CACEIS January 2021


CONTENT

CACEIS

EUROPEAN UNION

Benchmarks Regulation (BMR)

EFAMA publishes remarks on ECB CP on EURIBOR Fallback Trigger Event & €STR-based EURIBOR Fallback rates

CACEIS

  • On 15 January 2021, the European fund and Asset Management Association (EFAMA) published its remarks on ECB CP on EURIBOR Fallback Trigger Event & €STR-based EURIBOR Fallback rates:

    • Asset managers represent an important group of benchmarks’ users. In this context, EURIBOR rate is used by investment funds across all kinds of asset classes and financial instruments, as well as a benchmark for measuring fund performance, driving fee calculations and determining asset allocation.
    • The identification of fallback rates for the contract with reference to EURIBOR are essential for asset managers and a stable and permanent approach would make the fallback clauses more robust and ensure further transparency.
    • For any new rate to be relevant from the asset managers’ perspective, it needs to be as representative as possible of the activity and the market-based funding costs in the market segment it covers. Moreover, transparency as to the underlying methodology used in each step of the calculation of the fallback benchmark remains critical.
    • Concerning the appropriate methodology to be used in order to build a €STR-based term structure that could function as a EURIBOR fallback, EFAMA believes that, while in principle, a forward-looking fallback rate seems appropriate given that EURIBOR is also forward looking, EFAMA still sees  merits in backward looking methodologies. 
    • EFAMA suggested a cautious approach and choice between forward-looking and backward looking methodologies with the main aim to avoid market inconsistencies. The importance of maintaining consistency between asset classes for hedging purposes and cross asset class investment strategies is one that cannot be understated. 
    • What remains critical is a consistent approach firstly among asset classes and to the extent this isn’t always feasible a common understanding of the best approach for every asset class. 
    • A workable solution would also be to base the fallback definition on an OIS benchmark. Having a daily publication of a fixed rate which equals the market expectation of the overnight-compounded term rate has the advantage that like the EURIBOR term rates, the floating rate is known at the beginning of the accrual period and represents a forecast of rates on the right accrual period.
  • EP publishes its position on the adoption of Regulation on the exemption of certain third country spot foreign exchange benchmarks and the designation of replacements for certain benchmarks in cessation

    CACEIS

  • On 19 January 2021, the European Parliament (EP) published its position on the adoption of regulation on the exemption of certain third country spot foreign exchange benchmarks and the designation of replacements for certain benchmarks in cessation.

    Among others, the EP included amendments to Regulation (EU) No 648/2012 (EMIR) into the text to clarify that legacy contracts will not be subject to clearing or margin requirements if those contracts are amended for the sole purpose of replacing the benchmark they reference against the background of a benchmark reform:

    • That exception applies only to contractual amendments necessary to implement or prepare for the implementation of a replacement for a benchmark due to a benchmark reform or necessary to introduce fallback provisions in relation to a benchmark in order to enhance the robustness of the relevant contracts. 
    • Those amendments should serve to provide clarity to market participants and should not affect the scope of the clearing and margin obligations in relation to amendments of OTC derivative contracts for other purposes or in.

    Concerning the amendments to BMR, the EP concerns:

    • the extension of the transitional period for third-country benchmarks for a maximum of two years
    • the  adoption by the Commission of an implementing act designating a replacement for a benchmark should not prevent parties to a contract from agreeing to apply a different replacement for that benchmark.

    The EP's position is to put this Regulation enter into force a matter of urgency, in view of the fact that LIBOR will no longer be a critical benchmark within the meaning of Regulation (EU) 2016/1011 (BMR) as of 1 January 2021.

  • EU publishes Regulation amending Regulation (EU) 2016/1011 as regards the exemption of certain third-country spot foreign exchange benchmarks and the designation of replacements for certain benchmarks in cessation amending Regulation (EU) No 648/2012

    CACEIS

  • On 22 January 2021, the Council of the EU published a Regulation of the European Parliament and of the Council amending Regulation (EU) 2016/1011 as regards the exemption of certain third-country spot foreign exchange benchmarks and the designation of replacements for certain benchmarks in cessation, and amending Regulation (EU) No 648/2012 as well as an ‘I’ item note on the draft Regulation inviting the Permanent Representatives Committee to decide that the Council may use the written procedure to adopt the legislation.

    The Regulation introduces the definition of a “spot foreign exchange benchmark”: a benchmark which reflects the price, expressed in one currency, of another or a basket of other currencies, for delivery on the earliest possible value date. 

    By 31 December 2022, the Commission shall conduct a public consultation to identify spot foreign exchange benchmarks that fulfil the criteria laid down in the Regulation. By 15 June 2023, the Commission shall adopt a delegated act in accordance with Article 49 to create a list of spot foreign exchange benchmarks that fulfil the criteria laid down in paragraph 1 of this Article.

    The Regulation also provides for a new chapter on the scope of the statutory replacement of a benchmark as well as a new chapter on the replacement of a benchmark by Union law and by national law.

    Finally, the Regulation clarifies some amendments to legacy contracts for the purpose of the implementation of benchmark reforms.

    This Regulation shall apply from the day following that of its publication in the Official Journal of the European Union.

  • Brexit

    Here are four MoU established between the ESMA and the UK FCA

    CACEIS

  • 1. On 4 January 2020, the European Securities and Markets Authority (ESMA) published Memorandum of Understanding concerning consultation, cooperation and the exchange of information between ESMA and the UK Financial Conduct Authority.

    The UK Financial Conduct Authority and the European Securities and Markets Authority have reached this Memorandum of Understanding regarding arrangements for the cooperation and exchange of supervisory information related to certain regulated entities whose cross-border activities subject them to regulation and supervision by both the UK Authority and ESMA.

    2. On 4 January 2020, the European Securities and Markets Authority (ESMA) published Multilateral Memorandum of Understanding concerning consultation, cooperation and the exchange of information between each of the EEA competent authorities and the UK Financial Conduct Authority.

    The UK Authority, on the one hand, and the EEA Authorities, on the other hand, express, through this MMoU, their willingness to cooperate with each other in order to maintain confidence in the financial system and preserve financial stability in their respective financial markets by providing mutual assistance and exchanging information in their areas of responsibility within their respective jurisdictions particularly as regards investor protection, market integrity, transparency and the orderly functioning of financial markets.

    3. On 4 January 2021, the European Securities and Markets Authority (ESMA) published Memorandum of Understanding between ESMA and the Bank of England to set out arrangements for cooperation on the monitoring and supervision of CCPs established in the UK.

    CCPs established in the United Kingdom of Great Britain and Northern Ireland have applied to ESMA for recognition as CCPs, pursuant to Article 25 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, as amended and supplemented.

    The Bank of England the Bank and ESMA have reached this Memorandum of Understanding regarding arrangements for cooperation related to ESMA's monitoring of the on-going compliance by the Covered CCPs with those recognition conditions set out in Articles 25(2), 25(2b) and 25b of EMIR with which the Covered CCPs are required to comply to maintain recognition and in accordance with the Bank's financial stability objectives as set out in section 2A of the Bank of England Act 1998 and its role as supervisor of financial market infrastructure. 

    Under Article 25(6) of EMIR, the European Commission has adopted the Commission Implementing Decision (EU) 2020/13082 determining that, as of the date of its entry into force and for a limited period of time, i.e. until 30 June 2022, the framework which will be applicable to CCPs in the UK after the end of the transition period is considered equivalent, in accordance with EMIR. 

    4. On 4 January 2021, the European Securities and Markets Authority (ESMA) published Memorandum of Understanding related to ESMAs Monitoring of the ongoing compliance with recognition conditions by CSDs established in the UK and Northern Ireland.

    In view of CSDs established in the UK having applied to ESMA for recognition as CSDs, pursuant to article 25 of CSDR, the Bank of England and ESMA have reached this MoU regarding arrangements for cooperation related to ESMA's monitoring of the on-going compliance by the covered CSDs with the recognition conditions set our in article 25 of CSDR. 

  • EDPB updates its statement on the end of the Brexit transition period

    CACEIS

  • On 13 January 2021, the European Data Protection Board (edpb) updated its statement on the end of the Brexit transition period.

    The updates concern the EU and UK agreement on 24 December 2020, which provisionally came into force on 1 January 2021 until 28 February 2021 pending ratification by the European Parliament and the Council of the EU. 

    The Agreement provides that, for a maximum period of six months from its entry into force – i.e., until 30 June 2021 at the latest - and upon the condition that the UK’s current data protection regime stays in place, all data flows of personal data between stakeholders subject to GDPR and UK organizations will not be considered as transfers to a third country.

    This means that organizations subject to GDPR will be able to carry on transmitting data to UK organizations without the need to either put in place a transfer tool under Article 46 GDPR or rely on an Article 49 GDPR derogation.

    The EDPB also updated its related Information note.

  • Capital Markets Union (CMU) Action Plan

    EFAMA publishes key objectives for the creation of a Capital Market Union - EFAMA letter to EU Commissioner McGuiness

    CACEIS

  • On 4 January 2021. the European fund and Asset Management Association (EFAMA) published key objectives for the creation of a Capital Market Union - EFAMA letter to EU Commissioner McGuiness.

    The key objectives are the following:

    • Objective 1: Increasing retail participation in Capital Markets
    • Objective 2: Improving access to financial and non-financial data and address the data cost issue
    • Objective 3: Preserve the competitiveness of the EU asset management industry on the global scene
  • EC launches targeted consultation on the establishment of a ESAP for financial and non-financial information publicly disclosed by companies

    CACEIS

  • On 20 January 2021, the European Commission (EC) launched a targeted consultation on the establishment of a European single access point (ESAP) for financial and non-financial information publicly disclosed by companies.

    The target groups of this consultation are

    • Preparers: companies, issuers, SMEs, asset managers, private entities, market participants, etc.
    • Users: investors, analysts, asset managers, consumers, NGOs, data vendors, credit risk assessment entities, banks, etc.
    • Regulators: authorities, governments, European Authorities, National Competent Authorities, EFRAG ECB, etc.
    • Registers / repositories: OAMs, trading venues, ESMA, business registers, etc.
    • Stakeholders with vested interest: software vendors, standard setters, data vendors, e-identifiers, accounting firms, certain not for profit organizations, academia, etc.

    The purpose of this targeted questionnaire is to seek general and technical views on the way to establish a ESAP for companies’ financial and sustainable investment-related information made public pursuant to EU legislation. 

    The establishment of the ESAP is the first action in the Commission’s new action plan on the capital markets union (CMU). 

    The EU legislation in the financial services area requires companies to publish several hundreds of documents, particulars and datasets in order to increase the transparency and reduce asymmetry of information. These datasets may have regard to e.g. an entity’s financial performance, environmental, social or governance matters, products and services provided.

    The consultation period is open until 3 March 2020.

  • Central Counterparty Clearing House (CCP)

    Europe publishes Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties

    CACEIS

  • On 22 January 2021, the Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 was published in the Official Journal of the European Union (OJ).

    It aims at providing national authorities with adequate tools to manage crises and to handle situations involving failures of key financial market infrastructures. They build on the same principles as the recovery and resolution framework applying to banks.  The main objectives of the reform are:

    • to reduce the probability of CCP failure by introducing effective incentives for proper risk management;
    • in case a financial difficulty would effectively arise, to preserve CCPs' critical functions, to maintain financial stability, and to prevent taxpayers from bearing the costs associated with their restructuring or resolution.

    The recovery and resolution will be based on a 3-step approach:

    1) Prevention and preparation:  CCPs and resolution authorities will be required to draw up recovery and resolution plans on how to handle any form of financial distress which would exceed CCPs existing resources. If resolution authorities identify obstacles to resolvability in the course of the planning process, they can require a CCP to take appropriate measures.

    2) CCPs can take recovery measures, according to certain viability indicators and based on the prepared recovery plan. These include cash calls to non-defaulting clearing members, the reduction in value of the collateral provided daily to the CCP (so-called variation margin gains haircutting), and the use of the CCP's own resources. Furthermore, supervisory authorities will have the possibility to intervene at an early stage, i.e. before the problems become critical and the financial situation deteriorates irreparably. For example, they will be able to require the CCP to undertake specific actions in its recovery plan or to make changes to its business strategy or legal or operational structure.

    3) In the unlikely case of a CCP failure, national authorities will have the possibility to resort to resolution tools. These include the (partial) termination of the CCP's contracts, variation margin gains haircutting, the write-down of CCP capital, a cash-call to clearing members, the sale of the CCP or parts of its business or the creation of a bridge CCP. While in certain limited cases, extraordinary public support may be provided as a last resort, the purpose of resolution actions is to minimize the extent to which the cost of a CCP's failure is borne by taxpayers, while ensuring that shareholders bear an appropriate part of the losses and that taxpayer funds are recouped to the extent possible.

  • Central Securities Depositary Regulation (CSDR)

    EU publishes Commission Delegated Regulation (EU) 2021/70 of 23 October 2020 amending Delegated Regulation (EU) 2018/1229 concerning the regulatory technical standards on settlement discipline, as regards its entry into force

    CACEIS

  • On 27 January 2021, the Commission Delegated Regulation (EU) 2021/70 of 23 October 2020 amending Delegated Regulation (EU) 2018/1229 concerning the regulatory technical standards on settlement discipline, as regards its entry into force was published in the Official Journal.

    This Regulation shall enter into force on 1 February 2022.

  • COVID-19 Regulatory Measures

    EC prolongs and further expands Temporary Framework to support economy in context of COVID-19 outbreak

    CACEIS

  • On 28 January 2021, the European Commission decided to prolong until 31 December 2021 the State aid Temporary Framework adopted on 19 March 2020 to support the economy in the context of the coronavirus outbreak. The Commission has also decided to expand the scope of the Temporary Framework by increasing the ceilings set out in it and by allowing the conversion of certain repayable instruments into direct grants until the end of next year.

  • EIB publishes Investment Report 2020/2021: Building a smart and green Europe in the COVID-19 era and key findings

    CACEIS

  • 1. On 21 January 2021, the European Investment Bank (EIB) published the Investment Report 2020/2021: Building a smart and green Europe in the COVID-19 era.

    The European Union's massive efforts to rebuild after the COVID-19 pandemic present a unique opportunity to transform its economy, making it more green and digital – and ultimately more competitive. The Investment Report 2020-2021 looks at the toll the pandemic took on European firms’ investment and future plans, as well as their efforts to meet the demands of climate change and the digital revolution. The report’s analysis is based on a unique set of databases and data from a survey of 12 500 firms conducted in the summer of 2020, in the midst of the COVID-19 crisis. While providing a snapshot of the heavy toll the pandemic took on some forms of investment, the report also offers hope by pointing out the economic areas in which Europe remains strong, such as technologies that combine green and digital innovation.

    2. On 21 January 2021, the European Investment Bank (EIB) published Investment Report 2020/2021 - Key findings: Building a smart and green Europe in the COVID-19 era.

    The European Union's massive efforts to rebuild after the coronavirus pandemic present a unique opportunity to transform its economy, making it more green and digital – and ultimately more competitive. The Investment Report 2020-2021 looks at the toll the pandemic took on European firms’ investment and future plans, as well as their efforts to meet the demands of climate change and the digital revolution. The report’s analysis is based on a unique set of databases and data from a survey of 12 500 firms conducted in the summer of 2020, in the midst of the COVID-19 crisis. While providing a snapshot of the heavy toll the pandemic took on some forms of investment, the report also offers hope by pointing out the economic areas in which Europe remains strong, such as technologies that combine green and digital innovation.

  • European Market Infrastructure Regulation (EMIR)

    ESMA publishes Public Register for the Clearing Obligation under EMIR

    CACEIS

  • On 4 January 2021, the European Securities and Markets Authority (ESMA) published updated Public Register for the Clearing Obligation under EMIR.

  • ESMA and CFTC sign Enhanced MOU Related to Certain Recognized Central Counterparties

    CACEIS

  • On 7 January 2021, the European Securities and Markets Authority (ESMA) and the Commodity Futures Trading Commission (CFTC) announced the signing of a new Memorandum of Understanding (MOU) regarding cooperation and the exchange of information with respect to certain registered derivatives clearing organizations established in the United States that are central counterparties (CCPs) recognized by ESMA under the European Market Infrastructure Regulation (EMIR).

    Through the MOU, ESMA and the CFTC express their desire for enhanced cooperation as to the larger U.S. CCPs operating in the European Union with provisions that expand upon the collaboration set out in the 2016 CFTC-ESMA MOU related to recognized CCPs.

  • ESMA publishes final report on its revised Guidelines regarding written agreements between members of CCP colleges

    CACEIS

  • On 21 January 2021, the European Securities and Markets Authority (ESMA) published the final report on its revised Guidelines regarding written agreements between members of CCP colleges.

    The revised Guidelines take into account changes to composition, functioning and management of CCP colleges which were introduced by amendments to the regulatory technical standards (RTS) on CCP colleges, and by EMIR 2.2.

    The objective of the Guidelines is to ensure common, uniform and consistent application of the RTS on CCP colleges and Articles 18 and 19 of EMIR. The Guidelines specifically aim at establishing a standard written agreement to support the smooth functioning of a CCP college.

    The Guidelines will be translated into the official EU languages and published on ESMA’s website. The publication of the translations in all official languages of the EU will trigger a two-month period during which NCAs must notify ESMA whether they already comply or intend to comply with the Guidelines.

