Security models and Artificial Intelligence as some of the emerging fields within cyber-security.

3. The change to remote working has put additional strain on cyber-security teams and systems, requiring the need to re-evaluate existing cyber risks and controls. The changed ways of working have also exacerbated the challenges caused by ransomware, supply chain security and insider threats.

4. There are several common good practices that can be used to mitigate supply chain risks. CCG members identified fourth-party supply chain and Cloud Service Provider (CSP) risks as unique challenges in this space and shared potential mitigation strategies. CCG members also identified shared assurance models as potentially promising improvements to the way firms assess supply chain risk.

On 16 April 2021, the Financial Conduct Authority (FCA) published its letter to the HM Treasury on the Progress of the its Transformation Program.

The letter covers the progress for:

• Strengthening the FCA structure
• Operational improvements
• Actions to implement Review recommendations
• Transformation: FCA's investment in technology to support better use of data; and a fresh approach to tackling firms and individuals who do not meet the required standards.
• Recommendations for HM Government.

On 20 April 2021, the Financial Conduct Authority (FCA) published its Consultation paper CP21/8: FCA regulated fees and levies: Rates Proposals 2021/22. 

On 23 April 2021, the FCA published an updated version of CP21/8 which amends the description of the A.5 fee-block in paragraphs 2.66 and 3.22 from “managing general agents in the A.5 fee-block” to the correct description “managing agents at Lloyd’s in the A.5 fee-block”.

This applies to

• All fee payers will be affected by this consultation.
• Although fees are indirectly met by financial services consumers, there isn’t anything directly relevant to them or consumer groups in the consultation paper. 

The FCA proposes to change:

• FCA 2021/22 fees
• Fee-rates
• Not to increase minimum fees by the 2% increase due to COVID-19
• Double payment of fees by UK data reporting service providers (DRSPs)
• Application fees for peer-to-peer lending from moderately complex to complex
• Authorization application fees
• Funeral plans
• Financial Ombudsman Service general levy
• Money and Pensions Service levies
• Devolved Authorities debt advice levy
• Illegal money lending (IML) levy.

The consultation lasts until 25 May 2021.

On 29 April 2021, the Financial Services Act 2021 was published in the UK legislation. 

The Act amends existing laws on financial services in 17 distinct areas. In brief, grouped by its three stated objectives, these areas are:

Objective 1: Enhancing the UK’s world-leading prudential standards and promoting financial stability

1. Investment Firms Prudential Regime (IFR): Clauses 1 and 2 of the Act provide a framework for the UK’s own IFR, to be similar in substance to that being introduced in the EU and largely implemented in rules to be made by the UK Financial Conduct Authority (FCA).

2. Implementation of Basel III: Clauses 3 to 7 of the Act amend existing laws, and grants the Treasury the power to make further amendments in future, in connection with the implementation of the Basel III standards. The Act also introduces an enhanced “accountability framework” with a list of matters the PRA must have regard to when exercising its rule-making powers.

3. LIBOR transition: Clauses 8 to 19 grant the FCA greater powers to compel the continued publication of benchmarks, to prohibit the use of benchmarks, and to oversee the orderly “wind-down” of benchmarks.

4. Benchmarks - extension of third-country transitional period: Clause 20 extends this transitional period again for a further three years while the Government considers a longer-term response to this issue. Clause 21 makes minor and consequential amendments as a result of the changes made in the Act.

Objective 2: Promoting openness between the UK and overseas markets

5. Gibraltar Authorisation Regime: The Act sets out arrangements for implementing and running the new regime, which would be based on compliance with the objectives of the Act, alignment of law and regulatory oversight in both jurisdictions, and cooperation between parties on both sides.

6. Overseas Funds Regime: Clauses 24 to 26 introduce a simplified new regime for granting marketing approval to overseas retail funds (including non-EU funds), based on whether the Treasury considers the jurisdiction where that fund is based to have “equivalent” investor protections to its own regime. A separate “equivalence” regime will also be introduced for money market funds. For funds whose countries do not benefit from an equivalence determination, the existing recognition process is being simplified. 

