CACEIS July August 2020


CONTENT

CACEIS

EUROPEAN UNION

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

EC decides to refer Austria, Belgium and the Netherlands to the Court of Justice of the EU for failing to fully implement EU anti-money laundering rules

CACEIS

  • On 2 July 2020, the European Commission referred Austria, Belgium and the Netherlands to the Court of Justice of the European Union, with a request for financial sanctions, for failing to fully implement the 4th Anti-Money Laundering Directive (AMLD4) into their national law:

    • fundamental aspects of the anti-money laundering framework, such as betting and gambling legislation (Austria), 
    • mechanisms under which the Financial Intelligence Units exchange documents and information (Belgium), and 
    • the information to be provided on the beneficial ownership of corporate and other legal entities (Netherlands).
  • European Market Infrastructure Regulation (EMIR)

    ESMA updates EMIR Q&As (July 2020)

    CACEIS

  • On 8 July 2020, the European Securities and Markets Authority (ESMA) published updated Q&As document on practical questions regarding data reporting issues, under the European Markets Infrastructure Regulation (EMIR).

    The updated Trade Repository (TR) Q&A 11(b) clarifies that the counterparties should follow their local time and the relevant calendar of their Member State to specify the “working day”  in the context of determining the deadline for reporting under EMIR. This clarification should be applied even if the two counterparties to the same derivative follow different calendars and/or are located in different time zones, meaning that each counterparty should follow its own local calendar and use the local time to determine the deadline for reporting.

  • ESMA’s third EU-wide CCP stress test finds system resilient to shocks

    CACEIS

  • On 13 July 2020, the European Securities and Markets Authority (ESMA) published  the results of its third stress test exercise regarding Central Counterparties (CCPs) in the European Union (EU) which confirm the overall resilience of EU CCPs to common shocks and multiple defaults for credit, liquidity and concentration stress risks.

    This year’s exercise demonstrates that EU CCPs are overall resilient under the implemented common shocks and multiple defaults scenarios. As with the previous exercise, the adverse scenario did not aim to cover all possible market movements but was designed to provide an internally consistent narrative to assess the resilience of EU CCPs to EU-wide market shocks.
    The credit stress test highlighted differences in resilience between CCPs under the selected market stress scenario, although no systemic risk has been identified. Similarly, the liquidity stress test showed EU CCPs to be resilient under the considered scenarios and did not reveal any systemic risk.
    Finally, the new concentration component added a new dimension to the exercise and highlighted the need for EU CCPs to accurately account for liquidation cost within their risk framework.
    During the time of finalisation of the exercise, the Covid-19 outbreak led to sharp and extreme market movements for instruments across the majority of asset classes. ESMA, in coordination with the NCAs, closely monitored the impact that the outbreak may have had on EU CCPs. Overall, ESMA notes that EU CCPs remained resilient through the crisis, despite the increased market volatility and operational risk. 

    In line with the EMIR mandate, where the assessments expose shortcomings in the resilience of one or more CCPs, ESMA will issue the necessary recommendations.

  • Here are three delegated acts from the European Commission on EMIR

    CACEIS

  • Here are three delegated acts from the European Commission on EMIR.

    1. On 14 July 2020, the European Commission published a delegated act on  the minimum elements to be assessed by ESMA when assessing third-country CCPs' requests for comparable compliance and the modalities and conditions of that assessment. 

    This delegated act is adopted in accordance with Article 82(2) of EMIR, which provides that the Commission shall endeavour to consult ESMA before adopting such an act.

    According to Article 25a(3) of EMIR, the Commission must specify the minimum elements to be assessed by ESMA and the modalities and conditions of the assessment of comparable compliance.

    In its technical advice, ESMA proposed specifying minimum elements for each EMIR provision, according to a requirement-by-requirement approach. ESMA divided the minimum elements into: (i) ‘core provisions’, which were satisfied by ‘equal or at least as strict or conservative corresponding requirements’ in the third country; and (ii) ‘other EMIR provisions’, which could be satisfied by similar corresponding third-country requirements substantially achieving the respective objectives. 

    This delegated act has not yet entered into force. It is subject to the right of the European Parliament and of the Council to express objections.

    2. On 14 July 2020, the European Commission adopts a delegated act on the criteria that ESMA should take into account to determine whether a central counterparty established in a third-country is systemically important or likely to become systemically important for the financial stability of the Union or of one or more of its Member States.

    This delegated act is adopted in accordance with Article 82 of EMIR which stipulates that the Commission shall endeavour to consult ESMA before adopting such an act.

    The Commission must further specify the five qualitative tiering criteria set out in Article 25(2a) of EMIR and which ESMA must take into account when determining the degree of systemic risk a third-country CCP presents to the EU or one or more of its Member States. 

    These criteria include: 

    (i) the nature, size and complexity of the CCP’s business;

    (ii) the effect of the failure of or disruption to the CCP; 

    (iii) the CCP’s clearing membership structure; 

    (iv) alternative clearing services provided by other CCPs; and 

    (v) the CCP’s relationship, interdependencies, or other interactions. In determining the systemic importance of a third country CCP, ESMA is required to assess all these criteria, none of them being determinative.

    This delegated act has not yet entered into force. It is subject to the right of the European Parliament and of the Council to express objections.

    3. On 14 July 2020, the European Commission adopted a delegated act on  fees charged by the European Securities and Markets Authority to central counterparties established in third countries.

    The Commission must specify further the types of fees, the matters for which fees are due, the amount of the fees and the manner in which fees are to be paid by third-country CCPs that apply for recognition and that are recognised. According to Article 25d, fees should be proportionate to the turnover of CCPs and cover all costs incurred by ESMA for the recognition and the performance of its tasks in relation to third-country CCPs under EMIR.

    First, the Commission proposes differentiated fees for Tier 1 and Tier 2 CCPs. 

    Second, the Commission proposes a simple fee structure, minimising the different types of fees available to what is strictly necessary. That fee structure should consist only of recognition fees and annual fees, reflecting the legal requirement in EMIR.

  • Financial Market Infrastructure (FMI)

    ECB publishes results of the June 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets

    CACEIS

  • On 21 August 2020, the European Central Bank (ECB) published the results of the June 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets.

    Survey respondents reported the most widespread tightening of credit terms and conditions over a three-month review period since the SESFOD was launched in 2013. For the March 2020 to May 2020 review period, their respective institutions offered less-favourable price and non-price credit terms for all counterparty types. 

    The respondents reported less-favourable price terms for non-financial corporations and less-favourable non-price terms for hedge funds as well as the deterioration of liquidity and trading materially for all types of OTC derivatives, while initial margin requirements increased for almost all types. Finally, some insurance companies, hedge funds and investment funds faced strained liquidity situations linked to variation margins.

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

    ESMA updates Register of authorised European long-term investment funds (ELTIFs)

    CACEIS

  • On 30 July 2020, the European Securities and Markets Authority (ESMA) updated the Register of authorised European long-term investment funds (ELTIFs). 

    Pursuant to Article3(3), second sub-paragraph of the ELTIF Regulation, ESMA shall keep a central public register identifying each ELTIF authorised under this Regulation, the manager of the ELTIF and the competent authority of the ELTIF and be made available in electronic format.

  • EFAMA publishes European Fund Classification report

    CACEIS

  • On 20 August 2020, the European fund and Asset Management Association (EFAMA) published the second edition of the European Fund Classification report. 

    The  European Fund Classification (EFC) is a pan-European classification system of investment funds which has been developed by the European Fund Categorisation Forum (EFCF) – a dedicated Task Force of the European Fund and Asset Management Association (EFAMA). 

    The EFC has created a single transparent pan-European methodology for comparing funds. Thanks to this categorisation investors know what they can expect when they invest in an EFC compliant fund. The categorisation is performed on a share class level.

    A pan-European classification structure has never been more important. UCITS are recognized worldwide as highly regulated and transparent investment products, ideally suited for retail investors. Every effort that can be made to reinforce this core benefit will further strengthen the industry in its positioning within the savings arena. 

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

    EU publishes notice of information on postponement of entry into application of MiFIR open access provisions with regard to exchange-traded derivatives

    CACEIS

  • On 3 July 2020, the European Union published notice of information on postponement of entry into application of MiFIR open access provisions with regard to exchange-traded derivatives. 

    Article 54(2) of Regulation (EU) No 600/2014 of the European Parliament and of the Council (1)(‘MiFIR’) provides for a transitional period during which Articles 35 or 36 of MiFIR do not apply to those central clearing counterparties (‘CCPs’) or trading venues which made a request to benefit from this transitional arrangement with respect to exchange-traded derivatives. 

    The transitional period expires on 3 July 2020. The current market environment, with a high degree of uncertainty and volatility driven by the COVID-19 pandemic, increases operational risks for CCPs and trading venues. Increased risk requires more focus on business continuity and the assessment of access requests may, in the current environment, have negative repercussions on the orderly functioning of markets in trading and clearing of exchange- traded derivatives. The co-legislators therefore agreed to extend the transitional period until 3 July 2021. 

    In consequence, market participants should be aware that the co-legislators agreed to extend the transitional arrangements in Article 54(2) concerning Articles 35 or 36 of MiFIR, effective as of 4 July 2020. The extension applies to those CCPs or trading venues, which made a request to their competent authorities to benefit from the transitional arrangements with respect to exchange-traded derivatives.  

  • ESMA updates list of trading venues temporarily exempted from open access under MiFIR

    CACEIS

  • On 7 July 2020, the European Securities and Markets Authority (ESMA) updated the list of trading venues which have a temporary exemption from the open access provisions under the Markets in Financial Instruments Regulation (MiFIR). The updated list includes an extension of the exemption for five venues until 4 January 2023. Those venues are Athens Stock Exchange (Greece), GPW (Poland), MEFF (Spain), Nasdaq Stockholm (Sweden) and OMIP (Portugal).

    This update includes DVC data and calculations for the period 1 June 2019 to 31 May 2020 as well as updates to already published DVC periods.

    The number of new breaches is 45: 36 equities for the 8% cap, applicable to all trading venues, and 9 equities for the 4% cap, that applies to individual trading venues. Trading under the waivers for all new instruments in breach of the DVC thresholds should be suspended from 10 July 2020 to 9 January 2021. The instruments for which caps already existed from previous periods will continue to be suspended.

    In addition, ESMA highlights that none of the previously identified breaches of the caps proved to be incorrect thus no previously identified suspensions of trading under the waivers had to be lifted.

    As of 7 July 2020, there is a total of 317 instruments suspended.

  • ESMA updates MiFID II and MiFIR transparency Q&As (July 2020)

    CACEIS

  • On 8 July 2020, the European Securities and Markets Authority (ESMA) published updated Q&As regarding transparency issues under the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

    The new Q&A document provides technical clarifications for the performance of the mandatory systematic internaliser (SI) test. The Q&A specifies how the number of transactions and the nominal amount traded of a derivative shall be allocated when a derivative contract changes over the observation period from one sub-class to another.

  • ESMA publishes results of the annual transparency calculations for non-equity instruments

    CACEIS

  • On 15 July 2020, the European Securities and Markets Authority (ESMA) published the results of the annual transparency calculations for non-equity instruments, which will apply from 15 September 2020.
    Recommendations for market participants:

    • Transitional transparency calculations (TTC) will no longer be applicable from 14 September 2020;
    • Consult the guidance provided in Q&A 20 of Section 4 Non-equity transparency of the Questions and Answers on MiFID II and MiFIR transparency topics for the application of the annual transparency calculations for non-equity instruments (in particular, in relation to the order of application of the annual transparency calculations at ISIN level vs. at sub-class level); and
    • Review the FIRDS Transparency System downloading instructions document to avoid any misinterpretation of the results.

    The transparency requirements based on the results of the annual transparency calculations for non-equity instruments shall apply from 15 September 2020 until 31 May 2021. From 1 June 2021, the results of the next annual transparency calculations for non-equity instruments, to be published by 30 April 2021, will become applicable.

  • ESMA issues second report on sanctions under MiFID II

    CACEIS

  • On 13 July 2020, the European Securities and Markets Authority (ESMA) issued a second report on sanctions under MiFID II.

    Overall, in 15 (out of 30) EEA Member States, NCAs imposed a total of 371 sanctions and measures in 2019 of an aggregated value of about €1.8 million.

    The Report provides an overview of the applicable legal framework and the sanctions and measures imposed by NCAs under the MiFID II framework during the year 2019. Due to differences in the identification of sanctions and measures for the purpose of the reporting to ESMA and the length of the enforcement processes, the data does not provide at this time the basis for detailed statistics, clear trends or tendencies in the imposition of sanctions and measures.

    The information included in this Report will contribute to ESMA’s work aimed at fostering supervisory convergence in the application of MiFID II.

  • ESMA updates MIFIR data reporting Q&As (July 2020)

    CACEIS

  • On 8 July 2020, the European Securities and Markets Authority (ESMA) published updated Q&As on data reporting under the Market in Financial Instruments Regulation (MiFIR).

    The Q&A provides clarifications in relation to the reporting requirements for submission of transaction reports under Art. 26 of MiFIR and RTS 22. In particular, the new Q&A provides two reporting scenarios where an Investment Firm executes a transaction through an execution algorithm provided by another Firm.

    The amendments to the existing Q&A on MiFIR data reporting becomes effective from 8 July 2020.

  • ESMA publishes MiFID II/MiFIR Annual Report under Commission Delegated Regulation (EU) 2017/583 (RTS 2)

    CACEIS

  • On 23 July 2020, the European Securities and Markets Authority (ESMA) published MiFID II/MiFIR Annual Report under Commission Delegated Regulation (EU) 2017/583 (RTS 2). 

    This final report covers the mandate under Article 17 of Commission Delegated Regulation (EU) 2017/583 (RTS 2) whereby ESMA is required to analyse whether it is appropriate to move to the following stage in terms of transparency with regard to (i) the average daily number of trades (ADNT) threshold used for the quarterly liquidity assessment of bonds, and (ii) the trade percentile used for determining the pre-trade SSTI thresholds.  

    This report analyses the feedback received to the proposal to change the thresholds for the liquidity criterion 'average daily number of trades' for bonds in as well as the trade percentiles that are used to determine the size specific to the financial instruments for non-equity instruments.

    This report is submitted to the European Commission and the amended regulatory technical standards are expected to be adopted and published in the Official Journal (OJ).  

  • ESMA publishes data for the systematic internaliser calculations for equity, equity-like instruments, bonds and other non-equity instruments

    CACEIS

  • On 31 July 2020, the European Securities and Markets Authority (ESMA) published data for the systematic internaliser quarterly calculations for equity, equity-like instruments, bonds and, for the first time, for other non-equity instruments under the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

    The total number of trades and total volume over the period January-June 2020 for the purpose of the systematic internaliser (SI) calculations under MiFID II for:

    • 20,204 equity and equity-like instruments;
    • 121,040 bonds; and
    • as announced on 9 April 2020, for 5,896 sub-classes of derivatives (including equity derivatives, interest rate derivatives, commodity derivatives, C10 derivatives, emission allowance and derivatives thereof and contracts for difference (CFDs)) and

    The SI test shall be performed by:

    • 15 August 2020 for equity and equity-like instruments;
    • 15 August 2020 for bonds;
    • 15 September 2020 for all other non-equity instruments, including those for which ESMA has not published the SI data due to data-related issues.
  • ESMA agrees position limits under MiFID II

    CACEIS

  • On 6 August 2020, the European Securities and Markets Authority (ESMA) published twelve opinions on position limits regarding commodity derivatives under the Markets in Financial Instruments Directive and Regulation (MiFID II/MIFIR).

    ESMA’s opinions agree with the proposed position limits regarding:

    • the EEX Panamax Freight contracts;
    • the EEX Capesize TC5 Freight contracts;
    • the EEX Capesize C7 Freight contracts;
    • the EEX Supramax TC10 Freight contracts;
    • the EEX NCG Gas contracts;
    • the EEX GPL Gas contracts;
    • the EEX CEGH-VTP Gas contracts;
    • the EEX PSV Gas contracts;
    • the EEX PEG Gas contracts;
    • the ICE Endex Italian Power Base contracts;
    • the ICE Endex German Power Base contracts; and
    • the ICE Endex NGC Gas contracts.
  • Here are several ESMA reports on the review of MiFID II

    CACEIS

  • Here are several ESMA reports on the review of MiFID II.

    1. On 16 July 2020, the European Securities and Markets Authority (ESMA) publishes the timeline of upcoming MiFID II Review Reports. 

    Regarding the MiFID II review report on non-equity instruments and RTS 2 annual review : 

    • The end of the consultation period was pushed to 14 June 2020
    •  No postponement on publication of the RTS 2 Annual Review Report 
    • Publication of the nonequity transparency Review Report was postponed to September 2020

    Regarding the MiFID II report on SME GMs:

    • The end of the consultation period was pushed to 30 June 2020
    • No postponement on publication of the SME Growth Market Review Report 

    Regarding the MiFID II review report on algorithmic trading :

    • Publication of the Consultation Paper on the algorithmic trading Review Report was postponed to September 2020 
    • Publication of the algorithmic trading Review Report was postponed to Q1 2021

    Regarding the MiFID II review report on OTFs :

    • Publication of the Consultation Paper on the OTF Review Report was postponed to September 2020 
    • Publication of the OTF Review Report was postponed to Q1 2021

    Regarding MiFID II review report on Transaction Reporting :

    • Publication of the Consultation Paper on transaction reporting Review Report was postponed to September 2020 
    • Publication of the transaction reporting Review Report was postponed to Q1 2021.

    2. On 16 July 2020, the European Securities and Markets Authority (ESMA) published MiFIR report on systematic internalisers in non-equity instruments. 

    Systematic Internalisers (SIs) are subject to the obligation to make public firm quotes, subject to certain conditions, both in respect of equity instruments and non-equity instruments. While for equity instruments, the MiFIR provisions are further specified via a Commission Delegated Regulation, there are no equivalent Level 2 measures for non-equity instruments. 

    However, the application of the transparency provisions, which apply to SIs dealing in non-equity instruments, are to be monitored by competent authorities (CAs) and ESMA as specified in Article 19(1) of MiFIR. Based on this monitoring, ESMA is submitting this report to the European Commission in accordance with the agreed timetable. 

    ESMA’s preliminary findings and proposals have been published in a consultation paper (CP) which was open for comments from 3 February to 15 April 2020, and to which 35 responses were submitted. The final proposals included in this document consider the feedback received in the course of this public consultation.

    3. On 16 July 2020, the European Securities and Markets Authority (ESMA) published MiFID II/MiFIR Review Report on the transparency regime for equity and equity-like instruments, the double volume cap mechanism and the trading obligations for shares. 

    This report covers the mandate relating to the impact of the transparency obligations and, in particular, the impact of the volume cap mechanism described in Article 5 of MiFIR. 

    In order to help producing informed proposals of the issues to be considered and addressed in its report to the EC, ESMA published a Consultation Paper (CP) on 4 February 2020 that provided an initial assessment of the impact of the transparency obligations for equity and equity-like financial instruments and of the double volume cap (DVC) seeking stakeholders’ views on some suggested amendments to the legal texts.

    The responses received shows a wide diversity of approaches and perspectives amongst respondents who expressed sometimes opposite views on aspects of the MiFID II / MiFIR regime or, more generally, EU financial markets:

    • The majority considered that MiFIR has generally fostered more transparency in the EU equity markets, many highlighted the many remaining issues regarding market data that should be addressed including (i) the price of the data, (ii) the quality of the data and (iii) the access to the data.  
    • Some respondents insist on the increased internalisation of retail order flow after the implementation of MiFIR and invite ESMA to reflect possible ways to limit or revert this trend by, for instance, ensuring that trading venues’ systems are not designed to cater to the needs of principal and high frequency traders only. 

    The impacts of the new obligations are therefore maybe not all fully clear and in particular considering that this review occurs in the very particular context of both Brexit and COVID-19 crisis.

  • Money Market Funds Regulation (MMFR)

    ESMA confirms risk parameters update in guidelines on stress test scenarios under the MMF Regulation

    CACEIS

  • On 27 August 2020, the European Securities and Markets Authority (ESMA) confirmed that the 2019 Guidelines on stress test scenarios under the Money Market Funds Regulation (MMFR) will be updated in 2020 to include a modification of the risk parameters to reflect recent market developments related to the COVID-19 crisis.

    ESMA has assessed whether the scenarios envisaged in the 2019 Guidelines are still appropriate and finds that applying the 2019 scenarios in the current market environment generally leads to absolute levels of stress similar to the levels observed in March 2020. 

    However, for some parameters, the 2019 scenarios have been exceeded by the extreme market movements observed during the COVID-19 crisis and the relevant factors will be updated accordingly. 

    The guidelines, under the MMFR, are updated at least every year taking into account the latest market developments.

    Pending the application date for the 2020 update, all the sections of the 2019 Guidelines continue to apply, including the existing calibrated scenarios and the internal stress test exercise to be carried out by managers of MMFs. 

  • Packaged Retail and Insurance-based Investment Products (PRIIPs)

    ESAs notify the European Commission about the outcome of the review of the PRIIPs key information document

    CACEIS

  • On 20 July 2020, the European Banking Authority (EBA) published the letter sent to the European Commission about the outcome of the review of the key information document (KID) for packaged retail and insurance-based investment products (PRIIPs). This follows the ESAs’ consultation paper published on 16 October 2019 on draft regulatory technical standards (RTS) to amend the technical rules on the presentation, content, review and revision of KID (Delegated Regulation (EU) 2017/653).

    The aims of this review have been to address the main regulatory issues that have been identified since the implementation of the KID, in particular regarding the information on performance and costs, and to allow the appropriate application of the KID by UCITS. 

    A draft Final Report following this public consultation was submitted to the three Boards of Supervisors of the ESAs for their approval in June. The ESAs considered that the Report contained balanced and proportionate final proposals, which would allow the ESAs to meet their main policy objectives, while remaining in line with the PRIIPs level 1 framework (Regulation (EU) No 1286/2014). 

    The draft Final Report was submitted to the Boards of Supervisors of the ESAs for their approval in June. While it was adopted at the EBA and ESMA Boards, it did not receive the support of the qualified majority a the EIOPA.  It was argued that  generally argued that a partial revision of the PRIIPs Delegated Regulation is not appropriate at this stage, prior to a comprehensive review of Regulation (EU) No 1286/2014 as envisaged in Article 33 of the Regulation.
    A number of Board members also indicated that for investment funds, they would prefer the past performance graph from the UCITS key investor information document to be included in the PRIIPs KID itself, rather than in a separate publication.

  • EFAMA calls for urgent Level 1 review and extension of the UCITS exemption

    CACEIS

  • On 5 August 2020, the European fund and Asset Management Association (EFAMA) informed that the EFAMA sent a letter to the European Commission on the subject of the PRIIPS draft Regulatory Technical Standards (RTS), calling for an immediate extension of the UCITS exemption, as well as an urgent Level 1 review of the regulation.

    The association believes that this long-overdue review is now unavoidable and should be initiated with urgency to prevent further harm to the interest of retail investors.

    While addressing the existing flaws in the PRIIP KID, the technical review was also meant to provide the legal basis for funds to switch from the UCITS KIID to the revised PRIIP KID on 01 January 2022. 

    This timeline can no longer reasonably be upheld, as the industry must be given sufficient lead time to implement the changes. Therefore, EFAMA also calls for the current exemption for funds producing a UCITS KIID to be extended until a full PRIIPs review (Level 1 and 2 including a 12-month implementation period) has been completed. To avoid further confusion among investors and preserve the worldwide reputation of the UCITS framework, the well-functioning UCITS KIID should not be replaced with a PRIIP KID before the well-documented flaws affecting the latter are remedied. 

  • Payment Services Directive (PSD2)

    EBA publishes 13 Q&As on PSD2

    CACEIS

  • On 24 July 2020, the European Banking Authority (EBA) published thirteen Q&As on PSD2.

    1) Question ID: 2018_4399

    Question:

    As a Payment Service Provider (PSP) acquirer, how should we report the German chip + signature transactions in the “EBA fraud report under PSD2” given the fact this kind of transactions are non-Strong Customer Authentication (SCA) and do not fall under any allowed exemption?

    Answer:

    Q&A 2018_4031 clarified that card-based payment transactions are subject to the requirement in Article 97(1)(b) of Directive 2015/2366 (PSD2) to apply strong customer authentication (SCA). In addition, Q&A 2018_4108 clarified that card-based electronic payment transactions that require the signature of the payer at the point of sale for authorisation or authentication fall under the scope of Article 97(1)(b) PSD2. Therefore, card-based electronic payment transactions where a signature of the payer at the point of sale is used are subject to SCA according to Article 97(1)(b) PSD2.

    In accordance with Guidelines 2.11, 7.11 and 7.12 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, card payments should be reported both by the payer’s payment service provider (PSP) (the issuer), and by the payee’s PSP acquiring the payment transaction (the acquirer) as follows:

    • from the issuer’s perspective, under the Data Breakdown C in Annex 2 of the Guidelines; and
    • from the acquirer’s perspective, under the Data Breakdown D in Annex 2 of the Guidelines.

    From the acquirer’s perspective, card-based electronic payment transactions to which SCA is applied should be reported in accordance with Data Breakdown D in Annex 2 of the Guidelines, under the category 4.2.1.2 (“Of which authenticated via strong customer authentication), or, as applicable, 4.2.2.2 (“Of which Authenticated via strong customer authentication”).

    2) Question ID: 2019_4532

    Question:

    For a device to be considered possession:-

    a) should the device perform "cryptographically underpinned validity assertions using keys or cryptographic material stored in" the device?

    b) should the device be in the physical possession of the  Payment Service User (PSU)? I.e. it cannot be held and operated remotely.

    Answer:

    This question is related to the possession elements under Article 7 of the Delegated Regulation (EU) 2018/389, and not to the requirements on authentication codes or dynamic linking specified under Articles 4 and 5 of this Delegated Regulation.

    However, Recital 4 of the Delegated Regulation, to which the submitter refers, is related to authentication codes under Article 4 of the Delegated Regulation and not to possession elements. Recital 4 provides example of potential ways in which the authentication code can be designed without prescribing a specific technology for the implementation of authentication codes.

    In accordance with Article 4(30) of Directive 2015/2366/EU (PSD2), possession is ‘something only the user possesses’. Article 7 of the Delegated Regulation further specifies that ‘payment service providers (PSPs) shall adopt measures to mitigate the risk that the elements of strong customer authentication (SCA) categorised as possession are used by unauthorised parties’ and that ‘the use by the payer of those elements shall be subject to measures designated to prevent replication of the elements’.

    Paragraph 35 of the EBA Opinion on the implementation of the RTS on strong customer authentication and secure communication (EBA-Op-2018-04) clarified that ‘for a device to be considered possession, there needs to be a reliable means to confirm the possession through the generation or receipt of a dynamic validation element on the device’. This means that it is not always required that the device should perform cryptographically underpinned validity assertions using keys or cryptographic material stored in the device.

    In addition, paragraph 24 of the EBA Opinion on the elements of Strong Customer Authentication under PSD2 (EBA-Op-2019-06) clarified that ‘possession does not solely refer to physical possession but may refer to something that is not physical (such as an app)’.

    It follows from the above, that in the cases where the possession element is based on a device, the SCA process must reliably confirm that the specified device is in the physical possession of the Payment Service User (PSU).

    If the possession element is based on something not physical (e.g. a mobile app), in line with the requirements of Article 7 of the Delegated Regulation, the Payment Service Provider (PSP) should ensure that a unique connection is established between the possession element and the PSU.

    In both of the above cases, the PSP should in accordance with Article 7 of the Delegated Regulation mitigate the risk that the element is used by unauthorised third parties.

    Q&A 2018_4414 provides further clarity on the transmission of authentication codes or payment information under Article 5(2)(a) of the Delegated Regulation via a Short Message Service (SMS).

    3) Question ID: 2019_4703

    Question:

    For card-based transactions: 

    • When the issuer reports frauds under the EBA Guidelines on fraud reporting (EBA/GL/2018/05), shall the issuer provide information on the unauthorised transactions for which the acquirer has applied an exemption? If so, shall the issuer provide a break-down according to the different exemptions applied by the acquirer?
    • When the acquirer reports frauds under the EBA Guidelines on fraud reporting, shall the acquirer provide information on the unauthorised transactions for which the issuer has applied an exemption? If so, shall the acquirer provide a break-down according to the different exemptions applied by the issuer?

    Answer:

    In accordance with Guidelines 2.11, 7.11 and 7.12 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, card payment transactions should be reported both by the payer’s payment service provider (PSP) (the issuer), and by the payee’s PSP acquiring the payment transaction (the acquirer), as follows:

    • from the issuer’s perspective, under the Data Breakdown C in Annex 2 of the Guidelines; and
    • from the acquirer’s perspective, under the Data Breakdown D in Annex 2 of the Guidelines.

    The reporting PSP (in its issuing or acquiring capacity) should report all card based payments transactions for which strong customer authentication (SCA) was not applied under the relevant category “Of which authenticated via non-strong customer authentication” under Data Breakdowns C or D of Annex 2, as applicable, and assign each of these transactions to one of the relevant breakdowns regarding the reason for not applying SCA, depending on the exemption to SCA that was applied, and irrespective of whether it was the issuer or the acquirer who triggered the application of that exemption.

    As regards transactions executed before 1 July 2020, if the issuer applied the exemption under Article 13 of the Commission Delegated Regulation (EU) 2018/389 the acquirer should report the relevant transaction only under the category “Of which authenticated via non-strong customer authentication” and not in the breakdowns relating to the different exemptions to SCA in Data Breakdown D given that these breakdowns do not cover this exemption. For transactions executed after 1 July 2020, the acquirer should report these transactions under the breakdown “Other” in row 4.2.1.3.8, or, as applicable, row  4.2.2.3.7 of the Data Breakdown D in Annex 2 of the Guidelines, as amended by the EBA Guidelines EBA/GL/2020/01.

    4) Question ID: 2019_4702

    Question:

    In the case of card-based transactions, shall issuers include in their fraud rate calculation only the unauthorized transactions for which they apply strong customer authentication (SCA) or an exemption?  Or, shall issuers also include unauthorised transactions for which the acquirer applies an exemption?

    Shall acquirers include in their fraud rate calculation only the unauthorised transactions for which they apply an exemption?  Or shall acquirers also include unauthorised transactions for which the issuer applies an exemption?

    Answer:

    Article 19(1), second paragraph of the Commission Delegated Regulation (EU) 2018/389 provides that, for the purpose of the transaction risk analysis exemption in Article 18 of the Delegated Regulation, payment service providers (PSPs) shall calculate “the overall fraud rate for each type of transaction […] as the total value of unauthorised or fraudulent remote transactions […] divided by the total value of all remote transactions for the same type of transactions, whether authenticated with the application of strong customer authentication (SCA) or executed under any exemption referred to in Articles 13 to 18 on a rolling quarterly basis (90 days)”.

    It follows from the above that the payer’s Payment Services Provider (PSP) (the issuer) should include in the calculation of its fraud rate, all unauthorised or fraudulent remote payment transactions, which includes those transactions authenticated with the application of SCA and those where any exemption from SCA as referred to in Articles 13 to 18 of the Delegated Regulation were applied by the issuer or the PSP of the payee (the acquirer).

    Similarly, acquirers should include in the calculation of its fraud rate, all acquired unauthorised or fraudulent remote payment transactions, which includes those transactions authenticated with the application of SCA and those where any exemption from SCA as referred to in Articles 13 to 18 of the Delegated Regulation were applied either by the acquirer or the issuer.

    Q&A 2018_4034 provides further details on the application of the transaction risk analysis exemption from SCA. Further, Q&A 2018_4042 clarified the liability for fraud when an exemption from SCA is applied.

    5) Question ID: 2019_4866

    Question:

    In the Fraud Reporting, how should payment service providers (PSPs) report card transactions without Strong Customer Authentication (SCA) that are out of scope of the requirement for SCA, i.e. one-leg transactions and merchant-initiated transaction?

    Answer:

    In accordance with the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, “Merchant initiated transactions”, as defined in the EBA/GL/2020/01, that are initiated and executed from 1 July 2020 onwards, without the application of strong customer authentication (SCA), should be reported under the category “Merchant initiated transactions”, introduced through the EBA/GL/2020/01, in row 3.2.1.3.9 of Data Breakdown C, row 4.2.1.3.7 of Data Breakdown D or, as applicable, row 6.1.2.10 of Data Breakdown F.

    Similarly, card-based payments initiated and executed from 1 July 2020 onwards where either the payer’s payment service provider (PSP) (the issuer) or the payee’s PSP (the acquirer) is located outside the Union (the so-called ‘one-leg’ transactions), to which SCA is not applied for reasons other than an exemption to SCA in Articles 11 to 18 of the Commission Delegated Regulation (EU) 2018/389, should be reported under the category “Other” in rows 3.2.1.3.10 and 3.2.2.3.8 of Data Breakdown C, rows 4.2.1.3.8 and 4.2.2.3.7 of Data Breakdown D and rows 6.1.2.11 and 6.2.2.8 of Data Breakdown F.

    Given that the amendments introduced through the EBA/GL/2020/01 apply only to payment transactions initiated and executed from 1 July 2020 onwards, merchant initiated transactions and one-leg payment transactions that are initiated and executed before 1 July 2020, for which SCA is not applied for reasons other than an exemption in Articles 11 to 18 of the Commission Delegated Regulation, should be reported only under the higher-level category “Of which authenticated via non-strong customer authentication” in the relevant Data Breakdowns in Annex 2, and not in the breakdowns relating to the different exemptions to the SCA. This will affect the validation rules under the relevant Data Breakdowns in Annex 2 of the Guidelines, as the total of the transactions reported under the higher-level category “Of which authenticated via non-strong customer authentication” could be higher than the total of the transactions reported under the breakdowns relating to the different exemptions to SCA.