  • EU adopts equivalence decision for US central counterparties

    CACEIS

  • On 27 January 2021, the European Commission adopted an equivalence decision determining that the United States Securities and Exchange Commission (SEC) regime for US central counterparties (CCPs) is equivalent to EU rules.

    The decision is an important first step for US CCPs registered with the SEC to be recognised in the European Union. It will allow such US CCPs to apply for recognition by the European Securities and Markets Authority (ESMA). Once recognised by ESMA, these US CCPs will be able to provide central clearing services in the EU.

    The decision complements the existing equivalence decision for US CCPs regarding the US Commodity Futures Trading Commission (CFTC), which was adopted in 2016. No later than 3 years after the date of entry into force of this Decision and then no later than every 3 years after each previous review under this Article, the Commission shall undertake a review of the grounds on which the determination under Article 1 was made.

  • ESMA updates EMIR Q&As

    CACEIS

  • On 28 January 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers document on practical questions regarding reporting issues under the European Markets Infrastructure Regulation (EMIR).

    The updated Trade Repository (TR) Q&A 3b explains how to report the direction of derivatives in specific cases that are described.

    A new Q&A for Trade Repositories clarifies the steps to be taken for the due termination of derivatives when the reporting counterparty ceases to exist. It also specifies how to deal with non-terminated reports of inactive (dissolved) counterparties to ensure that accurate information is provided to the authorities.

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

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

  • Financial Conglomerates Directive (FICOD)

    ESAs publish final draft ITS on reporting templates for intra-group transactions and risk concentration under FICOD

    CACEIS

  • On 18 January 2021, the European Supervisory Authorities (ESAs) published European the final Report on the draft Implementing Technical Standards (ITS) under the Financial Conglomerates Directive (FICOD) on reporting templates for intra-group transactions (IGT) and risk concentration (RC). 

    The draft ITS aim at further increasing comparability amongst conglomerates of different EU Member States thereby improving supervisory consistency.

    The harmonization of the IGT and RC templates for conglomerates aim to align the reporting under FICOD in order to enhance convergence overview on group specific risks, in particular contagion risk. The draft ITS provide the foundation for the harmonisation of reporting, with one single set of templates and common definitions and instructions to fill in the templates as set out in the Annex to the ITS.

    The proposed date of entry into force of the ITS is 1 January 2022, which will give conglomerates sufficient time to implement the reporting requirements.

  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    ESMA launches a common supervisory action with NCAs on the supervision of costs and fees of UCITS

    CACEIS

  • On 6 January 2021, the European Securities and Markets Authority (ESMA) launched a Common Supervisory Action (CSA) with national competent authorities (NCAs) on the supervision of costs and fees of UCITS across the European Union (EU). The CSA will be conducted during 2021.

    The CSA aims is to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework, and the obligation of not charging investors with undue costs. For this purpose, the NCAs will take into account the supervisory briefing on the supervision of costs published by ESMA in June 2020.

    The CSA will also cover entities employing Efficient Portfolio Management (EPM) techniques to assess whether they adhere to the requirements set out in the UCITS framework and ESMA Guidelines on ETFs and other UCITS issues.

    The work will be done on the basis of a common methodology developed by ESMA. While, the CSA assessment framework, including scope, methodology, supervisory expectations and timeline, results from a joint effort to carry out comprehensive supervisory action in a convergent manner.

    Throughout 2021, NCAs will share knowledge and experiences through ESMA to ensure supervisory convergence in how they supervise cost-related issues, and ultimately enhance the protection of investors across the EU.

  • EFAMA publishes response to the European Commission Roadmap on the review of EU alternative investment fund managers

    CACEIS

  • On 7 January 2021, the European fund and Asset Management Association (EFAMA) published response to the European Commission Roadmap on the review of EU alternative investment fund managers.

    EFAMA considers that the upcoming AIFMD review should only introduce targeted changes either at Level 2 or Level 3 when necessary and duly justified by factual evidence of shortcomings. It is important to bear in mind that any change to the current framework might create more uncertainties, generating more operational costs to apply those changes.

    Please find hereto the link to access the industry responses to the consultation on the review of EU rules on AIFM: ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12648-Alternative-Investment-Fund-Managers-review-of-EU-rules/feedback

  • EFAMA publishes response to the EC public consultation on the review of the ELTIF regulatory framework

    CACEIS

  • On 21 January 2021, the European fund and Asset Management Association (EFAMA) published its response to the EC public consultation on the review of the ELTIF regulatory framework.

    Profound changes are necessary to transform the current regime in view of making ELTIFs an EU product of choice, i.e. one that promotes more participation in less-liquid, “real asset” markets, allows individuals and institutions to invest their wealth in the long-term, and diversifies their exposure away from public markets. In this regard, EFAMA advocates a recalibration of the Regulation’s asset eligibility requirements, minimum investment amounts, accompanied by adequate tax incentives.

    The EFAMA proposes changes in the “supply-side” constraints for the ELTIF product, as well as in the taxation perspective.

  • ESMA updates list of competent authorities which have to comply or intend to comply with the guidelines on liquidity stress testing in UCITS and AIFs

    CACEIS

  • On 22 January 2021, the European Securities and Markets Authority (ESMA) updated the list of competent authorities which have to comply or intend to comply with ESMA’s Guidelines on liquidity stress testing in UCITS and AIFs.

  • EFAMA publishes response to the European Commission consultation ?for an AIFMD review

    CACEIS

  • On 29 January 2021, the European fund and Asset Management Association (EFAMA) published its response to the European Commission’s public consultation on the review of the Alternative Investment Fund Managers Directive (AIFMD).  

    EFAMA members believe that the AIFMD is an effective and balanced regime for the regulation of AIF Managers. The framework has improved the monitoring of risk to the financial system and the cross-border raising of capital for investments in alternative assets. Following the introduction of the Directive which came into effect in 2011, AIF Managers are now operating with greater transparency for investors and supervisors, helping build confidence in financial markets.

  • Macroeconomic Framework

    EU publishes Joint Declaration on EU Legislative Priorities for 2021 and Policy Objectives and Priorities for 2020-2024

    CACEIS

  • On 18 January 2021, the 2 joint declarations of the European Parliament, the Council of the European Union and the European Commission were published in the Official Journal of the European Union (OJ):

    1. EU Legislative Priorities for 2021:

    • To implement the European Green Deal
    • To shape Europe’s Digital Decade
    • To deliver an economy that works for people
    • To make Europe stronger in the world
    • To promote a free and safe Europe
    • To protect and strengthen the democracy and defend the common European values.

    2. Policy Objectives and Priorities for 2020-2024:

    • ensure a full recovery from the COVID-19 pandemic
    • build the Union of tomorrow and prioritize actions that accelerate transition to a fairer, healthier, greener and more digital society in the EU and on the global stage
    • remains EU’s global leadership in fighting climate change as a key priority as drastic reductions in emissions and more efficient use of resources in all sectors of the economy have become an urgent imperative
    • shape the digital solutions and establish Europe’s digital sovereignty
    • make the economy more resilient and robust
    • strengthen the EU's role as a global actor.
  • EC takes further steps to foster the openness, strength and resilience of Europe's economic and financial system

    CACEIS

  • On 19 January 2021, the European Commission (EC) published presented a new strategy to stimulate the openness, strength and resilience of the EU's economic and financial system for the years to come. 

    This strategy aims to better enable Europe to play a leading role in global economic governance, while protecting the EU from unfair and abusive practices. This goes hand in hand with the EU's commitment to a more resilient and open global economy, well-functioning international financial markets and the rules-based multilateral system. 

    This proposed approach is based on three mutually reinforcing pillars:

    1. Promoting a stronger international role of the euro by reaching out to third-country partners to promote its use, supporting the development of euro denominated instruments and benchmarks and fostering its status as an international reference currency in the energy and commodities sectors, including for nascent energy carriers such as hydrogen. 
    2. Further developing EU financial market infrastructures and improving their resilience, including towards the extraterritorial application of sanctions by third countries. 
    3. Further promoting the uniform implementation and enforcement of the EU's own sanctions.
  • Market Abuse Directive & Regulation (MAD / MAR)

    ESMA publishes list of national competent authorities that have increased the thresholds for the notification of transactions of persons discharging managerial responsibilities and closely associated persons

    CACEIS

  • On 4 January 2021, the European Securities and Markets Authority (ESMA) published updated list of national competent authorities that have increased the thresholds for the notification of transactions of persons discharging managerial responsibilities and closely associated persons.

  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    EFAMA publishes its reply to ESMA's consultation paper on the guidelines on the MiFID II/MiFIR obligations on market data

    CACEIS

  • On 13 January 2021, the European fund and Asset Management Association (EFAMA) published its reply to ESMA's consultation paper on the guidelines on the MiFID II/MiFIR obligations on market data. 

    EFAMA welcomes this ESMA initiative and is in favour of turning the proposed guidelines into binding regulation. EFAMA strongly encourages increased supervision by the NCAs under a ESMA harmonized approach to ensure consistency in supervision and enforcement, also of the proposed guidelines.

    In that perspective, we welcome the guidelines and any changes to applicable supervisory laws that are needed to

    • close gaps in the existing MiFID legislations,
    • achieve a coherent regulation and supervision in the EU of financial market data cost,
    • impose cost, price and license transparency rules across the different market data providers.

    EFAMA asks ESMA to extend the Guidelines to other types of data providers, i.e. beyond MiFID (e.g. ESG data providers, index providers) as the issues we are facing are very similar in all cases of Data Providers.

  • ESMA consults on appropriateness and execution-only under MIFID II

    CACEIS

  • On 29 January 2021, the European Securities and Markets Authority (ESMA) launched a consultation on guidelines on the application of certain aspects of the appropriateness and execution-only requirements under MiFID II.

    These requirements constitute an important element of investor protection in the provision of investment services other than investment advice or portfolio management. Under MiFID II, investment firms, providing non-advised services are required to request information on the knowledge and experience of clients or potential clients to assess whether the investment service or product envisaged is appropriate, and to issue a warning in case the investment service or product is deemed inappropriate. The execution-only framework allows for an exemption to this assessment in certain conditions, including that the firm issues a warning to the client.

    This Consultation Paper builds on relevant parts from ESMA’s Guidelines on certain aspects of the MiFID II suitability requirements, while adjusting these to the appropriateness and execution-only framework. In addition, it takes into account the insights of supervisory activities conducted by national competent authorities (NCAs) on the application of the appropriateness and execution-only requirements, in particular resulting from the 2019 common supervisory action (CSA) on appropriateness.  This CSA showed that there was insufficient convergence in the understanding and application of several areas of the appropriateness and execution-only requirements by firms in different Member States, and often within Member States themselves, creating problems for achieving a consistent level of investor protection in the EU.

  • Prospectus Regulation

    AFME publishes Industry Guidelines on Selling Restrictions for Equity Transactions

    CACEIS

  • On 8 January 2021, the Association for Financial Markets in Europe (AFME) published its Guidelines on Selling Restrictions for Equity Transactions which set out the selling restrictions for equity transactions for use in documentation for offerings or admissions taking place from January 2021 onwards.

    The wording comprises an EEA and a mirror United Kingdom public offer equity selling restriction (with separate forms for insertion into transaction contracts e.g. underwriting agreements and prospectuses, respectively) and a selling restriction addressing additional United Kingdom securities law (for insertion into transaction contracts).

  • Prudential Requirements for Investment Firms Directive & Regulation (IFD / IFR)

    EBA publishes final draft technical standards to identify investment firms’ risk takers and to specify the instruments used for the purposes of variable remuneration

    CACEIS

  • On 21 January 2021, the European Banking Authority (EBA) published two final draft Regulatory Technical Standards (RTS) on 

    (i) the criteria to identify all categories of staff whose professional activities have a material impact on the investment firm’s risk profile or asset it manages (‘risk takers’) and 

    (ii) on the classes of instruments that adequately reflect the credit quality of the investment firm and possible alternative arrangements that are appropriate to be used for the purposes of variable remuneration. 

    The objective of these RTS is to define and harmonize the criteria for the identification of such staff and the use of instruments or alternative arrangements for the purposes of variable remuneration so as to ensure a consistent approach across the EU.

    These regulations shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union

  • Securities Financing Transactions Regulation (SFTR)

    ESMA updates SFTR Q&As

    CACEIS

  • On 28 January 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers related to reporting under the Securities Financing Transactions Regulation (SFTR).

    The Q&As were updated to clarify:

    • reporting of events that were not duly reported on time
    • updates to records of outstanding SFTs by the Trade Repositories based on reports made by the counterparties
    • operational aspects concerning the reporting by financial counterparties on behalf of small non-financial counterparties pursuant to the Article 4(3) of SFTR.

    The updated set of Q&A complements ESMA’s guidance on reporting under SFTR. This document aims at ensuring 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.

  • Sustainable Finance / Green Finance

    ECIIA publishes practical guidance on climate change and environmental sustainability

    CACEIS

  • On 4 January 2021, the European Confederation of Institutes of Internal Auditing (ECIIA) published practical guidance on climate change and environmental sustainability.

    This practical guidance is part of the Risk in Focus 2021 publication and is produced to support the narrative report by the 10 European Institutes of Internal Auditors in Austria, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain, Sweden and the UK & Ireland.

    Environmental challenges are of a growing importance for all organizations. It is undeniable that this is now a strategic preoccupation for all organizations, encouraged by their internal and external stakeholders – to become more resilient to environmental risks and to directly contribute to the environmental sustainability of our society. In fact, the risk is already proven, the consequences on businesses are measurable. Sustainable Development Goals (SDGs) are increasingly being adopted.

    There is growing attention amongst all stakeholders (from investors to clients) on how ESG (Environment, Social and Governance) matters are integrated into business activities. Non-financial and financial information is now considered as an integrated component to measure what is called the multi-capital performance of organizations. Internal auditors have measured the importance of climate change and environmental risks. In Risk in Focus 2021, 22% of CAEs cited climate change and environmental sustainability as one of their organization’s top five risks, a more than 50% increase on the 14% who said the same in last year’s Risk in Focus survey. Moreover, 41% of CAEs are anticipating it being a top five risk in three years’ time. No other risk area is expected to gain more in priority over this period.

    The guidance explains to internal auditors how they can assist organizations in this area.

  • ESAs publishes letter to EU Commission on priority issues relating to SFDR application

    CACEIS

  • On 14 January 2021, the European Supervisory Authorities (ESAs) published a letter to EU Commission on priority issues relating to SFDR application. 

    During the course of the work on the draft regulatory technical standards under Regulation (EU)

    2019/2088 on sustainability-related disclosures in the financial services sector (SFDR), as amended by Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation), the ESAs have encountered several important areas of uncertainty in the interpretation of SFDR. 

    The ESAs have identified certain priority questions pertaining to the SFRD that would benefit from a more urgent clarification to facilitate an orderly application of SFDR from 10 March 2021. 

    These priority areas of SFDR are summarised in the Annex covering:

    • the application of SFDR to non-EU Alternative Investment Fund Managers (AIFMs) and registered AIFMs;
    • application of the 500-employee threshold for principal adverse impact reporting on parent undertakings of a large group; 
    • the meaning of “promotion” in the context of products promoting environmental or social characteristics;
    • the application of Article 9 of SFDR; and
    • the application of SFDR product rules to portfolios and dedicated funds.
  • ESA's publish Final Report and draft RTS on disclosures under SFDR

    CACEIS

  • On 4 February 2021, the European Supervisory Authorities (ESAs) published the final report on draft regulatory technical standards (RTS) for the Sustainable Finance Disclosures Regulation (SFDR).

    The proposed RTS aim to strengthen protection for end-investors by improving Environmental, Social and Governance (ESG) disclosures to end-investors on the principal adverse impacts of investment decisions and on the sustainability features of a wide range of financial products. This will help to respond to investor demands for sustainable products and reduce the risk of greenwashing.

    Main proposals

    Entity-level principal adverse impact disclosures

    The principal adverse impacts that investment decisions have on sustainability factors should be disclosed on the entity’s website. The disclosure should take the form of a statement showing how investments adversely impact indicators in relation to

    • climate and environment; and
    • social and employee matters, respect for human rights, anti-corruption and anti-bribery aspects.

    The ESAs have updated the list of indicators for principal adverse impacts. The principal adverse impact reporting in the SFDR is based on the principle of proportionality – for companies with fewer than 500 employees, the entity-level principal adverse impact reporting applies on a comply-or-explain basis.

    Product level disclosures

    The sustainability characteristics or objectives of financial products are to be disclosed in an annex to the respective sectoral pre-contractual and periodic documentation in mandatory templates and on providers’ websites.

    Proposals relate to:

    • Pre-contractual information should include details on how a product with environmental or social characteristics/ sustainable investment objective/ meets those/ that characteristics/ objective.
    • Information on the entity’s website on the environmental or social characteristics of financial products/ sustainable investment objective of the product and the methodologies used.
    • Information in periodic reports specifying: (I) the extent to which products met the environmental and/or social characteristics by means of relevant indicators; and (II) for products with sustainable investment objectives, including products whose objective is a reduction in carbon emissions.
    • Information in relation to the ‘do not significantly harm’ principle: specifying the details for how sustainable investments do not significantly harm sustainable investment objectives.

    As the ESAs were not empowered to differentiate the disclosures between financial market participants and products, the RTS contain a harmonised approach to all financial products. Therefore, the same disclosures are required for a very broad range of products attached as annexes to existing sectoral disclosure documents that have different levels of granularity and length.