7. MiFIR: Clause 27 amends MiFIR to broadly reflect changes made by the EU. The changes include granting the FCA powers to specify reporting requirements, changes to the “equivalence” assessment criteria, granting the Treasury powers to impose specific requirements on firms registered under the regime, and additional powers for the FCA (under a procedure) to restrict or withdraw the recognition of specific firms using the regime.

Objective 3: Maintaining the effectiveness of the financial services regulatory framework and sound capital markets

8. Cancellation of the authorization of firms: Clause 28 introduces a new procedure to allow the FCA to cancel or vary an inactive firm’s authorization to perform certain regulated activities. 

9. Amendments to the MAR: The Act clarifies that both issuers and those acting on their behalf or on their account must maintain such lists. The second change extends the time issuers have to notify the public of senior managers’ transactions in their instruments (such as shares) from within three business days of the transaction to within two working days of it being notified by the senior manager.

10. Extending the maximum criminal sentence for market abuse: Clause 30 increases the maximum sentences to ten years’ imprisonment to bring it into line with fraud, which the Government considers to be a comparable economic crime.

11. Application of money laundering regulations to overseas trustees: Clause 31 amends Sanctions and Anti-Money Laundering Act 2018 to ensure that regulations made by the Government relating to the enabling, detection or investigation of money laundering can apply to foreign trustees of trusts with links to the UK. 

12. Debt Respite Scheme: The Act provides greater powers for the Government to implement the second part of the Debt Respite Scheme, the Government’s strategy to help individuals struggling with problem debt: the statutory debt repayment plan (SDRP). The SDRP will be introduced by regulations.

13. Successor accounts for Help-to-Save savers: Clause 33 amends existing legislation to allow the Treasury to make regulations for the transfer of these savings into successor accounts (which may be interest-bearing) in the absence of instructions from the account holder.

14. Amendments to the PRIIPS Regulation: Clause 34 amends the PRIIPs Regulation, as it applies in the UK from 2021, to empower the FCA to make rules to specify which products are within the scope of the PRIIPs Regulation and to amend the disclosure requirements for products within its scope, with the aim of increasing the accuracy of information provided to investors.

15. Amendments to the EMIR: Clause 35 amends EMIR, as it applies in the UK from 2021, to reflect changes made at EU level which will only come into force after the UK leaves the European single market. 

16. Financial Collateral Arrangements: Clause 36 affirms that the legislation is valid and should be treated as such, to avoid any doubt that might be raised by a future legal challenge as to whether the UK implementing regulations were correctly made. 

17. Appointment of the FCA Chief Executive.

On 28 April 2021, the Financial Conduct Authority (FCA) published its evaluation report of the Digital Sandbox pilot.

The key lessons from the pilot: 

• There is significant industry demand, particularly from early-stage firms and start-ups, for a digital testing environment. 
• Access to the digital sandbox was successful in accelerating early stage PoC development and improving product design, to varying degrees. 
• The synthetic data was the most valuable feature cited by participants while simultaneously the one with greatest potential for improvement. 
• Future cohorts should have a narrower focus. The pilot covered 3 broad areas exacerbated by the Covid-19 pandemic; scams and fraud, consumer vulnerability, and SME financing. 
• The core set of tools/features made available in the pilot successfully met an underserviced market need. 
• The application and approval process should be brought forward, and successful applicants onboarded earlier in the process.
• Participants would benefit from a more structured journey through the cohort, rather than the digital sandbox being a ‘self-service’ platform. 

The FCA will: 

• Run a second cohort of the digital sandbox in late 2021. 
• Further iterate and improve the digital sandbox testing environment by incorporating the lessons learned from the initial pilot and making the suggested improvements to the platform. 
• Expand on the use of the digital sandbox testing environment to highlight the opportunities and value it contributes to the financial services ecosystem. 
• Focus the efforts of this second cohort around the theme of Sustainability/ climate change to support the UK’s green finance ambitions ahead of hosting COP26 in November 2021. 
• Explore, with industry and other stakeholders, viable sustainable operating models for a future, permanent version of the digital sandbox.