    6) Question ID: 2019_5039

    Question:

    Regarding the fraud definition, could you please clarify how the following fraud examples should be classified by the acquirers.

    Answer:

    Article 96(6) of Directive 2015/2366 (PSD2) requires Member States to ensure that payment service providers (PSPs) provide, at least on an annual basis, statistical data on “fraud relating to different means of payment” to their competent authorities.

    In line with this Article, the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, require reporting by PSPs of fraudulent transactions that fall under one of the two categories specified in GL 1.1: “unauthorised payment transactions” as defined in Guideline 1.1 (a); and cases of fraud by “manipulation of the payer”, as defined in Guideline 1.1(b).

    As clarified in the EBA Final report on the Guidelines on fraud reporting, the cases where the payer is fraudulent (also known as ‘first party fraud’) are excluded from the scope of the reporting under the Guidelines, on the basis that such fraud does not reflect on the effectiveness of payment systems (see the responses to comments 41 and 57 in the Feedback Table, on pages 73 and 80 of the Final report).

    Accordingly, the first example provided by the submitter in a) appears to be a case of first party fraud, that is not covered by the reporting under these EBA Guidelines.

    As regards the examples in b) and c), as clarified in the EBA Final report on the Guidelines, in a consistent manner with the exclusion of first party fraud from the scope of the Guidelines, the reporting of fraud on the part of the payee is also excluded from the scope of the Guidelines, unless the fraud has occurred through the use of a means of payment (see the response to comment 57 in the Feedback Table, on page 80 of the EBA Final report).

    Therefore, if the payee itself is fraudulent (for instance because it sells fictitious goods or services), but it does not intervene directly in the payment process, this would fall outside the scope of fraudulent transactions that need to be reported under the EBA Guidelines on fraud reporting under PSD2.

    By contrast, cases of fraud by “manipulation of the payer”, as defined in Guideline 1.1(b), should be reported under the Guidelines.

    7) Question ID: 2019_5041

    Question:

    Is there a requirement to segregate the Payment Initiation Service Provider (PISP) initiated payments which were executed without Strong customer authentication (SCA), by the relevant availed exemption used? Or are PISP initiated payments, only required to be presented in Bulk (Value, Volume, SCA/Non-SCA)?

    Answer:

    In accordance with Guidelines 7.5 and 7.6 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, payment initiation services providers (PISPs) should report the executed payment transactions and fraudulent transactions they initiated, both by volume and value, in accordance with Data Breakdown H in Annex 2. Guideline 7.6 further clarifies that PISPs “should record and report data on volumes and values with the following breakdowns: a. geographical perspective, b. payment instrument, c. payment channel, and d. authentication method”.

    There is no requirement for PISPs to include a breakdown of the transactions they have initiated depending on the reason for not applying strong customer authentication.

    8) Question ID: 2019_5042

    Question:

    Should payment initiation service provider (PISP) initiated payments be reported under both Table A (1.1) and Table H (8.x)? More specifically how should these transactions be reported where the customer initiates a payment via a PISP, from their bank account, to one of their payees flagged in the bank’s online channel as “trusted beneficiaries” (Article 13 of the RTS on SCA&CSC).

    Answer:

    In accordance with Guidelines 7.5 and 7.6 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, payment initiation services providers (PISPs) should report the executed payment transactions and fraudulent transactions they initiated in accordance with Data Breakdown H in Annex 2  of the Guidelines.

    In addition, credit transfers should also be reported by the account servicing payment service provider (ASPSP) that executed the respective credit transfer in accordance with Guidelines 2.12 and 7.9, under the Data Breakdown A in Annex 2 of these Guidelines.

    In the submitter’s example, a credit transfer initiated by a PISP, that is subject to the exemption from strong customer authentication under Article 13 of the Commission Delegated Regulation (EU) 2018/389 should be reported:

    • by the ASPSP that executed the credit transfer in accordance with the Data Breakdown A in Annex 2 of the Guidelines (under the rows 1 (Credit transfers); 1.1 (Of which initiated by payment initiation service providers); 1.3 (Of which Initiated electronically); 1.3.1 (Of which initiated via remote payment channel) (assuming the payment is initiated via a remote payment channel); 1.3.1.2 (Of which authenticated via non-strong customer authentication); 1.3.1.2.6 (Trusted beneficiary (Art.13 of the Delegated Regulation)); and
    • by the PISP that initiated the transaction in accordance with the Data Breakdown H in Annex 2 of the Guidelines.

    9) Question ID: 2019_5043

    Question:

    In relation to the direct debits fraud, please clarify the reporting criteria for direct debit fraud.

    Answer:

    In accordance with Guidelines 2.11 and 7.10 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, the payee’s payment service provider (PSP) should report payment transactions and fraudulent payment transactions executed using direct debits in accordance with the Data Breakdown B in Annex 2 of the Guidelines.

    In line with Guideline 6.2, PSPs “should report all fraudulent payment transactions from the time fraud has been detected”. In the context of direct debits, as clarified in paragraph 20 of section 3.2 of the EBA Final Report on the Guidelines on fraud reporting, refunds under eight weeks should not be automatically reported, as they do not always indicate fraud cases; such transactions should be reported only if they were subject to fraud and the reporting PSP was aware that this was the case, without implying any legal obligation to ask the payment service user whether this was the case.

    10) Question ID: 2019_5044

    Question:

    If a card issued by an E-money institution has a cash function, how should the cash withdrawal from that card be recorded? Should it be recorded on the debit card withdrawal, as the E-money breakdown section does not include a cash withdrawal category?

    Answer:

    In accordance with Guideline 7.15 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, cash withdrawals and fraudulent cash withdrawals using a card at ATMs, at bank counters and through retailers (‘cash back’), should be reported by the issuing payment service provider (the issuer) in accordance with the Data Breakdown E in Annex 2 of the Guidelines.

    As regards reporting of e-money payment transactions, Guideline 7.2 provides that “when providing data on e-money transactions, the payment service provider (PSP) should include e-money payment transactions: a. where the PSP is identical to the payee’s PSP, or b. where a card with an e-money functionality is used.” However, this Guideline should be interpreted in conjunction with Guideline 1.5 which provides that “transactions and fraudulent transactions where e-money has been transferred by an e-money provider to a beneficiary account” should be reported in accordance with the Data Breakdown F. Cash withdrawals with e-money cards are not considered as “transfers” within the meaning of Guideline 1.5.

    Accordingly, cash withdrawals using cards with an e-money function, where the user redeems the e-money stored on the card by withdrawing funds, are out of scope of reporting under the EBA Guidelines on fraud reporting. By contrast, cash withdrawals using a payment card with a non e-money function, should be reported in accordance with Guideline 7.15 under the Data Breakdown E.

    11) Question ID: 2019_5046

    Question:

    If a card has both an e-money and non e-money function, how should a payment be recorded? Should the recording be different based on the type of the reporting institution (for example, depending on whether is an electronic money institution (EMI) or a bank)?

    Answer:

    In accordance with Guidelines 2.11, 7.11 and 7.12 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, data for card payments should be reported both by the payer’s payment service provider (PSP) (the issuer), and by the payee’s PSP acquiring the payment transaction (the acquirer), as follows:

    • from the issuer’s perspective, under the Data Breakdown C in Annex 2 of the Guidelines; and
    • from the acquirer’s perspective, under the Data Breakdown D in Annex 2 of the Guidelines.

    By contrast, “transactions and fraudulent transactions where e-money has been transferred by an e-money provider to a beneficiary account” should be reported in accordance with Guideline 1.5 from the payer’s PSP perspective only, under the Data Breakdown F in Annex 2 of the Guidelines.

    Where a card has both an e-money and a non e-money function, the reporting will depend on which function of the card was used to conduct a particular transaction. If a debit or credit card function was used, then the payment should be reported as a card payment transaction under the Data Breakdown C from the issuer’s perspective and under the Data Breakdown D from the acquirer’s perspective. By contrast, if the e-money function of the card was used, then the payment should be reported as an e-money transaction under the Data Breakdown F only by the issuer.

    The type of the reporting PSP, namely whether it is an electronic money institution or a credit institution, is not a relevant criterion for determining how these transactions should be reported.

    12) Question ID: 2019_5056

    Question:

    Does the breakdown on “card payments by fraud types” in Table E of the EBA Guidelines on fraud reporting under PSD2 refer only to cards with a credit/delayed debit function?

    Answer:

    The breakdown on “card payments by fraud types” in the Data Breakdown E in Annex 2 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, refers to all cash withdrawals using a card, including both cash withdrawals using cards with a credit/delayed debit function and cash withdrawals using cards with a debit function.

    13) Question ID: 2020_5070

    Question:

    Should e-commerce card-based payment transactions – falling within the scope of the EBA Opinion on the elements of strong customer authentication under PSD2 (EBA-Op-2019-06) and for which no strong customer authentication was applied – be reported under the higher-level category “Of which authenticated via non-strong customer authentication”?

    Answer:

    In accordance with the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, e-commerce card based transactions initiated and executed from 1 July 2020 onwards that are subject to the supervisory flexibility allowed under the EBA Opinion  on the elements of strong customer authentication under PSD2 (EBA-Op-2019-06) and the EBA Opinion on the deadline for the migration to SCA for e-commerce card-based payment transactions (EBA-Op-2019-11), and for which strong customer authentication (SCA) is not applied for reasons other than an exemption in Articles 11 to 18 of the Commission Delegated Regulation (EU) 2018/389, should be reported under the category “Other”, in row 3.2.1.3.10 / 3.2.2.3.8 of Data Breakdown C, row 4.2.1.3.8 / 4.2.2.3.7 of Data Breakdown D and/or, as applicable, row 6.1.2.11/ 6.2.2.8 of Data Breakdown F.

    By contrast, e-commerce card based transactions initiated and executed before 1 July 2020, that are subject to the above-mentioned supervisory flexibility and for which SCA is not applied for reasons other than an exemption in Articles 11 to 18 of the Delegated Regulation, should be reported only under the higher-level category “Of which authenticated via non-strong customer authentication”, and not under the breakdowns underneath relating to the different exemptions to the SCA. However, this will affect the validation rules under the relevant Data Breakdowns in Annex 2, as the total of the transactions reported under the higher-level category “Of which authenticated via non-strong customer authentication” could be higher than the total of the transactions reported under the breakdowns relating to the different exemptions to SCA.

  • Prospectus Regulation

    ESMA promotes consistent application of prospectus disclosure requirements

    CACEIS

  • On 15 July 2020, the European Securities and Markets Authority (ESMA) published its final Guidelines on disclosure requirements under the Prospectus Regulation.

    The aim of the Guidelines is to ensure that market participants have a uniform understanding of the relevant disclosure required in the various annexes included in the Commission Delegated Regulation (EU) 2019/980. The Guidelines will help those responsible for the prospectus to assess which disclosure is required and to promote consistency across the EU in how the annexes to the Delegated Regulation are applied.

    The Guidelines clarify ESMA’s expectations on the key areas of working capital statements and pro forma information. 

    The completion of these Guidelines is ESMA’s latest output in a series of workstreams undertaken during the transition from the Prospectus Directive to the Prospectus Regulation. 

    Once translated into all official languages of the EU, ESMA will focus on the consistent application of the Guidelines by national competent authorities.

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

    ESMA updates List of market makers and authorized primary dealers who are using the exemption under the SSR - 30 July 2020

    CACEIS

  • On 30 July 2020, the European Securities and Markets Authority (ESMA) updated List of market makers and authorized primary dealers who are using the exemption under the Regulation on short selling and credit default swaps.

  • Securities Financing Transactions Regulation (SFTR)

    ESMA announces SFTR reporting regime sees successful first day

    CACEIS

  • On 13 July 2020, the European Securities and Markets Authority (ESMA) announced SFTR reporting regime sees successful first day.  

    The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has received reports from trade repositories (TRs) indicating that the first day of reporting by financial and no-financial market participants under the Securities Financing Transactions Regulation (SFTR), has gone smoothly.

    ESMA will continue to engage with market participants to clarify any remaining issues and will assess the need for further supervisory convergence measures to facilitate compliance with the new reporting requirements.

  • Securitisation Regulation

    ESMA publishes Guidelines on Securitisation Repository Data Completeness and Consistency Thresholds

    CACEIS

  • On 10 July 2020, the European Securities and Markets Authority (ESMA) published its final report on the Guidelines on securitisation repository data completeness and consistency thresholds. The Guidelines provide clarity for market participants and securitisation repositories (SRs) on the accepted levels of No-Data (ND) options contained in the securitisation data submitted to SRs.

    ESMA, following a public consultation, has drafted final guidelines which explain how securitisation repositories should verify that the ND options, included in the data it receives from securitisation parties, are only used where permitted and do not prevent the data submission from being sufficiently representative of the underlying exposures in the securitisation. The majority of feedback received during the public consultation was supportive of the data completeness and consistency thresholds. 

    Following limited adjustments to the guidelines, the final report now provides full transparency to market participants on the concrete accepted levels of ND options contained within the data submitted to securitisation repositories.

  • ESMA publishes securitisation disclosure templates and instruction

    CACEIS

  • On 19 August 2020, the European Securities and Markets Authority (ESMA) publishes securitisation disclosure templates and instruction. This document describes the Business Transactions and underlying message set.

    This document sets:

    • The Business Process scope (business processes addressed or impacted by the project)
    • The Business Roles involved in these Business Processes.

    The main objectives of this document are:

    • To explain what Business Processes and Business Activities these Message Definitions have addressed
    • To give a high-level description of Business Processes and the associated Business Roles
    • To document the Business Transactions and their Participants (sequence diagrams) 
    • To list the Message Definitions.

    This document describes also the elements of the interface that shall be built by the receiving SRs including:

    • Overall process for Disclosure Regulatory Reporting
    • Common technical format for data submission
    • Common set of data quality controls to be applied to each Securitisation report.
  • Shareholders' Rights Directive (SRD II)

    ESMA publishes list of thresholds for shareholder identification

    CACEIS

  • On 31 August 2020, the European Securities and Markets Authority (ESMA) published a document listing the thresholds above which shareholders can be identified in the various Member States of the European Union (EU).

    The document contains information provided by national competent authorities setting out:

    • national thresholds for shareholder identification in Member States that have established such a threshold;
    • relevant national legislation and rules; and
    • indication of Member States where the revised Shareholder Rights Directive (SRDII) has not yet been transposed into national law.

    ESMA drafted this document to enhance transparency around the regimes adopted across the EU.

    The revised SRDII requires Member States to ensure that companies have the right to identify their shareholders. Member States may provide for companies having a registered office on their territory to be only allowed to request the identification of shareholders holding more than a certain percentage of shares or voting rights. Such a percentage shall not exceed 0,5 %.

  • Sustainable Finance / Green Finance

    Here are several answers of national authorities and associations to the European consultation on the renewed sustainable strategy

    CACEIS

  • Here are several answers of national authorities and associations to the European consultation on the renewed sustainable strategy.

    1. On 15 July 2020, the Association for Financial Markets in Europe (AFME) published its Key messages for the future EU Renewed Sustainable Finance Strategy .

    The renewed Strategy should place a greater focus on the transition of the real economy (ie, non-financial sectors) and should be based on coherent, sequential and proportionate policies taking into account the implementation status of the existing legislative measures under the 2018 Action Plan and duly reflecting their uptake and effectiveness with a view to identifying possible issues and gaps. 

    The AFME's key messages are as followings:

    • The post COVID-19 economic recovery should be sustainable 
    • A clear EU-wide trajectory for transition of real economy sectors is necessary 
    • Providing tools, incentives, and removing barriers to scale up sustainable finance: a strong cooperation between the private and public sectors is critical where mechanisms need to be established to incentivise both borrowers (investees) and finance providers (investors) to shift to sustainable finance models.
      (i) Further consideration should be given to how market-based carbon pricing mechanisms can be structured effectively to contribute to transition funding.
      (ii) There should be a plan to gradually phase out blanket government subsidies to high carbon emitting industries.
      (iii) Fiscal policy incentives (tax, subsidies) to both green issuers/borrowers and investors/lenders should be considered.
      (iv) Introducing risk-sharing mechanisms.
    • EU-wide and international coordination is critical to long-term, sustainable growth
    • Further legislative measures should be sequential and coherent
    • Prudential treatment of “green” and “brown” should remain risk sensitive.

    2. On 15 July 2020, the European Securities and Markets Authority (ESMA) published its response to European Commission consultation on Renewed Sustainable Finance Strategy. 

    Building on the 2018 Action Plan on financing sustainable growth, the renewed sustainable finance strategy will provide a roadmap with new actions to increase private investment in sustainable projects and activities to support the different actions set out in the European Green Deal and to manage and integrate climate and environmental risks into our financial system. 

    The initiative will also provide additional enabling frameworks for the European Green Deal Investment Plan.

    3. On 15 July 2020, the Dutch Banking Association (Nederlandse Vereniging van Banken, NVB) published its response to European Commission's consultation on Renewed Sustainable Finance Strategy. 

    The NVB ask the European Commission to : 

    • Avoid complexity and redundant reporting and ask for meaningful reporting, focused on contributing to the greening of the economy and managing climate and other ESG risks.
    • Align reporting requirements under the NFRD, SFDR, CRR and the Taxonomy Regulation and facilitate centralized data collection.
    • Encourage governments to set green as the default option. To enable a green economy, a threefold effort is required: (1) enabling legislation, (2) thereby removing obstacles that are currently still limiting green finance, and (3) setting clear and credible sustainability targets with parameters. Governments should develop transition paths, including social impacts, based on scenario’s in line with the Paris Climate Agreement. This will help businesses to adapt their business models accordingly. 
    • Develop a European sensible price on CO2 emissions and providing (tax) incentives when clients invest in green projects, such as the Dutch Fiscal Green Funds scheme. 
    • Facilitate and improve ESG disclosures and access to relevant and reliable data and scenarios, by using technology, preferably in a standardized form and based on legislation. Due to the specific nature of climate risks, we see added value in scenario analysis offering a “flexible ‘what-if’ methodological framework that is better suited to exploring the risks that could crystallise in different possible futures” (Network for Greening the Financial System). Including access to disaggregated raw data is important for better data quality and comparability. For this, we ask the European Commission to set up a centralised European ESG data register. As a minimum, we would ask for a map of climate risks based on geographic risks.

    4. On 16 July 2020, the European Banking Authority (EBA)  published its response to European Commission’s consultation on the renewed sustainable finance strategy. 

    Building on the 2018 Action Plan on financing sustainable growth, the renewed sustainable finance strategy will provide a roadmap with new actions to increase private investment in sustainable projects and activities to support the different actions set out in the European Green Deal and to manage and integrate climate and environmental risks into our financial system. The initiative will also provide additional enabling frameworks for the European Green Deal Investment Plan.

    The aim of this consultation is to collect the views and opinions of interested parties in order to inform the Commissions renewed strategy on sustainable finance.

    5. On 16 July 2020, the Association of German Banks (Bankenverband) participated in the public consultation of the European Commission on its renewed sustainable finance strategy. 

    6. On 17 July 2020, the BVI Bundesverband Investment und Asset Management e.V. published comments on the EU Commission consultation on "Renewed Sustainable Finance Strategy".

    The association formulated the following key demands:

    • The association strongly supports the basic idea of the EU Action Plan of 2018 to promote sustainable investment by providing incentives and relying on voluntary commitment by investors. The association therefore considers that regulatory measures prohibiting, or stigmatizing as "brown", investments in companies, which are not in breach of any EU or national law, are wrong.  Instead, where the EU legislator regards corporate activities as open to criticism it should take appropriate action directly.
    • Although BVI is in favor of an EU-wide Eco-Label, BVI also fears that the eco-labelling criteria are far too ambitious. This is particularly true of the thresholds being discussed for green investments in accordance with taxonomy and of the long lists of exclusion criteria. These would considerably restrict the investment universe and with it risk diversification.
    • BVI see the risk of overlapping, inconsistent and fragmented sustainability rules. For example, the timing of the application of SFDR does not allow for proper implementation of ESG disclosure requirements. Due to the time gap between the application of disclosure requirements for financial products and the availability of the necessary relevant corporate data, there is a risk that sales of sustainable products will to be discontinued.
    • In future, asset managers will be subject to the requirements of the EU Disclosure Regulation and the Taxonomy Regulation, among others. However, in order to incorporate ESG factors into their investment decisions and to assess correctly the sustainability risks and opportunities of their investments, it will also be necessary to revise the EU requirements for non-financial reporting by companies. Companies must be required to publish comparable and information on their economic activities and the resulting impact on the sustainability factors
    • Small investors who are indifferent to sustainability criteria, or who even explicitly state that they are only interested in financial returns, should not be pushed into sustainable investment products. This contradicts the basic approach of the EU Action Plan to promote voluntary investment in sustainable activities and to create incentives to achieve this. Ultimately, it must be up to the investor to decide if he wants to finance sustainable projects by way of his investment.

    7. On 22 July 2020, the International Swaps and Derivatives Association (ISDA) announces that it submitted a response to the European Commission’s (EC) consultation on its Renewed Sustainable Finance Strategy. 

    Building on the 2018 Action Plan on financing sustainable growth, the renewed sustainable finance strategy will provide a roadmap with new actions to increase private investment in sustainable projects and activities to support the different actions set out in the European Green Deal and to manage and integrate climate and environmental risks into our financial system. The initiative will also provide additional enabling frameworks for the European Green Deal Investment Plan.

    The aim of this consultation is to collect the views and opinions of interested parties in order to inform the Commissions renewed strategy on sustainable finance.

    8. On 24 July 2020, the European Savings and Retail Banking Group (ESBG) published its response to EU's consultation on renewed sustainable finance strategy. 

    According to the association, regulatory actions in the financial sector must prioritise the completion and implementation of regulation developed in the Sustainable Finance Action Plan provided in the EU Green Deal.

    The association also notes that policymakers need to avoid overlap and misalignment between regulations as well as misalignment in implementation deadlines of interdependent rules. Those rules include the Sustainable Finance Disclosure Regulation , or SFDR, Taxonomy Regulation and some delegated acts, such as for MiFID. 

    New regulations developed must be targeted to specific objectives – to address market failures or observed deficiencies proportionate to the regulatory objective avoid excessive burdens for entities – and must follow the materiality principle.

    9. On 24 July 2020, the Autorité des marchés financiers (AMF) published responses of the French authorities to the consultation on the renewed strategy for sustainable finance.

    The French authorities - the Banque de France, the Prudential Control and Resolution Authority, the Autorité des marchés financiers, the Commissariat Général du Développement Durable and the Direction Générale du Trésor - present what they identify as key proposals for establishing the European Union's ambition for sustainable finance.

    • Improving the availability, reliability and comparability of environmental, social and governance (ESG) data is essential for redirecting capital;
    • The development of a regulatory and supervisory framework for ESG ratings is necessary to bring transparency and robustness to the sector;
    • The climate and environmental emergency requires investments to be directed towards the transition from carbon-intensive production models;
    • The rapid adoption of a European standard on green bonds would accompany the growing maturity of the market and contribute to a green recovery of the European economy;
    • The proposal for minimum standards applicable to investment funds with ESG names must be able to clarify, at European level, the conditions under which a financial product can put a strong emphasis on ESG;
    • The availability of climate data is a fundamental element for integrating climate-related risks into financial decision-making, justifying the need to develop specific databases in the EU.
  • AFME publishes first ESG guidelines for European high yield market

    CACEIS

  • On 22 July 2020, the Association for Financial Markets in Europe (AFME) published first ESG guidelines for European high yield market.

    The guidelines are intended to provide guidance on sustainable finance considerations for issuers and investors when leading or otherwise participating in offerings of non-investment grade notes (known as “high yield bonds”).

    The guidelines make recommendations for considerations and practices to encourage transparency and consistency in disclosure, as well as recommendations for due diligence practices related to such transactions.

    They are intended to assist the market by providing  a framework for assessing relevant ESG factors, including:

    • Disclosure and Diligence considerations;
    • Impact of ESG factors on an issuer’s strategy and business model; and
    • Exposure of an issuer to ESG risks, both at issuer  and stakeholder level including sponsors and shareholders.
  • Brexit

    AFME calls for further progress on the future EU-UK relationship for financial services

    CACEIS

  • On 6 July 2020, the Association for Financial Markets in Europe (AFME) called for further progress on the future EU-UK relationship for financial services.

    AFME highlights that continuing uncertainty on Brexit, combined with the adverse macroeconomic situation arising from COVID-19, has the potential to aggravate existing risks at the end of the transition period and significantly increase disruption to clients and markets.

    The paper also highlights outstanding regulatory challenges for financial services that should be addressed ahead of the end of the transition period to minimise disruption to markets and clients. These include ensuring continued access for EU firms to UK CCPs, addressing the implications of the MiFID share trading obligation (STO) and the derivatives trading obligation (DTO), and ensuring the continued servicing of existing clients and contracts.

  • Here are several European notices and communications concerning Brexit

    CACEIS

  • Here are several European notices and communications concerning Brexit.

    1. On 6 July 2020 European Commission published notice to stakeholders: withdrawal of the United Kingdom and EU rules in the field of data protection. This notice replaces the notice dated 9 January 2018.

    Since 1 February 2020, the United Kingdom has withdrawn from the European Union and has become a “third country”. The Withdrawal Agreement provides for a transition period ending on 31 December 2020.

    After the end of the transition period, any transfer of personal data to the United Kingdom other than that governed by Article 71(1) of the Withdrawal Agreement will not be treated as sharing of data within the Union. It will need to comply with the relevant Union rules applicable to transfers of personal data to third countries. 

    This notice explains the legal situation applicable after the end of the transition period and certain relevant separation provisions of the Withdrawal Agreement.

    2. On 7 July 2020, the European Commission published notice to stakeholders: Withdrawal of the United Kingdom and EU rules in the field of credit rating agencies. This notice replaces the notice dated 8 February 2018.

    Since 1 February 2020, the United Kingdom has withdrawn from the European Union and has become a “third country”. The Withdrawal Agreement provides for a transition period ending on 31 December 2020. Until that date, EU law in its entirety applies to and in the United Kingdom.

    After the end of the transition period, EU rules in the field of Credit Rating Agencies (CRAs) and in particular Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies ("CRA Regulation") no longer apply to the United Kingdom. 

    This has in particular the following consequences: 

    • CRAs established in the United Kingdom will no longer be considered to be established in the EU after the end transition period. ESMA will withdraw their registrations with effect after the end of the transition period.
    • Financial marker participants the EU will no longer be able to use credit ratings issued by UK established CRAs for EU regulatory purposes.
    • The endorsement process for UK CRAs remains possible.
    • Where a prospectus contains a reference to a credit rating or credit ratings issued by a CRA established in the United Kingdom, it will need to include clear and prominent information stating that those credit ratings are not issued by a credit rating agency established in the EU.

    3. On 7 July 2020, the European Commission published notice to stakeholders: Withdrawal of the United Kingdom and EU rules in the field of asset management. This notice replaces the notice  dated 8 February 2018.

    Since 1 February 2020, the United Kingdom has withdrawn from the European Union and has become a “third country”. The Withdrawal Agreement provides for a transition period ending on 31 December 2020. Until that date, EU law in its entirety applies to and in the United Kingdom.

    UCITS management companies and Alternative Investment Fund (AIF) managers (AIFMs) are advised to assess the consequences of the end of the transition period in view of this notice and take appropriate action, such as obtaining an authorization to manage non-EU AIFs (former UK UCITS or UK AIFs), informing investors of the consequences of the end of the transition period and reviewing, when appropriate, the delegation of certain operational functions to providers established in the United Kingdom. Following the change of legal status of the UK funds, investors should also check when appropriate the modification of eligibility of their investments. 

    After the end of the transition period, the EU rules in the field of asset management, in particular Directive 2009/65/EC on Undertakings for Collective Investment in Transferable Securities (“UCITS Directive”) and Directive 2011/61/EU on Alternative Investment Fund Managers (“AIFM Directive”) no longer apply to the United Kingdom.

    4. On 9 July 2020, the European Commission published communication on readiness at the end of the transition period  between the European Union and the United Kingdom.

    This Communication aims to highlight the main areas of inevitable change and to facilitate readiness and preparations by citizens, public administrations, businesses and all other stakeholders for these unavoidable disruptions due to Brexit.

    In the financial services field, insurance operators, banks, investment firms, trading venues and other financial services providers should finalise and implement their preparatory measures by 31 December 2020 at the latest to be ready for the changes that will happen under all scenarios, including wherein their area, there is no equivalence decision taken by the European Union or the United Kingdom.

    Union businesses, banks or investors that currently rely on UK service providers should consider how this may affect their operations and take all the necessary steps to prepare for all possible scenarios. EU financial services providers with operations in the United Kingdom should also prepare to abide by all relevant UK rules. EU clearing members of UK CCPs and their clients should take active steps to prepare for all scenarios, including by reducing their systemic exposure to UK market infrastructures.

    EU and national supervisors and regulators will need to continue their dialogue with stakeholders with a view to ensuring that all necessary actions for readiness are taken by the end of 2020.

    5. On 14 July 2020, the European Commission published a notice on withdrawal of the United Kingdom and EU rules in the field of post-trade financial services. 

    After the end of the transition period, EU rules on financial markets, in particular 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 (EMIR), Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (MIFIR), Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012 (SFTR), Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories (CSDR), and Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (SFD), no longer apply to the United Kingdom.

    This has consequences on : 

    • derivatives
    • trade repositories and reporting
    • central securities depositories and securities settlement system.

    6. On 29 July 2020, the European Banking Authority (EBA) called on financial institutions to finalise preparations for the end of the transitional arrangements between the EU and UK.

    The EBA draws the attention of financial institutions that the transitional arrangements agreed by the EU and the UK in the context of the UK withdrawal from the EU will end on 31 December 2020. Starting from 1 January 2021 financial institutions based in  the UK and not holding valid authorisation from the EU competent authorities will lose their authorisation to provide services in the EU.

    The EBA recalls the importance of the following three steps:

    1) Finalisation of preparations and effective establishment in the EU as agreed with relevant competent authorities

    Relevant UK-based financial institutions need to ensure that they have appropriate authorisations from the EU competent authorities in place, including for their existing branches already operating in the EU, and fully establish those operations. 

    2) Preparedness of payment and electronic money institutions

    The EBA warns UK-authorised payment and electronic money institutions wishing to continue to offer services to EU-based customers that it is illegal for them to provide payment or electronic money services in the EU after 31 December 2020, unless they have been adequately authorised beforehand by an EU competent authority. 

    3) Communication to customers

    The EBA is calling on all financial institutions affected by the UK withdrawal from the EU, and in particular, those offering financial services to the EU-based customers on a cross-border basis and benefiting from the passporting arrangement, to adequately inform their EU customers on any relevant actions undertaken as part of their contingency planning affecting the availability and continuity of such services, or whether institutions plan to cease offering services to the EU-based customers after the end of the transition period.

    7. On 13 July 2020, the European Commission published a notice on withdrawal of the United Kingdom and EU rules in the field of markets in financial instruments.

    As the United Kingdom will become a third country, investment firms are advised to carefully assess the consequences of the end of the transition period and take appropriate action, such as ensuring that the necessary authorizations are in place, and that the necessary actions for any relocation, corporate reorganisation or contractual adaptations have been taken.

    Investment firms should also duly inform their clients and counterparts on the implications of the end of the transition period on their business and contractual relationships and on any impact of related measures that a firm has taken or intends to take (such as the loss of passporting rights, implications of any corporate reorganisation, changes to contractual terms or contractual and statutory rights of clients or counterparties, including the right to modify the contractual terms or cancel the contracts and any right of recourse).

    Business adaptations and investment strategies for investment firms and underlying clients should be ready for no equivalence being in place by the end of the transition period.5 A high level of preparation by investment firms will mitigate firms’ and their clients’ individual exposure to any impacts at the end of the transition period. Investment firms are therefore strongly encouraged to take advantage of the time until 31 December 2020 to ensure that they have taken all the necessary actions to prepare for the UK’s withdrawal and the end of the transition period.

  • Central Securities Depositary Regulation (CSDR)

    ESMA updates Central Securities Depositories Regulation Q&As (July 2020)

    CACEIS

  • On 8 July 2020, the European Securities and Markets Authority (ESMA) published new question in its Q&As on Central Securities Depositories Regulation.

    Question:  According to Articles 26, 27(1), 28, 29(1), 30 and 31(1) of the RTS on Settlement Discipline, a buy-in process should be initiated “on the business day following the expiry of the extension period”. By when, on the business day following the extension period, should the buy-in process be started by the party in charge of it? 

    Answer:  Article 2(1)(14) of CSDR refers to the definition of “business day” that is provided in point (n) of Article 2 of SFD: it “shall cover both day and night-time settlement and shall encompass all events happening during the business cycle of a system”. For the purposes of conducting a buy-in process, the relevant system is the securities settlement system where the settlement fail occurred. Therefore, should the buy-in process be considered effective according to Article 22 of the RTS on Settlement Discipline, the party in charge of the buy-in should initiate the process (i.e. check if a buy-in is possible and, if it is the case, launch an auction or appoint a buy-in agent, as the case may be) at any time during the business day (as defined in the rules of the securities settlement system where the settlement fail occurred) following the expiry of the extension period, and not necessarily at the start of that business day. 

  • EU published amends the regulation about the regulatory technical standards on settlement discipline

    CACEIS

  • On 24 August 2020, Europe published Commission Delegated Regulation (EU) 2020/1212 of 8 May 2020 amending Delegated Regulation (EU) 2018/1229 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards on settlement discipline, in the Official Journal.

    Article 42 of Delegated Regulation (EU) 2018/1229 is replaced by the following: 

    This Regulation shall enter into force on 1 February 2021.