    The ESAs also conducted two consumer testing exercises for the pre-contractual and periodic product template: exercise 1 and exercise 2.

    The EC is expected to endorse the RTS within 3 months of their publication.

  • FRANCE

    COVID-19 Regulatory Measures

    AMF informs shareholders/listed companies of extension of measures taken for the organization of 2021 general meetings / L'AMF informe les actionnaires/sociétés cotées de la prorogation des mesures prises pour l'organisation des assemblées générales 2021

    CACEIS

  • On 5 January 2021, the Autorité des marchés financiers (AMF) informed shareholders and listed companies of the extension of exceptional measures taken for the organization of 2021 general meetings.

    The AMF draws the attention of investors to the extension, subject to several adjustments, of the special measures organising the holding of general meetings in the context of the health crisis. It encourages listed companies to follow certain best practices.

    In view of the persistence of the health crisis and the measures taken in response to it, the government has taken - by an ordinance of 2 December 2020 - various measures to extend the ordinance of 25 March 2020.

    Version française

    Le 5 janvier 2021, l'Autorité des marchés financiers (AMF) a informé les actionnaires et les sociétés cotées de la prorogation des mesures exceptionnelles prises pour l'organisation des assemblées générales 2021.

    L’AMF attire l’attention des épargnants sur la prorogation, sous réserve de plusieurs ajustements, des mesures particulières organisant la tenue des assemblées générales dans le contexte de la crise sanitaire. Elle encourage les sociétés cotées à suivre certaines bonnes pratiques.

    En raison de la persistance de la crise sanitaire et des mesures prises pour y répondre, le gouvernement a pris - par une ordonnance du 2 décembre 2020 - diverses dispositions aux fins de proroger l'ordonnance du 25 mars 2020.

  • Brexit

    AMAFI publishes two letters to the European Commission on Brexit / L'AMAFI publie deux lettres à la Commission Européenne sur le Brexit

    CACEIS

  • On 27 and 28 January 2021, the Association Française des Marchés Financiers (Amafi) published letters to the EC on Brexit. 

    1) EMIR question :

    As of 1 January 2021, national market authorities following this doctrine would oblige the players under their supervision to clear their OTC derivatives transactions with UK pension funds. This would put them at a significant competitive disadvantage compared to UK institutions that will not be subject to the same constraint.

    Would it be possible for you to confirm that the AMF will adopt a flexible supervisory approach until the mid-2021 deadline when the clearing exemption for European pension funds ceases to apply, with regard to institutions that would continue to operate under this exemption when they deal in OTC derivatives contracts with UK pension funds?

    In response to the letter of 15 December on the application of the clearing requirement under EMIR to UK pension funds, the AMF Chairman confirms that it does not seem appropriate to implement in the current Brexit context the OTC Q&A 13 (c) of EMIR Q&A, which was drafted several years ago. Robert Orphèle calls on AMAFI to encourage French institutions concerned by this subject to contact the AMF.

    Reminder Q&A 13 (c) : Does a pension scheme established in a third country benefit from the exemption from the clearing obligation provided under EMIR? EMIR provides for the conditions that European pension schemes shall meet in order to benefit from the exemption. These conditions are specific for defined categories of pension schemes established in the EU. Therefore, the exemption from the clearing obligation does not apply to a pension scheme established in a third country.

    2) Detrimental impact of conflicting application of EU and UK derivatives trading obligations on EU capital markets

    The DTO represents a critical issue, not only for European financial institutions but also for the European Union itself: 

    • First, it is crucial to avoid that European financial institutions acting in the United Kingdom through local branches be subject to a simultaneous application of overlapping and potentially conflicting EU and UK DTOs, which would generate an unlevel playing field between them and their non-EU competitors. 
    • Beyond local competition considerations, enabling UK branches of EU financial institutions to continue their business with UK and third countries counterparties without additional constraints compared to their local competitors is critical.

    In light of the issues at stake and the impossibility to amend MiFIR with very little time left, the banking industry considers the best option would be as of 1 January 2021 for the European Commission to adopt temporary forbearance of the EU DTO imposed on UK branches of EU financial institutions for their derivatives activities entered into with non-EU counterparties for a period of at least 12 months. This proposal will not hinder the development of EU trading venues since all the transactions entered into with EU clients concerning derivatives subject to the EU DTO will be traded on EU trading venues as from 1 January 2021.

    Version française

    Le 27 et 28 janvier 2021, l'Association Française des Marchés Financiers (Amafi) a publié deux lettres à la Commission Européenne sur le Brexit.

    1) Question EMIR: 

    A compter du 1er janvier 2021, les autorités de marché nationales qui suivraient cette doctrine, contraindraient les acteurs sous leur tutelle à compenser les opérations de dérivés OTC qu’ils réalisent avec des fonds de pension britanniques. Cette situation créerait alors à leur détriment un important désavantage compétitif par rapport aux établissements britanniques qui ne seront pas soumis à la même contrainte.

    Vous serait-il possible de confirmer que l’AMF adoptera, jusqu’à l’échéance mi-2021 à laquelle cessera de s’appliquer l’exemption de compensation pour les fonds de pension européens, une approche de supervision souple vis-à-vis des établissements qui continueraient à opérer dans le cadre de cette exemption lorsqu’ils traitent des contrats de dérivés OTC avec des fonds de pension britanniques ?

    En réponse au courrier du 15 décembre relatif à l’application de l’obligation de compensation sous EMIR aux fonds de pension britanniques, le président de l’AMF confirme qu’il ne paraît pas approprié de mettre en œuvre dans le contexte actuel du Brexit la question/réponse OTC 13 (c) du Q&A EMIR, rédigée il y a plusieurs années. Robert Orphèle invite l’AMAFI à inciter les établissements français concernés par ce sujet à se rapprocher des services de l’AMF.

    Rappel Q&A 13 (c) : Un régime de retraite établi dans un pays tiers bénéficie-t-il de l'exemption de l'obligation de compensation prévue par la directive EMIR ? La directive EMIR prévoit les conditions que les régimes de retraite européens doivent remplir pour bénéficier de l'exemption. Ces conditions sont spécifiques à des catégories définies de régimes de retraite établis dans l'UE. Par conséquent, l'exemption de l'obligation de compensation ne s'applique pas à un régime de retraite établi dans un pays tiers.

    2) Incidence négative d'une application contradictoire des obligations de l'UE et du Royaume-Uni en matière de négociation de produits dérivés sur les marchés de capitaux de l'UE

    La DTO représente une question cruciale, non seulement pour les institutions financières européennes, mais aussi pour l'Union européenne elle-même : 

    • Premièrement, il est crucial d'éviter que les institutions financières européennes agissant au Royaume-Uni par l'intermédiaire de succursales locales soient soumises à l'application simultanée de DTO de l'UE et du Royaume-Uni qui se chevauchent et sont potentiellement en conflit, ce qui créerait des conditions de concurrence inégales entre elles et leurs concurrents non européens. 
    • Au-delà des considérations de concurrence locale, il est essentiel de permettre aux succursales britanniques des institutions financières de l'UE de poursuivre leurs activités avec des contreparties britanniques et de pays tiers sans contraintes supplémentaires par rapport à leurs concurrents locaux.

    Compte tenu des enjeux et de l'impossibilité de modifier la MiFIR dans un délai très court, le secteur bancaire estime que la meilleure option serait que la Commission européenne adopte, à compter du 1er janvier 2021, une abstention temporaire de l'obligation de maintien en activité imposée aux succursales britanniques des institutions financières de l'UE pour leurs activités sur produits dérivés conclues avec des contreparties non européennes, et ce pour une période d'au moins 12 mois. Cette proposition n'entravera pas le développement des systèmes de négociation de l'UE puisque toutes les transactions conclues avec des clients de l'UE concernant des produits dérivés soumis au DTO de l'UE seront négociées sur les systèmes de négociation de l'UE à partir du 1er janvier 2021.

  • ACPR reminds UK financial institutions of their obligations towards customers residing in France / L’ACPR rappelle aux établissements financiers britanniques leurs obligations à l’égard de la clientèle résidant en France

    CACEIS

  • On 4 January 2021, the Autorité de contrôle prudentiel et de résolution (ACPR) reminded UK financial institutions (including those located in Gibraltar) of their obligations towards customers residing in France.

    As part of its customer protection mission, ACPR reminds the British institutions concerned that they must provide their customers in France with personalised information on the terms and conditions under which their services continue - or cease - to be provided in France from 1 January 2021.

    The ACPR further recalls that contracts entered into before the United Kingdom's exit from the European Union with British institutions remain valid and must be performed in good faith. In particular : 

    • Customers with a bank account or payment account opened in the United Kingdom with a service provider authorised in the United Kingdom or the United Kingdom branch of an institution authorised in the European Union, or an account opened with the European branch of an institution authorised in the United Kingdom, remain entitled to keep this account. However, they are invited to find out about the deposit protection rules which are now applicable, if necessary by consulting the website of the Deposit Guarantee and Resolution Fund. 
    • Insurance contracts entered into with a UK insurer who has not made arrangements to continue operating in France remain valid and must be performed in good faith until their maturity. The insurer is required to inform policyholders residing in France, by registered letter or electronic registered letter, within fifteen days of leaving the United Kingdom from the European Union, that it will no longer be able to issue new premiums or renew the contract; it must specify the date on which the guarantees end. For those that end more than three months after this initial information, clients must be informed of the end of these guarantees at least two months before they expire.

    Version française

    Le 4 janvier 2021, l'Autorité de contrôle prudentiel et de résolution (ACPR) a rappelé aux établissements financiers britanniques (y compris ceux localisés à Gibraltar) leurs obligations à l’égard de la clientèle résidant en France.

    Dans le cadre de sa mission de protection de la clientèle, l’ACPR rappelle aux établissements britanniques concernés qu’ils doivent délivrer à leurs clients en France une information personnalisée sur les modalités selon lesquelles leurs services continuent – ou cessent – d’être fournis en France depuis le 1er janvier 2021.

    L’ACPR rappelle, en outre, que les contrats conclus avant la sortie du Royaume-Uni de l’Union européenne avec des établissements britanniques demeurent valides et doivent être exécutés de bonne foi. En particulier : 

    • les clients disposant d’un compte bancaire ou d’un compte de paiement ouvert au Royaume-Uni, auprès d’un prestataire agréé au Royaume-Uni ou de la succursale implantée au Royaume-Uni d’un établissement agréé sur le territoire de l’Union européenne, ou d’un compte ouvert auprès de la succursale européenne d’un établissement agréé au Royaume Uni, demeurent en droit de conserver ce compte. Ils sont cependant invités à se renseigner sur les règles de protection des dépôts qui sont désormais applicables, le cas échéant en consultant le site du Fonds de garantie des dépôts et de résolution. 
    • les contrats d’assurance conclus avec un assureur britannique qui n’a pas pris de disposition pour continuer d’exercer en France, demeurent valides et doivent être exécutés de bonne foi jusqu’à leur échéance. L’assureur est tenu d’informer les souscripteurs résidant en France, par lettre recommandée ou recommandé électronique, dans les quinze jours suivant la sortie du Royaume-Uni de l’Union européenne, qu’il ne pourra de ce fait plus émettre de nouvelles primes ni renouveler le contrat ; il doit préciser la date de fin des garanties. Pour celles qui prennent fin plus de trois mois après cette première information, les clients doivent être informés de la fin de ces garanties au moins deux mois avant leur échéance.
  • AMF informs on the continuity of intermediation activities in the context of Brexit / L'AMF informe sur la continuité des activités d’intermédiation dans le contexte du Brexit

    CACEIS

  • On 22 January 2021, the Autorité des marchés financiers (AMF) informed on the continuity of intermediation activities in the context of Brexit.

    As of 1 January 2021, European law is no longer applicable in the United Kingdom. Overall, the transition to date has proceeded smoothly, with the vast majority of UK institutions making arrangements to continue to provide services in the European Economic Area through local offices.

    Following questions from some industry participants, the AMF and ACPR remind that, as of 1 January 2021, European regulations no longer allow the provision of investment services in the European Economic Area through brokers in the United Kingdom and acting on behalf of a UK entity.

    The AMF and the ACPR state that, as of 1 January 2021, with the loss of European passporting rights, entities based in the United Kingdom are no longer authorised to provide investment services in the European Economic Area, unless they have set up an authorised branch or subsidiary in the European Economic Area.  The AMF and ACPR also wish to stress that entities that have relocated to the European Economic Area must have sufficient personnel to ensure prudent risk management and effective supervision of their activities.

    In this respect, entities must complete on-going relocation plans as soon as possible and finalise the transfer of any persons yet to be relocated.

    Furthermore, the two supervisory authorities stress that entities that provide investment services in the European Economic Area without the appropriate authorisation or that do not comply with the limited exceptions provided for in national law may face administrative or criminal proceedings under the laws of each Member State.

    Version française

    Le 22 janvier 2021, l'Autorité des marchés financiers (AMF) a informé sur la continuité des activités d’intermédiation dans le contexte du Brexit.

    Depuis le 1er janvier 2021, le droit européen n’est plus applicable au Royaume-Uni. Dans l’ensemble, à ce jour, la transition s’est bien déroulée, la large majorité des établissements britanniques ayant pris des dispositions pour pouvoir continuer à fournir leurs services dans l’Espace Économique Européen au travers d’implantations locales.

    L’AMF et l’ACPR rappellent, à la suite des interrogations de certains acteurs, que la réglementation européenne applicable depuis le 1er janvier 2021 ne permet plus de fournir un service d’investissement dans l’Espace Économique Européen par le biais de courtiers situés au Royaume-Uni et agissant pour le compte d’une entité britannique.

    L’AMF et l’ACPR précisent que, depuis le 1er janvier 2021, les entités situées au Royaume-Uni ne sont plus autorisées à fournir des services d’investissement dans l’Espace Économique Européen du fait de la perte du passeport européen sauf à y établir une succursale ou une filiale agréée. Par ailleurs, l’AMF et l’ACPR rappellent que les entités relocalisées dans l’Espace Économique Européen doivent disposer des effectifs suffisants pour assurer une gestion prudente des risques et une supervision efficace de leurs activités.

    À ce titre, les entités doivent achever au plus vite les plans de relocalisation en cours d’exécution et  finaliser les transferts des personnes restant éventuellement à relocaliser.

    Les deux autorités de supervision rappellent qu’une entité fournissant des services d’investissement dans l’Espace Économique Européen sans l’agrément approprié ou conformément aux exceptions limitées prévues en droit national s’expose au risque de poursuites administratives ou pénales en application du droit de chaque État membre.

  • European Market Infrastructure Regulation (EMIR)

    AMF publishes Decision of 19 March 2019 on the approval of the operating rules of MARKET SECURITIES FRANCE OTF / L'AMF publie la Décision du 19 mars 2019 sur l’approbation des règles de fonctionnement de MARKET SECURITIES FRANCE OTF

    CACEIS

  • On 5 January 2021, the Autorité des marchés financiers (AMF) published a Decision of 19 March 2019 effective as of 1 December 2020 relating to the approval of the operating rules of the organised trading system MARKET SECURITIES FRANCE OTF.

    The operating rules of the organised trading system MARKET SECURITIES France OTF as annexed to this Decision are approved.

    Version française

    Le 5 janvier 2021, l'Autorité des marchés financiers (AMF) a publié la Décision du 19 mars 2019 sur l’approbation des règles de fonctionnement de MARKET SECURITIES FRANCE OTF.

    Sont approuvées les règles de fonctionnement du système organisé de négociation MARKET SECURITIES France OTF telles qu’annexées à la présente décision.

  • AMF publishes Decision of 8 December 2020 on amendments to the operating rules of the MTF NowCP / L'AMF publie la Décision du 8 décembre 2020 relative aux modifications des règles de fonctionnement du SMN NowCP

    CACEIS

  • On 8 January 2021, the Autorité des marchés financiers (AMF) published Decision of 8 December 2020 on amendments to the operating rules of the Multilateral Trading Facility (MTF) NowCP, aimed in particular at extending the scope of eligible securities.

    The amendments to the operating rules of the NowCP MNS as annexed to this Decision are approved.

    Version française

    Le 8 janvier 2021, l'Autorité des marchés financiers (AMF) a publié la Décision du 8 décembre 2020 relative aux modifications des règles de fonctionnement du système multilatéral de négociation (SMN) NowCP, visant notamment à permettre l’extension du périmètre des titres admissibles.

    Sont approuvées les modifications des règles de fonctionnement du SMN NowCP telles qu’annexées à la présente décision.

  • Financial supervision

    AMF publishes its action and supervisory priorities for 2021 / L'AMF publie ses priorités d’action et de supervision pour l’année 2021

    CACEIS

  • On 11 January 2021, the Autorité des marchés financiers (AMF) published its action and supervisory priorities for 2021.

    2021 Priorities for action

    In an environment still marked by the COVID-19, the AMF has set itself the following priorities for 2021:

    • engage all its resources to overcome the health and economic crisis: the AMF will accompany issuers in their financial operations and disclosure to ensure that investors are properly informed and will monitor the quality of shareholder dialogue. It will contribute to the regulatory changes made in response to the market turmoil of spring 2020;
    • participate in the reforms that will shape future financial regulation: the AMF will contribute to the CMU and the planned legislative reviews with the threefold objective of protecting investors, financing the economy and ensuring increased European competitiveness, at a time when the UK  leaves the European Union. It will continue to foster innovative European digital finance markets;
    • speed up the transition to sustainable finance by supporting the Paris financial centre in implementing the regulatory framework and in moving towards quality non-financial disclosure, while facilitating innovative approaches.