On 29 April 2021, the Financial Conduct Authority (FCA) published Discussion paper DP 21/1 on Strengthening our financial promotion rules for high-risk investments and firms approving financial promotions.

The discussion paper focuses on 3 main areas where the FCA intends to strengthen its financial promotion rules to help investors make more effective decisions that meet their savings and investment needs:

• The classification of high-risk investments: The FCA’s classification of investments determines the level of marketing restrictions that applies to that investment. The FCA is seeking views on whether more types of investments should be subject to marketing restrictions and what marketing restrictions should apply, for example for equity shares and Peer-to-Peer agreements.
• Further segmenting the high-risk investments market: The FCA is concerned that despite its existing marketing restrictions, too many consumers are still investing in inappropriate high-risk investments which do not meet their needs. Therefore, the FCA plans to strengthen its rules to further segment high-risk investments from other investments and is seeking views on how best to achieve this. The FCA is considering what improvements could be made to risk warnings, which are often perceived as white noise to many investors and often do not convey the genuine possibility of an investment loss. Other suggestions in the paper include requiring consumers to watch educational videos or to pass an online test to demonstrate sufficient knowledge about financial products. This could help prevent consumers from simply clicking through and accessing high-risk investments that they do not understand.
• The approval of financial promotions: Firms which approve financial promotions for unauthorised persons play a key role in ensuring those promotions meet the standards FCA expects. The FCA is seeking views on whether there should be more requirements for these firms to monitor a financial promotion on an ongoing basis, after approval, to ensure it remains clear, fair and not misleading.

The FCA is inviting feedback on its discussion paper by 1 July 2021. 

On 28 April 2021, the Financial Conduct Authority (FCA) published consultation paper CP21/9 on Changes to UK MIFID’s conduct and organizational requirements, which lasts until 23 June 2021.

It applies to:

• investment firms and market operators in the UK
• banks and Collective Investment Scheme operators providing investment services
• firms providing investment advice and reception and transmission of orders who did not opt into MiFID (‘Article 3’ firms)
• firms providing research that FCA does not authorise.

Key proposals:

1. SME and Fixed Income, Currencies and Commodities (FICC) research

• The FCA proposes to change the existing inducements rules relating to research. 
• These changes broadens the list of what are considered minor non-monetary benefits to include research on SMEs with a market cap below £200m and FICC research, so that it is not subject to the inducement rules. 
• The FCA also has made rule changes on how inducement rules apply to openly available research and research provided by independent research providers. 

2. Best execution reports: The FCA proposes to remove two sets of reporting obligations on firms: 

• The obligation on execution venues to publish a report on a variety of execution quality metrics to enable market participants to compare execution quality at different venues (known as RTS 27 reports) 
• The obligation on investment firms who execute orders to produce an annual report setting out the top 5 venues used for executing client orders and a summary of the execution outcomes achieved (known as RTS 28 reports.

On 19 April 2021, the Financial Conduct Authority (FCA) published Consultation paper CP21/7 on a new UK prudential regime for MiFID investment firms, which lasts until 28 May 2021.

This is the second phase of proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR). IFPR is a new prudential regime for UK firms authorized under the Markets in Financial Instruments Directive (MiFID).

The new regime will streamline and simplify the prudential requirements for MiFID investment firms that are prudentially regulated by the FCA in the UK (FCA Investment Firms). It represents a major change for investment firms. It is critical that firms adequately prepare for the regime.

The IFPR will refocus prudential requirements and expectations away from the risks the firm faces, to also consider and manage the potential harm the firm itself can pose to consumers and markets.

To accompany this consultation, the FCA also published: 

• proposed templates for the new reporting to support the IFPR 
• guidance for completing these templates. 
• proposed forms for applications and notifications. 