  • ESMA publishes final report on draft regulatory technical standards (RTS) further postponing CSDR settlement discipline

    CACEIS

  • On 28 August 2020, the European Securities and Markets Authority (ESMA) published a final report on draft regulatory technical standards (RTS) definitively postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) until 1 February 2022.

    This postponement is due to the impact of the COVID-19 pandemic on the implementation of regulatory projects and IT deliveries by Central Securities Depositaries and a wide range of market participants and follows a request from the European Commission (EC).

    The measure is additional to the Commission Delegated Regulation (EU) 2020/1212 , based on ESMA’s proposal to amend the RTS on settlement discipline to postpone its date of entry into force from 13 September 2020 to 1 February 2021.

    This Final Report is sent to the European Commission, and ESMA is submitting the draft RTS presented in Annex IV for endorsement in the form of a Commission Delegated Regulation, i.e. a legally binding instrument applicable in all Member States of the European Union. Following the endorsement of the draft RTS by the European Commission, the Commission Delegated Regulation will then be subject to the non-objection of the European Parliament and of the Council.

  • COVID-19 Regulatory Measures

    ESMA publishes statement on MiFIR open access and COVID-19

    CACEIS

  • On 11 June 2020, the European Securities and Markets Authority (ESMA) issued a public statementto clarify the application of the MiFIR open access provisions (OAP) for trading venues (TVs) and central counterparties (CCPs) in light of the recent adverse developments related to COVID-19. 

    ESMA considers that the current market environment, with a high degree of uncertainty and volatility driven by the COVID-19 pandemic, may negatively impact CCPs and TVs operations and increase their operational risk. These increased risks, combined with limited capacity for assessing access requests and for managing the migration of transactions flows, may impact the orderly functioning of markets or financial stability.  The ESMA expects:

    • NCAs to take into consideration, to the extent relevant, the relevant adverse developments when taking decisions on open access requests.
    • CCPs and trading venues to have the necessary operational capacity to process access requests once the exceptional market circumstances have cleared up. 

    The current exemptions under MiFIR, which allow NCAs to temporarily exempt TVs and CCPs from the OAP for exchange traded derivatives (ETDs), expire on 3 July and from 4 July the OAP for ETDs will apply.

  • Council of the EU publishes the proposal for Council Directive amending Directive 2011/16/EU on administrative cooperation in the field of taxation

    CACEIS

  • On 15 July 2020, the Council of the EU published the proposal for Council Directive amending Directive 2011/16/EU on administrative cooperation in the field of taxation.

    The COVID-19 pandemic adds urgency to the need to protect public finances and limit its socio-economic consequences. Member States will require adequate tax revenues to finance their considerable efforts to contain the negative economic impact of the measures against the COVID-19 pandemic, while ensuring that the most vulnerable groups do not bear the burden in raising these revenues. Ensuring tax fairness by preventing tax fraud, tax evasion and tax avoidance has become more important than ever. In this context, strengthening the administrative cooperation and exchange of information is crucial in the fight against tax avoidance and tax evasion in the Union. 

    Therefore, the EU is better placed than individual Member States to address the problems identified and ensure the effectiveness and completeness of the system for the exchange of information and administrative cooperation. First, it will ensure a consistent application of the rules across the EU. Second, all digital platforms in scope will be subject to the same reporting requirements. Third, the reporting will be accompanied with exchange of information and, as such, enable the tax administrations to obtain a comprehensive set of information regarding the income earned through a digital platform. 

  • European Commission adopts Capital Markets Recovery Package

    CACEIS

  • On 24 July 2020, the European Commission published its  Capital Markets Recovery Package, as part of the Commission's overall coronavirus recovery strategy. 

    The measures aim to make it easier for capital markets to support European businesses to recover from the crisis.  The package proposes targeted changes to capital market rules, which will encourage greater investments in the economy, allow for the rapid re-capitalisation of companies and increase banks' capacity to finance the recovery.

    The package contains targeted adjustments to the Prospectus Regulation, MiFID II and securitisation rules. All of the amendments are at the heart of the Capital Markets Union project aimed at better integrating national capital markets and ensuring equal access to investments and funding opportunities across the EU.

  • EU publishes ESMA Decision (EU) 2020/1123 of 10 June 2020 on temporary additional transparency obligations for net short positions

    CACEIS

  • On 30 July 2020, European Securities and Markets Authority Decision (EU) 2020/1123 of 10 June 2020 renewing the temporary requirement to natural or legal persons who have net short positions to temporarily lower the notification thresholds of net short positions in relation to the issued share capital of companies whose shares are admitted to trading on a regulated market to notify the competent authorities above a certain threshold in accordance with point (a) of Article 28(1) of Regulation (EU) No 236/2012 of the European Parliament and of the Council was published in the Official Journal.

    A natural or legal person who has a net short position in relation to the issued share capital of a company that has its shares admitted to trading on a regulated market shall notify the relevant competent authority where the position reaches or falls below a relevant notification threshold of a percentage that equals 0.1% of the issued share capital of the company concerned and each 0.1% above that threshold.

    The temporary additional transparency obligations shall not apply to:

    • shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country;
    • transactions performed due to market making activities;
    • net short position in relation to the carrying out of a stabilisation under Article 5 of Regulation (EU) No 596/2014 of the European Parliament and of the Council.

    This Decision enters into force on 17 June 2020. It shall apply from the date of its entry into force for a period of three months.

  • Here are several European publications related to COVID-19 regulatory measures

    CACEIS

  • Here are several European publications related to COVID-19 regulatory measures.

    1. On 2 July 2020, the European Commission prolonged the validity of certain State aid rules which would otherwise expire at the end of 2020. In this context, and to take the effects of the current crisis into due consideration, the Commission, after consulting Member States, has decided to make certain targeted adjustments to the existing rules with a view to mitigate the economic and financial impact of the COVID-19 outbreak on companies.

    Commission has decided to prolong the validity of the following State aid rules, which are due to expire by the end of 2020:

    1. Prolongation by one year (until 2021):

    • Guidelines on regional State aid for 2014-2020 
    • Guidelines on State aid to promote risk finance investments
    • Guidelines on State aid for environmental protection and energy
    • Communication on the execution of important projects of common European interest (IPCEI)
    • Communication on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance (STEC)

    2. Prolongation by three years (until 2023):

    • General Block Exemption Regulation (GBER)
    • De minimis Regulation
    • Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty.

    Commission has also decided to make some targeted adjustments to the rules which are being prolonged as well as to the Framework for State aid for research and development and innovation. In parallel, the Commission has recently proposed to prolong the SGEI de minimis Regulation, which is not part of the “fitness check” exercise but which will also otherwise expire on 31 December 2020,by three years.

    2. On 14 July 2020, the European Commission  released Best Practices' to provide relief for consumers and businesses. 

    Best practices identified in this document outline temporary, non-binding relief measures that financial institutions are encouraged to implement, when appropriate, on a best-effort basis and as long as they are still relevant depending on the situation in Member States.

    The best practices include :

    • Payment moratoria for consumer and business loans, and for insurance contributions: these measures can help those facing financial difficulties by deferring payments;
    • Enabling safer cashless payments while ensuring cash payments remain available for those who need them;
    • Ensuring loans aimed at mitigating the impact of COVID-19 are provided swiftly, and that the fees and interest rates incurred are fair;
    • Legitimate insurance claims are processed and paid out as quickly as possible.

    3. On 31 July 2020, Decision (EU) 2020/1143 of the European Central Bank of 28 July 2020 amending Decision (EU) 2020/440 on a temporary pandemic emergency purchase programme (ECB/2020/36) was published in the Official Journal.

    The ECB decision establishes the temporary pandemic emergency purchase programme (“PEPP”) as a separate purchase programme. The overall envelope of the PEPP is EUR 1 350 billion. The maturing principal payments from securities purchased under the PEPP shall be reinvested by purchasing eligible marketable debt securities until at least the end of 2022. 

    The Governing Council delegates to the Executive Board the power to set the appropriate pace and composition of PEPP monthly purchases within the total overall envelope of EUR 1 350 billion. In particular, the purchase allocation may be adjusted under the PEPP to allow for fluctuations in the distribution of purchase flows, over time, across asset classes and among jurisdictions.

    4. On 18 August 2020, the European Investment Bank (EIB) published a paper on their contribution to combating COVID-19.

    The EIB’s initiative to create a guarantee fund of €25 billion, which could support up to €200 billion of financing for European companies, with a focus on SMEs was welcomed from April. 

    Moreover, the EIB Group has established a financing package consisting of: 

    • Dedicated guarantee schemes based on existing programmes for immediate deployment. Based on a €1 billion guarantee tranche, the EIF will provide guarantees worth €2.2 billion to financial intermediaries, unlocking €8 billion in available financing. 
    • Dedicated liquidity lines to banks to ensure additional working capital support for SMEs and mid-caps of up to €10 billion. 
    • Dedicated asset-backed securities (ABS) purchasing programmes to allow banks to transfer risk on portfolios of SME loans, mobilising up to another €10 billion of support.

    In parallel, the EIB announced a €5 billion pipeline of projects in the health sector using existing financial instruments, primarily the InnovFin Infectious Disease Finance Facility, to finance projects that work towards halting the spread of or finding a cure for the coronavirus. The EIB Group will also support emergency measures to finance urgent infrastructure improvements and equipment needs in the health sector, using existing framework loans or undisbursed amounts from existing health projects.

    5. On 9 July 2020, the European Securities and Markets Authority (ESMA) published a public statement on external support under Article 35 of the Money Market Funds (MMF) Regulation.

    ESMA is issuing this statement in the context of financial markets authorities recent actions to mitigate the impact of COVID-19 on the EU’s financial markets, to clarify the potential interaction between the intermediation of credit institutions and the requirements of Article 35 of the MMF Regulation on external support. It also aims to coordinate the supervisory approaches of national competent authorities (NCAs) in light of  liquidity challenges for MMFs in the context of the current COVID-19 pandemic. 

    In the second half of March 2020, certain MMFs faced significant liquidity challenges. In this context, measures taken by central banks and securities and markets regulators to ensure the proper and orderly functioning of markets and financial stability were also relevant for MMFs. In particular, the market liquidity brought by some of these measures may have also indirectly benefited MMFs through the intermediation of credit institutions.

    ESMA, together with NCAs, will continue to closely monitor the situation and will take or recommend any measures necessary to mitigate the impact of COVID-19.

  • Data protection / General Data Protection Regulation (GDPR) / ePrivacy Regulation (ePR)

    ECJ invalidates Decision 2016/1250 on the adequacy of the protection provided by the EU-US Data Protection Shield

    CACEIS

  • On 16 July 2020, the European Court of Justice (ECJ) delivered a major judgment concerning the data transfer regime between the European Union and the United States in the so-called “Schrems II” case.

    The CJEU invalidated the “Privacy Shield” adequacy decision, adopted in 2016 by the European Commission following the invalidation of the “Safe Harbor”, which allowed the transfer of data between the European Union and American operators adhering to its data protection principles without further formality.

    The CJEU has also validated the standard contractual clauses allowing the transfer of data from the European Union to importers established outside the Union.

  • BELGIUM

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

    Chambre des représentants de Belgique adopts Draft Law transposing Directive (EU) 2018/843 (AML V)

    CACEIS

  • On 16 July 2020, the Chambre des représentants de Belgique adopted the partial transposition in Belgium Law of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU.

    The most substantial modification of the legislative framework in force consists in the addition of new "subject", professionals who will now have to comply with the obligations arising from the preventive anti-money laundering regime. They are respectively:

    • providers of virtual currency services and custody portfolios;
    • art dealers;
    • professionals who offer advice in tax matters;
    • real estate agents,
    • top-level professional football clubs.

    The draft law also lowers the threshold for prepaid payment cards. Another element concerns the establishment of a list of important Belgian public functions. In order to further concretize the definition of the persons who must be considered as politically exposed in Belgium (“PEPs”), a list of the exact functions which can be qualified as important public functions is drawn up with regard to the law and the public functions under Belgian law.

    The enhanced due diligence obligations that taxable persons must (already) apply to a business relationship involving a high-risk third country are now expressly identified.

    Finally, the rules for national and international cooperation and for exchanges and access to confidential information between competent authorities are adapted .

  • Belgium publishes the Law of 20 July 2020 transposing Directive (EU) 2018/843 (AML V)

    CACEIS

  • On 5 August 2020, Belgium published in the Official Journal the partial transposition in Belgium Law of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU.

    The most substantial modification of the legislative framework in force consists in the addition of new "subject", professionals who will now have to comply with the obligations arising from the preventive anti-money laundering regime. They are respectively:

    • providers of virtual currency services and custody portfolios;
    • art dealers;
    • professionals who offer advice in tax matters;
    • real estate agents,
    • top-level professional football clubs.

    The law also lowers the threshold for prepaid payment cards. Another element concerns the establishment of a list of important Belgian public functions. In order to further concretize the definition of the persons who must be considered as politically exposed in Belgium (“PEPs”), a list of the exact functions which can be qualified as important public functions is drawn up with regard to the law and the public functions under Belgian law.

    The enhanced due diligence obligations that taxable persons must (already) apply to a business relationship involving a high-risk third country are now expressly identified.

    Finally, the rules for national and international cooperation and for exchanges and access to confidential information between competent authorities are adapted .

  • COVID-19 Regulatory Measures

    Belgium publishes Royal decree establishing the list of other jurisdictions subject to declaration and the list of partner jurisdictions, for the purpose of the communication of information relating to financial accounts

    CACEIS

  • On 1 July 2020, the Banque nationale de Belgique (BnB) published the Financial Stability Report 2020.

    The COVID-19 pandemic poses challenges to the financial sector and financial stability. However, thanks to its capital and liquidity buffers, the Belgian financial system is strong and can therefore play a key role in cushioning the impact of the crisis on households and businesses. As a supervisory authority, the National Bank of Belgium (BNB) calls on financial institutions, in its Financial Stability Report, to continue supporting the real economy, if necessary by using the built-in cushions.

    The BNB examines its macroprudential policy and situates this policy within the framework of the economic and financial policy measures adopted in response to the COVID-19 crisis.

    Due to the COVID-19 crisis, the Belgian financial system is facing significant challenges, but it can boast a solid starting position. Since the financial crisis, the Belgian banking sector has built up significant capital and liquidity buffers, in particular due to restructuring, prudent management of the crisis, but also more stringent regulation and supervision. . These cushions can now be used to absorb credit losses and provide credit to the real economy. In this sense, the Belgian financial sector, and the banking sector in particular, constitutes a crucial lever to tackle and resolve the current crisis.

    Economic policy at national and international level has been fundamentally adapted, with the contribution, by those responsible for fiscal, monetary, microprudential and macroprudential policies, of a decisive and coordinated response to the crisis. In addition to the direct support measures stemming from budgetary and monetary policy, prudential policy also plays, indirectly, a key role in the fight against the crisis.

    The NBB addresses a series of recommendations to the financial sector and to credit institutions in particular:

    • encourage the maximum and responsible use of microprudential and macroprudential cushions to support the real economy
    • -the financial sector temporarily exercise the necessary restraint in with regard to the current and future policy of dividend distribution (and similar operations) and the allocation of variable compensation to senior managers
    • The financial sector must continue to be attentive to the major longer-term structural challenges . The persistence of a low interest rate environment remains an important structural challenge for the profitability of banks, and the viability of certain business models should be reassessed.
  • DAC 6

    Belgium publishes Royal decree implementing several articles of the law of 20 December 2019 transposing DAC 6

    CACEIS

  • On 14 July 2020, Belgium published Royal decree implementing several articles of the law of 20 December 2019 transposing DAC 6. According to this Royal decree, the Minister of Finance determines which data must be communicated in accordance with law of 20 December 2019 transposing DAC 6. The Royal decree grants the power to the Mister of Finance to establish the form necessary to realize the reporting under DAC 6. 

  • Money Market Funds Regulation (MMFR)

    FSMA publishes Communication FSMA_2020_09 on ESMA Guidelines on stress test scenarios under the Money Market Funds Regulation

    CACEIS

  • On 11 August 2020, the Financial Services and Markets Authority (FSMA) published Communication FSMA_2020_09 on ESMA Guidelines on stress test scenarios under the Money Market Funds Regulation.

    This communication addresses the guidelines drawn up by the European Securities and Markets Authority (ESMA) regarding the stress test scenarios based on the EU’s Money Market Funds Regulation, and on the implementation of those guidelines by the FSMA.

  • FSMA publishes communication FSMA_2020_10 addressing the Guidelines on the reporting to competent authorities under the MMF Regulation

    CACEIS

  • On 25 August 2020, the Financial Services and Markets Authority (FSMA) published Communication FSMA_2020_10. This communication concerns the guidelines published by the European Authority for Securities and Markets (ESMA) on the reporting to competent authorities under Article 37 of the Money Market Funds Regulation and  its implementation by the FSMA.

  • Payment Services Directive (PSD2)

    NBB publishes Communication NBB_2020_22 / EBA opinion on the obstacles referred to in Article 32 (3) of the AFC & CSC NTRs within the framework of DSP2 (EBA-Op-2020-10)

    CACEIS

  • On 1 July 2020, the Banque nationale de Belgique (BnB) published a Communication NBB_2020_22 / EBA opinion on the obstacles referred to in Article 32 (3) of the AFC & CSC NTRs within the framework of PSD2 (EBA-Op-2020-10).

    This Communication sets out the Bank's expectations regarding the implementation of EBA Opinion 2020-10 on the impediments referred to in Article 32(3) of the AFC & CSC NTRs by payment service providers managing accounts which offer a dedicated interface to the payment service providers.

  • Shareholders' Rights Directive (SRD II)

    FSMA publishes Communication FSMA_2020_07 concerning the transposition of the Shareholders’ Rights Directive

    CACEIS

  • On 6 July 2020, the Financial Services and Markets Authority (FSMA) published Communication FSMA_2020_07 to draw the attention of IORPs to several new legal obligations under the Law of 28 April 2020 transposing Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, and containing miscellaneous provisions concerning companies and associations.

    IORPs must comply with these new transparency obligations with immediate effect.

  • FRANCE

    COVID-19 Regulatory Measures

    Here are several French publications related to COVID-19 regulatory measures / Voici plusieurs publications françaises relatives aux mesures réglementaires prises dans le cadre du COVID-19

    CACEIS

  • Here are several French publications related to COVID-19 regulatory measures.

    1. On 2 July 2020, the Commission nationale de l'informatique et des libertés (CNIL) published a Guide for a safe return to work.

    The COVID-19 epidemic has been accompanied by an upsurge in frauds and scams, particularly online. Government departments and control authorities have joined forces in a "Task Force to combat fraud and scams". In order to facilitate a successful deconfinement and resumption of activity without scams, the National Task Force offers a comprehensive guide to prevent them.

    In the context of containment, government departments and competent authorities have noted an increase in fraud, with fraudsters taking advantage of the sense of fear, urgency or distress of people and companies in a difficult economic situation.

    The Task Force is composed of :

    • the Ministry of Economy and Finance:
    • the Ministry of Action and Public Accounts:
    • the Ministry of the Interior, the DGPN (Central Directorate of the Judicial Police - DCPJ) and the DGGN (Judicial Pole of the National Gendarmerie (PJGN) ;
    • the Ministry of Justice, the Directorate of Criminal Affairs and Pardons (DACG) ;
    • the Commission nationale de l'informatique et des libertés (CNIL) for violations of personal data;
    • the Autorité des marchés financiers (AMF) and the Autorité de contrôle prudentiel et de résolution (ACPR), the financial sector supervisory authorities;
    • the National Agency for the Security of Information Systems (ANSSI);
    • the Ministry of Agriculture, the General Directorate for Food.

    2.  On 2 July 2020, the Autorité des marchés financiers (AMF) published the 2020 mapping of markets and risks which provides an overview of trends and vulnerabilities in the midst of the COVID-19 crisis. It analyzes the organization and functioning of markets, financial stability, and the financing of the economy.

    While markets and infrastructure worked well during the health crisis, the imbalances initially present have increased and geopolitical tensions remain. Beyond the many challenges presented by the financing of the post-COVID-19 economic recovery, a new vulnerability in itself, the mapping highlights an increase in risks to financial stability with a possible new market correction and the degraded solvency of many companies.

    The risk weighing on the financing of the economy therefore returns in 2020 and should increase further in 2021. The significant use of debt, banking or market represents a significant vulnerability in the medium term, which calls for a transition to a model more based on equity. This recapitalization of the economy should also take into account the green transition, which poses an additional challenge.

    The COVID-19 crisis must not minimize past vulnerabilities such as those linked to cyber security or Brexit.

    3. On 2 July 2020, the Autorité des marchés financiers (AMF) informed it takes part in the national anti-scam task force.

    During the confinement, noting the resurgence of fraud and scams, the State services and the supervisory authorities, including the AMF, joined forces in a national task force to fight more effectively against these practices in the context of COVID-19. The members of the task force, who remained mobilized after the deconfinement, launch a joint call for vigilance and publish practical sheets gathered in a guide aiming to encourage a resumption of activity without scams.

    Set up in April at the initiative of the Ministry of Economy and Finance, this task force brings together the AMF and the Prudential Control and Resolution Authority (ACPR), the general management of the Competition, Consumer Affairs and Fraud Prevention (DGCCRF), responsible for consumer protection, the Directorate General of Public Finance (DGFIP), the Directorate General of Customs and Indirect Rights (DGDDI), the Ministries of Interior (central directorate of the judicial police and judicial pole of the national gendarmerie), Justice (directorate of criminal affairs and pardons), Agriculture (general directorate of food) as well as the National Agency for security of information systems (ANSSI) and the National Commission for Information Technology and Liberties (CNIL).

    It pools everyone's skills in order to optimize public action. Can affect both consumers and businesses, fraud can take a variety of forms, for example false administrative sites illegally collecting personal data or bank details, calls for fraudulent donations, identity theft by professionals, campaigns phishing, etc.

    The AMF has drawn up with the ACPR the practical sheet "Savings / Credits: watch out for fraudulent offers" where advice is gathered to recognize scams and protect themselves from them.

    4. On 2 July 2020, the Ministère de l'Economie announced additional aid measures for companies impacted by COVID-19 crisis.

    In addition to the State-guaranteed loan, the Minister of the Economy and Finance wished to set up a system of repayable advances and subsidised loans to support the cash flow of companies weakened by the COVID-19 crisis. 

    The terms of application of this new tool managed by the Directorate General for Enterprises (DGE) within the Ministry of the Economy and Finance and the rates applicable to the financing granted were recently specified. This mechanism aims to support businesses weakened by the health crisis of COVID-19, through repayable advances or loans at subsidised rates, complementing existing tools while remaining subsidiary to them. 

    Strategic companies with 50 to 250 employees are the preferred target of this discretionary scheme. The objective is to support companies with real prospects for recovery, taking into account their economic and industrial positioning, in particular their recognised and to be preserved know-how, their critical position in a value chain and their importance within the local employment area.  

    5. On 3 July 2020, the Banque de France announced it adjusts its rating and invites companies to communicate during COVID-19.

    Each year, the Banque de France assigns a rating to more than 270,000 companies, which takes into account not only their accounting documentation but also qualitative elements which are brought to its attention by managers.

    Since April, the Banque de France has adapted its rating process for balance sheet data drawn up for 2019 and, in July, it will endeavor to collect, by means of a questionnaire sent to each manager, the information on the current financial situation of their business.

    An exceptional adjustment of the listing procedure in 2020

    Assigning a rating to companies in the current economic context strongly affected by the COVID crisis requires special attention.

    As the Banque de France rating is a fundamental indicator for the proper monitoring of financing and credit risks for the national economy, it is imperative that the 2020 rating exercise best reflect the fundamentals of the productive fabric and integrate the effect of public support mechanisms that have been put in place. The expertise of the Banque de France as the leading French rating agency is and must remain an anchor of confidence in the economy.

    To this end, protective measures have been taken to ensure the robustness of the diagnosis on the financial situation of a company and the reliability of its rating in 2020: the listing campaign is thus shifted to the second half of 2020 so as to give step back and have more stabilized perspectives on the company's trajectory.

    6. On 16 July 2020, the Autorité des marchés financiers (AMF) announced the end of the exceptional measures regarding the organization of the AMF examination during COVID-19 pandemic.

    The 6-month period available to persons exercising a key function to justify the verification of minimum knowledge was suspended on March 18, 2020. In view of the measures aimed at organizing the exit from the state of emergency, this period remains suspended until further notice.

    Temporarily, the persons concerned can exercise their function, but must be supervised pending the successful completion of the internal knowledge check or the AMF exam.

    7. On 17 July 2020, the Banque de France published Article 2 Bulletin No. 230: COVID-19 and value chains.

    The containment measures put in place to fight the COVID-19 pandemic not only have a direct impact on the economies of the countries concerned, but they also have international repercussions via value chains and external demand. A short-term analysis suggests that these international repercussions are having a significant effect on France, albeit second-rate compared to the internal shock caused by the lockdown. France is more exposed to containment shocks from the rest of the European Union and relatively less exposed to shocks from China. The most unfavourable situation for France would be that it suffers a supply shock (fall in productivity linked to health measures, or second wave) while the rest of the world is out of the crisis,

    8. On 18 July 2020, Decree No. 2020-884 of 17 July 2020 amending Decree No. 2020-860 of 10 July 2020 prescribing the general measures necessary to deal with the COVID-19 epidemic in territories that have emerged from a state of health emergency and in those where it has been extended was published in the Official Journal.

    The current decree provides for the following:

    • Prescription of quarantine or placement and maintenance in isolation, when arriving in the national territory from abroad, of persons showing symptoms of COVID-19 infection
    • Authority to order quarantine or placement and maintenance in segregation
    • Wearing a mask is mandatory in covered markets.

    9. On 21 July 2020, the Autorité de contrôle prudentiel et de résolution (ACPR) published a Notice of extension to finance companies of guidelines EBA/GL/2020/08 on legislative or non-legislative payment moratoriums carried out during the COVID-19 pandemic.

    The purpose of this notice is to extend to finance companies the European Banking Authority (EBA) guidelines EBA/GL/2020/08 on legislative or non-legislative moratoria on loan repayments applied due to the COVID-19 pandemic by finance companies.

    The EBA has issued guidance EBA/GL/2020/08 with the aim of extending to 30 September 2020 the deadline until which moratoria under the legislative or non-legislative moratoria put in place in the various European countries as part of their management of the COVID-19 crisis can benefit from the derogatory treatment provided for in guidance EBA/GL/2020/02.

    10. On 24 July 2020, the Autorité des normes comptables (ANC) updated its recommendations and observations on accounts and situations established as of 1 January 2020 in the context of the COVID-19.

    The update adds the following new question:

    Can income and expenses related to the COVID-19 event be recorded as exceptional (or non-current) income?

    The ANC does not recommend that the income and expenses related to this event be recorded as extraordinary income or expense. However, income and expenses that are normally recorded as exceptional income or expense may continue to be recorded as exceptional income or expense. Entities are therefore recommended to continue their previous practices in this area, which could, if necessary, lead to the recognition of some of the consequences of the COVID-19 event (e.g. exceptional depreciation).

    11. On 28 July 2020, the Autorité de contrôle prudentiel et de résolution (ACPR) called on financial institutions under its supervision to follow recommendation ESRB/2020/07  on distributions of dividends or variable compensation and on share repurchases.

    In the context of the COVID-19 pandemic, on 27 May 2020 the European Systemic Risk Board adopted a recommendation aimed at the vast majority of financial institutions (credit institutions and finance companies, investment firms, central counterparties), insurance and reinsurance organisations), so that the latter refrain until 1 January 2021 from paying dividends, buying back shares or granting new variable remuneration to their main risk takers, in order to preserve their own funds and their ability to fully support the real economy during the crisis.

    At its meeting on 8 July 2020, the Supervisory Board of the ACPR decided to comply with this recommendation, which follows on from its previous communications of 30 March and 3 April on dividend distributions.

    12. On 15 August 2020, Decree No. 2020-1048 of 14 August 2020 amending Decree No. 2020-371 of 30 March 2020 on the solidarity fund for enterprises particularly affected by the economic, financial and social consequences of the spread of the COVID-19 epidemic and the measures taken to limit this spread was published in the Official Journal.

    This decree amends the solidarity fund for companies particularly affected by the economic, financial and social consequences of the spread of the COVID-19 epidemic and the measures taken to limit this spread.

    It extends the first component of the fund, for losses in July, August and September 2020, for companies in the sectors mentioned in Annexes 1 and 2 of the decree.

    13. On 28 August 2020, the Système unifié de rapport financier (e-surfi) announced the end of flexibility and regularization measures of the electronic signature.

    In accordance with Instruction 2015-I-18, on the electronic signature of documents transmitted electronically to the ACPR, and Instruction 2016-I-17, on the transmission of prudential documents to the ACPR, it is mandatory that "Accounting and Prudential" document submissions be signed electronically.

    In a press release on its website, the ACPR has temporarily relaxed these rules of remittance due to the context of the COVID-19 pandemic.

    The end of this relaxation was recalled in the press release of July 10, 2020, on the E-surfi site: "The tolerance granted during the health crisis in terms of electronic signature will no longer be accepted from September, when unsigned or poorly signed remittances sent to the ACPR during the period from March to the end of August will have to be communicated again to the ACPR with a compliant signature. ».

    The ACPR therefore invites the organizations that have benefited from the above-mentioned tolerance to regularize as soon as possible the unsigned or non-compliant remittances made during the period.

    14. On 31 August 2020, the Ministère de l'Economie announced the extension of agreements concerning cross-border and frontier workers, concluded with Germany, Belgium, Luxembourg and Switzerland until 31 December 2020.

    Last March, amicable agreements were reached with Germany, Belgium and Switzerland so that those benefiting from the specific tax regimes for workers living and working across borders can continue to benefit from them even if they are forced to remain at home during the COVID-19 health crisis.

    Given the current health context, France and these three States have agreed that the agreements will continue to apply until December 31, 2020.

    Similarly, France and Luxembourg agree to extend the period of applicability of their amicable agreement of July 16, 2020, to December 31, 2020 inclusive.

    15. On 31 August 2020, the Système unifié de rapport financier (e-surfi) informed on transmission methods from the order of September 2020 (FINREP COVID-19).

    From the order of September 2020:

    Institutions subject to monthly and quarterly collections will have to submit to ACPR, the quantitative information defined in Article 2 by teletransmission on the OneGate portal, using the XBRL (eXtensible Business Reporting Language) format. This reporting is integrated in the taxonomy version 2.10 phase 2 published by the EBA.

    As for organizations subject to "Finrep_DP" reporting, the reference taxonomy integrating the data defined in Article 2 of the aforementioned instruction will soon be published by the ECB, a communication will then be made by the ACPR.  

    The reporting of institutions to FINREP_COVID statements is currently being prepared in the e-surfi system. It will be communicated to institutions shortly (during September) via their functional business card.

    This statement will have to be signed electronically according to the same signature modalities as the FINREP reporting.

    The current FINREP signature rights will apply to the submission of these statements, so the information already validated will not require any action on the part of the institutions.

    Version française

    Voici plusieurs publications françaises relatives aux mesures réglementaires prises dans le cadre du COVID-19.

    1. Le 2 juillet 2020, la Commission nationale de l'informatique et des libertés (CNIL) a publié un Guide pour un retour au travail en toute sécurité.

    L’épidémie de COVID-19 s’est accompagnée d’une recrudescence de fraudes et d’escroqueries, notamment en ligne. Les services de l’État et les autorités de contrôle se sont associés au sein d’une « Task-Force de lutte contre les fraudes et escroqueries ». Afin de faciliter un déconfinement réussi et une reprise d’activité sans arnaques, la Task-Force nationale propose aujourd’hui un guide complet pour s’en prémunir.

    Dans le contexte du confinement, les services de l’État et les autorités compétentes ont constaté une multiplication des fraudes, les escrocs profitant du sentiment de crainte, d’urgence ou de détresse de personnes et d’entreprises se trouvant dans une situation économique difficile.

    Cette « task-force » regroupe :

    • le ministère de l’Économie et des Finances :
    • le ministère de l’Action et des Comptes publics :
    • le ministère de l’Intérieur, la DGPN (Direction centrale de la Police judiciaire – DCPJ) et la DGGN (Pôle judiciaire de la Gendarmerie nationale (PJGN) ;
    • le ministère de la Justice, la Direction des affaires criminelles et des grâces (DACG) ;
    • la Commission nationale de l’informatique et des libertés (CNIL) pour les atteintes aux données personnelles ;
    • l’Autorité des marchés financiers (AMF) et l’Autorité de contrôle prudentiel et de résolution (ACPR), les autorités de contrôle du secteur financier ;
    • l’Agence nationale de la sécurité des systèmes d’information (ANSSI) ;
    • le ministère de l’Agriculture, la Direction générale de l’Alimentation.

    2. Le 2 juillet 2020, l'Autorité des marchés financiers (AMF) a publié sa cartographie des marchés et des risques 2020 donnant un aperçu des tendances et des vulnérabilités au cœur de la crise COVID-19. Elle analyse l'organisation et le fonctionnement des marchés, la stabilité financière et le financement de l'économie.

    Si les marchés et les infrastructures ont bien fonctionné pendant la crise sanitaire, les déséquilibres initialement présents se sont accentués et les tensions géopolitiques demeurent. Au-delà des nombreux défis posés par le financement de la reprise économique post-COVID-19, une nouvelle vulnérabilité en soi, la cartographie met en évidence une augmentation des risques pour la stabilité financière avec une éventuelle nouvelle correction des marchés et la dégradation de la solvabilité de nombreuses entreprises.

    Le risque pesant sur le financement de l'économie revient donc en 2020 et devrait encore augmenter en 2021. Le recours important à l'endettement, à la banque ou au marché représente une vulnérabilité importante à moyen terme, qui appelle une transition vers un modèle plus basé sur l'équité. Cette recapitalisation de l'économie devrait également prendre en compte la transition verte, qui constitue un défi supplémentaire.