    At the same time, within the AMF, the regulator will pursue its objectives to reduce the length of enforcement proceedings, reinforce the monitoring of asset management companies, and expand  risk-based supervision by making greater use of data.

    Supervisory priorities

    1) For asset management companies:

    •  implementation of best selection and best execution obligations under the Markets in Financial Instruments Directive;
    • 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.

    2) For market intermediaries and infrastructures:

    • security of market infrastructure information systems;
    • implementation of post-trade transparency requirements on bonds;
    • product governance systems implemented by financial instrument producers;
    • application of the European regulation for simple, transparent and standardised securitisation;
    • cross-border activities and their integration into the compliance and control systems of institutions;
    • transition plans towards benchmark indices.

    3) For marketing and advisory services players:

    • supervision of financial investment advisors;
    • compliance with the rules for assessing the appropriateness and suitability of investment services providers.

    Furthermore, as part of the AMF-ACPR Joint Unit, the AMF will investigate the consequences of increasing the use of digital distribution and subscription methods on the understanding and consent of retail investors. The Joint Unit will also focus on the prevention of scams and the information provided to clients when marketing products described as sustainable. 

    Version française

    Le 11 janvier 2021, l'Autorité des marchés financiers (AMF) a publié ses priorités d’action et de supervision pour l’année 2021.

    Priorités d’action 2021

    Dans un environnement encore marqué par le coronavirus, l’AMF s’est fixée pour 2021 les priorités suivantes :

    • 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. Elle contribuera aux évolutions réglementaires en réponse aux turbulences de marché connues au printemps 2020 ;
    • participer aux réformes qui définiront la réglementation financière de demain : l’AMF contribuera à l’UMC et à la revue des textes à l’agenda 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. Elle poursuivra son implication en faveur de marchés européens innovants en matière de finance numérique ;
    • accélérer la transition vers la finance durable en accompagnant la place dans la mise en œuvre du cadre règlementaire et vers une information extra-financière de qualité tout en facilitant les approches innovantes.

    Parallèlement, en interne, le régulateur poursuivra ses objectifs de réduction des délais de sa filière répressive, de renforcement du suivi des sociétés de gestion et de généralisation de l’approche de la supervision par les risques grâce à une utilisation plus importante de la donnée.

    Priorités de supervision

    1) Concernant les sociétés de gestion :

    • la mise en œuvre des obligations de meilleure sélection et de meilleure exécution dans le cadre de la directive sur les Marchés d’instruments financiers ;
    • 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.

    2) Concernant les intermédiaires et infrastructures 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 ;
    • les dispositifs mis en place par les intermédiaires producteurs d’instruments financiers en matière de gouvernance des produits ;
    • la mise en œuvre du règlement européen pour une titrisation simple, transparente et standardisée ;
    • les activités transfrontières et leur intégration dans les dispositifs de contrôle de conformité des établissements ;
    • les plans de transition vers les indices de référence.

    3) Concernant les acteurs de la commercialisation et du conseil :

    • la supervision des conseillers en investissements financiers ;
    • le respect des règles d’évaluation du caractère approprié et de l’adéquation par les prestataires de services d’investissement.

    Dans le cadre du pôle commun AMF-ACPR, les conséquences des modes de distribution et de souscription de plus en plus digitalisés sur la compréhension et le consentement des particuliers seront étudiés. Le pôle commun concentrera également ses travaux sur la prévention des arnaques et, par ailleurs, la communication faite aux clients lors de la commercialisation de produits présentés comme durables.

  • Fraud

    France publishes Opinion on the recommendations of the AFA / La France publie un avis relatif aux recommandations de l’AFA

    CACEIS

  • On 12 January 2021, the Opinion on the recommendations of the AFA to help public and private legal entities prevent and detect corruption, influence peddling, embezzlement, illegal interest taking, misappropriation of public funds and favouritism was published in the Official Journal. 

    The recommendations of the AFA are intended to help public and private legal persons to prevent and detect corruption, influence peddling, embezzlement, illegal interest taking, embezzlement of public funds and favouritism.

    They are regularly updated to take into account changes in practices and may be subject to public consultation. This approach should enable stakeholders to make the prevention of corruption an opportunity for the business climate and for the democratic and civic life of our country. After three years of activity and drawing lessons from its advisory and control missions, the AFA is committed to updating its recommendations. This project was submitted for public consultation from October 16 to November 16, 2020. More than forty contributors took part in this consultation.  

    The recommendations define the implementation modalities of an anti-corruption mechanism that can be deployed, in a proportionate manner and adapted to their risk profile, by all public and private law legal entities. The recommendations are structured in three parts: 

    • The first part consists of general provisions relating to the anti-corruption system applicable to all stakeholders
    • The second concerns the companies subject to Article 17 of the law
    • The third is devoted to the public actors subject to Article 3 of the law.

    Version française

    Le 12 janvier 2021, l'Avis relatif aux recommandations de l’Agence française anticorruption destinées à aider les personnes morales de droit public et de droit privé à prévenir et à détecter les faits de corruption, de trafic d’influence, de concussion, de prise illégale d’intérêts, de détournement de fonds publics et de favoritisme a été publié dans le Journal Officiel.

    L'avis relatif aux recommandations de l'Agence française anticorruption destinées à aider les personnes morales de droit public et de droit privé à prévenir et à détecter les faits de corruption, de trafic d'influence, de concussion, de prise illégale d'intérêt, de détournement de fonds publics et de favoritisme.

    Elles sont régulièrement mises à jour pour tenir compte de l'évolution des pratiques et peuvent faire l'objet d'une consultation publique. Cette approche devrait permettre aux parties prenantes de faire de la prévention de la corruption une opportunité pour le climat des affaires et pour la vie démocratique et civique de notre pays. Après trois ans d’activité et tirant les enseignements de ses missions de conseil et de contrôle, l’AFA s’est engagée dans une démarche d’actualisation de ses premières recommandations. Une consultation publique, qui s’est déroulée du 16 octobre au 16 novembre 2020, a porté sur un projet initial de texte. Plus d’une quarantaine de contributeurs ont participé à cette consultation.

    Les recommandations définissent les modalités de mise en œuvre d’un dispositif anticorruption que peuvent déployer, de manière proportionnée et adaptée à leur profil de risques, toutes les personnes morales de droit public et de droit privé. Ces recommandations sont structurées en trois parties : 

    • la première consiste en des dispositions générales relatives au dispositif anticorruption applicable à tous les acteurs
    • la deuxième concerne les entreprises assujetties à l’article 17 de la loi
    • la troisième est consacrée aux acteurs publics assujettis à l’article 3 de la loi.
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    AMF applies ESMA guidelines on performance fees / L’AMF applique les orientations de l’ESMA sur les commissions de surperformance

    CACEIS

  • On 5 January 2021, the Autorité des marchés financiers (AMF) published a position DOC-2021-01 to incorporate ESMA's guidance on performance fees in undertakings for collective investment in transferable securities and certain types of alternative investment funds.

    The AMF has incorporated the guidance published by ESMA on "Outperformance fees in undertakings for collective investment in transferable securities and certain types of alternative investment funds" (ESMA34-39-992) into a new position DOC-2021-01.

    The objective of these guidelines is to promote greater convergence and standardisation in the area of performance fees and to encourage convergent supervision by the competent authorities. In particular, they aim to ensure that the performance fee models used by management companies comply with the principles of acting fairly and equitably in the conduct of their business activities and acting with due skill, care and diligence in the best interests of the fund they manage, so as to prevent undue costs being charged to the fund and its investors. In addition, they aim to establish a common standard for the disclosure of performance fees to investors.

    ESMA's five guidelines, applicable as from 5 January 2021, provide guidance on the following points:

    • The method of calculating performance fees ;
    • Consistency between the performance fee model and the investment objectives, strategy and policy of funds;
    • The frequency with which performance fees are charged;
    • Catching up on negative performance;
    • Communication of the performance fee model.

    Version française

    Le 5 janvier 2021, l'Autorité des marchés financiers (AMF) a publié la position DOC-2021-01 pour incorporer les orientations de l’ESMA sur les commissions de surperformance dans les organismes de placement collectif en valeurs mobilières et certains types de fonds d’investissement alternatifs.

    L'AMF a incorporé les orientations de l’ESMA sur "Les commissions de surperformance dans les organismes de placement collectif en valeurs mobilières et certains types de fonds d’investissement alternatifs" (ESMA34-39-992) dans sa position DOC-2021-01.

    L’objectif de ces orientations est de promouvoir une convergence et une normalisation accrues dans le domaine des commissions de surperformance et d’encourager une surveillance convergente par les autorités compétentes. Elles visent en particulier à garantir que les modèles de commission de surperformance utilisés par les sociétés de gestion respectent les principes consistant à agir loyalement et équitablement lorsqu’elles mènent leurs activités commerciales, et à agir avec la compétence, le soin et la diligence qui s’imposent, au mieux des intérêts du fonds qu’elles gèrent, de manière à prévenir le prélèvement de coûts indus au fonds et à ses investisseurs. En outre, elles visent à établir une norme commune en ce qui concerne la communication aux investisseurs des commissions de surperformance. 

    Les cinq orientations de l’ESMA, applicables à compter du 5 janvier 2021, apportent des précisions sur les points suivants : 

    • la méthode de calcul des commissions de surperformance ; 
    • la cohérence entre le modèle de commission de surperformance et les objectifs, la stratégie et la politique de fonds en matière d’investissement ; 
    • la fréquence de prélèvement des commissions de surperformance 
    • le rattrapage de performances négatives ; 
    • la communication du modèle de commissions de surperformance.
  • Sustainable Finance / Green Finance

    AFG publishes fact sheet on SFDR / L'AFG publie une fiche pratique sur SFDR

    CACEIS

  • On 28 January 2021, the Association Française de Gestion (AFG) published a fact sheet on SFDR.

    This “Sustainability Risks - SFDR” fact sheet proposes avenues for the communication that asset management companies will have to make on sustainability risks from 10 March 2021 in the prospectuses for each fund and on their website for the management company.

    Version française

    Le 28 janvier 2021, l'Association Française de Gestion (AFG) a publié une fiche pratique sur SFDR.

    Cette fiche pratique « Risques de durabilité –  SFDR » propose des pistes concernant la communication que les SGP vont devoir faire sur les risques de durabilité dès le 10 mars 2021 dans les prospectus pour chaque fonds et sur leur site internet pour la société de gestion.

  • AMF informs on the implementation of the SFDR regulation for asset management companies as of 10 March 2021 / L'AMF informe sur l'entrée en application au 10 mars 2021 du règlement SFDR pour les sociétés de gestion de portefeuille

    CACEIS

  • On 20 January 2021, the Autorité des marchés financiers (AMF) informed on the implementation of the SFDR regulation for asset management companies as of 10 March 2021.

    Certain provisions of European Regulation (EU) 2019/2088, known as the Sustainable Finance Disclosure Regulation (“SFDR”), will come into force on March 10, 2021. The AMF is clarifying the relationship between these new obligations and national requirements, and the position-recommendation DOC-2020-03 on the information to be provided by collective investment schemes integrating non-financial approaches.

    Version française

    Le 20 janvier 2021, l'Autorité des marchés financiers (AMF) a informé sur l'entrée en application au 10 mars 2021 du règlement SFDR pour les sociétés de gestion de portefeuille.

    Certaines dispositions du règlement européen (UE) 2019/2088 dit Sustainable Finance Disclosure (SFDR) entrent en application le 10 mars 2021. L’AMF précise aujourd’hui l’articulation de ces nouvelles obligations avec les exigences nationales, et la position-recommandation DOC-2020-03 sur les informations à fournir par les placements collectifs intégrant des approches extra-financières.

  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    AMF publishes Decision of 18 December 2020 relating to amendments to the operating rules of SON of Griffin Markets Europe SAS / L'AMF publie la Décision du 18 décembre 2020 sur les modifications des règles de fonctionnement de Griffin Markets Europe SAS

    CACEIS

  • On 13 January 2021, the Autorité des marchés financiers (AMF) published the Decision of 18 December 2020 relating to amendments to the operating rules of the organized trading system (SON) of Griffin Markets Europe SAS, aimed in particular at extending trading to agricultural commodity derivatives.

    The amendments to the operating rules of the SON of Griffin Markets Europe SAS as annexed hereto are approved. They will come into force on  4 January 2021.

    Version française

    Le 13 janvier 2021, l'Autorité des marchés financiers (AMF) a publié la Décision du 18 décembre 2020 relative aux modifications des règles de fonctionnement du système organisé de négociation (SON) de Griffin Markets Europe SAS, visant notamment à permettre l’extension de la négociation aux instruments dérivés sur marchandises agricoles.

    Sont approuvées les modifications des règles de fonctionnement du SON de Griffin Markets Europe SAS telles qu’annexées à la présente décision. Elles entreront en vigueur, le 4 janvier 2021.

  • AMF publishes MiFIR form to complete the reporting requirements / L'AMF publie le questionnaire MiFIR pour compléter les obligations de déclaration

    CACEIS

  • On 27 January 2021, the Autorité des marchés financiers (AMF) published the MiFIR form to complete the reporting requirements.

    Version française

    Le 27 janvier 2021, l'Autorité des marchés financiers (AMF) a publié le formulaire MiFIR pour compléter les obligations de déclaration.

  • Prospectus Regulation

    AMF publishes a guide for preparing the universal registration document / L'AMF publie un guide d'élaboration du document d'enregistrement universel

    CACEIS

  • On 8 January 2021, the Autorité des marchés financiers (AMF) published a guide for preparing the universal registration document. 

    On the occasion of the entry into application of Regulation (EU) n ° 2017/1129 dated June 14, 2017 (“Prospectus Regulation”) and its delegated regulations, the AMF has grouped and updated in a new guide several recommendations relating to the development of the universal registration document. The main objective of this guide, which bears the reference DOC-2021-02, is to:

    • present the regulations applicable to the universal registration document (“DEU”);
    • specify the way in which issuers present the required information concerning them; and
    • bring together the positions and recommendations of the AMF and ESMA in this area.

    This guide is made up of three parts:

    • the first part presents the general principles relating to the preparation of the universal registration document (format, content, language, distribution, etc.). It also specifies the link between the universal registration document and other information documents published by issuers (annual financial report, integrated report, non-financial performance statement, report on corporate governance, etc.) ;
    • the second part presents the different sections of the universal registration document, as they result from Annex 1 of the Delegated Regulation n ° 2019/980 of March 14, 2019, as well as the related recommendations, composed of (i) ESMA guidelines (published in English on July 15, 2020) and (ii) AMF recommendations resulting from positions-recommendations DOC-2009-16 (guide to the preparation of reference documents) and DOC-2014-14 (guide to development of reference documents adapted to average values), these two documents being made obsolete by the publication of the new guide. 
    • the third part of the guide incorporates AMF positions and recommendations specific to specialist issuers (including biotechs and real estate companies) and updated recommendations relating to pro forma financial information.

    Version française

    Le 8 janvier 2021, l' Autorité des marchés financiers (AMF) a publié un guide d'élaboration du document d'enregistrement universel.

    À l’occasion de l’entrée en application du Règlement (UE) n°2017/1129 en date du 14 juin 2017 (« Règlement Prospectus ») et de ses règlements délégués, l’AMF a regroupé et mis à jour au sein d’un nouveau guide plusieurs recommandations relatives à l’élaboration du document d’enregistrement universel. L’objectif principal de ce guide, qui porte la référence DOC-2021-02, est de :

    • présenter la réglementation applicable au document d’enregistrement universel (« DEU ») ;
    • préciser la façon dont les émetteurs présentent les informations requises les concernant ; et
    • regrouper les positions et recommandations de l’AMF et de l’ESMA en la matière.

    Ce guide est composé de trois parties :

    • la première partie présente les principes généraux relatifs à l’élaboration du document d’enregistrement universel (format, contenu, langue, diffusion etc.). Elle précise également l’articulation entre le document d’enregistrement universel et les autres documents d’information publiés par les émetteurs (rapport financier annuel, rapport intégré, déclaration de performance extra-financière, rapport sur le gouvernement d’entreprise, etc.) ;
    • la deuxième partie présente les différentes rubriques du document d’enregistrement universel, telles qu’elles résultent de l’annexe 1 du Règlement Délégué n°2019/980 du 14 mars 2019, ainsi que les recommandations y afférentes, composées (i) des orientations de l’ESMA (publiées en version anglaise le 15 juillet 2020) et (ii) des recommandations de l’AMF issues des positions-recommandations DOC-2009-16 (guide d’élaboration des documents de référence) et DOC-2014-14 (guide d'élaboration des documents de référence adapté aux valeurs moyennes), ces deux documents étant rendus obsolètes par la publication du nouveau guide. 
    • la troisième partie du guide intègre les positions et recommandations AMF spécifiques aux émetteurs spécialisés (dont les biotech et les sociétés immobilières) et les recommandations actualisées relatives aux informations financières pro forma.
  • Anti-money laundering / Combating the financing of terrorism (AML / CFT)

    France publishes Order of 6 January 2021 relating to the AML/CFT system and internal control and the freezing of assets / La France publie l'Arrêté du 6 janvier 2021 relatif au dispositif et au contrôle interne LBC/LFT et de gel des avoirs

    CACEIS

  • On 16 January 2021, the Order of 6 January 2021 relating to the system and internal control in the fight against money laundering and terrorist financing and the freezing of assets and the prohibition of the making available or use of funds or economic resources was published in the Official Journal. 