The proposed rules will apply to: 

• Any MiFID investment firm authorized and regulated by the FCA that is currently subject to any part of the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR) including:
  i. investment firms that are currently subject to BIPRU and GENPRU
  ii. ‘full scope,’ ‘limited activity’ and ‘limited license’ investment firms currently subject to IFPRU and CRR
  iii. ‘local’ investment firms
  iv. matched principal dealers
  v. specialist commodities derivatives investment firms that benefit from the current exemption on capital requirements and large exposures
  vi. ‘exempt CAD’-firms
  vii. investment firms that would be exempt from MiFID under Article 3 but have ‘opted-in’ to MiFID
• Collective Portfolio Management Investment Firms (CPMIs).

On 14 April 2021, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) published a joint statement welcoming the Financial Stability Board’s (FSB) Peer Review of the UK’s remuneration regime.

The UK authorities will continue to work together to take these forward when delivering on their regulatory objectives. In all cases, the timings for taking the recommendations forward will be balanced against other regulatory priorities.

On 23 April 2021, the Bank of England (BoE) informed that the changes to the provision of U.S. dollar repo operations will be effective as of 1 July 2021.

In view of the sustained improvements in U.S. dollar funding conditions and low demand at recent U.S. dollar liquidity-providing operations, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank, in consultation with the Federal Reserve, have jointly decided to discontinue offering dollar liquidity at the 84-day maturity.

From 1 July 2021 onwards, these central banks will continue to hold weekly operations with a 7-day maturity.  These central banks stand ready to re-adjust the provision of U.S. dollar liquidity, including restarting the 84-day operation, as warranted by market conditions.

On 6 April 2021, the Financial Conduct Authority (FCA) added users guides for adding or amending certified and assessed persons data, which concern its Senior Managers and Certification Regime (SM&CR).

On 22 April 2021, the S.I. 2021 No. 494 - The Recognized Auction Platforms (Amendment and Miscellaneous Provisions) Regulations 2021 was published UK legislation.

This instrument is being made as part of the legislative effort to establish a United Kingdom (“UK”) Emissions Trading Scheme (“ETS”) and accompanying emission allowance market.

This instrument updates existing UK provisions to reflect that the UK is no longer part of the EU ETS but has now established the UK ETS. The holding of a UK auction of emissions allowances will, if approved by Parliament, be governed by the Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021. This instrument is specifically concerned with amendments to financial services law that govern access to a UK ETS auction platform, what is required of an auction platform, and the auctioning and trading of emissions allowances as financial instruments.

On 23 April 2021, the S.I. 2021 No. 484 - The Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021 was published in the UK legislation.

These Regulations make provision under the Finance Act 2020 for auctions of allowances to emit 1 tonne of carbon dioxide equivalent created under the Greenhouse Gas Emissions Trading Scheme Order 2020, which particularly provide for:

• The products to be auctioned, and how bids are to be submitted and withdrawn, and how the auction clearing price is to be determined. 
• The auction calendar and when that calendar may be adjusted. It sets out what happens to the volume of allowances at cancelled auctions, what volume of allowances is to be auctioned annual, and provides for a cost containment mechanism, enabling the Treasury to the distribution or volume of allowances to be auctioned in any one year if the carbon price exceeds specified limits. 
• Access to auctions. 
• The appointment and functions of the auctioneer and the auction platform, and their appointment requirements. 
• The reporting of transactions. 
• The payment and transfer of the auction proceeds. 
• The delivery of the auctioned allowances. 
• The management of collateral. 
• The fees and costs. 
• The monitoring of auctions, remedial measures and sanctions. 
• The publication of auction results and protection of confidential information and 
• The right of appeal, and the correction of errors.

Here are two remarks from the FCA on sustainable finance strategy and climate-related reporting requirements.

1. On 23 April 2021, the Financial Conduct Authority (FCA) published its remarks on FCA's TCFD-aligned reporting requirements, which companies and firms fall in scope of the rules, and FCA's plans for extending the requirements. 