    La crise COVID-19 ne doit pas minimiser les vulnérabilités passées telles que celles liées à la cybersécurité ou au Brexit.

    3. Le 2 juillet 2020, l’Autorité des marchés financiers (AMF) a annoncé sa participation à la task-force nationale de lutte contre les fraudes pendant la pandémie COVID-19.

    Pendant le confinement, constatant la recrudescence des fraudes et escroqueries, les services de l’Etat et les autorités de contrôle, dont l’AMF, se sont associés au sein d’une task-force nationale pour lutter plus efficacement contre ces pratiques dans le contexte du COVID-19. Restés mobilisés après le déconfinement, les membres de la task-force lancent un appel commun à la vigilance et publient des fiches pratiques rassemblées dans un guide visant à favoriser une reprise d’activité sans arnaques.

    Mise en place dès le mois d’avril à l’initiative du ministère de l’Economie et des Finances, cette task-force réunit l’AMF et l’Autorité de contrôle prudentiel et de résolution (ACPR), la direction générale de la concurrence, de la consommation et de la répression des fraudes (DGCCRF), chargée de la protection des consommateurs, la direction générale des finances publiques (DGFIP), la direction générale des douanes et des droits indirects (DGDDI), les ministères de l’Intérieur (direction centrale de la police judiciaire et pôle judiciaire de la gendarmerie nationale), de la Justice (direction des affaires criminelles et des grâces), de l’Agriculture (direction générale de l’alimentation) ainsi que l’Agence nationale de la sécurité des systèmes d’information (ANSSI) et la Commission nationale de l’informatique et des libertés (CNIL).

    Elle mutualise les compétences de chacun afin d’optimiser l’action publique. Pouvant toucher tant les consommateurs que les entreprises, les fraudes peuvent prendre des formes très variées, par exemple de faux sites administratifs collectant illicitement les données personnelles ou les coordonnées bancaires, des appels aux dons frauduleux, des usurpations d’identité de professionnels, des campagnes d’hameçonnage, etc.

    L’AMF a rédigé avec l’ACPR la fiche pratique « Epargne/Crédits : attention aux offres frauduleuses » où sont rassemblés des conseils pour reconnaître les arnaques et s’en prémunir.

    4. Le 2 juillet 2020, le Ministère de l'Economie a annoncé des mesures d'aides supplémentaires pour les entreprises impactées par la crise COVID-19.

    En complément du prêt garanti par l’Etat (PGE), le ministre de l’Economie et des Finances, a souhaité mettre en place un dispositif d’avances remboursables et de prêts à taux bonifiés, pour soutenir la trésorerie des entreprises fragilisées par la crise de la COVID-19.

    Les modalités d’application de ce nouvel outil géré par la Direction générale des Entreprises (DGE) au sein du ministère de l’Economie et des Finances et les taux applicables aux financements octroyés ont été récemment précisés. Ce dispositif vise à soutenir les entreprises fragilisées par la crise sanitaire du COVID-19, via des avances remboursables ou prêts à taux bonifiés, venant compléter les outils existants en ayant vocation à leur rester subsidiaires.

    Les entreprises stratégiques de 50 à 250 salariés constituent la cible privilégiée de ce dispositif discrétionnaire. L’objectif est de soutenir des entreprises qui présentent de réelles perspectives de redressement, en tenant compte de leur positionnement économique et industriel, en particulier leur savoir-faire reconnu et à préserver, leur position critique dans une chaîne de valeur ainsi que leur importance au sein du bassin d’emploi local.

    5. Le 3 juillet 2020, la Banque de France aménage sa cotation et invite les entreprises à communiquer pendant la crise COVID-19.

    Chaque année, la Banque de France attribue une cotation à plus de 270.000 entreprises, qui tient non seulement compte de leur documentation comptable mais aussi d’éléments qualitatifs qui sont portés à sa connaissance par les dirigeants.

    À situation exceptionnelle, mesures exceptionnelles. Depuis avril, la Banque de France a adapté son processus de cotation des données des bilans arrêtés à 2019 et, en juillet, elle s’attachera à recueillir, par le biais d’un questionnaire adressé à chaque dirigeant, les éléments d’information sur la situation financière actuelle de leur entreprise.

    Un aménagement exceptionnel de la procédure de cotation en 2020

    Attribuer une cotation aux entreprises dans le contexte économique actuel fortement affecté par la crise du COVID nécessite une attention particulière.

    La cotation Banque de France étant un indicateur fondamental pour le bon suivi du financement et des risques de crédit pour l’économie nationale, il est impératif que l’exercice de cotation 2020 reflète au mieux les fondamentaux du tissu productif et intègre l’effet des dispositifs de support public qui ont été mis en place. L’expertise de la Banque de France en tant que premier organisme français de cotation est et doit rester un ancrage de confiance dans l’économie. 

    À cette fin, des mesures conservatoires ont été prises pour assurer la robustesse du diagnostic sur la situation financière d’une entreprises et la fiabilité de sa cotation en 2020 : la campagne de cotation est ainsi décalée sur le deuxième semestre 2020 de manière à donner du recul et disposer de perspectives plus stabilisées sur la trajectoire de l’entreprise.

    6. Le 16 juillet 2020, l'Autorité des marchés financiers (AMF) a annoncé le terme des mesures exceptionnelles s’agissant des modalités d’organisation de l'examen AMF pendant la crise COVID-19.

    Le délai de 6 mois dont disposent les personnes exerçant une fonction clé pour justifier de la vérification des connaissances minimales, a été suspendu le 18 mars 2020. Compte tenu des mesures visant à organiser la sore de l’état d’urgence, ce délai demeure suspendu jusqu’à nouvel ordre.

    Temporairement, les personnes concernées peuvent exercer leur fonction, mais doivent être supervisées en attendant la réussite de la vérification interne des connaissances ou de l’examen AMF.

    7. Le 17 juillet 2020, la Banque de France a publié l’article 2 du Bulletin No. 230 sur la COVID-19 et les chaînes de valeur.

    Les mesures de confinement mises en place pour lutter contre la pandémie de Corvidé 19 ont non seulement un impact direct sur l’économie des pays concernés, mais elles ont aussi des répercussions internationales via les chaînes de valeur et la demande extérieure. Une analyse de court terme suggère que ces répercussions internationales ont un effet significatif sur la France, bien que de second ordre par rapport au choc interne provoqué par le confinement. La France est plus exposée aux chocs de confinement provenant du reste de l’Union européenne et relativement moins exposée aux chocs provenant de Chine. La situation la plus défavorable pour la France serait qu’elle subisse un choc d’offre (baisse de la productivité liée aux mesures sanitaires, ou deuxième vague) tandis que le reste du monde serait sorti de la crise.

    8. Le 18 juillet 2020, le Décret no 2020-884 du 17 juillet 2020 modifiant le décret no 2020-860 du 10 juillet 2020 prescrivant les mesures générales nécessaires pour faire face à l’épidémie de covid-19 dans les territoires sortis de l’état d’urgence sanitaire et dans ceux où il a été prorogé a été publié au Journal Officiel. 

    Le présent décret prévoit ce qui suit :

    • Prescrit la mise en quarantaine ou le placement et le maintien en isolement, lorsqu’elles arrivent sur du territoire national depuis l’étranger des personnes présentant des symptômes d’infection au COVID-19
    • Pouvoir d'ordonner la mise en quarantaine ou le placement et le maintien en isolement
    • Le port d'un masque est obligatoire dans les marchés couverts.

    9. Le 21 juillet 2020, l’ Autorité de contrôle prudentiel et de résolution (ACPR) a publié une Notice d’extension aux sociétés de financement des orientations EBA/GL/2020/08 de l’Autorité bancaire européenne (ABE) modifiant les orientations EBA/GL/2020/02 sur les moratoires de paiement législatifs ou non législatifs réalisés dans le cadre de la pandémie du COVID-19.

    La présente notice a pour objet d'étendre aux sociétés de financement les lignes directrices de l'Autorité bancaire européenne (ABE) EBA/GL/2020/08 relatives aux moratoires législatifs ou non législatifs sur les remboursements de prêts appliqués en raison de la pandémie de COVID-19 par les sociétés de financement.

    L'ABE a publié les lignes directrices EBA/GL/2020/08 dans le but de prolonger jusqu'au 30 septembre 2020 la date limite jusqu'à laquelle les moratoires législatifs ou non législatifs mis en place dans les différents pays européens dans le cadre de leur gestion de la crise COVID-19 peuvent bénéficier du traitement dérogatoire prévu dans les lignes directrices EBA/GL/2020/02.

    10. Le 24 juillet 2020, l'Autorité des normes comptables (ANC) a mis à jour ses recommandations sur les comptes et situations établis à compter du 1er janvier 2020 pendant la COVID-19.

    La mise à jour ajoute la nouvelle question suivante :

    Les produits et charges liés à l’événement Covid-19 peuvent-ils être inscrits en résultat exceptionnel (ou non courant) ? 

    L’ANC ne recommande pas l’inscription des charges et produits liés à cet événement en résultat exceptionnel. Peuvent cependant continuer à être inscrits en résultat exceptionnel les produits et charges qui sont inscrits de façon usuelle en résultat exceptionnel. Il est ainsi recommandé aux entités de poursuivre leurs pratiques antérieures en la matière, ce qui pourra le cas échéant conduire à y inscrire certaines des conséquences de l’événement COVID-19 (dépréciation exceptionnelle par exemple).

    11. Le 28 juillet 2020, l'Autorité de contrôle prudentiel et de résolution (ACPR) a appelé les institutions financières sous sa supervision à suivre la recommandation ESRB/2020/07 du Comité européen du risque systémique sur les distributions de dividendes ou de rémunération variable et sur les rachats d’actions.

    Dans le contexte de la pandémie de COVID-19, le 27 mai 2020, le Comité européen du risque systémique (European systemic risk board ou ESRB) a adopté une recommandation visant la vaste majorité des institutions financières (établissements de crédit et sociétés de financement, entreprises d’investissement, contreparties centrales, organismes d’assurance et de réassurance), afin que ces dernières s’abstiennent jusqu’au 1er janvier 2021 de verser des dividendes, racheter des actions ou d’octroyer de nouvelles rémunérations variables aux principaux preneurs de risque en leur sein, pour préserver leurs fonds propres et leur capacité à pleinement soutenir l’économie réelle durant la crise. 

    Lors de sa séance du 8 juillet 2020, le Collège de supervision de l’Autorité de contrôle prudentiel et de résolution (ACPR) a décidé de se conformer à cette recommandation, qui s’inscrit dans la continuité de ses précédentes communications du 30 mars et du 3 avril derniers sur les distributions de dividendes.

    12. On 15 août 2020, le Décret no 2020-1048 du 14 août 2020 modifiant le décret no 2020-371 du 30 mars 2020 relatif au fonds de solidarité à destination des entreprises particulièrement touchées par les conséquences économiques, financières et sociales de la propagation de l’épidémie de COVID-19 et des mesures prises pour limiter cette propagation a été publié au Journal Officiel. 

    Le décret modifie le fonds de solidarité à destination des entreprises particulièrement touchées par les conséquences économiques, financières et sociales de la propagation de l’épidémie de COVID-19 et des mesures prises pour limiter cette propagation. 

    Il prolonge le premier volet du fonds, au titre des pertes des mois de juillet, août et septembre 2020, pour les entreprises des secteurs mentionnés aux annexes 1 et 2 du décret.

    13. Le 28 août 2020, le Système unifié de rapport financier (e-surfi) a annoncé la fin des mesures d'assouplissement et mesures de régularisation de la signature électronique.

    Conformément à l’instruction 2015-I-18, relative à la signature électronique de documents télétransmis à l'ACPR, et l’instruction 2016-I-17, relative à la transmission à l’ACPR de documents prudentiels, les remises des documents « Comptables et prudentiels » doivent obligatoirement être signées électroniquement.

    Par communiqué sur son site internet, l’APCR a assoupli temporairement ces règles de remises en raison du contexte de pandémie de COVID-19.

    La fin de cet assouplissement a été rappelée lors du communiqué de place du 10 juillet 2020, sur le site E-surfi : « La tolérance accordée pendant la crise sanitaire en matière de signature électronique ne sera plus acceptée à compter du mois de septembre, date à laquelle les remises non signées ou mal signées adressées à l’ACPR pendant la période de mars à fin août devront être de nouveau communiquées à l’ACPR revêtues d’une signature conforme. ».

    L’ACPR invite en conséquence les organismes qui ont bénéficié de la tolérance précitée, à régulariser dans les meilleurs délais les remises non signées ou non conformes réalisées pendant la période.

    14. Le 31 août 2020, le Ministère de l'Economie a annoncé la prolongation des accords amiables concernant les travailleurs frontaliers et transfrontaliers, conclus avec l’Allemagne, la Belgique, le Luxembourg et la Suisse jusqu’au 31 décembre 2020.

    En mars dernier, des accords amiables ont été conclus avec l’Allemagne, la Belgique et la Suisse afin que les personnes bénéficiant des régimes spécifiques d’imposition, prévus pour les travailleurs résidant et travaillant dans les zones frontalières (« régimes frontaliers »), puissent continuer à en bénéficier même si elles sont conduites à demeurer chez elles pendant la crise sanitaire liée au COVID-19.

    En raison du contexte sanitaire actuel, la France et ces trois Etats sont convenus que les accords continueront de s’appliquer jusqu’au 31 décembre 2020.

    De même, la France et le Luxembourg conviennent de prolonger la période d'applicabilité de leur accord amiable du 16 juillet 2020 jusqu'au 31 décembre 2020 inclus.

    15. Le 31 août 2020, le Système unifié de rapport financier (e-surfi) a publié une communication sur les modalités de transmission à compter de l’arrêté de septembre 2020 (FINREP COVID-19).

    À partir de l’arrêté de Septembre 2020 :

    Les établissements soumis aux collectes mensuelles et trimestrielles  devront remettre à l’Autorité de contrôle prudentiel et de résolution, les informations quantitatives définies à l’article 2 par télétransmission sur le portail OneGate, en utilisant le format XBRL (eXtensible Business Reporting Language). Ce reporting est intégré dans la version de taxonomie 2.10 phase 2 publiée par l’EBA.

    Quant aux organismes soumis à un reporting « Finrep_DP », la taxonomie de référence intégrant les données définies à l’article 2 de l’instruction précitée sera prochainement publiée par la BCE, une communication sera alors effectuée par l’ACPR. 

    L’assujettissement des établissements aux états FINREP_COVID est en cours de préparation dans le système e-surfi. Il sera communiqué aux établissements prochainement (courant septembre) via leur carte de visite fonctionnelle.

    Cette déclaration devra être signée électroniquement selon les mêmes modalités de signature que le reporting FINREP.

    Les droits à signer actuellement portés sur le domaine FINREP s’appliqueront pour la remise de ces états, les informations déjà validées ne nécessiteront donc aucune action de la part des établissements.

  • Digital economy

    Ministère de l'Economie announces the creation of 24 new funds in favor of the Digital economy / Le Ministère de l'Economie annonce la création de 24 nouveaux fonds pour le financement des entreprises technologiques

    CACEIS

  • On 29 July 2020, the Ministère de l'Economie announced the creation of 24 new funds in favor of the Digital economy.

    In early January, at a meeting organized by Bruno Le Maire and Cédric O, investors announced that they were mobilizing an additional 1 billion euros for this initiative, bringing their total commitments to more than 6 billion euros. On 6 July, the Investors Committee examined the fund applications submitted in May and June.

    • On the "unlisted" side of the initiative, the following 17 funds met the eligibility criteria: « Andera BioDiscovery 6 », « Ardian Growth II », « BLISCE II », « Earlybird Health 2 », « Eiffel Essentiel », « Five Arrows Growth Capital », « Gaïa Growth I », « Jolt Capital IV », « Lauxera Growth I », « LBO France Digital Health I », « Quadrille Technologies IV », « Seventure Health for Life Capital II », « Supernova Ambition Industrie », « Techlife Capital I », « Tikehau T2 Energy Transition Fund », « Tilt Capital Fund I », « Truffle Medeor ».
    • On the "listed" side of the initiative, the following 7 funds met the eligibility criteria : « BNP Paribas AM Next Tech », « Echiquier Artificial Intelligence », « Edmond de Rothschild Big Data », « Financière Arbevel Pluvalca Disruptive Opportunities », « Groupama AM World (R)evolutions », « Oddo BHF Artificial Intelligence », « Ostrum Global New World ».

    Version française

    Le 29 juillet 2020, le Ministère de l'Economie annonce la création de 24 nouveaux fonds pour le financement des entreprises technologiques.Début janvier, lors d’une réunion organisée par Bruno Le Maire et Cédric O, les investisseurs ont annoncé mobiliser 1 milliard d’euros supplémentaire pour cette initiative, portant au total leurs engagements à plus de 6 milliards d’euros. Le 6 juillet, le comité des investisseurs a examiné les dossiers des fonds présentés au cours des mois de mai et de juin.

    • Sur le volet « non coté » de l’initiative, les 17 fonds suivants ont répondu aux critères d’éligibilité : « Andera BioDiscovery 6 » « Ardian Growth II » « BLISCE II » « Earlybird Health 2 » « Eiffel Essentiel » « Five Arrows Growth Capital » « Gaïa Growth I » « Jolt Capital IV » « Lauxera Growth I » « LBO France Digital Health I » « Quadrille Technologies IV » « Seventure Health for Life Capital II » « Supernova Ambition Industrie » « Techlife Capital I » « Tikehau T2 Energy Transition Fund » « Tilt Capital Fund I » « Truffle Medeor ».
    • Sur le volet « coté » de l’initiative, les sept fonds suivants ont répondu aux critères d’éligibilité : « BNP Paribas AM Next Tech » « Echiquier Artificial Intelligence » « Edmond de Rothschild Big Data » « Financière Arbevel Pluvalca Disruptive Opportunities » « Groupama AM World (R)evolutions » « Oddo BHF Artificial Intelligence » « Ostrum Global New World ».
  • Financial Market Amendment Law

    AMF modifies the operating rules of the multilateral trading system Euronext Growth / L’AMF modifie les règles de fonctionnement d’Euronext Growth

    CACEIS

  • On 30 July 2020, the Autorité des marchés financiers (AMF) published the Decision of 21 July 2020 to modify the operating rules of the multilateral trading system Euronext Growth in order to clarify the requirements of Euronext Paris SA vis-à-vis issuers admitted to trading on this platform.

    The amendments to the operating rules of the Euronext Growth multilateral trading facility as annexed to this Decision are hereby approved. They shall enter into force on the date determined by Euronext Paris S.A.

    Version française

    Le 30 juillet 2020, l'Autorité des marchés financiers (AMF) a publié la Décision du 21 juillet 2020 de modification des règles de fonctionnement du système multilatéral de négociation Euronext Growth en vue de clarifier les exigences d’Euronext Paris S.A. vis-à-vis des émetteurs admis à la négociation sur cette plate-forme.

    Les modifications des règles de fonctionnement du système multilatéral de négociation Euronext Growth, telles qu'annexées à la présente décision, sont approuvées. Elles entrent en vigueur à la date déterminée par Euronext Paris S.A.

  • AMF modifies the operating rules of the multilateral trading system Euronext Access / L’AMF modifie les règles de fonctionnement d’Euronext Access

    CACEIS

  • On 30 July 2020, the Autorité des marchés financiers (AMF) published a Decision of 21 July 2020 to modify the operating rules of the multilateral trading system Euronext Access in order to clarify the requirements of Euronext Paris SA vis-à-vis issuers admitted to trading on this platform.

    The amendments to the operating rules of the Euronext Access multilateral trading facility as annexed to this Decision are hereby approved. They shall enter into force on the date determined by Euronext Paris S.A.

    Version française

    Le 30 juillet 2020, l'Autorité des marchés financiers (AMF) a publié la Décision du 21 juillet 2020 de modification des règles de fonctionnement du système multilatéral de négociation Euronext Access en vue de clarifier les exigences d’Euronext Paris S.A. vis-à-vis des émetteurs admis à la négociation sur cette plate-forme.

    Les modifications des règles de fonctionnement du système multilatéral de négociation Euronext Access, telles qu'annexées à la présente décision, sont approuvées. Elles entrent en vigueur à la date déterminée par Euronext Paris S.A.

  • AMF publishes Decision of 7 July 2020 to modify the operating rules of LCH SA applicable to the CDSClear segment / L’AMF publie la décision du 7 juillet 2020 de modification des règles de fonctionnement de LCH SA applicables au segment CDSClear

    CACEIS

  • On 30 July 2020, the Autorité des marchés financiers (AMF) published a Decision of 7 July 2020 to modify the operating rules of LCH SA applicable to the CDSClear segment.

    The amendments to the operating rules of LCH SA as annexed to this Decision are approved. They shall enter into force on the date determined by LCH SA.

    Version française

    Le 30 juillet 2020, l'Autorité des marchés financiers (AMF) a publié la décision du 7 juillet 2020 de modification des règles de fonctionnement de LCH SA applicables au segment CDSClear.

    Les modifications des règles de fonctionnement de LCH SA telles qu'annexées à la présente décision sont approuvées. Elles entrent en vigueur à la date déterminée par LCH SA.

  • Financial supervision

    AFTI publishes Annual report 2019 / L'AFTI publie son rapport annuel 2019

    CACEIS

  • On 8 July 2020, the AFTI published its Annual report 2019. 

    The report is divided in 11 sections, including interviews of Muriel De Szilbereki, General Delegate of ANSA - National Association of Joint Stock Companies, Anne Maréchal legal director of the AMF and Dominique De Wit, President of AFTI.

    The report exposes events, publications, partnerships with universities, highlights of the board of directors and AFTI members. The annual report describes as well some priority areas on green finance and dedicated workgroups. 

    Version française

    Le 8 juillet 2020, l’AFTI a publié son rapport annuel 2019.

    Le rapport est divisé en 11 sections, comprenant des interviews de Muriel De Szilbereki, déléguée générale de l'ANSA - Association nationale des sociétés par actions, Anne Maréchal, directrice juridique de l'AMF et Dominique De Wit, président de l'AFTI.

    Le rapport expose des événements, publications, partenariats avec des universités, de temps forts du conseil d'administration et des membres de l'AFTI. Le rapport annuel décrit également les domaines de priorité sur la finance durable et les groupes de travail y étant dédiés.

  • FBF publishes Activity Report 2019 / La FBF publie son rapport d'activité 2019

    CACEIS

  • On 1 July 2020, the Fédération Bancaire Francaise (FBF) published its Activity Report 2019.

    In the occasion of the publication of her annual report, the mediator with the French Banking Federation recalls three highlights of this year: the drop in referrals concerning bank charges, the upsurge of scams and the emergence of new disputes.

    • Lower referrals on bank charges :
      Referrals relating to bank charges fell sharply, in line with professional commitments ended at the end of 2018 and put in place from the beginning of 2019. The mediation proposals have, in these files, systematically encouraged banks to better equip their customers to prevent incidents and limit costs. It thus appears that the complaints services of the banks, on the front line, have helped to resolve the problems earlier and that their action has also enabled a wider dissemination of offers for customers in a fragile financial situation.
    • A resurgence of scams:
    • This year was marked by an increase in reimbursement claims following a scam. By practicing the skillful game of apparent respectability, by playing on urgency and fear, scammers contact their victims by email, phone, text or social networks and obtain confidential information (bank card number, username access to online banking, personal code ...). This then allows them to make fraudulent payments, with the unwitting help of consumers. All means of payment are affected: irregular checks, fraudulent transfers after intrusion into the personal space of abused people.
    • Emergence of new disputes:
    • From mid-2019, a new type of mediation request emerged, caused by the bankruptcies of several airlines: travellers who paid for their flights with a bank card are looking to be reimbursed by their bank to compensate for the merchant's failure.

    Mediation is rendered in law and in equity. The Mediator, after having established the rule of law, assesses the damage to determine the appropriateness and the amount of a possible commercial gesture. It therefore recommends that consumers specify and demonstrate their harm.

    Le 1 juillet 2020, la Fédération Bancaire Française (FBF) a publié son rapport d’activité 2019.

    A l'occasion de la publication de son rapport annuel, la médiatrice auprès de la Fédération bancaire française revient sur trois faits marquants de cette année : la baisse des saisines concernant les frais bancaires, la recrudescence des escroqueries et l'émergence de nouveaux litiges.

    • Baisse des saisines sur les frais bancaires :
      les saisines portant sur les frais bancaires ont fortement diminué, en lien avec les engagements professionnels pris fin 2018 et mis en place dès le début de l'année 2019. Les propositions de médiation ont, dans ces dossiers, systématiquement encouragé les banques à mieux équiper leur clientèle pour prévenir les incidents et limiter les frais. Il apparait ainsi que les services réclamation des banques, en première ligne, ont contribué à résoudre plus précocement les problèmes et que leur action a permis aussi une plus large diffusion des offres destinées à la clientèle en situation financière fragile.
    • Une recrudescence des escroqueries :
      cette année a été marquée par une hausse des demandes de remboursement à la suite d'une escroquerie. En pratiquant le jeu habile de l'apparente respectabilité, en jouant sur l'urgence et la peur, les escrocs contactent leurs victimes par email, téléphone, sms ou par les réseaux sociaux et obtiennent des informations confidentielles (numéro de carte bancaire, identifiant d'accès à la banque en ligne, code personnel ...). Cela leur permet ensuite de faire des paiements frauduleux, avec l'aide involontaire des consommateurs. Tous les moyens de paiement sont concernés : chèques irréguliers, virements frauduleux après intrusion dans l'espace personnel de personnes abusées.
    • Emergence de nouveaux litiges :
      dès la mi-2019, un nouveau type de demande de médiation a émergé, causé par les faillites de plusieurs compagnies aériennes : les voyageurs ayant payé leur vols avec une carte bancaire cherchent à se faire rembourser par leur banque pour pallier la défaillance du commerçant.

    La médiation est rendue en droit et en équité. La Médiatrice, après avoir posé la règle de droit, évalue le préjudice pour déterminer l'opportunité et le montant d'un éventuel geste commercial. Elle recommande donc aux consommateurs de préciser et de démontrer leur préjudice.

  • AFG publishes 2019 report / L'AFG publie son rapport 2019

    CACEIS

  • On 15 July 2020, the Association Française de Gestion (AFG) published its 2019 report.The report contains :

    • Key numbers
    • AFG's missions
    • AFG's expertise
    • International
    • Economy studies
    • Communication
    • Training
    • Governance.

    Le 15 juillet 2020, l'Association Française de Gestion (AFG) a publié son rapport 2019.

    Ce rapport traite de :

    • Les chiffres clés
    • Les missions de l'AFG
    • L'expertise d'AFG
    • International
    • Études économiques
    • Communication
    • Formation
    • Gouvernance.
  • Insurance

    L'ACPR publishes 2 notices regarding the application of the guidelines about subcontracting to CLOUD service providers / L’ACPR émet 2 publications concernant l'application des lignes directrices sur la sous-traitance sur le CLOUD

    CACEIS

  • 1. On 22 July 2020, the Autorité de contrôle prudentiel et de résolution (ACPR) published a Notice on the modalities for the implementation by supplementary occupational pension organizations of the guidelines relating to subcontracting to cloud service providers (EIOPA-BoS-20-002).

    The purpose of this notice is to provide for the implementation by supplementary occupational pension schemes (ORPS) of the EIOPA guidelines on outsourcing to cloud providers (EIOPA-BoS-20-002).

    These guidelines specify in particular the due diligence to be carried out by insurance and reinsurance organisations before concluding an outsourcing agreement with cloud service providers, the arrangements for the supervision and control of the provider by the company, the management of such outsourcing within the company and the role of the competent authorities in the supervision of the cloud outsourcing arrangements put in place by companies.

    2. On 22 July 2020, the Autorité de contrôle prudentiel et de résolution (ACPR) published Implementation of the EIOPA guidelines on outsourcing to cloud service providers (EIOPA-BoS-20-002).

    ACPR has declared itself compliant with the European Insurance and Occupational Pensions Authority's guidance on outsourcing to cloud providers (EIOPA-BoS-20-002). 

    These guidelines are applicable to insurance and reinsurance organisations and to the participating and parent undertakings mentioned respectively in the second and third paragraphs of Article L. 356-2 of the French Insurance Code, subject to the supervision of the ACPR, which must make every effort to comply with them, in accordance with the provisions of Article 16 of Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing the European Insurance and Occupational Pensions Authority.

    Version française

    Le 22 juillet 2020, l'Autorité de contrôle prudentiel et de résolution (ACPR) a publié un Avis sur les modalités de mise en œuvre par les organismes de retraite professionnelle complémentaire des lignes directrices relatives à la sous-traitance à des prestataires de services informatique en nuage ou infrastructure de « Cloud Computing » (EIOPA-BoS-20-002).

    Cette notice a pour objet de prévoir la mise en œuvre par les organismes de retraite professionnelle complémentaire (ORPS) des lignes directrices de l’EIOPA relatives à la sous-traitance à des prestataires de services de cloud (EIOPA-BoS-20-002).

    Ces lignes directrices précisent notamment les diligences à effectuer par les organismes d'assurance et de réassurance avant de conclure un accord d'externalisation avec des prestataires de services de cloud, les modalités de surveillance et de contrôle du prestataire par l'entreprise, la gestion de cette externalisation au sein de l'entreprise et le rôle des autorités compétentes dans la surveillance des accords d'externalisation dans le nuage mis en place par les entreprises.

    2. Le 22 juillet 2020, l’Autorité de contrôle prudentiel et de résolution (ACPR) a publié la mise en œuvre des lignes directrices de l'EIOPA sur l'externalisation vers des fournisseurs de services de cloud.

    L’ACPR s'est déclarée conforme aux orientations de l'Autorité européenne des assurances et des pensions professionnelles sur l'externalisation vers des fournisseurs de cloud (EIOPA-BoS-20-002). 

    Ces lignes directrices sont applicables aux organismes d'assurance et de réassurance et aux entreprises participantes et mères mentionnées respectivement aux deuxième et troisième alinéas de l'article L. 356-2 du code des assurances français, sous le contrôle de l’ACPR, qui doit s'efforcer de s'y conformer, conformément aux dispositions de l'article 16 du règlement (UE) n° 1094/2010 du Parlement européen et du Conseil du 24 novembre 2010 instituant l'Autorité européenne des assurances et des pensions professionnelles.

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

    AMF publishes presentation and inventory of liquidity management tools for French funds / L'AMF publie une présentation et recensement des outils de gestion de la liquidité des fonds français

    CACEIS

  • On 17 July 2020, the Autorité des marchés financiers (AMF) published a  presentation of management tools of liquidity of French funds. 

    This article constitutes a first presentation of the prospectus analysis tool developed through cooperation between the Banque de France and the Autorité des Marchés Financiers (AMF). This aims to identify liquidity management tools ( liquidity management tools or LMT) set up in French law funds. This work is part of a follow-up to IOSCO recommendations to strengthen the overall liquidity risk management framework following on from the recommendations adopted by the FSB in 2017. 

    To allow the liquidity risk of funds to be managed as well as possible investment, numerous measures are provided for by international texts, and imposed at the level of European Directives and Regulations governing funds and management companies or recommended by ESMA. 

    In addition to the rules for monitoring and steering liquidity, certain tools can be used in normal times or in times of stress, in order to limit the risks of firesalesor mitigate their impact. This paper presents these liquidity management tools as precisely as possible and describes the appropriation of these tools by French law funds at the end of 2019, based on a textual analysis of the prospectuses.

    Version française

    Le 17 juillet 2020, l’AMF a publié une présentation et recensement des outils de gestion de la liquidité des fonds français.

    Cet article constitue une première présentation de l’outil d’analyse des prospectus élaboré à travers une coopération entre la Banque de France et l’Autorité des marchés financiers (AMF). Celui-ci vise à recenser les outils de gestion de la liquidité (liquidity management tools ou LMT) mis en place dans les fonds de droit français. Ces travaux s’inscrivent dans une logique de suivi des recommandations IOSCO de renforcer le cadre global de gestion du risque de liquidité dans le prolongement des recommandations adoptées par le FSB en 2017. 

    Pour permettre de gérer au mieux le risque de liquidité des fonds d’investissement, de nombreuses mesures sont prévues par les textes internationaux, et imposées au niveau des Directives et Règlements européennes encadrant les fonds et sociétés de gestion ou recommandées par l’ESMA. 

    En sus des règles permettant le suivi et le pilotage de la liquidité, certains outils peuvent être mobilisés en temps normal ou en période de stress, afin de limiter les risques de firesales ou d’atténuer leur impact. Ce papier présente ces outils de gestion de la liquidité le plus précisément possible et décrit l’appropriation de ces outils par les fonds de droit français à fin 2019, en s’appuyant sur une analyse textuelle des prospectus.

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

    AMF updates list of current short selling notifications / L'AMF met à jour la liste des notifications de ventes à découvert valides

    CACEIS

  • On 4 August 2020, the Autorité des marchés financiers (AMF) updated the list of current short selling notifications under the European Regulation 236/2012 on short selling.

    Version française

    Le 4 août 2020, l'Autorité des marchés financiers (AMF) a mis à jour la liste des notifications de ventes à découvert en cours au titre du règlement européen 236/2012 sur les ventes à découvert.

  • Securitisation Regulation

    France temporary lower the control threshold for foreign investments in some French companies / La France abaisse temporairement le seuil de contrôle des investissements étrangers dans certaines sociétés françaises

    CACEIS

  • 1. On 23 July 2020, Order of 22 July 2020 on the temporary lowering of the control threshold for foreign investments in French companies whose shares are admitted to trading on a regulated market was published in the Official Journal.