    The order aims at clarifying the measures to combat money laundering and the financing of terrorism internal procedures, internal arrangements and procedures for freezing assets and prohibiting their disposal, internal control and provide for provisions applicable to groups as well as the role of leaders.

    Reporting organizations (organisms mentioned at 1. to 1. ter, 2. to 4. 6. and 7. bis of Article L. 561-2 of the French Monetary and Financial Code, with the exception of the organizations mentioned in 2. of I of Article L. 561-36.) document the identification, assessment and classification of risks mentioned in Article L. 561-4-1 of the Monetary and Financial Code. Prior to the launch of new products, services or business practices, including the use of new distribution mechanisms and new or developing technologies, in connection with new or pre-existing products and services, the reporting bodies shall identify and assess, in particular, the related money laundering and terrorist financing risks, in order to take appropriate measures to manage and mitigate these risks. To draw up the risk classification, the reporting entities take into account, in particular, the information disseminated by the Minister in charge of the Economy, the department mentioned in Article L. 561-23 of the Monetary and Financial Code, the Financial Action Task Force (FATF) and the publications of the Organization for Economic Cooperation and Development (OECD) and the European Union.

    Version française

    Le 16 janvier 2021, l'Arrêté du 6 janvier 2021 relatif au dispositif et au contrôle interne en matière de lutte contre le blanchiment de capitaux et le financement du terrorisme et de gel des avoirs et d’interdiction de mise à disposition ou d’utilisation des fonds ou ressources économiques est publié au Journal Officiel.

    L'ordonnance vise à clarifier les mesures de lutte contre le blanchiment de capitaux et le financement du terrorisme : procédures internes, dispositions et procédures internes pour le gel des avoirs et l'interdiction de leur disposition, contrôle interne et prévoit des dispositions applicables aux groupes ainsi que le rôle des dirigeants.

    Les organismes déclarants (organismes mentionnés aux 1. à 1. ter, 2. à 4. 6. et 7. bis de l'article L. 561-2 du code monétaire et financier, à l'exception des organismes mentionnés au 2. du I de l'article L. 561-36.) documentent l'identification, l'évaluation et la classification des risques mentionnés à l'article L. 561-4-1 du code monétaire et financier. Avant le lancement de nouveaux produits, services ou pratiques commerciales, y compris l'utilisation de nouveaux mécanismes de distribution et de technologies nouvelles ou en développement, en relation avec des produits et services nouveaux ou préexistants, les organismes déclarants identifient et évaluent notamment les risques de blanchiment de capitaux et de financement du terrorisme qui y sont liés, afin de prendre les mesures appropriées pour gérer et atténuer ces risques. Pour établir la classification des risques, les organismes déclarants prennent notamment en compte les informations diffusées par le ministre chargé de l'économie, le service mentionné à l'article L. 561-23 du code monétaire et financier, le Groupe d'action financière (GAFI) et les publications de l'Organisation de coopération et de développement économiques (OCDE) et de l'Union européenne.

  • AMF updates its AML/CFT General Regulation and guidelines / L'AMF met à jour son règlement général et ses lignes directrices LBC/LFT

    CACEIS

  • On 18 January 2021, the Autorité des marchés financiers (AMF) updated Book III of its General Regulation and the four guidelines that make up its policy on anti-money laundering and combating terrorist financing (AML-CFT). This is to take account of the impact of the legislative and regulatory changes made in connection with the transposition of the fifth anti-money-laundering directive and to make a number of adjustments.

    1) Update of the General Regulation

    The General Regulation has been updated further to the legislative and regulatory changes made in connection with the transposition of the fifth anti-money-laundering Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 through Ordinance 2020-115 and Decrees 2020-118 and 2020-119.

    The scope of application of the AML-CFT obligations provided for in the AMF General Regulation is aligned with that set out in Article L. 561-2 6° of the Financial and Monetary Code. It is therefore extended to include managers of "Other AIFs" referred to in Article L. 214-24 paragraph III point 3° of the Monetary and Financial Code, to European Venture Capital Fund (EuVECA) and European Social Entrepreneurship Fund (EuSEF) managers, as well as to branches established in France by European management companies managing French UCITS or AIFs.

    The General Regulation has also been amended to take account of the exemption provided for in Article R. 561-38-4 of the Monetary and Financial Code for financial investment advisers (FIA) and crowdfunding investment advisers (CIA) concerning the submission of a report to the AMF on the organisation of their internal control system.

    2) Update of guidelines

    The policy documents impacted are as follows:

    • Position-Recommendation DOC-2019-15: Guidance on the risk-based approach to combating money laundering and terrorist financing;
    • Position - Recommendation DOC-2019-16: Guidelines on due diligence obligations with respect to clients and their beneficial owners;
    • Position DOC-2019-17: Guidelines on the concept of politically exposed persons;
    • Position DOC-2019-18: Guidelines on the obligation to report to TRACFIN.

    3) The main points of consideration for this update

    In addition to the adjustment of scope, the guidelines take account of the legislative and regulatory changes that have been made, which provide that obliged entities are required to consult the register of beneficial owners of client companies listed on the Trade and Companies Register, except if there is a low risk, and which eliminate the additional customer due diligence measures in the event of remote entry into a business relationship.

    The guidelines also take account of the regulatory adjustments made when obliged entities use the services of a third party to implement due diligence obligations before entering into a business relationship or those aimed at reinforcing the additional due diligence measures when the transaction involves a high-risk country.

    The AMF also recommends that obliged entities make provision in their internal procedures for a methodology for assessing the level of equivalence of the AML-CFT obligations of third countries. To assess this level of equivalence, the AMF recommends that obliged entities consult, not only the lists drawn up by the FATF, but also the mutual evaluation reports published by the FATF.

    Lastly, the AMF has adjusted its position regarding due diligence by collective investment management companies with respect to tenants of buildings acquired by the real estate funds that they manage.

    Version française

    Le 18 janvier 2021, l'Autorité des marchés financiers (AMF) a actualisé le livre III de son règlement général ainsi que ses quatre lignes directrices qui constituent sa doctrine en matière de lutte contre le blanchiment de capitaux et le financement du terrorisme (LCB-FT) pour prendre en compte les impacts des modifications législatives et réglementaires opérées dans le cadre de la transposition de la cinquième directive anti-blanchiment et pour procéder à quelques ajustements.

    1) Mise à jour du règlement général

    La mise à jour du règlement général fait suite aux modifications législatives et réglementaires effectuées dans le cadre des travaux de transposition de la cinquième directive anti-blanchiment (UE) 2018/843 du Parlement européen et du Conseil du 30 mai 2018 via l’ordonnance n° 2020-115 et les décrets n° 2020-118 et n° 2020-119.

    Le champ d’application des obligations relatives à la LCB-FT prévues au sein du règlement général de l’AMF est aligné sur celui prévu à l’article L. 561-2 6° du code monétaire et financier et est en conséquence élargi aux gestionnaires d’ « Autres FIA » mentionnés au 3° du III de l’article L. 214-24 du code monétaire et financier, aux gestionnaires de fonds de capital risque européens (EUVECA) et d’entrepreneuriat social européens (EUSEF) ainsi qu’aux succursales établies en France par des sociétés de gestion européennes pour la gestion d’OPCVM ou de FIA français.

    Par ailleurs, le règlement général est modifié afin de tenir compte de l’exemption prévue à l’article R. 561-38-4 du code monétaire et financier pour les CIF et les CIP de transmettre à l’AMF un rapport sur l’organisation du dispositif de contrôle interne.

    2) Mise à jour des lignes directrices

    Les documents de doctrine impactés sont les suivants :

    • Position - Recommandation DOC-2019-15 : Lignes directrices sur l'approche par les risques en matière de lutte contre le blanchiment de capitaux et le financement du terrorisme ;
    • Position - Recommandation DOC-2019-16 : Lignes directrices sur les obligations de vigilance à l'égard des clients et de leurs bénéficiaires effectifs ;
    • Position DOC-2019-17 : Lignes directrices sur la notion de personne politiquement exposée ;
    • Position DOC-2019-18 : Lignes directrices sur l'obligation de déclaration à TRACFIN.

    3) Les principaux points d’attention de cette mise à jour

    Outre l’ajustement de leur champ d’application, les lignes directrices tiennent compte des modifications législatives et réglementaires effectuées qui prévoient l’obligation pour les assujettis de consulter le registre des bénéficiaires effectifs des sociétés clientes inscrites au Registre du Commerce et des Sociétés sauf en présence d’un risque faible et la suppression des mesures de vigilance complémentaires pour les entrées en relation d’affaires à distance.

    Les lignes directrices tiennent également compte des ajustements réglementaires opérés lorsque les assujettis recourent à un tiers pour la mise en œuvre des obligations de vigilance avant l’entrée en relation d’affaires ou encore ceux visant à renforcer les mesures de vigilance complémentaires lorsque l’opération implique un pays à haut risque.

    Par ailleurs, l’AMF recommande aux assujettis de prévoir dans leurs procédures internes une méthodologie d’évaluation du niveau d’équivalence des obligations en matière de LCB-FT des pays tiers. Pour évaluer ce niveau d’équivalence, l’AMF recommande aux assujettis de consulter non seulement les listes établies par le GAFI mais également les rapports d’évaluation mutuelle publiés par le GAFI.

    Enfin, l’AMF ajuste sa position concernant les diligences des sociétés de gestion de placements collectifs vis-à-vis des locataires des immeubles acquis par les fonds immobiliers qu'elles gèrent.

  • Governance

    AFG strengthens its recommendations for 2021 on corporate governance / L'AFG renforce ses recommandations 2021 sur le gouvernement d'entreprise

    CACEIS

  • On 20 January 2021, the Association Française de Gestion (AFG) publishes its recommendations for 2021 on corporate governance.

    • Employee share ownership: AFG supports the promotion of employee share ownership plans in order to broaden the sharing of company performance to all employees.
    • Hybrid General Meeting: AFG does not support virtual general meetings outside of pandemic periods.
    • Sovereignty of the general meeting: AFG recommends that acquisitions (beyond asset disposals) of a significant and/or strategic nature be submitted to a prior vote of the shareholders.
    • Remuneration of executives: AFG recommends that the rules governing stock option or free share plans provide that, in the event that the general meeting rejects ex-post compensation, the plans distributed in the previous financial year should be forfeited.
    • Other developments: AFG recommends that issuers set targets for increasing the number of women in senior management in order to contribute to better human resources management and better representation of women in decision-making bodies. Stakeholders should ensure that votes on AGM resolutions received within the legal deadlines are not rejected without cause. A director should not receive remuneration for services rendered, or through subsidiaries, in order not to be in a conflict of interest situation.

    Version française

    Le 20 janvier 2021, l'Association Française de Gestion (AFG) renforce ses recommandations 2021 sur le gouvernement d'entreprise.

    • actionnariat salarié : l’AFG est favorable à la promotion de plan à destination des salariés afin d’élargir le partage des performances de l’entreprise à l’ensemble des salariés.
    • assemblée générale hybride : l’AFG n’est pas favorable, hors période de pandémie, à des assemblées générales uniquement sous forme virtuelle. 
    • souveraineté de l’assemblée générale : l’AFG recommande que les acquisitions (au-delà des cessions d’actifs) ayant un caractère significatif et/ou stratégique soient soumises préalablement au vote des actionnaires.
    • rémunération des dirigeants : l’AFG recommande que le règlement des plans d’options ou actions gratuites prévoie, en cas de rejet de la rémunération ex-post par l’assemblée générale, la perte des plans distribués lors du précédent exercice.
    • autres évolutions: AFG recommande aux émetteurs de fixer des objectifs de féminisation de l’encadrement supérieur afin de contribuer à une meilleure gestion des ressources humaines et une meilleure représentativité des femmes dans les instances décisionnaires. Les acteurs devraient veiller à ce que les votes sur des résolutions d’AG reçus dans les délais légaux ne soient pas rejetés sans motif. Un administrateur ne devrait pas toucher de rémunérations pour des prestations de service, ou via des filiales, afin de ne pas être en situation de conflit d’intérêts.
  • BELGIUM

    Brexit

    NBB communicates on the end of transitional regime for: provision and performance of investment services and activities, offering of payment services, issuance and/or distribution of electronic money and performance of insurance activities after Brexit

    CACEIS

  • On 28 January 2021, Banque nationale de Belgique (BnB) published communication on the end of the transitional regime for the provision of investment services, the performance of investment activities, the offering of payment services, the issuance and/or distribution of electronic money and the performance of insurance activities after Brexit.

    On 31 January 2020, the United Kingdom left the European Union and entered into a transition period which ended on 31 December 2020. Furthermore, the UK and the EU concluded an agreement, the “EU-UK Trade and Cooperation Agreement”, which does not provide for a special treatment of financial services after Brexit. As of 1 January 2021, the UK is considered a third country for the purposes of financial supervision.

    Consequently, credit institutions, investment firms, payment institutions, electronic money institutions and insurance undertakings that are governed by UK law and that were active in Belgium before 31 December 2020 will only be able to continue their activities in Belgium if they:

    • obtain an authorization from the National Bank of Belgium or the Financial Services and Markets Authority for the establishment of a Belgian branch of a credit institution, investment firm, payment institution, electronic money institution or insurance undertaking governed by the law of a third country, or
    • limit their activities to insurance activities exempted by the GATS or OECD trade agreements (i.e. marine and transport insurance), or
    • limit their activities to the management of insurance portfolios in run-off, on condition that they comply with the conditions to be imposed for this purpose in a Royal Decree of 22 December 2020, or
    • limit their activities to providing investment services and performing investment activities without an establishment in Belgium with respect to professional clients per se, eligible counterparties and UK nationals established in Belgium, which requires them to notify the FSMA.
  • Capital requirements / CRD / CRR / Basel III/IV

    NBB publishes Circular NBB_2021_02 of the Resolution College of the National Bank of Belgium relating to the granting of an authorization for the reduction of eligible liabilities instruments

    CACEIS

  • On 15 January 2021, the  Banque nationale de Belgique (BnB) published Circular of the Resolution College of the National Bank of Belgium relating to the granting of an authorization for the reduction of eligible liabilities instruments.

    In accordance with Article 78a of Regulation (EU) No 575/20131 ("CRR"), introduced by Article 1e (38) of Regulation (EU) No 2019/8762, the resolution authority may authorize in advance institutions under its jurisdiction to redeem or buy back eligible liabilities instruments before their contractual maturity date. In this circular, the resolution authority specifies the conditions and procedure for the request, including deadlines and information requirements.

  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    FSMA publishes communication FSMA_2021_04 on the suitability statement for retail clients

    CACEIS

  • On 26 January 2021, the Financial Services and Markets Authority (FSMA) published communication FSMA_2021_04 on the suitability statement for retail clients.

    Regulated companies that provide investment advice must first give their retail clients a suitability statement, in which they set out what their advice consists of and explain why it is suited to the client. The suitability statement is mandatory, even where the advice does not lead to a transaction. The FSMA has noted that companies vary greatly in the way they fulfil this obligation.

    The FSMA intends this Communication FSMA_2021_04 to further clarify this obligation and provide recommendations regarding what companies must, at a minimum, include in the suitability statement. The FSMA will use this Communication as a guideline in conducting its supervision.

    The Communication can also serve as a guide for the preparation of the report on the annual review of the investment advice that companies provide to retail clients along with a periodic suitability assessment or when conducting  portfolio management.

  • GERMANY

    Central Counterparty Clearing House (CCP)

    Bundesfinanzministerium publishes draft law on the implementation of different EU Regulations and Directives (crowdfunding service providers for business, PEPP, recovery and resolution of CCPs)

    CACEIS

  • On 13 January 2021, the Bundesfinanzministerium published draft law on the implementation of different EU Regulations and Directives.

    The draft law essentially serves to implement several legal acts of the European Union:

    • Regulation ( EU ) 2020/1503 and Directive ( EU ) 2020/1504 of 7 October 2020 on European crowdfunding service providers for business;
    • Regulation (EU) 2019/1238 of 20 June 2019 on a pan-European Personal Pension Product (PEPP);
    • Regulation on a framework for the recovery and resolution of CCPs;
    • Directive (EU) 2019/2177 of 18 December 2019 amending Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), Directive 2014/65/EU on markets in financial instruments and Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money-laundering or terrorist financing.

    The legal acts either have to be implemented by mid-June 2021 or come into effect for the first time from the end of 2021 or the beginning of 2022, so that the national legislation will have to be adapted by then.

  • COVID-19 Regulatory Measures

    BaFin publishes COVID-19 FAQ update on institutions submission of their annual financial statements

    CACEIS

  • On 25 January 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published COVID-19 FAQ update on institutions submission of their annual financial statements.

    Question: In light of the exceptional circumstances surrounding the coronavirus crisis, are institutions permitted to submit only a digital copy of their annual financial statements to BaFin and the Deutsche Bundesbank in place of the original? 