TCFD reporting requirements 

• FCA focused initially on introducing TCFD-aligned disclosure rules for premium listed companies.
• FCA has been developing proposals to extend the scope of issuers covered by FCA’s rules. 
• FCA also plans to consult on new TCFD-aligned disclosure rules for: asset managers, life insurers, FCA-regulated pension schemes 

UK listed commercial companies with a premium listing: If the company falls within the scope of this rule, the company must include a statement in its annual financial report setting out:  

• whether the company has made disclosures consistent with the TCFD’s recommendations and recommended disclosures in your annual financial report 
• where the company has included some, or all, of its disclosures in a document other than its annual financial report, an explanation of why and a reference to where the disclosures can be found 
• where the company has not made disclosures, an explanation of why, and a description of any steps to be taken or plan to take to be able to make consistent disclosures in the future – including relevant timeframes 

FCA disclosure regime for ESG matters: firms are subject to a range of disclosure requirements:

• listed issuers 
• other issuers with securities admitted to trading on regulated markets 
• other entities in scope of requirements under the Market Abuse Regulation (MAR) and the Prospectus Regulation.

2. On 23 April 2021, the Financial Conduct Authority (FCA) published its remark on FCA's sustainable finance strategy.

FCA's sustainable finance strategy is based on 3 themes: 

• Transparency: Promoting good disclosures along the investment chain. 
• Trust: Ensuring that the market delivers sustainable finance instruments and products that genuinely meet investors’ sustainability preferences.  
• Tools: Government, regulators and industry all working together to share experience, develop guidance and tools, and provide mutual support as we address the challenges of climate change.  

On 29 April 2021, the S.I. 2021 No. 511 - The Greenhouse Gas Emissions (Kyoto Protocol Registry) Regulations 2021 was published in the UK legislation.

The purpose of this instrument is to amend retained EU law related to the UK’s Kyoto Protocol (“KP”) registry, and to KP projects, to ensure that it will be operable in the UK. 

The KP is a protocol to the United Nations Framework Convention on Climate Change (“the UNFCCC”), which is an international climate change treaty. The KP set out emission reduction obligations that applied for the period up to 31st December 2020 for certain countries, including the EU Member States and the UK.

This instrument is necessary to: 

a) make operability amendments to the Registries Regulation to reflect that the UK’s KP registry is no longer housed on the CSEUR and that EU entities have ceased to have functions in relation to the UK. This ensures that the UK KP registry, which will be housed on a new UK software platform going forwards, has a clear legal basis on which to function. 

b) revoke provisions of the Registries Regulation related to the EU ETS. These are no longer relevant because the UK Government and Devolved Administrations have created the UK Emissions Trading Scheme including the UK ETS Registry via the Greenhouse Gas Emissions Trading Scheme Order 2020 and the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020. 

c) remove the obligation in the 2005 Regulations on the Environment Agency to comply with EU law. The legislation is being amended so that the Environment Agency must instead act consistently with the UK’s relevant international climate law obligations.

Here are two SEC statements concerning the accounting and reporting considerations for warrants issued by SPACs under the Securities Law.

1. On 8 April 2021, the U.S. Securities and Exchange Commission (SEC) published a statement on SPACs, IPOs and Liability Risk under the Securities Laws.

The statement addresses the legal liability that attaches to disclosures in the de-SPAC transaction. Some – but far from all – practitioners and commentators have claimed that an advantage of SPACs over traditional IPOs is lesser securities law liability exposure for targets and the public company itself. They sometimes specifically point to the Private Securities Litigation Reform Act (PSLRA) safe harbor for forward-looking statements, and suggest or assert that the safe harbor applies in the context of de-SPAC transactions but not in conventional IPOs.[7] This, such observers assert, is the reason that sponsors, targets, and others involved in a de-SPAC feel comfortable presenting projections and other valuation material of a kind that is not commonly found in conventional IPO prospectuses.

2. On 12 April 2021, the U.S. Securities and Exchange Commission (SEC) published a statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”). 

This statement highlights the potential accounting implications of certain terms that may be common in warrants included in SPAC transactions and to discuss the financial reporting considerations that apply if a registrant and its auditors determine there is an error in any previously-filed financial statements.