    The notification provided for in Article 2 of Decree No. 2020-892 of 22 July 2020 relating to the temporary lowering of the control threshold for foreign investments in French companies whose shares are admitted to trading on a regulated market shall include the following information: 

    a) The total number of voting rights that the investor holds before the investment and the total number of voting rights that he will hold afterwards, or an estimate when this number is not precisely foreseeable; 

    b) The number of securities that the investor owns giving future access to the shares to be issued and the voting rights that will be attached to them; 

    c) The shares already issued and the voting rights attached thereto that this person may acquire, by virtue of an agreement or a financial instrument mentioned in Article L. 211-1 of the Monetary and Financial Code ;

    d) The information mentioned in VII of Article L. 233-7 of the Commercial Code.

    2. On 23 July 2020, Decree No. 2020-892 of 22 July 2020 on the temporary lowering of the control threshold for foreign investment in French companies whose shares are admitted to trading on a regulated market was published in the Official Journal.

    This decree aims at describing the procedure applicable to investments in France made in French companies whose shares are admitted to trading on a regulated market by investors from third countries.

    Foreign investments must be authorized when they are made in activities that are essential to guarantee the country's interests in terms of public authority, public order, public security or national defence. The decree allows the threshold for the acquisition of voting rights that may trigger control in French companies engaged in sensitive activities and whose shares are admitted to trading on a regulated market to be lowered from 25% to 10%. 

    In order to limit the impediments to market liquidity during these transactions involving the acquisition of a minority fraction of voting rights, the procedure would be simplified by notifying the Treasury Directorate General of reduced information, with the filing of a request under ordinary law being subject to a request from the Minister expressed within ten working days. The minister's silence at the end of this period authorises the investment.

    Version française

    1. Le 23 juillet 2020, l'Arrêté du 22 juillet 2020 relatif à l’abaissement temporaire du seuil de contrôle des investissements étrangers dans les sociétés françaises dont les actions sont admises aux négociations sur un marché réglementé a été publié au Journal Officiel. 

    La notification prévue par l’article 2 du décret no 2020-892 du 22 juillet 2020 relatif à l’abaissement temporaire du seuil de contrôle des investissements étrangers dans les sociétés françaises dont les actions sont admises aux négociations sur un marché réglementé comporte les informations suivantes :

    a) Le nombre total de droits de vote que l’investisseur possède avant l’investissement et le nombre total, ou une estimation lorsque ce nombre n’est pas précisément prévisible, de droits de vote qu’il sera amené à posséder après ; 

    b) Le nombre de titres que l’investisseur possède donnant accès à terme aux actions à émettre et les droits de vote qui y seront attachés ;

    c) Les actions déjà émises et les droits de vote qui y sont attachés que cette personne peut acquérir, en vertu d’un accord ou d’un instrument financier mentionné à l’article L. 211-1 du code monétaire et financier ; 

    d) Les informations mentionnées au VII de l’article L. 233-7 du code de commerce.

    2. Le 25 juillet 2020, le Décret no 2020-892 du 22 juillet 2020 relatif à l’abaissement temporaire du seuil de contrôle des investissements étrangers dans les sociétés françaises dont les actions sont admises aux négociations sur un marché réglementé a été publié au Journal Officiel.

    Ce décret vise à décrire les procédures applicables aux investissements en France réalisés dans des sociétés françaises dont les actions sont admises aux négociations sur un marché réglementé par des investisseurs de pays tiers.

    Les investissements étrangers doivent faire l’objet d’une autorisation lorsqu’ils interviennent dans des activités essentielles à la garantie des intérêts du pays en matière d’autorité publique, d’ordre public, de sécurité publique ou de défense nationale. 

    Le décret permet d’abaisser le seuil d’acquisition des droits de vote susceptible de déclencher le contrôle dans les sociétés françaises exerçant des activités sensibles et dont les actions sont admises aux négociations sur un marché réglementé de 25% à 10%. 

    Afin de limiter les freins à la liquidité des marchés lors de ces opérations d’acquisition d’une fraction minoritaire des droits de vote, la procédure serait allégée à la notification, auprès de la direction générale du Trésor, d’informations réduites, le dépôt d’une demande de droit commun étant subordonnée à une demande du ministre exprimée dans un délai de dix jours ouvrés. Le silence du ministre à l’issue de ce délai autorise l’investissement.

  • Sustainable Finance / Green Finance

    France publishes Order of 8 July 2020 the reference framework and the control and monitoring plan for the "SRI" label / La France publie l’Arrêté du 8 juillet 2020 modifiant le référentiel, le plan de contrôle et surveillance du label «ISR»

    CACEIS

  • On 23 July 2020, Order of 8 July 2020 amending the Order of 8 January 2016 defining the reference framework and the control and monitoring plan for the "socially responsible investment" label was published in the Official Journal. 

    Annex No 2 to the Order of 8 January 2016 concerning the label reference system is replaced by the

    Annex attached to this Order.
    This annex can be consulted on the website of the Ministry of the Economy and Finance.

    Version française

    Le 23 juillet 2020, l'Arrêté du 8 juillet 2020 modifiant l’arrêté du 8 janvier 2016 définissant le référentiel et le plan de contrôle et de surveillance du label « investissement socialement responsable » a été publié au Journal Officiel. 

    L’annexe no 2 à l’arrêté du 8 janvier 2016 susvisé concernant le référentiel du label est remplacée par l’annexe jointe au présent arrêté. 

    Cette annexe est consultable sur le site internet du ministère de l’économie et des finances.

  • AMF updates doctrine on investor information policy for Sustainable finance and collective management / AMF met à jour sa doctrine en matière d’information des investisseurs dans la finance durable et gestion collective

    CACEIS

  • On 27 July 2020, Autorité des marchés financiers (AMF) updated its doctrine on investor information policy for Sustainable finance and collective management.

    This update has three components:

    • Adequacy of communication and the importance of taking extra-financial criteria into account in management: the position-recommendation now provides, alongside the possibility of communicating centrally on extra-financial aspects, the possibility of so-called 'reduced' communication for funds which take into account extra-financial criteria in their management without adopting a significantly engaging approach. 
    • Central communication on the inclusion of extra-financial criteria for certain approaches based on extra-financial indicators: this update of the doctrine aims to clarify the presumption of the significantly binding nature of other approaches based on extra-financial indicators (greenhouse gas emissions, gender equity, etc.) and not only on non-financial ratings.
    • Recommendations relating to controversy management and shareholder engagement policies: position-recommendation DOC-2020-03 is enriched with two recommendations relating to the formalization of controversy management policy and the content of shareholder engagement policies. 

    The update:

    • Broadens the engaging and meaningful approach with the inclusion of approaches based on ESG key performance indicators: see definition in position n°2
    • Introduces the intermediate approach: see definition in position No. 2a.
    • Modifies the deadlines schedule:
      - New products: immediate application of the doctrine
      - Stocks of products existing at the time of publication of the doctrine in March 2020: application by 10 March 2021
      - Products governed by foreign law and authorised for marketing in France created between 12 March and 27 July 2020: application of the doctrine from 30 September 2020.

    Version française

    Le 27 juillet 2020, l'Autorité des marchés financiers (AMF) a mis à jour sa doctrine en matière d’information des investisseurs dans la finance durable et gestion collective.

    La mise à jour comprend trois volets :

    • Adéquation de la communication et de l’importance de la prise en compte de critères extra-financiers dans la gestion : la position-recommandation prévoit désormais, aux côtés de la possibilité de communiquer de façon centrale sur les aspects extra-financiers, la possibilité d’une communication dite ‘réduite’ pour les fonds qui prennent en compte dans leur gestion les critères extra-financiers sans en faire un engagement significatif.
    • Communication centrale sur la prise en compte de critères extra-financiers pour certaines approches basées sur des indicateurs extra-financiers : cette mise à jour de la doctrine vise à expliciter la présomption du caractère significativement engageant à d’autres approches basées sur des indicateurs extra-financiers (émissions de gaz à effet de serre, équité femme-homme…) et non uniquement sur des notes extra-financières.
    • Recommandations relatives aux politiques de gestion de controverses et d’engagement actionnarial : la position-recommandation DOC-2020-03 est enrichie de deux recommandations relatives à la formalisation de politique de gestion de controverses et le contenu des politiques d’engagement actionnarial.

    La mise à jour :

    • Élargit l'approche engageante et significative avec l'inclusion d'approches basées sur les indicateurs clés de performance ESG : voir définition dans la position n°2
    • Introduit l'approche intermédiaire : voir la définition en position n° 2a
    • Modifie le calendrier des échéances :
      - Nouveaux produits : application immédiate de la doctrine
      - Stocks de produits existants au moment de la publication de la doctrine en mars 2020 : application avant le 10 mars 2021
      - Produits de droit étranger et autorisés à la commercialisation en France créés entre le 12 mars et le 27 juillet 2020 : application de la doctrine à partir du 30 septembre 2020.
  • AMF publishes an Overview of the main provisions of the draft RTS currently undergoing consultation related to the Disclosure Regulation / L’AMF présente les principales dispositions du projet de RTS en cours de consultation lié au règlement Disclosure

    CACEIS

  • On 28 July 2020, the Autorité des marchés financiers (AMF) published an Overview of the main provisions of the draft RTS currently undergoing consultation related to the Disclosure Regulation.

    Starting on 25 April and until 1 September 2020, the Joint Committee of European Supervisory Authorities has published a consultation on the draft regulatory technical standards (RTS) corresponding to the mandates given by EU Regulation (2019/1988) on sustainability?related disclosures in the financial services sector. 

    This note presents the main provisions of the draft RTS, relating to: 

    • transparency in the consideration by market participants of the principal adverse impacts of their investment decisions on sustainability factors; 
    • transparency applicable to investment products that “promote environmental or social characteristics” or have a “sustainable investment objective”. 

    This document is intended to provide stakeholders with some insight to better understand and take part in this consultation.

    Version française

    Le 28 juillet 2020, l'Autorité des marchés financiers (AMF) a publié une présentation sur les principales dispositions du projet de RTS en cours de consultation lié au règlement Disclosure.

    Du 25 avril au 1er septembre 2020, le Comité mixte des autorités européennes de surveillance a publié une consultation sur les projets de normes techniques réglementaires (RTS) correspondant aux mandats donnés par le règlement de l'UE (2019/1988) concernant les informations à publier en matière de développement durable dans le secteur des services financiers. 

    Cette note présente les principales dispositions du projet de RTS, relatives à : 

    • la transparence dans la prise en compte par les acteurs du marché des principaux impacts négatifs de leurs décisions d'investissement sur les facteurs de durabilité ; 
    • la transparence applicable aux produits d'investissement qui "promeuvent des caractéristiques environnementales ou sociales" ou qui ont un "objectif d'investissement durable". 

    Ce document est destiné à fournir aux parties prenantes un aperçu pour mieux comprendre et participer à cette consultation.

  • France publishes Decree 2020-1029 amending Decree of 2015 on the General Council for the Environment & Sustainable Development / La France publie le décret 2020-1029 modifiant celui de 2015 sur le Conseil général de l’environnement & développement durable

    CACEIS

  • On 13 August 2020, Decree No. 2020-1029 of 11 August 2020 amending Decree No. 2015-1229 of 2 October 2015 on the General Council for the Environment and Sustainable Development was published in the Official Journal. 

    The amendments concern the function of environmental authority (Ea). In particular, the decree provides that the Ea training college of the CGEDD will henceforth be competent to adopt its rules of procedure, which will no longer be incorporated into the rules of procedure of the CGEDD. Similarly, each of the regional environmental authority missions (MRAe) will adapt its own internal regulations which, in order to avoid ending up with 19 very different regulations, will have to comply with a reference framework.

    The decree adapts the composition of the colleges of the regional missions of environmental authority (MRAe) to allow for greater operating flexibility, and provides for a standard model for the agreement regulating in each region the conditions under which regional environmental service agents are placed under the functional authority of the president of the MRAe. 

    The decree creates the "conference of environmental authorities"; placed under the chairmanship of the vice-president of the CGEDD, it aims to facilitate the exchange of good practices and encourage the harmonization of interpretations and methods between entities performing environmental authority missions.

    Version française

    Le 13 août 2020, le Décret no 2020-1029 du 11 août 2020 modifiant le décret no 2015-1229 du 2 octobre 2015 relatif au Conseil général de l’environnement et du développement durable a été publié au Journal Officiel. 

    Les modifications concernent la fonction d’autorité environnementale (Ae). Le décret prévoit notamment que le collège de la formation d’Ae du CGEDD sera désormais compétent pour adopter son règlement intérieur, qui ne sera plus intégré au règlement intérieur du CGEDD. De même, chacune des missions régionales d’autorité environnementale (MRAe) adaptera son propre règlement intérieur qui, pour éviter d’aboutir à 19 règlements très différents, devra être conforme à un référentiel.

    Le décret adapte la composition des collèges des missions régionales d’autorité environnementale (MRAe) pour permettre une plus grande souplesse de fonctionnement, et prévoit un modèle-type pour la convention réglant dans chaque région les conditions dans lesquelles des agents du service régional de l’environnement sont placés sous l’autorité fonctionnelle du président de la MRAE.

    Le décret crée la « conférence des autorités environnementales » ; placée sous la présidence du vice-président du CGEDD, elle vise à faciliter les échanges de bonnes pratiques et encourager l’harmonisation des interprétations et des méthodes entre entités assurant des missions d’autorité environnementale.

  • GERMANY

    COVID-19 Regulatory Measures

    BaFin adapts requirements to the crisis

    CACEIS

  • On 15 July 2020, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published article summarizing  the temporary changes made to its supervisory practice in some areas during the COVID-19 crisis.

    The measures highlighted by BaFin are aimed at strengthening institutions and offering them relief to ensure that they are able to mitigate the effects of the crisis on the real economy.

    The elements presented by BaFin concern:

    • Banking supervision;
    • Simplifications with regard to creditworthiness assessments;
    • Flexible approach to governance requirements; 
    • Postponement of loan payments;
    • New requirements: limiting the pressure on institutions;
    • SREP capital add-on suspended;
    • Changes to reporting requirements;
    • Insurance and pension fund supervision;
    • Reporting;
    • Volatility adjustment and transitional measures;
    • Guarantee assets;
    • Securities supervision;
    • Working from home;
    • Financial reporting;
    • Money laundering prevention;
    • Authorization requirement
  • Cybersecurity

    Deutsche Bundesbank published document on the implementation of TIBER-DE

    CACEIS

  • On 22 July 2020, the Deutsche Bundesbank published document on the implementation of TIBER-DE.

    In 2018, the European System of Central Banks adopted TIBER-EU (Threat Intelligence-based Ethical Red Teaming), a framework for threat-led penetration tests. This framework sets rules and minimum standards under which enterprises can have ethical hackers review their cyber resilience. The rationale behind these tests is to reveal vulnerabilities in the firm’s security in order to identify specific needs for improvement and close security gaps. A TIBER-EU test is therefore not a pass-fail test; it is deemed successful if it has been performed correctly. The TIBER-EU framework prescribes mutual recognition of test participation for those member states where it has already been implemented.

    In summer 2019, the Federal Ministry of Finance (BMF) and the Deutsche Bundesbank resolved to implement the framework in Germany as a service to be provided by the Deutsche Bundesbank, aimed primarily at banks, insurers, financial market infrastructures and their key service providers. Participation in TIBER-DE tests is voluntary: TIBER-DE is not to be construed as a supervisory instrument. 

  • Directive on the institutions for occupational retirement provision (IORP II)

    BaFin publishes Consultation 08/2020 on a draft Circular implementing minimum regulatory requirements for Institutions for occupational retirement provision

    CACEIS

  • On 11 August 2020, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published Consultation 08/2020 on a draft Circular implementing minimum regulatory requirements for Institutions for occupational retirement provision.

    This circular is aimed at all occupational retirement provision that are subject to BaFin supervision. It is intended to provide IORP with information on the interpretation of the relevant business-organizational requirements in place. 

    The consultation period is open until 27 September 2020.

  • Financial supervision

    BaFin publishes Annual Report 2019

    CACEIS

  • On 18 August 2020, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published its Annual Report 2019.

    For 2020, BaFin has identified four priority areas that are of major significance to all of its Sectors: 1) digitalization, IT risk and cyber risks, 2) the integrity of the financial system and the fight against financial crime, 3) sustainable business models and 4) sustainable finance. More on this and on BaFin’s other priority areas can be found in the brochure entitled “Supervisory priorities for 2020”. 

    1) Digitalization

    Digitalization conducts technology-neutral supervision guided by two principles, “same business, same risk, same rules” and an appropriate sense of proportion. BaFin regularly tests its supervisory know-how and the underlying rules. Another aim is to create greater legal certainty. The same applies to how we deal with distributed ledger technology, virtual currencies and initial coin offerings. BaFin will be an active and committed participant in the international security debate and will to this end engage in regular exchanges with the supervisory authorities of other countries.

    2) AML/CFT 

    BaFin has made AML/CFT a priority area. Crypto assets, for example, are expected to bring exposure to significant money laundering risks in future. It is therefore a logical conclusion that BaFin is performing in-depth analyses to determine the extent to which and the type of business that is being conducted with crypto assets. In 2020, BaFin will also give particular attention to the authorization requirement for new business models – especially those involving the issue of tokens based on distributed ledger technology, such as the crypto custody business.

    3) Sustainable business models

    Companies in the financial market are right now facing the combined onslaught of interest rates at historic lows, economic slowdown and digital transformation. BaFin will therefore closely analyze in 2020 how sustainable the business models are in the different segments of the financial market. BaFin will examine the impact of the persistently low interest rates on credit standards as well as on investment strategies and practices.

    4) Sustainable finance

    BaFin put itself at the helm of the supervisory movement when it published a Guidance Notice on Dealing with Sustainability Risks at the end of 2019. The declared aim is that credit institutions, insurance undertakings and asset management companies systematically incorporate sustainability risks into their risk management systems. BaFin has set itself further ambitious targets and is planning to expand on its ideas about managing sustainability risks in 2020. From 2021 onwards, these risks are to be systematically captured and addressed using existing supervisory tools.

  • Financial System Stability

    Deutscher Bundestag publishes German Financial Stability Committee Annual Report 2020

    CACEIS

  • On 8 July 2020, the German Financial Stability Committee (G-FSC) presented its seventh report to the German Bundestag, warning of potentially extensive liquidity and solvency problems in the corporate sector due to the COVID-19 pandemic. The AFS notes that solvency of a large number of banks would be strained if numerous insolvencies caused significant credit losses, which could lead to an insufficient provision of financial resources to the real economy by the financial system and at worst to a loss of trust in the stability of the banking system. Further, the pandemic-related shock to the economy meets a financial system where cyclic systemic risks (the underestimation of credit risks, risks resulting from real estate financings and the risk of long-term low or abruptly rising interest rates) have already built up in recent years.

  • Investment Act

    Germany adopts Draft Law to accelerate investments in Germany

    CACEIS

  • On 13 August 2020, Germany adopted the Draft Law to accelerate investments.

    A number of urgent measures to accelerate planning and approval procedures in the infrastructure sector have already been adopted during this legislative period. This has created important preconditions for implementing investments more quickly and effectively. In order to be able to use the funds available for investments more quickly and to increase the effect of previous laws on planning acceleration, further acceleration potential is to be realised. The present draft law provides for a number of accelerating measures. These include simplifications in regional planning law and in the approval of the electrification of railway lines, as well as measures to speed up court proceedings.

  • Money Market Funds Regulation (MMFR)

    BaFin informs it applies updated ESMA guidelines to the reports according to Article 37 MMF Ordinance

    CACEIS

  • On 13 August 2020, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) informed it applies updated ESMA guidelines to the reports according to Article 37 Money Market Fund Ordinance.

    The purpose of these guidelines is to establish consistent, efficient and effective supervisory practices. The guidelines are intended, for example, to ensure that the national supervisory authorities apply Article 37 of the Money Market Fund Ordinance and the Implementing Ordinance on reporting in a uniform manner. In accordance with Article 37 of the Money Market Fund Ordinance, the money market fund manager reports to his supervisory authority at least annually certain information on the type and characteristics of the money market fund, portfolio indicators and stress test results. The guideline includes instructions on how to report this information. 

    The guidelines provide assistance, in particular with regard to the content of the fields of the reporting template in the annex of the Implementing Regulation ( EU ) 2018/708 for money market funds and money market fund administrators.

  • Pension Schemes

    Here are two publications concerning the German Basic Pension Law

    CACEIS

  • Here are two publications concerning the German Basic Pension Law.

    1. On 1 July 2020, the Deutscher Bundestag published a Draft law on the introduction of the basic pension for long-term insurance in the statutory pension insurance with below-average income and for further measures to increase retirement income (Basic Pensions Act).

    The amendment would remove the income imputation system, the automated retrieval procedure provided for this purpose between the pension insurance institutions and the tax authorities and the verification of income from capital assets. 

    The introduction of a so-called "basic pension" is geared to providing adequate security for the lifetime earnings of employees who have been working for decades on below-average incomes. This principle of a pension supplement on the basis of many years of employment (performance equity) would be counteracted by the determination of an income-dependent basic pension requirement (need equity), would be highly bureaucratic and would lead to disproportionately high costs. 

    The German Pension Insurance Fund assumes a current fulfilment cost of 200 million euros for the required 1,770 full-time employment units.

    2. On 1 July 2020, the Deutscher Bundestag published its comments on Draft Law on the introduction of the basic pension for long-term insurance in the statutory pension insurance with below-average income and for further measures to increase income in old age (Basic Pension Law).

    The amendment would remove the income imputation system, the automated retrieval procedure provided for this purpose between the pension insurance institutions and the tax authorities and the verification of income from capital assets. 

    The introduction of a so-called "basic pension" is geared to providing adequate security for the lifetime earnings of employees who have been working for decades on below-average incomes. 

    The principle of a pension supplement on the basis of many years of employment (performance equity) would be counteracted by the determination of an income-dependent basic pension requirement and would be highly bureaucratic and would lead to disproportionately high costs. 

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

    Bundesfinanzministerium (Federal Ministry of Finance) publishes Draft law to implement Directive (EU) 2019/2034 on the supervision of investment firms

    CACEIS

  • On 17 August 2020, the Bundesfinanzministerium (Federal Ministry of Finance) published the Draft law to implement Directive (EU) 2019/2034 on the supervision of investment firms.

    The draft law regulates the regulatory requirements for investment firms with regard to the risks they take, the capital requirements, their business organization and the requirements for management and supervisory bodies.

    In contrast to credit institutions, investment firms have a business model with a different risk profile. Because investment firms are financial companies that offer a financial service related to securities but, unlike a credit institution, do not accept deposits. Different requirements were made in proportion to the size of the investment firm. As a result, three size classes (large, medium and small investment firms) for investment firms.

    The WpFG contains requirements essentially proportional to the size and importance of the investment firms for financial stability:

    • Requirements for the initial capital,
    • Requirements for the business organization and certain reporting obligations,
    • Supervisory powers of the competent supervisory authorities, in particular with regard to the solvency of investment firms and equity and liquidity requirements,
    • Standards for assessing the appropriateness of internal capital requirements,
    • Requirements for the board of directors and the supervisory bodies of the investment firms with regard to internal corporate governance,
    • Regulations on the remuneration policy for certain categories of employees of the investment firms.

    Furthermore, the draft law serves to implement Article 2 of Directive ( EU ) 2019/2177 of the EP and the Council of December 18, 2019 amending Directive 2009/138 / EC on the taking up and pursuit of insurance and reinsurance activities (Solvency II). Directive ( EU ) 2019/2177 must be implemented by June 30, 2021. 

    The necessary changes to the Insurance Supervision Act (VAG) essentially relate to information requirements in the event of significant cross-border insurance activity or a crisis situation by strengthening the exchange of information between the supervisory authorities and EIOPA.

  • Regulation on the collection of granular credit data and credit risk data (AnaCredit Regulation)

    Deutsche Bundesbank publishes manual for the Anacredit validation rules version 11

    CACEIS

  • On 17 August 2020,  Deutsche Bundesbank published a manual for the Anacredit validation rules version 11.

    Among other things, version 11 contains an adjustment for fully written-off instruments from the reporting date of 31 January 2021 due to the requirements of the new EBA guidelines on the application of the default definition: written-off instruments for which the observed unit is neither a creditor nor a service after the write-off (e.g. due to debt forgiveness or sale of the instrument to a third party) are only to be reported up to the end of the quarter in which the write-off takes place. This is checked in the validations for the completeness of the credit-related data sets using condition CD0060. 

    The following attributes must be reported to the Bundesbank from this reporting date onwards:

    • Financial data: outstanding nominal amount, off-balance sheet value, default status of the instrument, date on the default status of the instrument 
    • Counterparty risk data: probability of default 
    • Counterparty default data: default status of the counterparty, date on the default status of the counterparty 
    • Accounting data: balance sheet recognition, cumulative write-downs and cumulative recoveries since default .

    The data fields on default status and probability of default refer to the time of write-down and can be updated until the end of the quarter. 

    Finally the manual introduces the delay of the outlier rules reporting date. No confirmations for "outliers" will be provided for the reporting deadline of July 31, 2020, and the new code "AK0003" will not yet be issued. 

  • Securities

    Bundesfinanzministerium (Federal Ministry of Finance) publishes draft law on dematerialized securities

    CACEIS

  • On 11 August 2020, the Bundesfinanzministerium (Federal Ministry of Finance) published draft law on dematerialized securities. The draft law objective is to modernize German securities law and the associated supervisory law. The central component is the introduction of a new law on dematerialized securities. 

    According to the current legal situation, financial instruments that are classified as securities under civil law must be securitized in a document.  To ensure the marketability of securities and legal compliance however, it requires a suitable replacement of the paper document, for example, by entry in a register based on the blockchain technology.

    This proposed regulation also creates regulatory clarity: The Federal Financial Supervisory Authority will monitor issuance and the maintenance of decentralized registers.

    The adaptation of the legal framework to new technologies, especially blockchain technology, serves to strengthen Germany as a business location and to increase transparency, market integrity and investor protection.

  • Sustainable Finance / Green Finance

    Bundesfinanzministerium publishes first framework for Green German Federal Securities

    CACEIS

  • On 25 August 2020, the Bundesfinanzministerium published the first framework for Green German Federal Securities. The aim of these securities is to make Germany’s “green” budget spending transparent while also strengthening the country’s position in the area of sustainable finance. As a benchmark issuer for the euro area, the German federal government will offer different maturities, establish a green yield curve, and thus create added value for the sustainable finance market in Europe. 

    The associated green expenditures will serve different purposes. For example, they will promote clean transport systems and reduce carbon emissions from motor vehicles. They will accelerate the transition towards an economy that largely runs on renewable energies and towards more efficient energy consumption, and they will support research that works towards a more sustainable future. In this way, the German government is also making a significant contribution to international climate action and the conservation of global biodiversity.

  • Transparency Directive

    Germany publishes Law on the further implementation of the Transparency Directive amending directive with regard to a uniform electronic format for annual financial reports

    CACEIS

  • On 18 August 2020, the Law on the further implementation of the Transparency Directive amending directive with regard to a uniform electronic format for annual financial reports was published in the Official Journal.

    According to the Transparency Directive, certain capital market companies must prepare their annual financial reports in a standardized European electronic format ( European Single Electronic Format, "ESEF"). The European Commission has made the relevant format specifications binding. The aim is to simplify reporting and to facilitate the accessibility, analysis and comparability of the accounting documents contained in an annual financial report for the benefit of issuers, investors and competent authorities.

    With the new regulations, the affected capital market companies are therefore obliged to publish their annual and consolidated financial statements as well as their management and group management reports electronically in the "ESEF". The new format specifications are to be applied for the first time to annual and consolidated financial statements as well as management and group management reports that are prepared for the financial year beginning after December 31, 2019, in accordance with European law.

     

     

  • HONG KONG

    COVID-19 Regulatory Measures

    HKMA reminds authorized institutions about Investor Protection Measures

    CACEIS

  • On 7 August 2020, the Hong Kong Monetary Authority (HKMA) published its reminder to authorized institutions (AI) about Investor Protection Measures.

    In view of the recent price volatility of various markets and investment products (including shares, bonds, commodities, precious metals, FX, etc.) as well as the operational challenges brought about by COVID-19, AIs are reminded to remain vigilant, and continue to treat customers fairly and act in the best interest of their customers in the sale of investment products.

    When making a solicitation or recommendation on investment products regulated by the Securities and Futures Ordinance, registered institutions (“RIs”) are also reminded to observe the relevant requirements promulgated by the HKMA and the SFC, including but not limited to: 

    (a) ensure proper product due diligence, taking into account, among others, the market conditions amid the COVID-19 situation

    (b) give due consideration to relevant circumstances of a customer when assessing the suitability of an investment product for the customer

    (c) explain to the customer the risks and features of the investment product

    (d) present balanced views: do not focus solely on advantageous terms such as high coupon rates or yields, but should explain also the disadvantages and potential downside risks.

  • Financial supervision

    SFC updates Licensing Handbook (version July 2020)

    CACEIS

  • On 6 July 2020, the Securities and Futures Commission (SFC) updated its Licensing Handbook.
    This Handbook provides general information of licensing and registration matters under the Securities and Futures Ordinance (SFO) (Chapter 571) administered by the Securities and Futures Commission (SFC).

    Any person carrying on regulated activities in the securities and futures markets and the non-bank retail leveraged foreign exchange market in Hong Kong has to be licensed or registered with the SFC, unless a specific exemption is applicable. 10 types of regulated activity and provides a detailed definition for each of them. These activities are: 

    • Type 1 Dealing in securities 
    • Type 2 Dealing in futures contracts
    • Type 3 Leveraged foreign exchange trading 
    • Type 4 Advising on securities 
    • Type 5 Advising on futures contracts 
    • Type 6 Advising on corporate finance 
    • Type 7 Providing automated trading services 
    • Type 8 Securities margin financing
    • Type 9 Asset management 
    • Type 10 Providing credit rating services.
  • HK updates Business Registration Regulations (Cap. 310A)

    CACEIS

  • On 9 July 2020, the updated version of the Business Registration Regulations (Cap. 310A) was published on Official Gazette of Hong Kong.

    A business registration application (other than a simultaneous business registration application) or a branch registration application must be made to the Commissioner.

    Exemptions The following businesses are exempt from the provisions of the Ordinance

    (a) the business of bootblack; 

    (b) business carried on by such hawkers as require licences for the carrying on of such businesses under the Hawker Regulation (Cap. 132 sub. leg. AI), other than businesses carried on inside the main structure of any building; 

    (c) a qualifying FiT business within the meaning of section 4 of the Exemption from Profits Tax (Feed-in Tariff Scheme) Order (Cap. 112 sub. leg. DJ).

  • HKMA launches consultation on Enhancing the Regulation and Supervision of Trust Business

    CACEIS

  • On 10 July 2020, the Hong Kong Monetary Authority (HKMA) published its Consultation paper on enhancing the regulation and supervision of trust business.

    The proposed Code will cover general principles and practical standards to govern the business conduct of companies that conduct trust business (collectively referred to as “trustees” or “trust companies” for the purposes of this consultation paper) in Hong Kong, unless otherwise specified.  For the purposes of this consultation paper, a “company” refers to an individual carrying on business as a sole proprietor; a partnership; or a corporation.  The collective term “trustee” will capture a relevant party by whatever name called that performs the functions of a trustee under the proposed scope of the Code.  

    In the context of the proposed Code, a “trust” refers to an obligation imposed on a person to hold or control and administer assets for the benefit of others (i.e. the beneficiaries) or for a specified purpose (e.g. charitable purpose, wills or estate planning). 

    “Trust business” refers to provision of the following services by a trustee: 

    (i) setting up a trust; 

    (ii) acting as trustee for a trust; 

    (iii) arranging for any person to act as trustee for a trust; 

    (iv) managing the assets held on trust; 

    (v) administration services for a trust; and/or (vi) eventual transfer of assets to beneficiaries.  In other words, it is not confined to services involving fiduciary duties. 

    The consultation lasts until 9 October 2020.

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

    SFC updates Forms & checklists for Investment products

    CACEIS

  • On 13 August 2020, the Securities and Futures Commission (SFC) updated the Forms & checklists for Investment products: 

    • Unit Trusts and Mutual Funds
    • Schemes under Mutual Recognition Arrangements
    • Mandatory Provident Fund Products and Pooled Retirement Funds .
  • SFC publishes the latest Asset and Wealth Management Activities Survey

    CACEIS

  • On 25 August 2020, the Securities and Futures Commission (SFC) published its latest Asset and Wealth Management Activities Survey which found that the assets under management (AUM) of the asset and wealth management business in Hong Kong increased by 20% year-on-year to $28,769 billion (US$3,694 billion) as at 31 December 2019.

    Highlights of the survey include:

    • Net fund inflows of $1,668 billion (US$214 billion) were recorded for the asset and wealth management business during 2019.
    • The AUM of the asset management and fund advisory businesses conducted by licensed corporations (LCs) and registered institutions (RIs) increased by 22% year-on-year to $20,040 billion (US$2,574 billion).
    • The AUM of the private banking and private wealth management business grew by 19% to $9,058 billion (US$1,163 billion).
    • Assets held under trusts increased by 11% to $3,844 billion (US$494 billion).
    • The number of licensed corporations carrying out asset management (Type 9 regulated activity) in Hong Kong increased by 10% to 1,808.
    • The total number of staff in the asset and wealth management business was 45,132, with an increasing proportion directly engaged in asset management and related support functions.
  • Private Equity

    HK publishes Limited Partnership Fund Ordinance (Cap. 637)

    CACEIS

  • On 17 July 2020, the Limited Partnership Fund Ordinance (Cap. 637) was published on the Official Gazette of Hong Kong.