    Answer: BaFin and the Deutsche Bundesbank will raise no objections if annual financial statements for the period ended as well 31 December 2019 as 31 December 2020 are not submitted in paper form, provided a digital version is submitted.

  • Sustainable Finance / Green Finance

    BaFin publishes article on sustainable investments

    CACEIS

  • On 6 January 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published article on sustainable investments. This article provides an overview of what a sustainable investment is, what risks exist and what will change in the future.

  • HONG KONG

    Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    SFC publishes the MoU on Mutual Recognition of Funds with Thailand

    CACEIS

  • On 20 January 2021, the Securities and Futures Commission (SFC) published the Memorandum of Understanding (MoU) on Mutual Recognition of Funds (MRF) to allow eligible Hong Kong and Thai public funds to be distributed in each other’s market through a streamlined process.

    The MoU establishes a framework for exchange of information, regular dialogue as well as regulatory cooperation in relation to the cross-border offering of eligible Hong Kong and Thai funds.

    In addition, the two regulators have agreed to expedite the approval process of a local feeder fund investing in an MRF-eligible Thai or Hong Kong master fund and to clarify how they may be operated in a streamlined manner.

    The cooperation arrangements set out in the MoU come into effect today, save for the mutual recognition of funds scheme which both regulators will endeavor to take all actions necessary to implement within six to 12 months following the signing of the MoU. 

  • IRELAND

    Directive on administrative cooperation in the field of taxation (DAC 6)

    Ireland publishes Revenue eBrief No. 014/21 - EU Mandatory Disclosure of Reportable Cross-Border Arrangements (DAC 6)

    CACEIS

  • On 27 January 2021, the Ireland - Office of the Revenue Commissioners updated Tax and Duty Manual Part 33-03-33 (EU Mandatory Disclosure of Reportable Cross-Border Arrangements) to set out filing instructions where certain specified information in a disclosure is subject to Legal Professional Privilege (LPP).

  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    CBI publishes letter regarding the outcome of the thematic review of the implementation of its framework for governance, management and oversight in fund management companies

    CACEIS

  • On 19 January 2021, the Central Bank of Ireland (CBI) published a letter, which CBI sent to Irish Funds Industry Association (Irish Funds) on 8 December 2020, in response to queries received relating to the outcome of the Central Bank’s thematic review of the implementation of its framework for governance, management and oversight in fund management companies.

    In order to address these queries, the CBI provided its position with reference to three separate but related matters; (i) effective supervision, (ii) substance, and (iii) presence in Ireland. 

    Fund management companies should consider their resourcing arrangements taking into account all of these various considerations – the effective supervision requirement, minimum substance level as communicated by way of the industry letter, the resources required to fulfil their obligations, their presence in Ireland and other relevant considerations that may be applicable.

  • Ireland publishes Investment Limited Partnerships (Amendment) Act 2020

    CACEIS

  • On 20 January 2021, the Investment Limited Partnerships (Amendment) Act 2020 was published in the Irish Statute Book

    An Investment Limited Partnership (ILP) is a regulated common law partnership structure. ILPs are tailored specifically for investment in a collective investment fund, one of five such investment fund vehicles in Ireland. In an ILP, the general partner is responsible for managing the business of the ILP and is ultimately liable for the debts and obligations of the ILP to the extent the ILP does not have sufficient assets. The general partner must: 

    (i) be authorized by the Central Bank to act as a general partner; or 

    (ii) avail of the right to manage an Irish alternative investment fund (AIF) on a cross-border basis under the Alternative Investment Fund Managers Directive (AIFMD). 

    The regulation aims to modernize Ireland’s private equity offering by amending the ILP. The key update:

    • sets out the requirements for amending a partnership agreement, requiring all partners to be notified prior to an alteration and provides for alterations in writing via the agreement of the majority of partners, provided the existing partnership agreement allows for changes via majority. 
    • allows for alterations to the partnership agreement to be implemented if the depositary certifies in writing that the alteration does not prejudice the interests of the limited partners, and that the partnership agreement provides that the depositary has the power to certify that the alteration does not prejudice the interests of the limited partners.
    • creates a statutory transfer of assets and liabilities on the admission or replacement of a general partner, so that all rights or property of the investment limited partnership shall vest in the incoming partner or existing general partners. 
    • sets out details of penalties in the event of non-compliance with the requirements regarding the maintenance of the register.
    • permits the investment limited partnership to purchase insurance for a general partner or auditor (or former general partner of former auditor) to indemnify him against any liability in the event of a case of negligence or default where the general partner or auditor is found not be negligent or in default. 
    • places the obligation to compile a beneficial ownership register on the general partner of an ILP, as well as outlining the proper interaction with designated persons, and the procedure for occasional transactions.
  • Prudential Requirements for Investment Firms Directive & Regulation (IFD / IFR)

    CBI publishes CP135 - Consultation on Competent Authority Discretions in the Investment Firms Directive and the Investment Firms Regulation

    CACEIS

  • On 14 January 2021, the Central Bank of Ireland (CBI) published CP135 - Consultation on Competent Authority Discretions in the Investment Firms Directive and the Investment Firms Regulation.

    In considering its position on the IFD and IFR discretions, the CBI has been guided by the following general principles:

    • To adopt a prudent approach to the steady-state provisions;
    • To choose the more risk sensitive option, where one is identified; and
    • To be consistent and transparent in the intended approach, and the reasoning behind it.

    Each investment firm should also reapply for the continued application of discretions on a case-by-case basis where the relevant conditions relevant to the exercise of them have changed. Investment firms must apply separately for each of these, which can be achieved by way of itemizing each discretion sought on the same application to the Central Bank. 

  • Sustainable Finance / Green Finance

    CBI publishes SFDR Process clarifications for UCITS and AIFs pre-contractual documentation updates applicable 10 March 2021

    CACEIS

  • On 11 January 2021, the Central Bank of Ireland (CBI) published Industry Communication to inform that the CBI established a fast-track filing process for pre-contractual document updates based on the SFDR Level 1 text, under which both UCITS management companies and AIFMs  will be able to certify their compliance with the SFDR. 

    A Responsible Person shall certify that the amendments made are in accordance with the SFDR and do not contain any other amendments to the pre-contractual documentation. 

    This certification along with the relevant revised final dated documents (prospectus/supplement) are required to be submitted to the dedicated mailbox SFDR@centralbank.ie for automated noting by the CBI.

    Filings can be made from 11 January 2021 to 10 March 2021.

  • IF remarks on the preparation for the compliance with SFDR

    CACEIS

  • On 15 January 2021, the Irish Funds Industry Association published a document to support firms  in the preparation for the compliance with Sustainable Finance Disclosure Regulation (SFDR).

    This publication focuses on what funds and asset managers need to do in order to comply with the 10 March deadline and beyond.

    A quick checklist for SFDR compliance by 10 March 2021:

    • Does the firm have a policy in place on the integration of sustainability risks into the investment process? Is information about this on the website?
    • Has the firm’s remuneration policy been reviewed/updated for consistency with the integration of sustainability risks? Is information about this on the website?
    • Will the firm consider principal adverse impacts of investment decisions on sustainability? 
    • Review the firm’s product range to establish if any products would be considered ESG products under the SFDR. 
    • Are all fund prospectuses updated to disclose the manner in which sustainability risks are integrated into investment decisions and the likely impacts of sustainability risks on the returns?
    • Is the firm ready to certify and file all prospectus updates with the Central Bank of Ireland under the fast-track filing process between 11 January and 10 March 2021?
    • If offering ESG products, has the firm put in place processes to ensure it can demonstrate compliance with the new requirements and made the relevant prospectus updates? Do ESG benchmarks need to be reviewed/updated?
    • Have all marketing communications been reviewed for consistency with the disclosures being made under SFDR?
    • Is a process in place to ensure that ESG disclosures remain up to date?
  • ITALY

    Brexit

    Here are two communications from the CONSOB in concerning Brexit

    CACEIS

  • 1. On 2 January 2021, CONSOB issued a communication targeting clients of UK financial intermediaries to provide additional details on the post Brexit period.

    The publication explains that, from 1 January 2021, Brexit will have significant implications on the provision of financial services to European customers by British intermediaries. In fact, British intermediaries will no longer be able to operate in Italy on the basis of the mutual recognition and can provide investment services only if they have obtained a new authorization in Italy on the basis of the current domestic regime for companies from third countries.

    To ensure the orderly management of this process, the "Milleproroghe" decree-law has established:

    (1)  Specific rules to protect the customers of intermediaries based in the United Kingdom. In particular, in order to avoid discontinuity in the provision of investment services and minimize inconveniences to customers, it was envisaged that investment firms and banks in the United Kingdom that submitted, respectively, to CONSOB and Banca d'Italia an application for authorization not yet finalized as of  31 December 2020, may continue to operate until the authorization is obtained.

    (2) The decree also specifies that investment firms and banks are not permitted to continue to provide investment services and activities under the regime of the free provision of services to retail clients and professional clients.

    (3) During the period from 1 January 2021 until the release of the authorization and in any case no later than 30 June 2021 - UK  intermediaries will not be able to enter into new contracts or modify existing ones; clients of intermediaries who operate with branches will be assisted by an Italian compensation system and will be able to continue to access the Arbitrator for financial disputes.

    (4)  UK investment service providers will need to provide their clients with the information concerning  which compensation scheme is responsible for protecting their savings as soon as possible and no later than 10 February 2021.

    (5) The decree also provides that, in the event of denial of the authorization, intermediaries must cease the unauthorized investment services and activities, in a manner and timeframe that will not harm customers.

    (6) The decree also requires British investment service providers  to ensure that adequate information  is available to customers, concerning the effects of Brexit.  In any case, customers are invited to contact the intermediaries with whom they have relationships directly, especially if they have not received the necessary information, to obtain all the information on whether or not to continue existing relationships.

    (7) UK intermediaries who stop providing investment services and activities in Italy should return to customers their cash, assets and financial instruments.

    2. On 2 January 2021, CONSOB issued a communication targeting British financial intermediaries operating in Italy after Brexit.

    The communication explains that the Decree Law No. 183 of 31 December 2020 (so-called "Milleproroghe") contains provisions on the operations of British financial intermediaries and insurance companies after the expiry of the transition period (31 December 2020) provided for by the Agreement the United Kingdom's withdrawal from the European Union.

    The provisions applicable to intermediaries providing investment services are summarized below:

    (1) It is envisaged that intermediaries who have submitted, by the date of  the entry into force of the aforementioned decree-law, an application to (a) operate in Italy as a third-country company or to (b) set up an Italian intermediary to which they sell the business but for which the authorization has not yet been issued or refused, may continue to provide the service / activity already exercised before the end of the transition period, until the authorization is issued and in any case no later than 30 June 2021. These intermediaries are subject to the national legislation applicable to third country companies and to the supervision of the competent Italian authorities.

    (2) During this period, it is allowed to carry out only the activities for which the authorization has been requested, limited to the management of existing relationships. Therefore, the acquisition of new customers is not permitted, nor the modification of existing relationships. It is possible to manage existing derivative contracts not subject to clearing by a central counterparty. In case of refusal of the authorization, the British intermediaries must cease the activities for which they have not received the authorization as soon as possible and in any case no later than three months from the communication of the refusal.

    (3) Intermediaries operating under the regime of free provision of services, cannot provide investment services to retail customers or professional customers.

    (4) The intermediaries that provide investment services in Italy through the establishment of a branch maintain their adherence to the Italian out-of-court dispute resolution system (Arbitrator for Financial Disputes) and adhere to the National Guarantee Fund (FNG) according to its Statute. Within the term of thirty days following the end of the transition period, British intermediaries will have to contact the FNG and complete the documents required for membership, including the fulfilment of contribution obligations.

    (5) To allow customers to know which compensation system is protecting them, the aforementioned intermediaries must provide customers with adequate information as soon as possible and, in any case, no later than forty days from the day following the end of the transition period.

    (6) Intermediaries that need to cease their activity,  must return cash, assets and financial instruments to customers.

  • COVID-19 Regulatory Measures

    Banca d'Italia publishes further indications on how to report the impact of COVID-19

    CACEIS

  • On 27 January 2021,  Banca d'Italia shared integrations to the guidelines applicable to financial intermediaries concerning reporting on the impact of COVID-19.

    The provisions explain how to display the effects that COVID-19 and support measures had on risk management strategies, objectives and policies,  financial and equity situation of intermediaries.  

    More specifically,  this publication further clarifies how to apply the IAS / IFRS in the current context (with particular attention towards IFRS 9). Moreover, the additional provisions also concern how to apply IFRS 16 in relation to the concessions on lease payments related to COVID-19.  Lastly, changes  to the provisions are implemented to take into account the new disclosure requirements related to IFRS 7 and the reform applicable to the reference indices for the determination of interest rates.

    The provisions apply from financial statements closed or in progress as at 31 December 2020.

  • Financial reporting

    CONSOB published resolution no. 21672 related to the identification of thresholds for disclosure of company shareholdings and declarations of intentions in companies

    CACEIS

  • On 13 January 2021, CONSOB communicated that the provisions contained in resolutions no. 21326 and no. 21327 of 9 April 2020 related to the identification of thresholds for disclosure of company shareholdings and declarations of intentions in companies with particularly widespread shareholding base, are extended for a further three-month period, from 14 January 2021 until 13 April 2021, unless early revocation.

    Resolution no. 21326 established that i) after the threshold of 1%,  reporting obligations arise for the companies listed in the Section A of the resolution; ii) after the additional threshold of 3% , reporting obligations arise for companies qualifying as SMEs , referred to in Section B of the list attached to the publication. Whoever, on the date of entry into force of this resolution, held a stake in the voting capital of the listed companies referred to in the attached list above the thresholds set out, is required to communicate it.

    Resolution no. 21327 complemented the list of societies subjected to reporting obligations after a the threshold of  5% would be passed.

  • Banca d'Italia shares a FAQ document on EBA-ITS Liability Data Reporting

    CACEIS

  • On 19 January 2020, Banca d'Italia shared the FAQ on EBA Liability Data Report.

    The document clarifies (the numbering of items does not reflect the numbering on the document, but is provided for clarity purposes):

    1. The new reporting with basis RPCO - RPIE - RPIO - RPRE - RPCP: the new reporting methods are adopted starting from the accounting date of 31 December 2018  for RPCO-RPIE-RPIO bases and starting from the accounting date of 31 December 2019 for RPRE-RPCP bases.
    2. With regard to the 2021 data collection , information is available on the Single website
    3. Resolution Board (SRB) "2021 Resolution Reporting"
    4. The document shares further technicalities such as  the templates to be used as well as the association between SRB entry point and Banca d'Italia information bases.
    5. The credentials to be used for reporting are those provided by INFOSTAT
    6. How to fill in the  templates for reporting
    7. The currency to be used (exclusively EUR)
    8. Validation rules and naming conventions
  • Financial supervision

    CONSOB publishes a table showing the supervision fee due by entities subjected to supervision

    CACEIS

  • On 21 January 2021, CONSOB issued resolution no. 21659, concerning the contribution due for the year 2021 by financial intermediaries, pursuant to of article 40 of law no. 724/1994.

    The resolution indicates the deadline and the procedure to follow for the execution of the payment, the process that CONSOB will implement in case the fee is not paid, and the procedure followed to determine the sum to be paid.

  • LUXEMBOURG

    Anti-money laundering / Combating the financing of terrorism (AML / CFT)

    Conseil d'Etat du Luxembourg comments on draft law 7736 on anti-money laundering and terrorism financing

    CACEIS

  • On 12 January 2021, the Conseil d'Etat du Luxembourg published an avis on the draft law 7736 published on 21 December 2020 on anti-money laundering and terrorism financing, modifying : 

    • Law of 12 November 2004 as amended on anti-money laundering and terrorism financing ;
    • Law of 25 March 2020 establishing a central electronic system for retrieving data concerning IBAN accounts and safes
    • Law of 10 July 2020 establishing a register of trusts and fiducies
    • Law of 17 December 2010 as amended concerning undertakings for collective investment

    In the dispatch, the Minister of Finance asked the Council of State to advise the draft law so as to allow its adoption in February 2021, because of the evaluation and visit of the Financial Action Task Force (FATF) in March 2021 and the imminence of Brexit.

    The avis first reminds the two objectives of the draft law :

    • The first objective is to amend and supplement the amended Law of 12 November 2004 relating to the fight against money laundering and terrorist financing, as well as the amended Law of 20 April 1977 on the fight against money laundering and terrorist financing the operation of games of chance and betting relating to sporting events. It is also to rectify material errors in the Law of 25 March 2020 instituting a central electronic system for searching data concerning IBAN accounts and safes and in the law of 10 July 2020 establishing a Register of trusts and fiducies.
    • The second objective is to extend the scheme until 31 July 2021 introduced in article 186-6 of the amended law of 17 December 2010 concerning undertakings for collective investment by the Law of 8 April 2019 on measures to be taken in relation to the financial sector in the event that of withdrawal of the United Kingdom of Great Britain and Northern Ireland from the  European Union and this in order to guarantee legal certainty for the European Luxembourg investors holding UK shares in undertakings for collective investment.

    The comments of the Conseil d'Etat first proceeds to the examination of the articles and then delivers its observations regarding the syntax of the text of the law. 

  • Luxembourg finalizes first vertical assessment of money laundering and terrorist financing risks associated with virtual asset service providers

    CACEIS

  • On 25 January 2021, Luxembourg published its first vertical assessment of money laundering and terrorist financing risks associated with virtual asset service providers.