    The Ordinance applies to:

    • A limited partnership fund:
      (a) is a fund set up in the form of a limited partnership under this Ordinance; and
      (b) does not have a legal personality.
    • Limited partnership: a partnership consisting of:
      (a) one or more than one partner, each commonly called a general partner, who is liable for all debts and obligations of the partnership; and
      (b) one or more than one partner,  each commonly called a limited partner, who
      (i) under an agreement entered into among the partners in the partnership, agrees to make contributions (whether in the form of property, services or otherwise) valued at a stated amount to the partnership; and
      (ii) is not liable for the debts and obligations of the partnership beyond the stated amount;
    • An arrangement in respect of any property is a fund if:
      (a) either or both of the following apply:
      (i) the property is managed as a whole by, or on behalf of, the persons operating the arrangement (operating persons);
      (ii) the contributions of the persons participating in the arrangement (participating persons), and the profits or income from which payments are made to them, are pooled;
      (b) under the arrangement, the participating persons do not have day-to-day control over the management of the property;
      (c) the purpose or effect, or purported purpose or effect, of the arrangement is to enable one or more operating persons and participating persons, whether by acquiring any right, interest, title or benefit in the arrangement.

    A fund is eligible to be registered as a limited partnership fund if, on its registration as a limited partnership fund:

    • the fund is constituted by a limited partnership agreement,
    • the fund has one general partner and at least one limited partner
    • the fund follows other conditions such as requirements for partners, fund's name, office, etc.
  • Reporting

    SFC publishes Circular to Licensed Corporations - Updated Technical Specifications for OTC Derivatives Trade Reporting

    CACEIS

  • On 8 July 2020, the Securities and Futures Commission (SFC) published Circular to Licensed Corporations - Updated Technical Specifications for OTC Derivatives Trade Reporting.

    The Circular informed that the Hong Kong Trade Repository (HKTR) issued a notice about updated specifications for over-the-counter (OTC) derivatives trade reporting. The key changes made in the revised Administration and Interface Development Guide (AIDG) include 

    (i) updates of coding schemes supported in the HKTR reporting templates, 

    (ii) modification of some input fields) checking and 

    (iii) changes in some business validation rule(s).

    Reporting entities are reminded to read the revised AIDG for the details of the changes and their obligation to report all transactions involving the updated coding schemes supported by the HKTR.

  • IRELAND

    COVID-19 Regulatory Measures

    CBI updates COVID-19 – Regulated Firms FAQ (5 August 2020)

    CACEIS

  • On 5 August 2020, the Central Bank of Ireland updated its COVID-19 – Regulated Firms FAQ with a new question about whether MIFID investment firms can continue to pay distributions and variable remuneration in the current circumstances.

    During the COVID-19 pandemic, the Central Bank requests:

    • all MiFID investment firms to exercise a high degree prudence at the EU group level if considering making any distributions until they can forecast their costs and future revenues with a high degree of certainty.
    • MiFID investment firms which are designated as “medium-high” or above under the Central Bank's Probability Risk Impact System (PRISM) to exercise strong restraint from making any distributions until 1 January 2021.
    • MiFID investment firms subject to CRR/CRD IV to take the same approach as outlined above in respect of their variable remuneration policies.
  • CBI updates COVID-19 – Regulated Firms FAQ (11 August 2020)

    CACEIS

  • On 11 August 2020, the Central Bank of Ireland (CBI) updated its COVID-19 – Regulated Firms FAQ about whether credit institutions can continue to pay distributions and variable remuneration in the current circumstances.

    The CBI expects that:

    • credit institutions should not pay dividends for the financial years 2019 and 2020 until at least 1 January 2021 and should refrain from share buybacks aimed at remunerating shareholders.
    • credit institutions adopt a prudent, forward-looking stance when deciding on their remuneration policies.
    • credit institutions should adopt a prudent approach with regard to variable remuneration payments until 1 January 2021, especially to identified staff (so-called “material risk takers”) insofar as these payments may result in a deterioration in the amount or quality of the institution’s total capital.
  • Irish Parliament publishes Companies (Miscellaneous Provisions) (COVID-19) Bill 2020

    CACEIS

  • On 20 July 2020, the Houses of the Oireachtas (Ireland's national parliament) published Companies (Miscellaneous Provisions) (Covid-19) Bill 2020.

    The amendments contained in the Bill will be operational for a interim period (a temporary period of time) which ends on 31 December 2020. In general. these amendments will:

    • allow a company seal and the necessary signatures to be on separate documents which will then be counted as one single document for the purpose of the Companies Act for the duration of the interim period. 
    • give companies the option to defer their annual general meeting to a date not later than 31 December 2020.
    • enable companies to hold fully electronic meetings or a hybrid meeting, with some attendees participating remotely and others attending a physical meeting.
    • set out that during the interim period a company may provide for participation in a general meeting by electronic communications, which shall include a mechanism for casting votes, and the mechanism adopted shall not require a member or his/her proxy to be physically present at the meeting. 
    • provide that where the directors of a company have recommended the declaration of a dividend at a general meeting they may amend or cancel the dividend due to the impact of COVID-19 on the affairs of the company. 
  • Irish Parliament published Financial Provisions (COVID-19) Bill 2020

    CACEIS

  • On 8 July 2020, the Houses of the Oireachtas (Ireland's national parliament) published Financial Provisions (COVID-19) Bill 2020.

    The purpose of this Bill is to 

    • enable the State to participate in two European instruments, to deal with the economic effects of COVID-19. The first instrument is the European instrument for temporary support to mitigate unemployment risks in an emergency (SURE), which was established by Article 1 of Council Regulation (EU) 2020/672 of 19 May 2020 and, for that purpose, to enable the State to enter into the guarantee provided for in Article 11(2) and (3) of that Council Regulation. 
    • enable the state to participate in the second instrument, the EIB Pan European Guarantee Fund, which is the subject of a resolution of the board of directors of the European Investment Bank of 26 May 2020, and which will be established in the circumstances as provided for in that resolution, to enable the State to enter into a guarantee agreement and a contribution agreement connected with the operation of that Fund. The Bill also seeks to amend section 5 of the Strategic Banking Corporation of Ireland Act 2014 in relation to the giving of guarantees by the Strategic Banking Corporation of Ireland. 
    • seek to make provision for the enforcement of arbitral awards to which the Third Protocol (done at Strasbourg on 6 March 1959) to the General Agreement on Privileges and Immunities of the Council of Europe (done at Paris on 2 September 1949) applies; and to provide for related matters. 
  • Ireland publishes S.I. No. 233 of 2020 - European Union (Administrative Cooperation in the Field of Taxation) (Amendment) Regulations 2020

    CACEIS

  • On 7 July 2020, the Statutory Instrument S.I. No. 233 of 2020 - European Union (Administrative Cooperation in the Field of Taxation) (Amendment) Regulations 2020 was published on the Irish Statute Book, which aims to implement the Council Directive (EU) 2020/876 of 24 June 2020 amending Directive 2011/16/EU to address the urgent need to defer certain time limits for the filing and exchange of information in the field of taxation because of the COVID-19 pandemic.

    These Regulations amends the European Union (Administrative Cooperation in the Field of Taxation) Regulations 2012 (S.I. No. 549 of 2012) as followings:

    • Revenue Commissioners shall communicate the first information to the competent authorities of all other Member States by 30 April 2021. 
    • Revenue Commissioners shall communicate to the competent authority of any other Member State the information that relates to the calendar year 2019 by 31 December 2020.

    These Regulations also amends Taxes Consolidation Act 1997 (No. 39 of 1997) as followings:

    • Notwithstanding the time limit specified in Taxes Consolidation Act 1997 (No. 39 of 1997), the period of 30 days for making a return shall begin on 1 January 2021 where -
      (a) the reportable cross-border arrangement is made available for implementation,
      (b) the reportable cross-border arrangement is ready for implementation, or
      (c) the first step in the implementation of the reportable cross-border arrangement was taken, whichever occurs first, during the period beginning on 1 July 2020 and ending on 31 December 2020.
    • The period of 30 days for making a return shall begin on 1 January 2021 where the aid, assistance or advice is provided, directly or by means of other persons as referred to in that subsection, during the period beginning on 1 July 2020 and ending on 31 December 2020.
      whichever occurs first, during the period beginning on 1 July 2020 and ending on 31 December 2020.

    Regarding Mandatory Automatic Exchange of Information in the Field of Taxation Regulations 2015 (S.I. No. 609 of 2015), the definition of “return date” is changed as: 

    (a) a date that is not later than the 30th day of September 2020, in respect of a return required for the calendar year 2019, and 

    (b) in all other cases, a date that is not later than the 30th day of June of the calendar year following the year for which a return is required.

  • CBI updates COVID-19 – Regulated Firms FAQ regarding Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT)

    CACEIS

  • On 1 July 2020, the Central Bank of Ireland (CBI) updated the COVID-19 – Regulated Firms FAQ regarding Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT) with following questions:

    1. What are the implications of COVID-19 for AML/CFT?
    2. What actions has the Central Bank, as AML/CFT supervisor, taken because of COVID-19? 
    3. What does the Central Bank expect of regulated financial services providers during COVID-19 from an AML/CFT perspective?
    4. What flexibilities are available to firms to continue to meet their AML/CFT obligations if they face operational challenges due to COVID-19? 
  • Data protection / General Data Protection Regulation (GDPR) / ePrivacy Regulation (ePR)

    DPC publishes 3 guidance relating to third parties accidentally in receipt of personal data relating to other individuals

    CACEIS

  • On 28 August 2020, the Data Protection Commission published three guidance relating to third parties accidentally in receipt of personal data relating to other individuals.

    1) Guidance for Individuals who Accidentally Receive Personal data

    The DPC recommends that an individual who accidentally receives personal data that is not their own should act promptly and take steps to reduce the risks to the rights of the individual/s the data relates to:

    • Identify the data controller and inform them of the mistaken disclosure. Do not wait for them to contact you.
    • Avoid opening email attachments, files or papers that are not yours to open.
    • Agree with the data controller how to resolve the mistake.
    • If you cannot identify or contact the data controller, contact the DPC using the webform or email.
    • Do not attempt to identify and contact the person the data belongs to as this is further processing the information.
    • Do not share the data with another third party including publically uploading information to social media platforms.

    2) Guidance for Organisations Accidentally in Receipt of Personal Data

    An organization must be aware of the possibility of finding itself accidentally in possession of personal data. An organisation that acquires control over personal data must deal with it in a way that respects its obligations as a data controller.

    The DPC recommends that organisations that come into accidental possession of personal data take immediate steps to identify the rightful data controller and remedy the breach. It should do so in a way that involves the minimum of intrusion or exposure:

    • Respond promptly to a misaddressed email informing the sender of their mistake, and permanently delete the copy you received without opening any attachments.
    • If possible, identify the sender of a misaddressed letter or package from the postmark, label or letterhead. Do not read through material not intended for you.
    • If you retain materials pending retrieval by the lawful controller, keep the data in a secure place where it cannot be mistakenly accessed or removed.
    • If the rightful data controller cannot be identified or contacted, you can contact the DPC.

    3) Guidance for Data Controllers who Lose Control of Data to a Third Party

    If a third party refuses to return or delete wrongly held personal data, the DPC recommends that data controllers act promptly and use all reasonable measures to address and mitigate the risks posed to data subjects and their rights. Apart from reporting the breach and all relevant information to the DPC, controllers should: 

    • Communicate to the third party that their retention of the data is unlawful and a breach of data subjects’ rights;
    • Consult their legal advisors on remedies, including injunctions, that may be available to them; and
    • In appropriate cases, consider informing An Garda Síochána.
  • Financial reporting

    Ireland publishes S.I. No. 245 of 2020 - Financial Accounts Reporting (United States of America) (Amendment) Regulations 2020

    CACEIS

  • On 14 July 2020, the S.I. No. 245 of 2020 - Financial Accounts Reporting (United States of America) (Amendment) Regulations 2020 was published on the Irish Statute Book.

    The Financial Accounts Reporting (United State of America) Regulations 2014 (S.I. No. 292 of 2014) are amended in Regulation 2(1) by the substitution of the following definition for the definition of “return date”  

    (a) a date that is not later than 30 September 2020, in respect of a return required for the tax year 2019, and 

    (b) in all other cases, a date that is not later than 30 June of the tax year following the tax year for which a return is required.

  • CBI publishes the findings of a Thematic Review of the Retail Intermediary Annual Return (RIAR)

    CACEIS

  • On 27 August 2020, the Central Bank of Ireland (CBI) published the findings of a Thematic Review of the Retail Intermediary Annual Return (RIAR).

    This latest Review examined the accuracy and quality of data submitted, and identified some material instances of incorrect reporting across categories including:

    • Financial position (net asset position);
    • Gross income/turnover;
    • Commission and fee income;
    • Professional indemnity insurance.

    The Review concluded that, in the majority of cases, incorrect reporting was due to either a lack of understanding of reporting requirements or human error.  The Central Bank has set out its expectations that firms will assess their procedures and controls to address specific issues identified and to mitigate against any further incorrect data reporting going forward.

    The Review also identified a small number of investment intermediaries that were unaware of their obligation to produce annual audited accounts. Finally, the Review found that some investment intermediaries were not actively trading and were retaining their authorisation for future use. 

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

    CBI publishes Notice of intention in relation to the application of the ESMA Guidelines on liquidity stress testing in UCITS and AIFs

    CACEIS

  • On 13 July 2020, the Central Bank of Ireland (CBI) published Notice of intention in relation to the application of the ESMA Guidelines on liquidity stress testing in UCITS and AIFs,

    This notice of intention relates to the Final Report on ‘Guidelines on liquidity stress testing in UCITS and AIFs’ (ESMA34-39-882) (the Guidelines) which the European Securities and Markets Authority (ESMA) published on 2 September 2019.  The Guidelines apply from 30 September 2020. 

    The Central Bank of Ireland will, in due course, consult on the incorporation of a requirement in the Central Bank UCITS Regulations and AIF Rulebook that UCITS Management Companies, AIFMs and depositaries adhere to the Guidelines.  In the interim, the Central Bank expects full compliance with the Guidelines from 30 September 2020. 

  • CBI publishes the thirty-fourth edition of the Central Bank AIFMD Q&A

    CACEIS

  • On 13 July 2020, the Central Bank of Ireland (CBI) published the thirty-fourth edition of the Central Bank AIFMD Q&A, which includes new Q&A IDs 1131 and 1132 in relation to liquidity stress testing in AIFs.

    The Q&As clarify the Central Bank’s expectations in relation to liquidity stress testing (LST) in AIFs, particularly in relation to the application of the ESMA ‘Guidelines on liquidity stress testing in UCITS and AIFs’. 

    The Q&As set out that the Central Bank considers that LST should generally be performed at least quarterly and that LST should be employed at all stages in an AIF’s lifecycle, including at the design phase.

  • CBI publishes the twenty-ninth edition of the Central Bank UCITS Q&A

    CACEIS

  • On 13 July 2020, the Central Bank of Ireland (CBI) published the twenty-ninth edition of the Central Bank UCITS Q&A, which includes new Q&A IDs 1095, 1096 and 1097 in relation to liquidity stress testing in UCITS.

    The Q&As clarify the Central Bank’s expectations in relation to liquidity stress testing (LST) in UCITS, particularly in relation to the application of the ESMA ‘Guidelines on liquidity stress testing in UCITS and AIFs’. The Q&As set out that the LST policy may be documented within the UCITS Risk Management Policy, that LST should generally be carried out at least quarterly and that LST should be employed at all stages in a UCITS lifecycle, including at the design phase.

  • ITALY

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

    Financial Information Unit shares guidelines for AML reporting

    CACEIS

  • On 25 August 2020, the Financial Information Unit shared guidelines for the production and sending of aggregate anti-money laundering reports. 

    Any reports relating to previous periods must be made in accordance with the provisions in force at the reference date of the report. 

    Below the key points of the guidelines:

    • transactions for an amount equal to or greater than 5,000 euros, carried out by clients, should be reported
    • occasional transactions, without limits in terms of amount, relating to the provision of payment services and the issuance and distribution of electronic money, carried out through agents
    • negative reporting should be provided in case, during an entire month, there have been no transactions meeting the above criteria
    • if these transactions are carried out by the financial entity who should report (hence the financial entities targeted by these guidelines), then the transactions should NOT be reported
    • for each aggregate report, the following information should be provided: the total amount of transactions in euro, the number of transactions carried out in the reference period, separately indicating transactions carried out in cash and the respective amount
    • the location of the recipient of the transaction(s) reported should always be indicated whenever it is known
    • Reporting should be transmitted on a monthly basis through the UIF portal of Banca d'Italia.
  • Brexit

    CONSOB provides guidelines to British investment firms operating in Italy after Brexit

    CACEIS

  • On 23 July 2020, CONSOB provided operational guidelines to British investment firms operating in Italy after Brexit.

    CONSOB reminds that, after the "transition period" (31 December 2020), the discipline dictated by art. 28 of the TUF and by articles 25-31 of CONSOB Regulation no. 20307/2018 will be applied  to British investment firms providing investment services and having activities in Italy.

    In particular, companies other than banks that intend to operate in Italy must submit an application to CONSOB; CONSOB will respond within the term of 120 days, If the authorisation is not obtained, the company must stop its activity by the end of the transaction period.

    All British investment firms need to provide Italian customers with updated information on the consequences of the changed operating conditions deriving from Brexit.

  • Capital requirements / CRD / CRR / Basel III/IV

    Banca d'Italia communicates the entry into application of the definition of default

    CACEIS

  • On 4 August 2020, Banca d'Italia issued a document on the application of the definition of "default"

    A previous communication, issued on 29 July 2019, modified the application of CRDIV/CRR to SIM and SIM groups (i.e. securities firms and groups of securities firms).  More specifically, the following aspects were modified:

    • the threshold for outstanding credit obligations to be defined as relevant (pursuant to art. 178 of Regulation EU no. 575/2013, CRR, supplemented by the Delegated Regulation EU no. 171/2018 of the Commission of 19 October 2017, RD)
    • the EBA Guidelines on the application of the definition of default were implemented, pursuant to Article 178 of the CRR.

    The new regulatory framework described above, impacting prudential default for SIM, will be applied as of the 1 January 2021, as per EBA's guidelines.

  • Italy grants Banca d'Italia power in the field of sanctions

    CACEIS

  • On 18 August 2020, Banca d'Italia issued a document containing provisions implementing the legislative framework granting Banca d'Italia powers in the field of sanctions and administrative sanctioning procedure, as foreseen following the transposition of Directive 2013/36 / EU (so-called CRD IV).

    The role of Banca d'Italia consists in verifying whether there have been violations, conducting investigation, imposing penalties or informing the interested parties that a sanctioning procedure has been initiated against them. 

    According to the provisions, Banca d'Italia can apply sanctions to significant entities upon request of ECB. Furthermore, sanctions can be applied to less significant entities autonomously by Banca d'Italia. Banca d'Italia can sanction individuals too. Lastly, Banca d'Italia has been granted full powers in all the matters which are not covered by ECB.

  • COVID-19 Regulatory Measures

    CONSOB issues note no. 8/20 on financial reporting during COVID-19

    CACEIS

  • On 16 July 2020, CONSOB issued note no. 8/20 on financial reporting during COVID-19.

    CONSOB had previously issued a communication to encourage financial entities to produce financial information considering the effects of COVID-19 in terms of business continuity. More specifically, CONSOB directed the attention of financial entities on the indications provided by ESMA in its release "Implications of COVID-19 epidemic on half-yearly financial reports", issued on 20 May 2020. 

    In line with the aforementioned public declaration, financial entities should:

    (1) pay particular attention  to IAS 36 "Impairment of assets" (IAS 36 paragraphs 9 and 12) -  in particular it should be assessed whether the effects of the COVID-19 epidemic caused losses of value of assets that require further assessments on whether the asset(s) impacted can be recovered. 

    (2) particular attention should also be paid to risks associated with COVID-19, especially if they could compromise the business continuity. 

    (3) financial entities will also have to provide quantitative information to display the impact of COVID-19 on their balance sheets as well as

    (4)  information on the impact of the pandemic on their strategic directions for the future. 

    (5) Lastly, mitigation measures will also need to be described.

  • Banca d'Italia updates on the distribution of dividends from less significant banks

    CACEIS

  • On 28 of July, Banca d'Italia published an update on the distribution of dividends by less significant banks in the context of COVID-19.

    Background: 

    On 20 March 2020, Banca d'Italia granted to less significant banks and non-bank intermediaries the possibility of temporarily operating below the level assigned by SREP process (Pillar 2 Guidance - P2G ), below the Capital Conservation buffer (CCB) and the Liquidity Coverage Ratio (LCR). Subsequently, on 27 March 2020, Banca d'Italia recommended to less significant banks not to pay dividends and to refrain from repurchasing treasury shares until 1 October 2020. These recommendations aimed at allowing financial intermediaries to absorb shocks. 

    New recommendations to less significant banks:

    1) not paying dividends for FY 2019 and 2020 and not making any irrevocable commitment for the payment of dividends for the same financial years; 

    2) not to repurchase shares to remunerate shareholders.

    New recommendations to the SIMs subject to the rules of the CRR / CRD IV package

    1) not to pay dividends for the current year (including the distribution of reserves) and not make any irrevocable commitment for the payment of dividends for to the current year; 

    2) not to repurchase shares aimed at remunerating shareholders.

    It should be noted that Banca d'Italia will not request the restoration of capital buffers before the end of 2022 and the level of LCR before the end of 2021.

  • CONSOB shares further guidelines on financial reporting during COVID-19

    CACEIS

  • On 30 July 2020, CONSOB shared new dispositions on financial reporting during COVID-19.

    Background:

    With note no. 8/20 of 16 July 2020, CONSOB invited:

    (1) listed issuers having Italy as the home Member State 

    (2) issuers of financial instruments widely distributed among the public

    to implement the guidelines provided by ESMA in the public statement "Implications of the COVID-19 outbreak on the half-yearly financial Reports". 

    More specifically, financial intermediaries should:

    • evaluate whether COVID-19 caused a loss of value in the assets such to require a verification on whether activities could be recovered
    • evaluate whether COVID-19 posed risks in terms of business continuity
    • assess and reflect the impact of COVID-19 on income statements
    • provide detailed and specific information in relation to the impacts, even future, of COVID-19 on strategic planning, economic performance, financial situation and cash flows.

    New dispositions:

    With note no. 9/2020 of 30 July 2020, CONSOB extended these dispositions to issuers with financial instruments traded on multilateral trading systems that adopt international accounting standards and that are subjected to CONSOB supervision.

    Moreover, CONSOB invited administrative and controlling bodies as well as audit entities to pay particular attention to the implementation of these dispositions.

    Lastly, targeted financial entities are invited to implement these guidelines also when issuing press releases as well as half-yearly financial reports.

  • The Italian government extends until 15 October 2020 the emergency status due to COVID-19

    CACEIS

  • On 30 July 2020, the Italian government decided to extend until 15 October 2020 the emergency status linked to COVID-19, allowing the government to take action in order to limit the impact of the pandemic. 

    The decision also extends measures related to the health system, such as how to employ doctors, how to produce sanitary tools (e.g. masks), how to distribute medicines, how to treat personal data during the emergency, how to protect workers, how to help Italians abroad, how to guarantee the continuity of educational activities in schools and universities, which measures to implement to guarantee continuity in the workplace.

  • Financial reporting

    CONSOB issues resolution no. 21434, extending the provisions of resolutions 21326 and 21327 until October 2020 regarding investment

    CACEIS

  • On 8 July 2020, CONSOB issued resolution no. 21434, extending the provisions of resolutions no. 21326 and 21327 of 9 April 2020.

    These resolutions concerned (1) communication obligations regarding investments in companies / shareholdings with a particularly widespread shareholder base and (2) declarations of intentions for companies with a particularly widespread shareholder base. In particular, resolution no 21326 established a reduction of the threshold after which it is necessary to communicate on shareholdings / participation in the capital of listed companies having Italy as a home Member State with a particularly widespread shareholder base (pursuant to art. 120, paragraph 2-bis, of Legislative Decree no. 58 of 1998). Resolution no. 21327 instead established reduced thresholds for communication obligations arising when acquiring a participation in listed issuers with Italy as their home Member State and with a particularly widespread shareholder base (pursuant to art. 120, paragraph 4-bis, of Legislative Decree no. 58 of 1998).

    The lists of companies to which these thresholds apply were updated resolutions no. 21352 of May 6, 2020 and no. 21404 of 17 June 2020.

    Based on the resolution just published (July 2020) these provisions / communication obligations are extended for a period of three months, from 12 July 2020 until 12 October 2020, unless earlier revocation.

  • Interest Rate

    Banca d'Italia publishes the interest rate for subsidized credit operations

    CACEIS

  • On 31 August 2020, Banca d'Italia published the interest rate to be applied to subsidized credit operations.

    • The weighted average yield for six-month and twelve-month BOTs (government bonds), relating to the month of August 2020 is equal to -0,263
    • The monthly average of the gross yields of government bonds, subject to taxation, for the month of July 2020 is equal to 0,802.
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    Banca d'Italia launches a consultation on the discipline of collective asset (savings) management

    CACEIS

  • On 30 July 2020, Banca d'Italia launched a consultation on the discipline on collective asset management.

    The consultation covers the following aspects:

    1. Identify a method of application of the manager's right to suspend the option to reimburse investors in open Italian UCIs, during exceptional market circumstances; 
    2. review some provisions applicable to closed Italian AIFs; and 
    3. clarify the possibility of deferring the payment of subscription fees over time.

    Regarding the first point, the suspension power allows fund managers to temporarily suspend the execution of repayments if, on the same day, they receive requests for repayment exceeding a certain percentage of the total net value of the fund (at least five percent). The duration of this temporary suspension is a maximum of fifteen days, it can be used on several consecutive occasions, and can never exceed the duration of one month.

    Regarding the second point, the goal is to simplify the rules applicable to closed Italian AIFs. In particular: 

    • the obligation of the Italian manager of non-reserved closed AIFs to purchase on own shares of at least 2% of the total initial net value of the AIF would be eliminated; 
    • for closed and non-reserved Italian AIF, the concentration limit would be increased for investments in credits towards the same counterpart (from 10 to 20 per cent of net assets). This limit would be eliminated instead for Italian closed AIFs reserved.

    Lastly, the third point clarifies that the current legislation does not prohibit the deferred and gradual payment of subscription fees nor does it prescribe a specific method for withdrawing them. However, the discipline invites intermediaries to respect informative obligations towards investors as well as to respect the balance / alignment between the withdrawal of the deferred subscription fee and the investment time horizon.

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

    CONSOB launches a consultation on knowledge and competence requirements of financial intermediaries

    CACEIS

  • On 23 July 2020, CONSOB launched a consultation on the implementation of "knowledge and competence requirements" foreseen by MIFID II.

    Matter of the consultation and background information:

    Based on MIFID II, Member States should require investment firms to guarantee and demonstrate that individuals who provide (1) investment advice to clients, or (2) information on financial instruments, (3) investment services or (4) ancillary services on behalf of the investment firm, possess adequate knowledge and skills. The Member States are in charge of deciding on the criteria to evaluate such knowledge and skills.

    ESMA has published the Guidelines ESMA / 2015/1886 which provide evaluation criteria for knowledge and skills. These evaluation criteria set by ESMA represent minimum standards; national authorities should refer to these criteria and implement more strict ones.

    In this scenario, CONSOB opened a consultation on these criteria, which define the requirements that professionals should meet to prove that they possess adequate knowledge and skills (e.g. academic requirements, experience accumulated).

    Triggers of the consultation:

    The consultation is triggered by several elements:

    • a comparative analysis of the regulatory scenario in other member states
    • requests of clarifications received by CONSOB on the following aspects: minimum duration of trainings and delivery methods, requirements applicable to staff working with professional customers; coordination with the discipline of other European member states applicable to staff operating cross-border; how to manage employees not meeting the necessary requirements.
    • the latest report of High-Level Forum on the Capital Markets Union, issued on 10 June 2020. The report is particularly relevant as it invites member states to:
    • initiate a revision of IDD and MiFID II concerning the fact that each Member State should provide a specific certification following training and professional development courses;
    • make provisions of MIFID II and IDD applicable to the profession of consultant ; 
    • introduce a transition period (of no more than two years) before applying the new model;
    • formulate a proposal for the establishment of a European quality certification for consultants.

    Regulatory options:

    The consultation can result in two alternatives.
    (1) The current setting will be maintained: general principles will be maintained, complying with MiFID II and ESMA Guidelines,  while at the same time more detailed rules will be elaborated on specific aspects. In this case, the consultation would be applied to the specific provisions and it would be aimed to enhance the decision-making autonomy of intermediaries.
    (2) The second option instead, is aimed to leave more "influence" to the principles established by ESMA, by directly linking the new text to the provisions of ESMA. Financial intermediaries would be free responsible of deciding how to implement the provisions from ESMA.

  • Packaged Retail and Insurance-based Investment Products (PRIIPs)

    CONSOB launches a consultation on the regulation of issuers of securities concerning the KID

    CACEIS

  • On 30 July 2020, CONSOB launched a consultation on the regulation of issuers of securities ("Regolamento Emittenti") concerning more specifically KIDs documents.

    Regulatory background:

    Previous regulatory developments led to the abolition of the notification to CONSOB of the KID of the PRIIPs, both in its initial and revised versions. Following these developments, a transitory regime was implemented, foreseeing that the KIDs/iKIDs' revised version(s) should be submitted to CONSOB at least the day before the day on which the product is placed on the market. 

    Matter of the consultation:

    The consultation focuses on implementing the regulatory changes described above, while  defining new operational methods based on which CONSOB can acquire the KID related information.

    The consultation starts by defining: 

    • which entities are required to fulfill the obligations: these are exclusively the creators of PRIIPs and not also those who sell the PRIP or distribute the product;
    • the obligation to make the KIDs electronically accessible to CONSOB before marketing the product - this disposition replaces the current obligation to notifying the supervisory authority about the KIDs (in line with the provisions of art. 8, paragraph 1, of Legislative Decree no.
    • 165/2019) 
    • the fact that the revised versions of the KIDs which must be made accessible electronically to CONSOB.

    The operational process for the acquisition of KIDs, which is the matter subject to consultation, is structured as follows: 

    • formal registration of the supervised entity to CONSOB;
    • provision of KIDs and structured data provided by the creator before the day preceding the marketing of the product or the publishing of an updated version of a KID already published;
    • acquisition, performed by CONSOB through an automatic process, of the KIDs and data.

    The consultation focuses on the operational aspects allowing CONSOB to acquire this information throughout the process (e.g. data format, opportunities for automatisation) as well as on implementing the regulatory changes described in the premise / background.

  • Prospectus Regulation

    CONSOB issues communication no. 7/2020 on the implementation of EU Regulation n. 1129/2017 (Prospectus Regulation) and EU Delegated Regulation no. 980/2019

    CACEIS

  • On 10 July 2020, CONSOB issued communication no. 7/2020 concerning EU Regulation n. 1129/2017 (Prospectus Regulation) and EU Delegated Regulation no. 980/2019.

    These regulations, respectively defined as The Prospectus Regulation and the Delegated Regulation, contain rules on controls that competent national authorities are required to carry out in order to approve the offer prospectuses or admission to the trading of securities. The regulations aim to harmonize the control framework at European level.

    The purpose of this communication is to provide an overview on the application of the new regulations covering the following aspects: 

    (1) the criteria to control the prospectus envisaged by the Delegated Regulation - on this matter, the following aspects should be checked by authorities: completeness of the prospectus, consistency and comprehensibility (i.e. how understandable the document is)

    (2) information exchanges within CONSOB and among CONSOB and other financial supervisory authorities - communication within CONSOB and other entities should be simplified as much as possible in order to ensure efficiency and timeliness of the control process

    (3) additional criteria for checking the prospectus - competent authorities can apply additional control criteria when it is necessary to ensure investor protection

    (4) controls excluded as part of the prospect verification activity;

    (5) the application of the proportionate approach to the control of prospectuses - the Delegated Regulation contains provisions that define a proportionate approach in the control of prospectuses, meaning that when the first draft prospectus submitted for approval is substantially similar to a prospectus already approved and highlights all the changes made compared to the already approved prospectus, the Authority is required to apply the standard control criteria only to those parts of the prospectus that have changed from the prospectus already approved.

  • Shareholders' Rights Directive (SRD II)

    Italy publishes Shareholder Rights Directive 2: Legislative Decree no. 84 of July 2020

    CACEIS

  • On 14 July 2020, the Legislative Decree no. 84 has been published in the Italian Gazzetta Ufficiale (no. 190 of 30 July 2020). 

    The Legislative Decree is intended to harmonise internal regulations with the Shareholder Rights Directive 2 (SHRD 2) encouraging (i) long-term shareholder commitment and (ii) the regulation of corporate governance systems in listed companies, through the implementation of Article 7 of Law no. 117 of 4 October 2019 (European Delegation Law 2018) (Legge di delegazione europea 2018). 

    This piece of legislation includes changes to the regulation of the corporate governance systems of insurance companies on remuneration, together with amendments to both the requirements and eligibility criteria for corporate officers, persons performing key functions and capital participants. 

    Furthermore, the Italian lawmaker has extended the sanctions system for violations of national rules on long-term shareholder commitment to also combat violations of particular obligations by intermediaries.  In addition, the maximum pecuniary sanction for specific cases has been increased from EUR 5 million to EUR 10 million. 

  • The Italian government implements EU directive 2017/828 (SRDII)

    CACEIS

  • On 30 July 2020, the Italian government implemented SRDII with the legislative decree of 14 July 2020.

    The transposition of SRDII caused modifications to the existing regulatory framework, on the matters listed below:

    • the remuneration; the requirements and eligibility criteria of corporate officers, profiles of people  who perform fundamental functions and shareholders (topics discussed in the Legislative Decree of 7 September 2005, no. 209)
    • the sanctions provided for violating long-term commitment of shareholders (Part V of Legislative Decree of 24 February 1998, no. 58)

    The legislative decree will be effective as of 14 August 2020.

  • CONSOB launches a consultation on post-trading to facilitate the implementation of SRDII

    CACEIS

  • On 3 August 2020, the CONSOB launched a consultation on post-trading to facilitate the implementation of SRDII in the national context.

    The proposed modifications cover the following general aspects:

    • intermediaries (and central depositories) should employ networks or IT connections suitable for fulfilling communication obligations, reporting and transmission of information
    • intermediaries should keep into consideration the indications provided concerning self-regulation and market practices

    Regarding shareholders identification:

    • a statutory choice is no longer needed to allow issuers to identify shareholders
    • it is no longer possible for shareholders to deny the consent to be identified by the issuer
    • only shareholders having a minimum quota can be identified ( 0.5% of the capital with voting rights)
    • issuers should notify the identification procedure with a press release and updating the shareholders' register on the basis of the data received
    • a qualified minority of shareholders can request the identification of further shareholders
    • Italian companies with shares admitted to trading in Italian or other EU multilateral trading systems can apply this discipline if foreseen in the statute
    • lastly,  the consultation focuses on identifying all the entities and subjects involved as well as the operational methods for the identification of shareholders

    Regarding the need for intermediaries to transmit information, issuers should transmit to central depositories information on the convocation of meetings and additional information necessary for the exercise of shareholders' rights. The consultation focuses on the operative modes to achieve this goal. 

    No further actions were taken on how to facilitate the exercise of shareholder rights, as the national regulatory framework is in line with the directive on this aspect.

    Lastly, the consultation proposes that the issuers should notify to shareholders when majority voting rights have been granted, following the minimum period to hold shares.

  • Stress test

    Banca d'Italia and CONSOB implement ESMA's guidelines on stress tests

    CACEIS

  • On 30 July 2020, CONOSB communicated the implementation of ESMA's guidelines on stress test scenarios under the Mutual Funds Regulation (Regulation 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds, ESMA34-49-172).

    The guidelines apply as of 30 July 2020.

  • Trading rules

    Borsa Italiana introduces changes to the AIM segment of the market

    CACEIS

  • On  6 July 2020, Borsa Italiana communicated amendments to the AIM segment of the market.

    AIM Italia is mainly targeting small and medium-sized enterprises engaged in credible and sustainable growth projects within expanding sectors, with a solid financial structure, capable of attracting a diversified investors.

    The changes introduced cover the following aspects:

    • A new segment for professional investors has been added, to facilitate entry on AIM Italia for (1) SMEs that wish to achieve a gradual access to the market, and (2) for start-ups and (3) entities with scale-up projects.
    • The role of the Panel of Arbitrators has been strengthened with reference to the takeover bids
    • Transparency and corporate governance controls have been consolidated
  • LUXEMBOURG

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

    Circular CSSF 20/744 complements Circular CSSF/650 regarding AML/CFT Law and Grand-Ducal Regulation

    CACEIS

  • On 3 July 2020, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 20/744.

    The purpose of this circular is to complement Circular CSSF 17/650 of 17 February 2017 which provides for guidance on the extension of the offence of money laundering to aggravated tax fraud and tax evasion and on applicable anti-money laundering and counter-terrorist financing ) professional obligations.

    The amendments concern only Annex 1 of Circular CSSF 17/650 and provide for new indicators to be taken into account in the context of collective investment activities (under a newly added title II.). Thus, Annex 1 of Circular CSSF 17/650 currently providing for a list of common indicators applicable to all professionals under the AML/CFT supervision of the CSSF (with the new title I. Common indicators), will be completed with an additional list of indicators specific to the collective investment activities and to professionals providing services in that particular sector (under the new title II. Specific indicators concerning collective investment activities). 

    CSSF expects professionals under its AML/CFT supervision to take these new indicators, where relevant, into account in their risk assessment and when designing risk mitigation measures proportionate to their risk exposure within the specific context of collective investment activities. 

  • ALFI responds to EBA consultation on ML/TF risk factor Guidelines

    CACEIS

  • On 8 July 2020, the Association of the Luxembourg Fund Industry (ALFI) published response to the EBA consultation paper on the Draft Guidelines under Articles 17 and 18(4) of Directive (EU) 2015/849 on customer due diligence and the factors credit and financial institutions should consider when assessing the money laundering and terrorist financing risk associated with individual business relationships and occasional transactions, amending Guidelines JC/2017/37.

    The objective of this paper is to draw the attention of the EBA on some issues raised in the Guidelines. First, ALFI would like to stress the fact that the Joint Guidelines have the merit of giving the professionals across Europe a consistent approach allowing a level playing field between the different actors throughout Europe, in order to successfully combat money laundering. ALFI believes that the organization of this consultation paper by types of business gives clarity on the scope of application of the AMLD to the various entities subject to its requirements. It is important to have an awareness and understanding of the risks in particular business areas.  

    While ALFI agrees with the points made in the document overall, ALFI has specific comments on the details of the document. 

  • ChD publishes adopted amendments to Draft law 7566 on the extension of the measures introduced by the Grand-ducal regulation of 20 March 2020 concerning the holding of meetings in companies and in other legal persons

    CACEIS

  • On 5 June 2020, the Chambre des députés - Luxembourg published adopted amendments to Draft law 7566 on the extension of the measures introduced by the Grand-ducal regulation of 20 March 2020 concerning the holding of meetings in companies and in other legal persons.

    The main amendments are as followings:

    • A non-profit association may, notwithstanding any contrary provision in the statutes, whatever the number of participants at its general meeting, convene any general meeting to deliberate on the matters referred to in article 4, point 3, of the amended law of 21 April 1928.
    • A trade union governed by the amended law of 16 May 1975 on the statute for the co-ownership of built buildings may, in the event that the co-ownership regulations provide for a later date close, convene the general meeting of the co-owners on a date that is at the latest 30 September 2020. 
    • By way of derogation from article 19 of the amended law of 10 June 1999 on the organization of the profession of certified accountants, the general meeting of the year 2020 of the Ordre des
    • Experts-Comptables (OEC) can be convened on a date which is no later than 30 September 2020. 
    • By way of derogation from the amended law of 23 July 2016 on the audit profession, the general meeting of the year 2020 of the Institut des Réviseurs d’Entreprises (IRE) maybe convened on a date which is no later than September 30, 2020.
    • It is also applicable to meetings of members, shareholders or associates as well as meetings of the management bodies of: non-profit associations and foundations, agricultural associations, mutual societies, economic interest groups, European economic interest groups, the Housing Fund, co-ownership trade unions, the Institut des Réviseurs d’Entreprises (IRE), the Order of Chartered Accountants, Ordre des Experts-Comptables (OEC).
    • This law comes into force on the 1st day following the end of the state of crisis, except article 1-quater which shall enter into force, with retroactive effect, from 30 May 2020.
  • Luxembourg publishes Law on the register of fiducies and trusts

    CACEIS

  • On 13 July 2020, Luxembourg published the Law on the register of fiducies and trusts in the Official Journal. 

    The law has several components: 

    1. Obliged entities: all fiducies (including foreign) and express trusts for which a fiduciaire or a trustee is established or domiciled in Luxembourg, as well as all fiducies and express trusts for which the fiduciaire or trustee is established in a third country, where the fiduciaire or trustee enters into a business relationship in Luxembourg with a professional subject to the AML Law of 12 November 2004.
    2. Trusts or fiducies will need to be transparent about all the parties involved in these particular structures, including the person who set up the fiducies/trust, the fiduciaire/trustee, and the beneficiaries the assets belong to. 
    3. The Administration of Registration, Domains and VAT (AED) will oversee the register wherein the trustees and fiduciaires will have to enter certain information they are obliged to collect.
    4. Access to the register will be reserved for national authorities; self-regulatory bodies exercising their supervisory role in the fight against money laundering and the financing of terrorism; and for professionals in the context of applying customer due diligence measures. However, the law leaves the door open to any natural or legal person who demonstrates a legitimate interest in the prevention of the use of the financial system for the purpose of money laundering or terrorist financing. 
    5. Cooperation: the Financial Intelligence Unit (FIU), supervisory authorities, and self-regulatory bodies will be able to cooperate closely and exchange any information obtained, which is necessary to fulfil their respective missions in the fight against money laundering and the financing of terrorism. 
  • Luxembourg publishes CSSF Regulation no. 20-05 of 14 August 2020 amending the CSSF Regulation n ° 12-02 of 14 December 2012 relating to the fight against money laundering and the financing of terrorism

    CACEIS

  • On 20 August 2020,  CSSF Regulation n ° 20-05 of 14 August 2020 amending the CSSF Regulation n ° 12-02 of 14 December  2012 relating to the fight against money laundering and the financing of terrorism was published in the Official Journal.

    The modified version of CSSF Regulation 12-02 should follow in the upcoming days.

    Initially introduced to respond to remarks made in the third FATF Luxembourg mutual evaluation report of February 2010, CSSF Regulation n°12-02 aims to strengthen and complete the Luxembourg regulatory framework by specifying the key concepts of a risk-based approach, customer due diligence, adequate internal organization, and cooperation with the authorities.

    Following the transposition of the Fifth Anti-Money Laundering Directive into Luxembourg legislation, the CSSF has updated its regulation to incorporate the changes introduced in the law of 12 November 2004, as amended (the “AML Law”).

    The amended version includes changes :

    1. Simplified due diligence

    • When entering into a business relationship with a new client that represents a low money laundering (ML) and/or terrorist financing (TF) risk, the acceptance may be carried out in an automated way that does not require the intervention of a natural person.
    • The amended version also includes concrete examples of simplified due diligence measures that professionals may apply to the business relationship in the case of a justified low risk.

    2. Enhanced due diligence

    • Despite the AML Law no longer providing for the automatic application of enhanced due diligence measures regarding non-face-to-face business relationships, the CSSF requires professionals to take additional measures considering the potential higher risk of these relationships where the professional did not take the necessary guarantees into account.
    • Regarding the enhanced due diligence measures applied to politically exposed persons (PEPs), the amended version imposes a detection frequency of six months.

    3. Due diligence on transfers of funds: prior to the transfer of funds, the payer’s payment service provider is now obliged to verify the accuracy of the information on the payer when transferring funds within the European Union (EU) that exceed EUR1,000. 

    4.  Outsourcing: the obligations of a professional relying on a service provider or agent are detailed further. The monitoring obligation should allow the professional to verify and control compliance with the obligations of the service provider.

    5. Governance: the amended regulation specifies the functions of the person responsible for the compliance with AML-CTF matters (the “person responsible for compliance”) and of the person responsible for the control of this compliance (the “person responsible for control”).

  • Luxembourg publishes Grand-Ducal Regulation of 14 August 2020 amending the Grand-Ducal Regulation of 1 February 2010 clarifying certain provisions of the amended law of 12 November 2004 on the fight against money laundering and the financing of terrorism

    CACEIS

  • On 20 August 2020, Grand-Ducal Regulation of 14 August 2020 amending the Grand-Ducal Regulation of 1 February 2010 clarifying certain provisions of the amended law of 12 November 2004 on the fight against money laundering and the financing of terrorism was published in the Official Journal.

    In accordance with the AML Law, professionals should pay special attention to any activity they regard as particularly likely, by its nature, to be related to ML or TF. This has been now further clarified, so that Regulation requires special attention to be provided regarding the following transactions: 

    • significant transactions relative to a business relationship, 
    • transactions that exceed certain limits, 
    • very high account turnover inconsistent with the size of the balance, or 
    • transactions which fall out of the regular pattern of the account's activity.

    CDD measures shall be carried out at least every seven years, without prejudice to higher frequency depending on the risk assessment. Both CDD in general and the assessment of the extent of the measures to be applied on a risk-sensitive basis in particular, shall be consistent with the guidelines issued by the “supervisory” authorities and “self-regulatory bodies” (new requirements).

    The Regulation extends the obligation of applying mandatory customer due diligence measures to an  occasional transaction carried out by providers of virtual asset services (not only to transfers of funds and transactions carried out in a single operation or in several operations which appear to be linked).

    Concerning, Enhanced Due Diligence, business relationships and transactions involving high-risk countries constitute higher-risk situations which require particular attention and the application of enhanced due diligence measures. Approval of senior management is necessary for establishing or continuing the business relationship with respect to business relationships or transactions involving high-risk countries. It is now clarified that this authorisation procedure shall also include the AML compliance officer.

    For non-face-to-face transactions “and only if professional did not put in place electronic identification means, relevant trust services within the meaning of Regulation (EU) No 910/2014 or any other secure, electronic or remote identification process which is regulated, recognised, approved or accepted by the relevant national authorities”, professional should put in place policies and procedures to address any specific risks associated with such business relationships or transactions.

    Regarding the Country-by-Country Reporting regime, it`s not enough anymore that professionals document the responsibilities of each institution in the fight against ML/TF but they should also “clearly understand” respective responsibilities.

    In addition, customer due diligence must comprise the set up by the professional of an electronic identification and trust services within the meaning of Regulation (EU) No 910/2014 or any other secure, electronic or remote identification process regulated, recognized, approved or accepted by the relevant national authorities.

    Concerning PEP, it is provided that the appropriate risk management systems to determine whether a potential customer, a customer or the beneficial owner is a politically exposed person should include risk based procedures. The Regulation clarifies that such authorisation procedure requiring approval from the senior management shall also involve the AML compliance officer.

    Moreover, it is clarified that the obligation to comply with all of the requirements listed in Article 3 of the Law (notably application of the CDD measures) only applies to “majority-owned” subsidiaries. Appropriate internal management requirements shall include the obligation to establish and maintain internal procedures, policies and controls, including risk management methods, to prevent money laundering and terrorist financing and to communicate these to employees.

    Finally, professionals should report suspicious transactions for each fact which might be an indication of money laundering, but also “an associated predicate offence” or terrorist financing due. The Regulation clarifies the extent of the risk assessment professionals must carry out when managing several types of risks as well as the powers of the Cellule de renseignement financier (CRF).

  • Here are several publications concerning the circular CSSF 20/747 on the establishing a central electronic data retrieval system related to IBAN accounts and safe-deposit boxes

    CACEIS

  • Here are several publications concerning the circular CSSF 20/747 on the establishing a central electronic data retrieval system related to IBAN accounts and safe-deposit boxes.

    1. On 23 July 2020, the Commission de Surveillance du secteur financier (CSSF)  published Circular 20/747 on Technical procedures relating to the application of the Law of 25 March 2020 establishing a central electronic data retrieval system related to IBAN accounts and safe-deposit boxes.

    The Circular is currently only in French.

    This Circular aims to provide professionals as defined in article 1, point 6 of the Law, with the necessary details for the establishment and operation in their IT systems, the necessary technical infrastructure to allow the efficient functioning, in the relationship between the CSSF and the professional, of the central electronic data retrieval system set up and managed by the CSSF. 

    The purpose of this Circular is more specifically to inform professionals about the technical and IT aspects of the central electronic data retrieval system so that they can develop and adapt their systems in accordance with the technical requirements of the system such as that it is set up by the CSSF. 

    The system is based on the creation and provision for the CSSF of a file by each of the professionals, with regard to payment accounts, bank accounts identified by an IBAN number and safes kept by credit institutions, thus excluding accounts kept for internal or technical needs. The CSSF, in its capacity as manager, will access the respective files of professionals by means of a secure procedure in order to be able to carry out searches.

    2. On 20 August 2020, the Commission de Surveillance du secteur financier (CSSF) published Q&As related to Circular CSSF 20/747 with regards the establishment of a central electronic data retrieval system.

    The CSSF clarifies the following:

    • The information to be reported is required to refer to accounts that are established and can be operated/used by the customer, i.e. the information that needs to be submitted is the one linked to accounts actually existing.
    • Relevant accounts / safe-deposit boxes, if closed on the exact date of entry into force of the law, i.e. on 26 March 2020, are also to be included in the file. However, if they have been closed before, they are out of scope and are not to be included in the file.
    • In case of a customer who is a natural person, connected with several other natural persons registered as joint beneficiaries or with persons purporting to act on behalf of this customer, the professionals must submit relevant data allowing the identification of these natural persons.
    • The data to be submitted in order to fill in the field “UBO” in the file must be aligned with the definition of the ultimate beneficial owner, as provided for under article 1 (7) of the AML/CFT law.
    • For any questions for example on the scope and details of customer due diligence measures, the professional shall refer to the AML/CFT law and its implementing measures.
    • Professionals shall use the following email address in case of questions related to the implementation of the system: registre_compte@cssf.lu
    • Once the file has been picked up by CSSF and processed by the validator, the CSSF will notify immediately the professionals via the API about the status of the processing (either “accepted” or “rejected”, list of the errors encountered is provided through the API).
    • In case of failure notification due to unsuccessful submission of the file, the professionals must continue to submit a file containing the most recent data available until it succeeds to submit it.
    • In case of failure, the feedback file contains all the errors related to the validation itself which will be communicated to the professionals.
    • The CSSF is working on the test environments setup. The availability of this environment will be communicated soon.
    • Empty fields shall not appear in the JSON.
    • The professional will remain the sole contact of the CSSF. It is also the case when the professional decides to delegate one or several of its obligation(s) to external sub-contractor(s).

    3. On 7 September 2020, the Commission de Surveillance du secteur financier (CSSF) updated Annex 1 of the Circular CSSF 20/747 with following information to the Technical guide:

    • Modification of the enrollment procedure 
    • Modification of CSSF’s authentication to the professional interface 
    • Additional information of file storage/clarification on the frequency of file sending 
    • Additional information on the environment  made available by the CSSF 
    • Additional information to be provided for the MFT account creation request.
  • Capital requirements / CRD / CRR / Basel III/IV

    CSSF Regulation N° 20-03 of 30 June 2020 sets the countercyclical buffer rate that the banking institutions shall appy for the 3rd quarter of 2020

    CACEIS

  • On 3 July 2020, the Commission de Surveillance du secteur financier (CSSF) published CSSF Regulation N° 20-03 of 30 June 2020 on the setting of the countercyclical buffer rate for the third quarter of 2020.

    The countercyclical buffer rate for the third quarter of 2020 remains at 0.50%.

    Indicators to assess the countercyclical buffer rate:

    For the 1st quarter of 2020:

    • The credit-to-GDP ratio, calculated on the basis of bank loans granted to Luxembourg households and non-financial companies, is estimated at 103.9%;
    • The gap of the credit-to-GDP ratio from its long-term trend is estimated at -1.3%;
    • The counter-cyclical buffer rate benchmark calculated in accordance with Recommendation CERS / 2014/1 is 0%.

    Considerations and assessment of the countercyclical buffer rate:

    • The gap of the credit-to-GDP ratio from its long-term trend is below the reference threshold of 2%;
    • The acceleration of the credit cycle in the current macroeconomic environment is likely to be a potential source of systemic risk.

    As a preventive measure, the CSSF kept the countercyclical buffer rate unchanged at 0.50% of risk-weighted assets on Luxembourg exposures and remains vigilant with regard to the evolution of credit, in particular to non-financial companies.

  • ChD publishes Draft Law 7638 as regards the loss absorption and recapitalization capacity of credit institutions and investment firms, capital requirements and risk management

    CACEIS

  • On 27 July 2020, the Chambre des deputes de Luxembourg published Draft Law 7638 on:

    1. transposition:

    a) of Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019 amending Directive 2013/36 / EU with regard to exempted entities, companies financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures; and

    b) Directive (EU) 2019/879 of the European Parliament and of the Council of 20 May 2019 amending Directive 2014/59 / EU as regards the loss absorption and recapitalization capacity of credit institutions and investment firms and Directive 98/26 / EC;

    2.implementation of Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, capital requirements and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures and reporting and publication requirements , and Regulation (EU) No 648/2012; and

    3. modification:

    a) of the amended law of 5 April 1993 on the financial sector;

    b) the amended law of 18 December 2015 on the failure of credit institutions and certain investment firms;

    c) the amended law of 24 March 1989 on the State Bank and Caisse d'Epargne, Luxembourg;

    d) the amended law of 23 December 1998 establishing a supervisory commission for the financial sector;

    e) the amended law of 12 November 2004 on the fight against money laundering and the financing of terrorism;

    f) the amended law of 10 November 2009 relating to payment services, the activity of an electronic money establishment and the finality of settlement in payment systems and securities settlement systems; and

    g) of the amended law of 7 December 2015 on the insurance sector.

    The most important volume of the new prudential rules applicable to banks is to be found in the regulations of direct application, of which only a few isolated provisions need to be operationalized through this bill. These include the provisions on the introduction of a binding leverage ratio and a stable funding ratio, as well as the definition of the new standard on "total loss absorption capacity".

    The draft law also amends and strengthens the second pillar of banking supervision, i.e. the additional capital requirements, by introducing the possibility for the CSSF to impose capital recommendations in addition to the capital requirements, clarifying the articulation of the different capital cushions.

    In order to ensure an efficient and credible application of the internal bail-out tool, the draft law aims at adapting the modalities related to the determination of the minimum capital requirement and eligible instruments specific to each institution. The calibration of the requirements applicable to entities is being recast in order to better modulate the level and quality of the minimum requirement according to the degree of risk of each institution. In addition, it is proposed to strengthen depositor protection by introducing an additional safety net for the benefit of the deposit guarantee fund.

    The draft law, through amendments to the existing legal framework, will further strengthen the ability of banks to withstand potential future shocks and thus support the stability of the financial sector as a whole.

  • COVID-19 Regulatory Measures

    ChD publishes amendments to Draft Law 7594 to stimulate business investment in the COVID-19 context

    CACEIS

  • On 1 July 2020, the Chambre des députés - Luxembourg published amendments to Draft Law 7594 to stimulate business investment in the COVID-19 context.

    This new scheme proposes to grant, under certain conditions, a financial aid to businesses that face liquidity problems related to the COVID-19 crisis, but that carry out an investment in favour of a development project, a process and organisational innovation project, an energy-efficiency project or a project to exceed environmental standards. The amount of such financial aid would depend on the investment amount and the size of the company.

    The main amendments:

    • make it possible to take better account of the impact to which businesses have to face, since companies must suffer a loss of turnover of at least 15% during the months of May, April and June, compared to the same period of the previous year or the monthly average for the year 2019. This covers the companies that continued to exercise their economic activities during the months of April and May, however did not suffer the economic impact of the COVID-19 than in June. 
    • specify that only the aid greater than 100,000 euros must be published on the transparency site of the European Commission.
  • CSSF announces the launch of the ESMA supervisory exercise in relation to the ESRB Recommendation on Liquidity Risk in Investment Funds

    CACEIS

  • On 10 July 2020, the Commission de Surveillance du secteur financier (CSSF) announced the launch of the ESMA supervisory exercise in relation to the ESRB Recommendation on Liquidity Risk in Investment Funds.

    As part of its actions to address the impact of COVID-19 on the financial system from a macroprudential perspective, the ESRB issued on 6 May 2020 a recommendation to ESMA to undertake together with national competent authorities a focused piece of supervisory engagement with those investment funds having significant exposure to corporate debt and real estate assets. 

    Based on recent COVID-19 experiences, the ESRB has identified corporate debt and real estate investment funds as particularly high-priority areas for enhanced scrutiny from a financial stability perspective.

    Through the supervisory engagement, the preparedness of these investment fund types to potential future elevated redemption pressures, a deterioration in market liquidity conditions and/or increased valuation uncertainty shall be assessed and potential enhancements shall be evaluated.

    On the basis of the data collection questionnaire prepared by ESMA, the CSSF has now launched this exercise by asking a larger sample of UCITS- and alternative investment fund managers to complete, by 31 July 2020, the questionnaire for selected UCITS as well as alternative investment funds. All concerned investment fund managers have been contacted directly by the CSSF in that context.

    In order to benefit from a secured exchange platform and ex ante (before submission to the CSSF) data quality checks, the response questionnaire for corporate debt funds will have to be submitted by the investment fund managers through CSSF’s eDesk portal. For that purpose, a dedicated section to complete this questionnaire will be accessible in the eDesk portal on 20 July 2020.

    The industry will be duly informed once this section, together with related guidance, will be available for use. Any complementary guidance from ESMA that may become available in that context will also be included in that user guide.

  • CSSF reiterates precautionary instructions amid resurgence in COVID-19 cases

    CACEIS

  • On 17 July 2020, the Commission de Surveillance du secteur financier (CSSF) informed the supervised entities to:

    • review their plans to lift lockdown (plans de déconfinement) to ensure that they are in line with the current situation, especially with regard to persons with vulnerabilities;
    • ensure that the health measures mentioned in our communication of 19 June are strictly observed.
  • Luxembourg publishes Law of 24 July 2020 on the deferral of DAC 6, CRS and FATCA deadlines

    CACEIS

  • On 24 July 2020, the Law of 24 July 2020 on the deferral of DAC 6, CRS and FATCA deadlines was published in the Official Journal.

    The objective of this Law is to implement Council Directive (EU) 2020/876 of 24 June 2020 giving EU Member States the option to defer the deadlines for automatic exchanges of information under Directive 2014/107/EU and for filing and exchanging information on reportable cross-border arrangements under Directive 2018/822/EU. The Law also extends reporting deadlines under the Foreign Account and Tax Compliance Act.

    New DAC 6 deadlines:

    • Information relating to "historical" reportable cross-border arrangements (i.e. cross-border arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020) must be filed before 28 February 2021 (instead of 31 August 2020);
    • The date for the beginning of the period of 30 days for filing information on reportable cross-border arrangements made available for implementation, ready for implementation, or where the first step in their implementation occurred between 1 July 2020 and 31 December 2020, will be 1 January 2021 (instead of 1 July 2020); 
    • The first quarterly reporting of marketable arrangements must be performed by 30 April 2021 at the latest;
    • Intermediaries subject to professional secrecy must make their notification in respect of reportable cross-border arrangements made available for implementation, ready for implementation, or where the first step in their implementation occurred between 1 July 2020 and 31 December 2020, within 10 days as from 1 January 2021.
    • The first automatic exchange of information shall be performed by the Luxembourg tax authorities by 30 April 2021 at the latest (instead of 31 October 2020).

    New FATCA/CRS deadlines:

    The Law amends the FATCA Law of 24 July 2015 and the CRS Law of 18 December 2015 so as to extend the deadlines for Luxembourg financial institutions to provide the Luxembourg tax authorities with information on "reportable financial accounts" in relation to the tax year 2019 to 30 September 2020 (instead of 30 June 2020).

    This law comes into force on 25 July 2020, with the exception of articles 1 to 7 (FATCA, CRS, DAC6) which come into force on June 30, 2020.

  • Directive on security of Network and Information Systems (NIS Directive)

    CSSF publishes CSSF Regulation n° 20-04 of 15 July 2020 on the definition of essential services according to the Law of 28 May 2019 about security of network and information systems across the EU

    CACEIS

  • On 20 July 2020, the Commission de Surveillance du secteur financier (CSSF) published  CSSF Regulation n° 20-04 of 15 July 2020 on the definition of essential services according to the Law of 28 May 2019 transposing Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the European Union.

    The essential services are the following : 

    a) For credit institutions:

    i. Custodian bank function;

    ii. Deposit management;

    iii. Credit granting;

    iv. Investment service;

    v. Payment service.

    b) For financial market infrastructures:

    i. Admission to trading of financial instruments on a regulated market or MTF trading platform

    The Regulation comes into force on 1st August 2020.

  • European Market Infrastructure Regulation (EMIR)

    CSSF publishes EU Corrigendum to Commission Implementing Regulation (EU) 2017/105 of 19 October 2016 about cross-currency swaps and forwards

    CACEIS

  • On 27 July 2020, the Commission de Surveillance du secteur financier (CSSF)  publishes Corrigendum to Commission Implementing Regulation (EU) 2017/105 of 19 October 2016 amending Implementing Regulation (EU) No 1247/2012 laying down implementing technical standards with regard to the format and frequency of trade reports to trade repositories according to Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories.

    for: 'In the case of cross-currency swaps and currency swaps and forwards, the counterparty that receives the currency first in alphabetical order according to the International Organisation for Standardisation (ISO) standard ISO 4217 is identified as the seller and the counterparty that delivers the currency is identified as the buyer'. 

    read: 'In the case of cross-currency swaps and currency swaps and forwards, the counterparty that receives the first currency in alphabetical order according to the International Organisation for Standardisation (ISO) standard ISO 4217 is identified as the buyer, and the counterparty that delivers the first currency is identified as the seller'.

  • Financial Reporting (FINREP)

    CSSF publishes status of problematic EBA validation rules

    CACEIS

  • On 17 July 2020, the Commission de Surveillance du secteur financier (CSSF) published the status of problematic EBA validation rules.

    This excel document should be read with the pdf document under : www.cssf.lu/fileadmin/files/Reporting_legal/Recueil_banques/Read_Me_EBA_Problematic_validation_rules.pdf

    that complements the excel file ans explain more precisely how EBA problematic rules shall be treated.

    The Excel file contains both (1) a list of EBA “Problematic” Validation rules that has been subject to questioning either by reporting entities or by the CSSF itself and (2) the latest official list of EBA Validation rules (also available on EBA’s website depending on the latest applicable taxonomy).

    EBA Problematic Validation rules generally lead to the opening, either by the reporting entity or by the CSSF, of an EBA Q&A after the problematic nature of the rule has been assessed by the CSSF. While reporting entities are required to follow closely the publication of EBA Q&As and comply with its conclusions, the CSSF intends to provide a support - in particular - as regards validation rules that have been causing troubles to Luxembourgish reporting entities. Nevertheless, it should be kept in mind that the objective of the CSSF is to stay aligned as much as possible with the official EBA list of validation rules since a precocious deactivation of any validation rule could lead to a massive and undesirable resubmission process. 

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

    CSSF publishes G2.1 template addressed to Investment fund managers

    CACEIS

  • On 3 July 2020, the Commission de Surveillance du secteur financier (CSSF) published G2.1 template addressed to Investment fund managers.  This reporting needs to be completed on a quarterly basis. 

  • CSSF publishes FAQ regarding Circular CSSF 02/77

    CACEIS

  • On 7 July 2020, the Commission de Surveillance du secteur financier (CSSF) published  a list of Q&As in relation to the provisions of CSSF Circular 02/77 concerning the protection of investors in case of NAV calculation error and correction of the consequences resulting from noncompliance with the investment rules applicable to undertakings for collective investment. 

    The CSSF FAQ on CSSF Circular 02/77 applies to UCITS and UCI subject to part II of the 2010 Law and outlines the principles to be applied by SIFs.

    The FAQ is divided in 3 chapters: 

    • Chapter I - General application of Circular CSSF 02/77
    • Chapter II – Selection of the correction method
    • Chapter III – Tolerance threshold of Circular CSSF 02/77
  • CSSF updates application questionnaire to set up additional sub-fund(s) to existing UCI

    CACEIS

  • On 22 July 2020, the Commission de Surveillance du secteur financier (CSSF) updated the application questionnaire to set up additional sub-fund(s) to existing undertaking for collective investment.

  • CSSF updates FAQ on Circular CSSF 02/77 concerning the protection of investors in case of NAV calculation error and correction of the consequences resulting from non-compliance with the investment rules applicable to UCI

    CACEIS

  • On 28 July 2020, the Commission de Surveillance du secteur financier (CSSF) updated its FAQ on Circular CSSF 02/77 concerning the protection of investors in case of NAV calculation error and correction of the consequences resulting from non-compliance with the investment rules applicable to undertakings for collective investment.

    The CSSF updated question N° 11 and decision trees 1 & 2 from the appendix. 

    Question: Should a UCITS that exceeds the level of leverage as disclosed to investors in the fund prospectus in accordance with box 24 of the CESR guidelines on Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS (CESR-10/788 dated 28/07/2010) for UCITS, respectively should a regulated AIF that exceeds the leverage limits as disclosed to investors in accordance with Article 21 (1) (a) of the Law of 12 July 2013 , notify such situation to the CSSF in the context of the provisions of Circular CSSF 02/77?

    Answer: No. However, the CSSF expects that such a breach is adequately monitored and corrected in accordance with applicable internal procedures (escalation, etc.).

  • CSSF updates FAQ concerning the Luxembourg Law of 17 December 2010 relating to UCI notably on the eligibility of Loans for UCITS

    CACEIS

  • On 7 August 2020, the Commission de Surveillance du secteur financier (CSSF) published version 9 of its FAQ concerning the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment.

    New FAQ 1.13 on the eligibility of Loans for UCITS is added. The CSSF's answer is that: 

    • Loans do not constitute eligible investments for UCITS.
    • Loans cannot be considered as assets as referred to in Article 41 (1) and (2) (a) of the Law of 2010 as they do not qualify as:
      i. money market instruments within the meaning of article 1 (23) of the Law of 2010 and Articles 3 and 4 of Regulation 2008, further clarified by the CESR guidelines;
      ii. transferable securities within the meaning of Article 1 (34) of the Law of 2010 and Article 2 of the Regulation 2008, further clarified by the CESR guidelines. 
    • UCITS that would be invested in Loans have to dis-invest from those positions by 31 December 2020, taking into account the best interests of investors. 
    • In addition, the prospectuses of those UCITS, offering the possibility to invest in Loans, have to be updated, by 31 March 2021 at the latest, in order to no longer provide for the possibility for such investments. 
  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    CSSF Circular 20/743 amends Circular 13/716 regarding third country equivalency and reverse solicitation as stated in Art 32-1 of LSF

    CACEIS

  • On 1 July 2020, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 20/743 - Amendment to Circular CSSF 19/716 regarding the provision in Luxembourg of investment services or performance of investment activities and ancillary services in accordance with Article 32-1 of the LFS.