    Luxembourg has just finalized the first vertical assessment of the risks in terms of money laundering and terrorist financing linked to providers of virtual asset services (PSAV). This vertical risk assessment was carried out under the direction of the Ministry of Justice and adopted on December 21, 2020 by the Committee for the Prevention of Money Laundering and the Financing of Terrorism (ML / FT Prevention Committee). It is a complement to the assessment national risk plan updated in December 2020 (ENR 2020) and responds to Recommendation 15 of the Financial Action Task Force (FATF).

    The methodology of this report is closely related to the ENR approach, but with some adjustments. First, the inherent risk is assessed based on the threats and vulnerabilities specific to virtual assets (VAs) and PSAVs; then, the mitigation measures implemented by public and private actors specific to AVs and PSAVs are presented. 

    At this stage, it was considered premature to determine the effectiveness of the mitigating factors in order to determine a residual risk level. The latter will be determined in a future update.

    The main findings of this vertical risk assessment are as follows:

    • The most significant threats posed by VAs and PSAVs to Luxembourg are drug trafficking, fraud, counterfeiting and theft. Other emerging threats are cybercrime, extortion and sexual exploitation;
    • Pseudo-anonymous AVs, like Bitcoin , and anonymous AVs, like Monero , are considered to have a very high level of inherent risk due to their anonymity, ease of use and security features;
    • The overall inherent risk level of PSAV is assessed as "medium". Only the sub-category of centralized exchange platforms has an inherent "high" level of risk.
  • CSSF publishes circular-letter: 2020 Survey related to the fight against money laundering and terrorist financing

    CACEIS

  • On 27 January 2021, the Commission de Surveillance du secteur financier (CSSF) published a circular-letter: 2020 Survey related to the fight against money laundering and terrorist financing.

    The annual online survey for the year 2020 collecting standardised key information concerning ML/TF risks to which the professionals under supervision are exposed and the implementation of related risk mitigation and targeted financial sanctions measures will be launched on 15 February 2021.

    This cross-sector survey contributes to the CSSF’s ongoing assessment of ML/TF risks present in the financial sectors under its AML/CFT supervision, and forms part of the AML/CFT risk-based supervision approach put in place by the CSSF over the last years. In substance, the 2020 survey remains generally unchanged compared to the previous year. 

    However, a limited number of questions have been added or amended due to the legislative and regulatory changes that occurred in 2020 (notably the amendment to the 2004 AML/CFT Law in March 2020 or the new law of 19 December 2020 regarding financial restrictive measures). Answers to the survey questions will have to be submitted through the CSSF eDesk portal by 15 March 2021. The self-assessment ML/TF risk survey must be initiated and submitted via the CSSF eDesk portal.

  • Luxembourg announces FATF on-site visit for the mutual evaluations of Luxembourg has been postponed due to COVID-19

    CACEIS

  • On 27 January 2021, Luxembourg announced the FATF on-site visit for the mutual evaluations of Luxembourg has been postponed due to COVID-19.

    Luxembourg's AML/CFT system is currently being evaluated as part of the 4th round of mutual evaluations by the FATF. On 26 January, in application of the FATF's supplementary procedures relating to the conduct of mutual evaluations at the time of COVID-19, the President of the FATF decided to postpone the on-site visit of the evaluators, initially scheduled for March 2021. A new schedule will be published, after the Plenary meeting at the end of February 2021, on the official FATF website.

  • Blockchain / Distributed Ledger Technology (DLT)

    Luxembourg publishes Law of 22 January 2021 amending: 1° the Law of 5 April 1993 on the financial sector, as amended; 2° the Law of 6 April 2013 on dematerialised securities

    CACEIS

  • On 22 January 2021, the Law of 22 January 2021 amending: 1° the Law of 5 April 1993 on the financial sector, as amended; 2° the Law of 6 April 2013 on dematerialised securities was published in the Official Journal. 

    The Law of 22 January 2021 introduces a new definition of "issuance account" as an account held with a settlement institution or a central account holder in which the dematerialized securities of an issuer must exclusively be registered. Such account may be maintained and registrations of securities may be made in or through secure electronic recording devices, including distributed electronic registers or databases.

    The investment firms referred to in Article 1, point 9) of the amended law of 5 April 1993 on the financial sector and the credit institutions referred to in Article 1, point 12) of the said law shall be considered as central account keepers within the meaning of this law for unlisted debt securities.

    These investment firms and credit institutions have at their disposal control and security mechanisms and computer systems adapted for the keeping of central accounts allowing the registration in an issue account of all the securities making up each issue admitted to their operations, to ensure the circulation of securities by transfer from account to account, to verify that the total amount of each issue admitted to their operations and registered in an issue account is equal to the sum of the securities registered in the securities accounts of their account holders and the exercise of the rights attached to the securities registered in the securities account.

  • Governance

    CSSF publishes table B 4.6 Persons responsible for certain functions and activities

    CACEIS

  • On 28 January 2021, the Commission de Surveillance du secteur financier (CSSF) published a table B 4.6 Persons responsible for certain functions and activities.

    The table  is to be used according to the following regulations:

    • Circular IML 93/101
    • Circular CSSF 17/671
    • Circular IML 96/125
    • Circular CSSF 01/29 
    • Circular CSSF 07/307
    • Circular CSSF 20/753
    • Circular CSSF 12/552
    • Circular CSSF 20/750
    • Circular CSSF 13/555
    • Grand-Ducal Regulation of 30 May 2018
    • Circular CSSF 17/665
    • CSSF Regulation N° 12-02 of 14 December 2012.
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    CSSF updates FAQ on Luxembourg Law of 12 July 2013 on AIFM

    CACEIS

  • On 20 January 2021, Commission de Surveillance du secteur financier (CSSF) updated its FAQ on Luxembourg Law of 12 July 2013 on AIFM (version 17).

    A updated question concerns the accounting standards which are accepted under article 20(3) of the Law of 2013 for preparing the accounting information in the annual report of an AIF managed by an authorized AIFM established in Luxembourg.

    As per article 20 (3) of the Law of 2013, an authorized AIFM established in Luxembourg managing an EU AIF is required to prepare the accounting information given in the annual report in accordance with the accounting standards of the home Member State of the AIF.

    Therefore, with regards to Luxembourg AIFs managed by an authorized AIFM established in Luxembourg, the accounting standards generally accepted in Luxembourg are LUX GAAP and IFRS as adopted by the European Union by Regulation (EC) No 1606/2002 on the application of international accounting standards.

  • Transparency Directive

    CSSF informs on the delay by one year of ESEF requirements for listed companies

    CACEIS

  • On 20 January 2021, the Commission de Surveillance du secteur financier (CSSF) informed listed companies that Member States are allowed to delay by one year the application of the European Single Electronic Format (ESEF) requirements in relation to annual financial reports. 

    For issuers subject to the Transparency Law, it will be made use in Luxembourg of the 1-year postponement option of the ESEF requirements. These requirements thus apply to the annual financial reports for periods beginning on or after 1 January 2021. For periods preceding that date, issuers may already apply the ESEF requirements on a voluntary basis.

    The CSSF reminded issuers that, as from the application of the ESEF requirements, the entire annual financial report shall be drawn up in accordance with the RTS on ESEF. 

    As such it shall be prepared in XHTML format and, where annual financial reports include IFRS consolidated financial statements, issuers shall mark up those consolidated financial statements using eXtensible Business Reporting Language (XBRL).

  • SWITZERLAND

    Brexit

    Switzerland and United Kingdom deepen relationship in financial sector

    CACEIS

  • On 27 January 2021, the finance ministers of Switzerland and the United Kingdom agreed the next steps for negotiations on a mutual recognition agreement in the financial sector.  The agreement sought by Switzerland and the UK is to be based on the principle of mutual recognition of the applicable financial market regulation and the relevant supervisory framework.

    With a financial services agreement, Switzerland and the UK want to reaffirm their commitment to the importance of open financial markets and international financial stability, as well as consolidate their position as the world's leading international financial centres in Europe. Both sides are committed to protecting investors and consumers, as well as maintaining market integrity and financial stability, while adhering to the highest regulatory standards.

  • Prudential Reporting

    FINMA publishes Practical guide for carrying out prudential audits

    CACEIS

  • On 25 January 2021, the FINMA published a Practical guide for carrying out prudential audits.

    This practical guide is a document to help prudential audit firms of banks, securities firms and financial groups in relation to the processing of the following prudential audit inquiry forms: risk analysis, standard audit strategy and prudential audit report. It also contains indications concerning the performance of prudential audits.

  • Sustainable Finance / Green Finance

    Switzerland promotes transparency on climate-related financial risks

    CACEIS

  • On 12 January 2021, the Federal Council announced Switzerland was promoting transparency on climate-related financial risks.

    At its meeting on 11 December 2020, the Federal Council presented concrete proposals on how to strengthen Switzerland's role as a global leader in sustainable financial services. In this context, the Federal Council called on Swiss companies from all sectors of the economy to implement these recommendations on a voluntary basis from now on. It also decided that a bill should be drafted to make the recommendations binding. The work will be carried out this year, with the private sector and associations being consulted.

  • NETHERLANDS

    Brexit

    DNB announces Dutch collective investment schemes may still invest capital in deposits with banks with a seat in the UK

    CACEIS

  • On 13 January 2021, De Nederlandsche Bank (DNB) published a communication on Brexit.

    On 24 December 2020, the EU and the UK concluded an agreement on the future trade relationship. DNB welcomes this agreement partly because of the importance of the UK as a trading partner for the EU, and the Netherlands in particular.

    In addition, on 29 December 2020, DNB announced that, for the application of Art. 130(f) and 134(2) Bgfo, the prudential supervision in the UK offers sufficient guarantees with regard to the interests that the law aims to protect.

    As a result, as from 1 January 2021, Dutch collective investment schemes may still invest assets in deposits with UK domiciled banks and may have a counterparty risk in a transaction in OTC derivatives of up to 10% of its assets when the counterparty is a UK domiciled bank. This decision will be valid from 1 January 2021 for a period of one year. UCITS making use of this are requested to notify their supervisor. 

  • European Single Electronic Format (ESEF)

    AFM announces securities issuers will be deferred for reporting in ESEF

    CACEIS

  • On 18 January 2021, the Autoriteit Financiële Markten (AFM) announced securities issuers will be deferred for reporting in European Single Electronic Format (ESEF).

    Securities issuers will be given a one-year extension to make their annual reports digitally available according to the ESEF. The European Commission offered that possibility because of the ongoing COVID-19 crisis. Minister Hoekstra of Finance has informed the EC that the Netherlands will make use of that possibility.

    Issuers with the Netherlands as their home state will therefore have an extra year, as of the 2021 financial year, to make their financial reporting available in accordance with ESEF.

    Reporting from the 2020 financial year onwards already in ESEF?

    Incidentally, companies are free to draw up their financial reports in ESEF as from the 2020 financial year. The AFM assumes that this will be done in accordance with the applicable regulations. The AFM will monitor this and take special circumstances into account in its supervision.

  • Financial supervision

    DNB informs on its adapted supervisory approach

    CACEIS

  • On 13 January 2021, De Nederlandsche Bank (DNB) informed on its adapted supervisory approach.

    From 1 January 2021, DNB will conduct supervision according to an updated supervisory methodology.

    An important aspect of the Actualisation of Supervision Methodology (ATM) is the risk tolerance of supervision. The starting point is that a stable and reliable financial system benefits from public trust in financial institutions to meet their obligations and act with integrity. In addition, the purpose of supervision is to reduce the risk and impact of a failing institution, not to prevent it at all costs. 

    The intensity of supervision increases as the negative impact of these risks on trust grows. With this risk-based approach, DNB aims to deploy its capacity as effectively and efficiently as possible.

  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    AFM will investigate costs and fees charged by managers of UCITS funds to retail investors

    CACEIS

  • On 15 January 2021, the Autoriteit Financiële Markten (AFM) informed it will investigate costs and fees charged by managers of UCITS funds to retail investors.

    This investigation is part of a joint effort initiated by the ESMA. The investigation is carried out by the national regulators of the different countries.

    The purpose of this study is to determine whether supervised companies adhere to UCITS requirements with regard to costs and whether they are not charging participants unnecessary costs. In addition, the research contributes to the consistency of supervision in Europe in terms of costs and thus to the protection of investors in Europe. The costs and performance of retail investment products have been identified as one of the strategic supervisory priorities in a European context.  

    The AFM will shortly select a number of parties that we will investigate.

  • Sustainable Finance / Green Finance

    AFM informs on SDFR

    CACEIS

  • On 29 January 2021, Autoriteit Financiële Markten (AFM) published an article on Sustainable Finance Disclosure Regulation (SFDR).

    The SFDR comes into effect on 10 March. This regulation applies to various sectors, including insurers, pension funds, banks and asset managers (investment firms and managers of collective investment schemes). The SFDR, the sustainability information regulation, comes into effect on 10 March. This regulation applies to various sectors, including insurers, pension funds, banks and asset managers (investment firms and managers of collective investment schemes)..

    On the basis of the new requirements, they will have to make (more) information available about how they deal with sustainability risks themselves in their business operations and how they take into account any adverse effects on sustainability. If they offer sustainable products, information about the sustainable characteristics or sustainable objectives of these products must be available.

  • UNITED KINGDOM

    Anti-money laundering / Combating the financing of terrorism (AML / CFT)

    PRA publishes CP3/21 - Depositor Protection: Identity verification

    CACEIS

  • On 20 January 2021, the Prudential Regulation Authority (PRA) published Consultation Paper 3/21 - Depositor Protection: Identity verification.

    This Consultation Paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposed rules regarding the timing of identity verification required for eligibility of depositor protection (DP) under the Financial Services Compensation Scheme (FSCS). 

    It also proposes amendments to the PRA’s expectations in respect of Insolvency Practitioners (IPs) being best placed to carry out identity verification checks in the event that a firm has failed to do so by the compensation date.

    The proposed rule changes are intended to prevent FSCS eligibility issues in the event that a firm has failed to conduct identity verification in accordance with the relevant anti-money laundering requirements referred to in DP Rule 2.2(4)(f) (the Relevant AML Requirements).

    This CP is relevant to the FSCS, all PRA-authorized deposit-takers, and IPs. This CP contains no material of direct relevance to retail financial services consumers or consumer groups upon which they might need to act.

    This consultation closes on Monday 15 February 2021.

  • Benchmarks Regulation (BMR)

    FCA updates its priorities and roadmap for the final year of LIBOR transition

    CACEIS

  • On 11 January 2021, the Financial Conduct Authority (FCA) published the updated of the Working Group on Sterling Risk-Free Reference Rates' priorities and roadmap for the final year of transition to help businesses to finish planning the steps they will need to take in the coming months.

    The Working Group’s top priority is for markets and their users to be fully prepared for the end of sterling LIBOR by the end of 2021. 

    In addition, the Working Group has recommended that firms no longer initiate new linear derivatives linked to sterling LIBOR after the end of March 2021, other than for risk management of existing positions or where they mature before the end of 2021.

    The Working Group, the Bank of England, and the FCA have made clear that, in future, they anticipate that the large majority of sterling markets will be based on SONIA compounded in arrears, to provide the most robust foundation for the overall market structure. However, in certain specific parts of the market, participants may need access to alternative rates. 

  • FCA updates on requirements for Benchmark administrators

    CACEIS

  • On 14 January 2021, the Financial Conduct Authority (FCA) update. on requirements for Benchmark administrators.

    UK firms involved in benchmark administration were required to submit their application through one of the prescribed routes (authorization or registration) before 1 January 2020.

    Third country benchmark administrators will need to be approved through the recognition or endorsement regimes, where an equivalence decision doesn't apply to them, by 31 December 2022. The Government has announced that it intends to extend this until the end of 2025 in forthcoming legislation.

  • Blocking Regulation

    UK publishes S.I. 2020 No. 1660 - The Protecting against the Effects of the Extraterritorial Application of Third Country Legislation (Amendment) (EU Exit) Regulations 2020

    CACEIS

  • On 6 January 2021, the S.I. 2020 No. 1660 - The Protecting against the Effects of the Extraterritorial Application of Third Country Legislation (Amendment) (EU Exit) Regulations 2020 was published in the UK legislation.

    These Regulations make amendments to the EU rules prohibiting persons from complying with the trade sanctions legislation of third countries to the extent that that legislation purports to have extraterritorial effects, together with amendments (consequent upon withdrawal) to the related UK implementing legislation. The changes to these EU rules are made to ensure that these rules operate as UK rules after withdrawal.
    For instance, the provisions prohibiting EU persons from complying with the relevant third country legislation become provisions prohibiting UK persons from doing so; powers on the part of the European Commission to make EU tertiary legislation to amend the annex of third country legislation (compliance with which is proscribed) becomes a power, exercisable by the Secretary of State, to amend the annex by domestic secondary legislation; obligations to provide information to the Commission become obligations to provide information to the Secretary of State; and provisions whereby persons may apply to the Commission to be allowed to comply with the third country legislation become provisions whereby persons may apply to the Secretary of State for permission to do so.

  • Brexit

    FCA publishes Form TMPR CH - Notification of certain changes to an EEA UCITS scheme and any sub-funds which are in the TMPR

    CACEIS

  • On 7 January 2021, the Financial Conduct Authority (FCA) published Form TMPR CH - Notification of certain changes to an EEA UCITS scheme and any sub-funds which are in the temporary marketing permissions regime (TMPR) as required by Regulations 65 and 66 of the

    Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019.

  • UK Government updates table of UK Equivalence Decisions

    CACEIS

  • On 14 January 2021, the UK Government updated the table of UK Equivalence Decisions to reflect the fact that the Transition Period has ended.

  • Consumer protection

    FCA publishes statement on recent share trading issues

    CACEIS

  • On 29 January 2021, the Financial Conduct Authority (FCA) published its statement on recent share trading issues:

    • The losses due to buying shares in volatile markets are unlikely to be covered by the Financial Services Compensation Scheme.
    • Broking firms are not obliged to offer trading facilities to clients.  They may withdraw their services, in line with customer terms and conditions if, for instance, they consider it necessary or prudent to do so.
    • Firms are exposed to greater risk and therefore more likely to need to take such action during periods of abnormally high transaction volumes and price volatility.
    • FCA will take appropriate action wherever there is an evidence of firms or individuals causing harm to consumers or markets.
  • COVID-19 Regulatory Measures

    FCA updates expectations regarding Market trading and reporting and COVID-19

    CACEIS

  • On 8 January 2021, the Financial Conduct Authority (FCA) updated its expectations for firms during the COVID-19 pandemic.

    The updates concern market trading and reporting:

    • At the start of the pandemic, if firms moved to an alternative site or a working from home arrangement, the FCA asked them to consider the broader control environment in view of the new circumstances. 
    • Given the extensive duration of these arrangements, the FCA also expects firms to record all relevant communications (including voice calls) when working outside the office. 
    • Firms should continue to take all steps to prevent market abuse risks. This could include enhanced monitoring, or retrospective reviews. The FCA will continue to monitor for market abuse and, if necessary, take action. 
    • Firms should also submit regulatory data without undue delay. 
    • If firms have any concerns about meeting the obligations due to COVID-19, firms should contact the FCA via their regular supervisory channels as soon as possible.
  • FCA publishes Market Watch 66 - newsletter setting out expectations for firms on recording telephone conversations and electronic communications when working from home

    CACEIS

  • On 11 January 2021, the Financial Conduct Authority (FCA) published its newsletter on market conduct and transaction reporting issues ‘Market Watch 66’, which sets out expectations for firms on recording telephone conversations and electronic communications when alternative working arrangements are in place – including increased homeworking. 

    • Risks from misconduct are likely to be heightened by increased homeworking, due to the increased use of unmonitored or encrypted communication applications such as WhatsApp for sharing potentially sensitive work information. Firms will need to ensure that if such apps are used for in-scope activities (e.g. arranging of deals and dealing as principal or agent in investments, managing investments, as well as managing a UCITS, an AIF and/or establishing, operating or windowing up a collective investment scheme) on business devices, they are recorded and auditable. 
    • In the past the FCA has acted against individuals and firms for misconduct involving the use of WhatsApp and other social media platforms to arrange investment advice, which included transmitting lists of trades to copy (‘trading signals’) and making other investment recommendations to clients. The FCA expects this to remain an area of focus. 
    • It is important for firms to proactively review their recording policies and procedures every time the context and environment they operate in changes. 
    • Firms must have effective, up to date recording policies, including for home working arrangements. Where new or amended recording policies are needed these should be clearly set out in writing, documented and signed off under the appropriate governance arrangements. 
    • Firms should assess policies and controls for the use of privately owned devices to connect to their organizational networks and access work-related systems and potentially sensitive or confidential data, to ensure that these provide sufficient scope for effective recording. This might for example include ensuring clear policies banning the use of privately owned devices for in-scope activities where recording cannot be carried out by the firm. New communication mediums must be approved by the firms before being used by employees to conduct business activities. 
    • If new or amended policies are introduced or new technologies used, the FCA expects firms to provide enhanced or refreshed training to staff. 
  • FCA publishes joint statement reminding companies that extended financial information timelines continue to apply

    CACEIS

  • On 27 January 2021, the Financial Conduct Authority (FCA) published the joint statement, together with Financial Reporting Council (FRC), reminding companies that extended financial information timelines continue to apply.

    The FCA and FRC reminded companies of the measures that remain valid and which provide some flexibility. This includes allowing listed companies an additional two months to publish their audited annual financial reports. This is because of the busiest period of the year for preparing, auditing and publishing financial information. This has coincided with further restrictions imposed through the recent national lockdowns in the UK.  

    Recognizing the heightened challenges and in line with the previous statements, the FCA and FRC encouraged all stakeholders including in particular boards of listed companies to 

    1. re-familiarize themselves with the measures and 
    2. use them in light of any resourcing constraints in finance and/or audit teams to ensure the quality of reporting is not compromised during this period.
  • FCA asks banks to reconsider branch closures during COVID-19 lockdown

    CACEIS

  • On 28 January 2021, the Financial Conduct Authority (FCA) reminded firms to consider the impact of national restrictions on compliance with the FCA's Principles for Businesses, given FCA's existing guidance on branch closures. 

    Where banks are unable to meet the expectations of FCA’s guidance during lockdown measures, they should consider pausing or delaying new branch closures where possible, particularly where this could have significant impact on vulnerable customers. 

    Where firms consider it is appropriate to continue with plans during this period, the FCA expects them to have considered FCA’s guidance and be able to demonstrate how they’ve taken the concerns and expectations set out in this statement into account. 

    If firms are considering new closures or advancing those previously announced during this period, FCA’s expects them to:

    • communicate with customers in a way that is clear, fair and not misleading to inform them of the closure proposals. Particular consideration should be given to the best way to make sure vulnerable and hard-to-reach customers are aware of the proposals and are able to contact the firm. 
    • give customers clear information about how the firm can help them access alternatives during this period of national restrictions, for example support to use online banking.
    • where appropriate, engage with customers to understand their needs and properly consider how they will be affected by the proposals.
  • Cryptoasset / Cryptocurrency / Virtual Currency

    UK Government publishes consultation on regulatory approach to crypto-assets and stablecoins

    CACEIS

  • On 7 January 2021, the UK Government publishes a consultation on its regulatory approach to crypto-assets and stablecoins.

    The government proposes a staged and proportionate approach to regulation, which is sensitive to risks posed, and responsive to new developments in the market. This document represents the first stage in the consultative process and focuses on establishing a sound regulatory environment for stablecoins, where the government judges that risks and opportunities are most urgent. 

    The government will strategically assess new and emerging risks as this market continues to mature. Future regulation of a potentially wider set of tokens and services will be informed by this analysis, taking into consideration the views of industry, consumers, and regulators.

    This consultation closes at 11:59pm on 21 March 2021.

  • Dormant accounts

    UK Government updates on the consultation on expanding the Dormant Assets Scheme

    CACEIS

  • On 11 January 2021, the UK Government concluded the response to the consultation on expanding the Dormant Assets Scheme.

    Additional assets in scope for expanded Scheme;

    - Insurance and pensions: Proceeds of life insurance and retirement income policies

    - Investment and wealth management (IWM): 

    • Shares or units in collective investments
    • Certain investment asset distributions and proceeds

    - Securities: 

    • Shares and distributions from shares in public limited companies
    • Proceeds from corporate actions.
  • Financial supervision

    FCA updates on authorization process

    CACEIS

  • On 15 January 2021, the Financial Conduct Authority (FCA) updated on its authorization process.

    Firms should:

    • Send FCA the completed application form and appropriate fee.
    • Offer firm’s case officer more information, clarification and/or evidence, as requested. 

    The FCA will:

    • Assess firm’s application in line with the FCA’s commitments, such as letting firm know when a case officer has been assigned and keeping firm up to date.
    • Check firm’s application against various databases and information held by other regulatory agencies in the UK or overseas.
    • Assess firm’s business, considering whether it meets the minimum ‘threshold conditions’ in FCA’s Handbook.
    • Make a decision on firm’s application.
  • FCA reminds firms to regularly review regulatory permissions

    CACEIS

  • On 18 January 2021, the Financial Conduct Authority (FCA) published a reminder on firms' obligation to regularly review regulatory permissions to ensure they are up to date and removed where they are not needed. 

    The FCA expects firms to notify the FCA of material changes and apply to make any necessary changes in a timely way. Firms should note that the FCA has the power to cancel a firm’s permission if it has not carried on a regulated activity for at least 12 months.

  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    UK Government publishes call for input for the review of the UK funds regime

    CACEIS

  • On 26 January 2021, the UK Government announced that it would carry out a review of the UK funds regime, covering tax and relevant areas of regulation. 

    At Budget 2020 the government announced that it would carry out a review of the UK funds regime to consider reforms which hold the potential to enhance the UK’s attractiveness as a location for asset management and for funds in particular. 

    Alongside this call for input the review also encompasses two separate work streams, which were also announced at Budget. 

    First, the government consulted on the tax treatment of asset holding companies (AHCs) in alternative fund structures. On 15 December 2020, the government responded to its AHCs consultation and launched a further detailed consultation on these AHCs proposals. Second, the government committed to reviewing the VAT treatment of fund management fees, which the government intends to take forward in 2021. 

    This call for input sets out the objectives, scope and next steps for the wider review, which are outlined in this introductory chapter. The remainder of this document seeks views to help HM Treasury identify which reforms should be taken forward and how these should be prioritized.

    This call for input closes on 20 April 2021.

  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    UK publishes S.I. 2021 No. 28 - The Markets in Financial Instruments (Switzerland Equivalence) Regulations 2021

    CACEIS

  • On 13 January 2021, the S.I. 2021 No. 28 - The Markets in Financial Instruments (Switzerland Equivalence) Regulations 2021 was published in the UK legislation.

    This instrument is being made in order to specify that the legal and supervisory framework for stock exchanges in Switzerland meet at least equivalent outcomes to the UK’s corresponding regime. 

    It will allow all investment firms subject to the trading obligation as set out in Article 23(1) of the Markets in Financial Instruments Regulation, as it forms part of retained EU law (MiFIR) to trade shares that fall within scope of the share trading obligation on Swiss trading venues that have been recognized as equivalent:

    (a) BX Swiss AG; and

    (b) SIX Swiss Exchange AG.

  • Regulation on Short Selling and certain aspects of Credit Default Swaps

    UK publishes S.I. 2021 No. 5 - Short Selling (Notification Thresholds) Regulations 2021

    CACEIS

  • On 6 January 2021, the S.I. 2021 No. 5 - Short Selling (Notification Thresholds) Regulations 2021 was published in the UK legislation.

    This instrument amends the retained EU regulation on short selling and certain aspects of credit default swaps (EUR 2012/236, as amended by S.I. 2018/1321), commonly known as the Short Selling Regulation (“the SSR”). 

    It lowers the initial notification threshold for the reporting of net short positions to the Financial Conduct Authority (“FCA”), in relation to the issued share capital of a company that has shares admitted to trading on a trading venue, from 0.2% to 0.1%. This change will allow the FCA to more effectively monitor short selling activity at a time of increased market volatility, and to act against any short selling activity that impacts on the integrity of the market.

  • Senior Managers & Certification Regime (SM&CR)

    PRA publishes PS1/21 - Strengthening Accountability: SM&CR: Forms update

    CACEIS

  • On 22 January 2021, the Prudential Regulation Authority (PRA) published Policy Statement 1/21 - Strengthening accountability: SM&CR forms update.

     It contains the PRA’s final policy, which includes an:

    • amended Notifications Part of the PRA Rulebook; 
    • updated Notification Form; and
    • updated Senior Managers & Certification Regime (SM&CR) Form L. 

    This PS is relevant to all PRA-authorized firms. 

  • INTERNATIONAL

    Anti-money laundering / Combating the financing of terrorism (AML / CFT)

    FATF updates Consolidated table of assessment ratings (26 January 2021)

    CACEIS

  • On 26 January 2021, the Financial Action Task Force (FATF) updated the Consolidated table of assessment ratings.

    This table provides an up-to-date overview of the ratings that assessed countries obtained for effectiveness and technical compliance. These should be read in conjunction with the detailed mutual evaluation reports, which are available on the website.

  • Benchmarks Regulation (BMR)

    ISDA announces new IBOR Fallbacks Take Effect for Derivatives

    CACEIS

  • On 25 January 2021, the International Swaps and Derivatives Association (ISDA) announced new IBOR Fallbacks Take Effect for Derivatives.

    New fallbacks for derivatives linked to key interbank offered rates (IBORs) have come into effect on 25 January 2021, ensuring a viable safety net is in place in the event an IBOR becomes permanently unavailable while firms continue to have exposure to that rate.

    The fallbacks, published by the ISDA, will be incorporated into all new derivatives contracts that reference ISDA’s standard interest rate derivatives definitions from today. They will also be included in legacy non-cleared derivatives if the counterparties have bilaterally agreed to include them or both have adhered to the IBOR Fallbacks Protocol. More than 12,000 entities across nearly 80 jurisdictions have so far adhered to the protocol, which will remain open for adherence.

  • Macro-prudential framework

    FSB sets out 2021 work program

    CACEIS

  • On 20 January 2021, the Financial Stability Board (FSB) published its work program for 2021. The work program reflects a strategic shift in priorities in the COVID-19 environment. The work program aims to maximize the value of FSB work to foster global financial stability while preserving the FSB’s capacity to respond to new issues that may emerge. Important FSB work program items, which include key deliverables to the G20 Italian Presidency, are:

    • International cooperation and coordination related to COVID-19. The FSB, through its cross-sectoral membership, continues to promote financial stability during market stress related to COVID-19.
    • Non-bank financial intermediation (NBFI). The FSB will take forward the ambitious work program for strengthening the resilience of NBFI laid out in its holistic review of the March market turmoil.
    • Central counterparty (CCP) resilience, recovery and resolvability. The FSB will, in cooperation with the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO), consider the need for, and develop as appropriate, international policy on financial resources in recovery and resolution to further strengthen the resilience and resolvability of CCPs.
    • Cross-border payments. The FSB will complete a number of actions under the FSB roadmap to enhance cross-border payments. It will also continue discussions of regulatory and supervisory approaches with respect to global ‘stablecoins’.
    • Climate change and sustainable finance. The FSB will explore ways to promote globally comparable, high-quality and auditable standards of disclosure based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The FSB will also work on regulatory and supervisory approaches to addressing climate risks at financial institutions.
    • Interest rate benchmarks. The FSB will continue to support transition away from LIBOR to more robust benchmarks by end-2021, and report on progress to the G20.
    • Cyber and operational resilience. The FSB will explore the scope for convergence in the regulatory reporting of cyber incidents and the need for revisions to the FSB Cyber Lexicon.
  • Securities Financing Transactions Regulation (SFTR)

    BIS proposes amendments to rules on haircut floors for securities financing transactions

    CACEIS

  • On 26 January 2021, the Bank of International Settlement (BIS) published for consultation two technical amendments to the standard on minimum haircut floors for securities financing transactions (SFTs). The technical amendments seek to address an interpretative issue relating to collateral upgrade transactions and correct for a misstatement of the formula used to calculate haircut floors for netting sets of STFs.

    Technical amendments are defined as changes in standards that are not substantial in nature but that cannot be unambiguously resolved based on the current text.

    Comments on the proposed technical amendments should be submitted by 31 March 2021. All comments will be published on the BIS website unless a respondent specifically requests confidential treatment.

  • CONTACTS

    This publication is produced by the Projects & Regulatory Monitoring teams as well as experts from the Legal Department and the Compliance Department of CACEIS entities, together with the close support of the Communications Department.

    Editors
    Gaëlle Kerboeuf, CACEIS Group Legal Manager - Projects & Regulatory Monitoring
    Pauline Fieni, CACEIS Compliance - General secretary, Projects & Regulatory Monitoring

    Permanent Editorial Committee
    Gaëlle Kerboeuf, CACEIS Group Legal Manager - Projects & Regulatory Monitoring
    Pauline Fieni, CACEIS Compliance - General secretary, Projects & Regulatory Monitoring
    Corinne Brand, Group Communications Manager

    Local Expert Correspondents
    Jennifer Yeboah, Team Manager Legal (CACEIS Belgium)
    François Honnay, Head of Legal and Compliance (CACEIS Bank Belgium Branch)
    Tania Deltchev, Head of Legal (France)
    Stefan Ullrich, Head of Legal (Germany)
    Georgios Frangou, Compliance Officer (CACEIS Bank Germany Branch)
    Robin Donagh, Legal Advisor (Ireland)
    Razanajafy (Fara) Francois-Sim, Head of Compliance (CACEIS Ireland Limited)
    Costanza Bucci, Head of Legal & Compliance (Italy)
    Agathe Doleans, Deputy Chief Compliance Officer (Luxembourg)
    Fernand Costinha, Head of Legal (Luxembourg)
    Gérald Stadelmann, Head of Legal (Luxcellence Luxembourg)
    Alessandra Cremonesi, Legal Fund Structuring (Switzerland)
    Samuel Zemp, Compliance Officer (CACEIS Bank Switzerland Branch)
    Sarah Anderson, Head of Legal (UK Branch)
    Michele Tuen, Head of Trustee and Legal, Trustee and Legal (Hong Kong)
    Mireille Mol, Legal and Compliance (Netherlands)
    Marc Weijkamp, AH Legal (Netherlands)

    Design
    CACEIS Group Communications

    Photos credit
    CACEIS, Adobe Stock

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