    The main amendments are as followings:

    • Definition of the “reverse solicitation”: the fact for a client established or located in Luxembourg to trigger the provision of a service on his/her own initiative investment or the exercise of an investment activity by a company from third countries;
    • When an investment service is provided on the basis of a reverse solicitation, third-country companies are exempt from applying for authorization in Luxembourg, or to establish a branch there.
    • Article 32-1 of the LSF applies to investment services provided “to Luxembourg ”, that is to say on Luxembourg territory. The CSSF considers that the investment service is presumed to be provided in Luxembourg when one of the following conditions is met:
      a. the third country enterprise has an establishment (for example, a branch) in Luxembourg;
      b. the third country company provides an investment service to a retail client, established or located in Luxembourg;
      c. the place where the "characteristic service" of the service is provided, which means the essential benefit for which payment is due, is Luxembourg.

    There are therefore special situations where, although the third country company provide investment services to a client, other than a retail client, established or located in Luxembourg, the service can be considered as not being supplied "in Luxembourg". It is the responsibility of the company to carry out the above analysis before any provision of services, document and keep the analysis performed.

  • Money Market Funds Regulation (MMFR)

    CSSF publishes transmission instructions for reportings under Article 37 MMF Regulation

    CACEIS

  • On 22 July 2020, the Commission de Surveillance du secteur financier (CSSF) informs that as of July 22, 2020 it accepts the submission of reportings under Article 37 of the Money Market Funds Regulation according to the amended XML schema (version 1.1) published by ESMA on June 4, 2020 in the test environment.

    The national specifications to be respected by the entities under the supervision of the CSSF in order to submit the reporting of money market funds are published on its website:

    The CSSF would like to remind that the reference period for the first reporting remains Q1 2020 but the submission to National Competent Authorities of the quarterly reportings for Q1 and Q2 2020 has been postponed to September 2020. In this context, as of September 1, 2020, the CSSF will accept submission of quarterly reporting for Q1 and Q2 2020 and the following quarters in the production environment.

    Submission of the reportings in the test environment before the September deadline is encouraged.

  • Securities

    ChD publishes Draft law 7637 amending the amended law of 5 April 1993 on the financial sector and the law of 6 April 2013 on dematerialised securities

    CACEIS

  • On 27 July 2020, the Chambre des députés - Luxembourg published Draft law amending the amended law of 5 April 1993 on the financial sector and the law of 6 April 2013 on dematerialised securities.

    The Law of 6 April 2013 on dematerialised securities allows any issuer to issue equity or debt securities directly in dematerialised form. The main purpose of this bill is to modernise the Law of 6 April 2013 by expressly recognising the possibility of using secure electronic registration mechanisms, including distributed electronic registers or databases, for the purpose of issuing dematerialised securities.

    Both the issue of dematerialised securities and the conversion of issued securities into dematerialised securities are exclusively and compulsorily carried out by means of the registration of the securities in an issue account held with a settlement institution or a central account holder. For the sake of clarity and legal certainty, the draft law seeks to define the issuance account while stating that this account may be maintained and entries of securities may be made in it or through secure electronic recording devices.

    In addition, the draft law aims to broaden the scope of application of the Law of 6 April 2013 by granting investment firms and credit institutions, as defined in the amended Law of 5 April 1993 on the financial sector, the possibility to act as central account keeper for unlisted debt securities in order to provide a wider range of services relating to dematerialised securities.

  • Third Country Access & Equivalence Regimes

    Luxembourg publishes CSSF Regulation N° 20-02 on the equivalence of certain third countries regarding supervision and authorisation rules for providing investment services by third-country undertakings

    CACEIS

  • On 1 July 2020, the CSSF Regulation N° 20-02 of 29 June 2020 on the equivalence of certain third countries with respect to supervision and authorisation rules for the purpose of providing investment services or performing investment activities and ancillary services by third-country undertakings was published on the Legilux (Journal Officiel du Grand-Duché de Luxembourg).

    Regarding the equivalence of the requirements for the purposes article 32-1 paragraph (1), paragraph 2 of the amended law of April 5, 1993 relating to the financial sector, the following third countries and territories are added:

    1. Canada
    2. Swiss Confederation
    3. United States of America
    4. Japan
    5. Hong Kong Special Administrative Region of the People's Republic of China
    6. Republic of Singapore

    These countries are considered to apply to companies having their central administration or their registered office in this third country supervision and accreditation, rules equivalent to those of the Luxembourg's law of April 5, 1993 relating to the financial sector, as amended. Where appropriate, the equivalence of the third country may be limited to the services.

    This equivalence decision may be revoked when one or more elements on the basis of which the decision was taken are no longer present.

  • NETHERLANDS

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

    AFM starts follow-up investigation into transaction monitoring of investment firms and institutions

    CACEIS

  • On 26 August 2020, the Autoriteit Financiële Markten (AFM) announced it started the follow-up investigation into transaction monitoring of investment firms and institutions.

    According to the Money Laundering and Terrorist Financing (Prevention) Act (Wwft), institutions under the Wwft are required, among other things, to continuously monitor their business relationships (including clients). They must also monitor the transactions of their business relations and inform the FIU as soon as possible in the event of an unusual transaction.

    The follow-up study, which started in June 2020, consists of six studies at individual investment institutions and investment firms. The authority checks, among other things, whether the companies draw up transaction profiles for their clients, apply detection rules to identify 'conspicuous' transactions and report promptly and properly to the Financial Intelligence Unit Netherlands (FIU).

  • AFM publishes September annual Wwft questionnaire for investment institutions

    CACEIS

  • On 27 August 2020, the Autoriteit Financiële Markten (AFM) published the September annual Wwft questionnaire for investment institutions.

    In the first week of September, investment institutions and their managers receive a request from the AFM to complete a questionnaire with questions about the risks of money laundering, terrorist financing and compliance with sanctions regulations.

    As a reminder, the AFM's supervision is risk-based. This means that the AFM uses information supplied to draw up risk profiles for the various (managers of the) investment institutions. The questionnaire must be completed every year. 

  • Benchmarks

    DNB publishes change in interest rate benchmarks

    CACEIS

  • On 2 July 2020, DNB published a newsletter regarding the change in interest rate benchmarks. The global transition from Inter Bank Offered Rates (IBORs) to Risk Free Rates (RFRs) will end on January 1, 2022. The reasons for this transition are the manipulation of various benchmarks and the reduced liquidity of some underlying unsecured markets.

    Although 2022 still sounds a long way off, it is important that financial institutions and customers are already switching to new benchmarks and introducing fallback options for current contracts. A disordered and / or incomplete transition can, among other things, create prudential risks.

  • Directive on the protection of persons who report breaches of Union law (Whistleblowers Directive)

    Netherlands consults on the amendment of the Whistleblowers Authority Act

    CACEIS

  • On 31 July 2020, the Netherlands launched a consultation on the amendment of the Whistleblowers Authority Act to implement the EU Directive.

    Implementation of the Directive will strengthen the legal position of whistleblowers (including by reversing the burden of proof in the event of prejudice against a report) and in a wider circle of people who receive support and legal protection when a suspected abuse is suspected (including applicants, shareholders , directors and anyone working under the supervision and direction of contractors, subcontractors and suppliers are entitled to legal protection and support, and those assisting a reporter and third parties involved are protected).

    The implementation of the guideline further leads to a number of additional obligations for employers (tightening of requirements for internal reporting channels) and for designated competent authorities (setting up external reporting channels).

  • Financial instruments

    DNB shares results of capital audit

    CACEIS

  • On 2 July 2020, DNB published a newsletter regarding the capital audit by DNB, which has shown that there is still a lot of uncertainty about the use of preference shares.
    DNB deals in this edition with shares that give shareholders a number of preferential rights, the preference shares. Issuance of preference shares is permitted provided that the ordinary shares continue to comply with the regulations that apply to CET1 instruments (eg ordinary shares must bear the first loss and share the profit last). That is why it is important to use the following principles at least for ordinary shares: pari passu (equal rights) and pro rata (in the same ratio). These two principles are briefly explained in the newsletter.
    Incidentally, preference shares never qualify as CET1 instruments and should therefore never be part of the shareholders' equity and qualifying capital.
    Most investment firms and institutions will shortly receive a letter by email with the findings of our investigation. Based on this information, we ask you to investigate whether your company meets the capital requirements.

  • Financial Market Amendment Law

    Netherlands consults on the Financial Markets Amendment Decree 2021

    CACEIS

  • On 1 July 2020, the Netherlands launched a consultation on the Financial Markets Amendment Decree 2021 .

    This Decree is a collective decree that changes the Decree on Conduct Supervision of Financial Undertakings under the Financial Supervision Act (BGfo), the Decree on Prudential Rules under the Financial Supervision Act (Bpr), the BES Financial Markets Decree, as well as some other decisions in the field of financial markets.

  • Investment management

    Netherlands consults on the Decree implementing various regulations on cross-border distribution and sustainability

    CACEIS

  • On 20 August, the Netherlands launched a consultation on the Decree implementing various regulations on cross-border distribution and sustainability.

    This proposal aims to amend the Decree implementing EU regulations on financial markets. The planned amendments to the Decree implementing EU regulations on financial markets aim to designate the Netherlands Authority for the Financial Markets (AFM) as the competent authority with regard to the regulation cross-border distribution of investment institutions and UCITS and several regulations on sustainability.

    As a result, the AFM can impose an order subject to a penalty or an administrative fine if the relevant articles of the regulation on cross-border distribution of investment institutions and UCITS, the regulation on information provision on sustainability or the regulation on the promotion of sustainable investments are violated.

    Managers of investment funds and UCITS, managers of European venture capital funds, managers of European social entrepreneurship funds, investment firms, banks, insurers, regulators and other stakeholders are impacted by the draft decree.

    The consultation runs until 1 October 2020.

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

    AFM announces MiFID II areas of improvement

    CACEIS

  • On 28 August 2020, the Autoriteit Financiële Markten (AFM) announced MiFID II areas of improvement.

    A study by the AFM on the effectiveness of the MiFID II regulatory framework for the fixed-income and derivatives markets shows price formation still needs to be more transparent. The MiFID II rules are also considered less suitable for the fixed-income markets. The AFM does, however, note a shift towards on-venue trading for bonds and derivatives as trading in derivatives subject to the clearing obligation has moved to multilateral platform.

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

    DNB shares new prudential framework for investment firms

    CACEIS

  • On 2 July 2020, DNB published a newsletter on the new prudential framework for investment firms, that will enter into force on 26 June next year. The new framework includes the capital requirements for investment firms.

    Within DNB, the implementation of the IFR and IFD is structured on a project basis to ensure that all relevant knowledge and expertise within DNB is properly involved. In addition, project-based management provides a clear point of contact for questions about the new regulations. Because the new prudential framework for investment firms entails a substantial change in the applicable rules, it is important for DNB to involve the sector as much as possible in the implementation and choices to be made. In that context, DNB has close contact with the various industry associations and DNB will share as much information with the sector as possible up to June 26, 2021. 

    DNB reminds that on June 4, EBA published the first draft technical standards under the IFR / IFD for consultation on its website. These draft standards specify, among other things, the IFR / IFD requirements regarding capital, reporting and remuneration policy.

    At the same time, EBA started a data collection, for the purpose of an impact analysis and the finalization of these standards. Participation in the data request is not mandatory for investment firms.
    Nevertheless, DNB calls on investment firms to participate wherever possible, so that the impact on Dutch investment firms is sufficiently included in the analysis at European level.
    DNB also expects that this exercise will provide the institutions with useful insights into the effects that IFR / IFD will have.

  • Netherlands consults on Prudential supervision of investment firms directive

    CACEIS

  • On 10 July 2020, the government of the Netherlands opened a consultation on Prudential supervision of investment firms directive.

    The consultation targets investment firms and investment fund managers and UCITS managers insofar as they also provide investment services or perform investment activities. 

    The Basel Committee standards do not fully reflect the specific risks associated with the services and activities of investment firms, but focus on addressing the most common risks for banks. For that reason, this Regulation and Directive provide for a new prudential regime for investment firms which addresses the specific risks for investment firms which is the subject of the current consultation.

  • SWITZERLAND

    Banking supervision

    SNB informs on U.S. dollar liquidity-providing operations from 1 September 2020

    CACEIS

  • On 20 August 2020, the Swiss National Bank (SNB) informed on U.S. dollar liquidity-providing operations from 1 September 2020.

    In view of continuing improvements in U.S. dollar funding conditions and the low demand at recent 7-day maturity U.S. dollar liquidity-providing operations, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank, in consultation with the Federal Reserve, have jointly decided to further reduce the frequency of their 7-day operations from three times per week to once per week. This operational change will be effective as of 1 September 2020. At the same time, these central banks will continue to hold weekly operations with an 84-day maturity.

  • COVID-19 Regulatory Measures

    Switzerland incorporates Emergency ordinance on COVID-19 credits into ordinary law

    CACEIS

  • On 1 July 2020, the Federal Council announced Switzerland is to incorporate Emergency ordinance on COVID-19 credits into ordinary law.

    The Federal Council initiated the consultation on the new Federal Act on COVID-19 Credits with Joint and Several Guarantee. This aims to incorporate the COVID-19 Joint and Several Guarantee Ordinance into ordinary law. 

    This is necessary because the Joint and Several Guarantee Ordinance was issued as an emergency ordinance and is therefore valid only until 25 September 2020. The bill does not affect the ongoing granting of credits. Applications for guaranteed COVID-19 credits can be submitted until 31 July 2020. The new law regulates all important aspects over the lifetime of the credits. It also contains instruments to combat abuse and deal with cases of hardship.

    The Federal Council must present the bill to incorporate the emergency ordinance into ordinary law to Parliament within six months. For the guaranteed COVID-19 credits, given the ramifications, this is to be achieved by means of a separate law. By contrast, for the remaining emergency ordinances, a common blanket framework is planned. The bill regulates the rights and obligations of the four recognised guarantee organisations, in particular in cases where the banks or PostFinance AG draw on the guarantee and the credit claims thus pass to the guarantee organisation. At the same time, it responds to demands from Parliament.

    The Federal Council wants to refrain from a general debt write-off for entire economic sectors or industries. Such a solution would be unfair because it would benefit only those companies which applied for bridging credit facilities. Furthermore, it would provide powerful false incentives. The planned repayment periods will mean that, to repay a COVID-19 credit not exceeding one-tenth of annual turnover, a company will have to deploy only 1% to 2% of its turnover; this should be affordable for companies whose finances are fundamentally sound.

  • SNB publishes Leaflet on the SNB-COVID-19 Refinancing Facility (CRF)

    CACEIS

  • On 17 July 2020, the Swiss National Bank (SNB) published leaflet on the SNB-COVID-19 Refinancing Facility (CRF). 

    The Swiss National Bank (SNB) provides to cushion the economic consequences the COVID-19 Pandemic a temporary, standing facility (SNB-COVID-19-Refinancing Facility, CRF). Under this facility, liquidity can be considered covered loan against claims from loans according to COVID-19 Solidarity surety ordinance and, on the initiative of the SNB, against others approved by itCollateral.

    This leaflet defines the modalities for loans for which claims are made Federal and cantonal credit protection programs in connection with the COVID-19 pandemic serve as security. For obtaining loans against other collateral, the conditions will depend on the duration of the refinancing and the type of Collateral set. This leaflet and the contracts to be concluded between the banks and the SNB set out the terms and operational details when using the facility firmly.

  • Switzerland publishes Draft Federal Act on the legal basis for Federal Council ordinances to overcome the COVID-19 pandemic

    CACEIS

  • On 18 August 2020, the Draft Federal Act on the legal basis for Federal Council ordinances to overcome the COVID-19 pandemic was published in the Official Journal.

    The Federal Council revised its preliminary draft following the consultation. It established the principle of the general and compulsory involvement of the cantons in the preparation of measures affecting their powers and supplemented the provisions on measures in the areas of health capacities, worker protection and culture.

    The draft now comprises 14 articles. 

    Highlight on Article 6: Measures in the field of company assemblies

    The Federal Council may derogate from the provisions of the Civil Code and the Code of Obligations if the exercise of the rights of participants in company meetings so requires and provide for the exercise of their rights: 

    a. in writing or in electronic form;
    b. through an independent representative.

  • Financial Market Amendment Law

    FINMA consults on partial revision of “Direct transmission” Circular

    CACEIS

  • On 20 August 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) launched a consultation on partial revision of “Direct transmission” Circular.

    Having carried out an ex-post evaluation of the “Direct transmission” Circular in 2019, the Swiss Financial Market Supervisory Authority FINMA is now launching a consultation on the partial revision of the Circular. This will run until 15 October 2020.

    The “Direct transmission” Circular entered into force on 1 January 2017. It serves to ensure the direct, legally secure and timely exchange of information between supervised institutions and foreign authorities. FINMA already announced its intention when the Circular was adopted of reviewing it two years after its entry into force. It accordingly carried out an ex-post evaluation from July to September 2019. The interested parties used this opportunity to communicate their experiences with the Circular so far and suggested improvements. FINMA evaluated the statements received and on the basis of this is now carrying out a partial revision of the Circular.

    In this draft of the partially revised Circular, FINMA takes into account the request of the supervised institutions for an expansion of the list of foreign authorities able to provide administrative assistance. This list is now also to include foreign authorities with which FINMA has concluded bilateral cooperation agreements sufficient for administrative assistance. FINMA is also specifying in more detail individual margin numbers in particular regarding the notification process for planned transmissions. The corresponding changes to the Circular primarily comprise clarifications and simplifications.

  • Financial reporting

    FINMA updates EHP Release Notes

    CACEIS

  • On 7 August 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) updated its survey and application platform (EHP) Release Notes.

    The FINMA EHP is continuously being updated to meet diverse needs. Major changes and corrections are bundled together in releases. Between three and four such releases are installed each year.

    General improvements: 

    • The enclosures are shown in the same language used in the EHP and more clearly structured
    • In response to many requests from financial intermediaries, the possibility of multiple downloads has been introduced
    • A check is now performed when documents are uploaded to ensure that the name of newly added documents is not the same as that of existing documents
    • The content of XML files which can be downloaded within the individual chart of account (ICA) is now shown in the language used in the EHP instead of only in German
    • Now, completed surveys remain visible by audit firms until they are archived
    • An error was corrected that prevented files with the “.PDF” ending from being validated when uploading the electronic delivery note
    • A new support area is available on the FINMA website including the frequently asked questions, the underlying documentation for the EHP, as well as a contact form developed for the EHP.
  • Financial supervision

    Switzerland amends Federal Law on Insurance Contracts

    CACEIS

  • On 12 August 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) announced it authorises third supervisory organisation.

    FINMA is granting the Organisme de Surveillance pour Intermédiaires Financiers & Trustees (SO-FIT) currently being set up in Geneva a licence as a supervisory organisation with effect from 11 August 2020. In addition, FINMA is recognising SO-FIT as a self-regulatory organisation. SO-FIT’s application for a licence was submitted by the Organisme d'Autorégulation des Gérants de Patrimoine (OAR-G). SO-FIT will succeed OAR-G.

    The supervisory organisations will be responsible for the supervision of portfolio managers and trustees in the future. FINMA has also received two further licence applications from supervisory organisations, which were submitted later.

  • Pension Schemes

    FINMA updates prescriptions of the occupational pension plan

    CACEIS

  • On 26 August 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) updated the prescriptions of the occupational pension plan.

    The Federal Council adopted specific amendments to four ordinances relating to occupational pension plans. These modifications are necessary in order to ensure that the provisions are adapted to financial and actuarial developments. In addition, several mandates entrusted by Parliament are thus implemented. 

    The changes in ordinances aim to adapt certain provisions to recent developments in the technical interest rate, the death rate and the disability rate. 

    The proposed changes concern:

    • the ordinance on Investment Foundations (OFP)
    • the ordinance on vested benefits in occupational retirement, survivors and invalidity (OLP)
    • the ordinance on occupational retirement, survivors and invalidity (OPP 2)
    • the ordinance on tax-permissible deductions for contributions paid to recognized forms of pension provision (OPP 3).

    These changes will come into effect on October 1, 2020.

  • Supervision

    FINMA publishes FAQ on delivery platform

    CACEIS

  • On 2 July 2020, the FINMA published an FAQ regarding the delivery platform. The FINMA delivery platform is an information and communication technology system through which supervised institutions, audit firms and other external offices can submit documents to FINMA electronically in a secure web environment. The platform issues electronic confirmation of receipt for every message sent to FINMA.

    The FAQ answers the following questions :

    • What is the FINMA delivery platform? 
    • Where is the delivery platform? 
    • What is the benefit of the delivery platform? 
    • How is the delivery platform different to the survey and application platform? 
    • What is a qualified electronic signature? 
    • How is it possible to know whether a document has a qualified electronic signature? 
    • What software is required to add a qualified electronic signature to a document? 
    • Which file formats can be transmitted? 
    • What if a problem occurs?
  • FINMA authorises first supervisory organisations

    CACEIS

  • On 7 July 2020, FINMA announced that it has granted OSIF and OSFIN the first licences as supervisory organisations, responsible for the supervision of portfolio managers and trustees. It has also authorised the first registration body for client advisers. 

    Furthermore, the Federal Department of Finance has recognised the first ombudsman’s offices in accordance with the FinSA for financial service providers.

  • UNITED KINGDOM

    Benchmarks Regulation (BMR)

    FCA publishes PS20/5: Extending the Senior Managers Regime to benchmark administrators: final rules

    CACEIS

  • On 7 July 2020, the Prudential Regulation Authority (PRA) published its statement outlining the PRA’s view on the implications of Libor transition for contracts in scope of the Contractual Recognition of Bail-In and Stay in Resolution Parts of the PRA Rulebook.

    The PRA considers that, where the sole purpose of an amendment to a liability (as defined in CROB) or a financial arrangement (as defined in Stays) is to transition away from Libor, the amendment should not be considered a material amendment as the term applies to either the CROB Part or the Stays Part of the PRA Rulebook.

    Nonetheless, firms should consider adding CROB and Stays terms into the documentation for a third-country law governed liability or financial arrangement that is amended for the sole purpose of transitioning away from Libor, as it enhances firm resolvability. CROB and Stays are part of the UK resolution regime, ensuring that firms can fail in an orderly way. Both sets of rules are needed for the effectiveness of UK resolution actions in third-country jurisdictions.

    Firms should also consider whether having non-Common Equity Tier 1 (CET1) own funds instruments governed by third-country law but without statutory or contractual recognition of UK bail-in rules would create difficulties for resolution.

  • UK Government publishes Policy paper on Amending the transitional period for third country benchmarks in the UK

    CACEIS

  • On 22 July 2020, the UK Government published its Policy paper on Amending the transitional period for third country benchmarks in the UK.

    This policy statement sets out HM Treasury’s rationale for extending the transitional period for third country benchmarks under the UK Benchmarks Regulation from 31 December 2022 to 31 December 2025. 

    This will allow UK supervised entities to continue using benchmarks provided by administrators located outside the UK in new financial contracts and instruments without these benchmarks being registered with the FCA until end-2025. 

    This prevents the risk of UK firms losing access after end-2022 to important benchmarks provided by non-UK administrators who are unable or unwilling to apply for continued market access through the existing third country regime under the UK Benchmarks Regulation.

  • Brexit

    Here are several FCA communications on the temporary permission regime regarding the Brexit

    CACEIS

  • Here are several FCA communications on the temporary permission regime regarding the Brexit.

    1. On 1 July 2020, the Financial Conduct Authority (FCA) updated that the temporary permissions regime (TPR) will take effect at the end of the transition period.

    The window for firms and fund managers to notify the FCA that they want to use the TPR is currently closed. Firms and fund managers that have already submitted a notification need take no further action at this stage.

    The FCA will re-open the notification window on 30 September 2020. This will allow firms and fund managers that have not yet notified to do so before the end of the transition period. There will also be an opportunity for fund managers to update their previously submitted notifications, if necessary. The FCA will communicate further on this in September.

    2. On 17 July 2020, the Financial Conduct Authority (FCA) published its statement on the agreement of Memoranda of Understanding (MoUs) with the European Securities and Markets Authority (ESMA) and EU regulators covering cooperation and exchange of information in the event the UK left the EU without a withdrawal agreement.

    The FCA, ESMA, and EU national securities regulators, confirm that these MoUs remain relevant and appropriate to ensure continued good cooperation and exchange of information. The MoUs will come into effect at the end of the transition period, which is set to expire on 31 December 2020.

    3. On 20 August 2020, the Financial Conduct Authority (FCA) published its summary on the ules that will apply to firms in the temporary permissions regime (TPR) and fund operators in the temporary marketing permissions regime (TMPR).

    1. Rules that will apply to firms in the TPR
      Firms in the TPR are treated as having a UK Part 4A permission (with the exception of payments and e-money firms), which means that, after the end of the transition period, the home-host state restrictions on regulatory action will no longer apply and they will come within the full scope of the FCA's supervision and rule-making powers. In designing and implementing the TPR, the FCA has taken a proportionate approach that will enable firms to comply with its requirements from Day 1 while maintaining an adequate level of consumer protection.
    2. Rules that will apply to fund operators in the TMPR
      Operators, depositories and trustees of funds in the temporary marketing permission regime (TMPR) will need to continue to comply with all relevant marketing requirements. As with firms in the TPR, the FCA is taking a proportionate approach.
    3. The transitional power and application of legislative requirements to firms and investment funds in the TPR/TMPR

    The Treasury has provided the financial services regulators with a power to phase in post-transition period requirements, allowing flexibility for firms and investment funds to transition to a fully domestic UK regulatory framework. Firms in the temporary permission and supervised run-off regime. However, to the extent that the transitional power is used to provide relief more generally (ie also to firms other than firms in the TPR) in respect of any of rules with which firms and investment funds in the regime are expected to comply, this relief will also be available for firms and investment funds in the regime.

    4. On 20 August 2020, the Financial Conduct Authority (FCA) published its explanation on the types of firms and investment funds can use the temporary permissions regime (TPR).

    Firms that can use the regime are:

    • Firms that have passports under Schedule 3 to FSMA in place before the end of the transition period, including where they also have top-up permissions
    • Treaty firms under Schedule 4 to FSMA which qualify for authorisation before the end of the transition period, including where they also have top-up permissions
    • Electronic money institutions, payment institutions and registered account information service providers who are exercising their passporting rights under the Electronic Money Directive (EMD) or the Payment Services Directive (PSD2) before the end of the transition period

    Investment funds that can use the regime are:

    • EA-domiciled UCITS and any notified sub-funds
    • UK and EEA-domiciled Alternative Investment Funds (including EuVECAs, EuSEFs, ELTIFs and AIFs authorized as MMFs) managed by EEA authorized managers.

    If new EEA sub-funds are authorised by the relevant home state regulator after the end of the transition period, but form part of an umbrella scheme that notified for the TMPR prior to exit, they may be added into the regime so that they can market to UK investors.

    5. On 20 August 2020, the Financial Conduct Authority (FCA) published the considerations that will be relevant for firms when leaving the temporary permissions regime (TPR).

    5.1. Firms passporting into the UK under Schedule 3 to FSMA and Treaty firms under Schedule 4 to FSMA

    • Once in the TPR, the FCA will allocate firms that will be solo-regulated a period (a ‘landing slot’) within which they will need to submit their application for UK authorization, if required.
    • Firms that are unsuccessful in securing authorization when leaving the TPR but that still have regulated business in the UK to run off, will enter the financial services contracts regime (FSCR) from where they can wind down their UK business.

    5.2. Payments and e-money firms

    • EEA payment institutions will have to establish an authorized or registered UK subsidiary to provide services in the UK when the EEA firm’s temporary permission ends. This will also apply to e-money institutions which provide payment services that are unrelated to e-money issuance.
    • EEA e-money institutions which only provide payment services related to e-money issuance, and EEA registered account information service providers will have to become authorized or registered to continue providing services in the UK when their temporary permission ends.
    • Payments and e-money firms firm that are unsuccessful in securing authorization or registration when leaving the TPR but that still have regulated business in the UK to run off, will enter the financial services contracts regime (FSCR) from where they can wind down their UK business.

    5.3. The FCA's approach to international firms

    • The FCA is currently reviewing its approach to the authorization and supervision of international firms (which will include firms from both EEA and non-EEA jurisdictions).
    • Firms should also consider the FCA's guide to the Senior Managers and Certification Regime to understand how it will apply to FCA solo-regulated firms.

    6. On 20 August 2020, the Financial Conduct Authority (FCA) published its explanation on the fees that firms and investment funds in the temporary permissions regime (TPR) will need to pay.

    The FCA recovers annual funding requirement (AFR) through periodic fees, paid annually in each fee-year (fee-year runs from 1 April to 31 March). The FCA consults each year, in April, on the allocation of the AFR across a series of fee-blocks that reflect broad sectors of the industry and are based on the regulated activities firms undertake in the UK. Investment funds have a separate fee-block within this series.

    The AFR recovered from periodic fees is net of the contribution to the FCA's costs made by applicants for authorization/recognition.

  • Capital requirements / CRD / CRR / Basel III/IV

    UK Government publishes consultation on the UK’s Prudential Regime before the end of the Transition Period

    CACEIS

  • On 16 July 2020, UK Government issued a consultation document on updating the UK’s prudential regime before the end of the transition period.

    The government will transpose EU legislation which applies before 31 December 2020. This includes CRDV, which must be transposed by 28 December 2020.   

     This consultation only seeks comment on those areas requiring legislation, which include: 

    • the intention to exempt investment institutions prudentially regulated by the FCA from the scope of CRDV, given the planned introduction of the Investment Firms Prudential Regime (IFPR) by summer 2021
    • various updates to the capital buffers that the PRA can require of institutions, to allow the Financial Policy Committee (FPC) and the PRA to maintain their current level of macro-prudential flexibility 
    • extending the PRA’s powers for consolidated supervision to holding companies and creating a new approval regime for Financial Holding Companies (FHCs) and Mixed Financial Holding Companies (MFHCs). In addition, granting the PRA an express power to remove members of the management body of institutions and holding companies 
    • amendments to the list of entities exempted from CRDV. 

    Responses are requested by 19 August 2020. 

  • COVID-19 Regulatory Measures

    FCA confirms further support for consumer credit customers

    CACEIS

  • On 1 July 2020, the Financial Conduct Authority (FCA) confirmed the support users of certain consumer credit products will receive if they are still experiencing temporary payment difficulties due to COVID-19.

    The FCA has confirmed:

    • If customers can afford to return to regular repayment, or make partial payments, it is in their best interest to do so.
    • Firms should contact customers coming to the end of a first payment freeze to find out if they can resume payments – and if so, agree a plan on how the missed payments could be repaid.
    • For customers still facing temporary payment difficulties as a result of COVID-19, firms will provide them with support, which could include freezing or reducing payments on their credit card and personal loans to a level they can afford for 3 months.
    • Customers who are negatively impacted by COVID-19 and who already have an arranged overdraft on their main personal current account can request up to £500 interest-free for a further 3 months. Firms will also provide these customers with further support where it is needed including reducing the cost of borrowing above the interest-free buffer, especially if this cost of borrowing would otherwise increase.
    • Customers that have not yet had a payment freeze or an arranged interest-free overdraft of up to £500 and experience temporary financial difficulty, due to COVID-19, would be able to request one up until 31 October 2020.
    • Any payment freezes or partial payment freezes offered under this guidance should not have a negative impact on credit files. However, consumers should remember that credit files aren’t the only source of information which lenders can use to assess creditworthiness.

    The FCA has published a statement providing an update following the letter that was sent to firms in January, requesting information on new overdraft pricing.

    This guidance comes into force on 3 July 2020 and only applies to credit cards (and other retail revolving credit, such as store cards and catalogue credit), personal loans and overdrafts.

    It does not apply to other consumer credit products, such as motor finance, high-cost short-term credit, rent-to-own, pawnbroking and buy-now pay-later, which are covered by separate guidance which will be updated soon.

  • FCA updates on Unsecured debt products – persistent credit card debt

    CACEIS

  • On 1 July 2020, the Financial Conduct Authority (FCA) updated the COVID-19 - Information for firms regarding Unsecured debt products – persistent credit card debt.

    Credit card firms should give these customers until 1 October 2020 to respond to firms’ PD36 communications. This meant that firms were not required to suspend the cards of non-responders before then. This expectation applied both to those who had already received communications from their provider and those that were yet to receive them.

    For those customers who are yet to receive a PD36 communication, firms can now decide what is a reasonable period of time to give these customers to respond to a PD36 communication. This should not be earlier than 1 October.

  • FCA publishes announces proposals to further support motor finance and high cost credit customers

    CACEIS

  • On 3 July 2020, the Financial Conduct Authority (FCA) announced proposals which would provide continued support for users of motor finance and high cost credit products, who continue to face payment difficulties due to COVID-19.

    The proposals outline the options firms will provide motor finance, buy-now pay-later (BNPL), rent-to-own (RTO) and pawnbroking customers who are coming to the end of a payment freeze, as well as those who are yet to request one. For customers yet to request a payment freeze, the time to apply for one would be extended until 31 October 2020.

    The proposals include:

    • At the end of a first payment freeze, firms should contact their customers to find out if they can resume payments
    • Anyone who continues to need help gets help
    • Extending the time the scheme is available to people who may be impacted at a later date
    • The ban on repossessions should continue until 31 October 2020
    • Where a customer needs further temporary support to bridge the crisis.

    The FCA welcomes comments on these proposals until 5pm on 6 July 2020 and expects to finalize the guidance shortly afterwards.

  • FCA highlights on the role of investment managers in the post COVID-19 recovery

    CACEIS

  • On 8 July 2020, the Financial Conduct Authority (FCA) published highlighted information on the role of investment managers in the post COVID-19 recovery:

    • Overall, the fund management industry showed considerable resilience in the face of volatile market conditions. When material uncertainty over commercial real estate values made it necessary to suspend daily dealing in open-ended property funds, fund managers worked with us to make this happen quickly and safely.
    • The FCA has been trying to build a bridge across the economic aspects of the COVID-19 crisis to ensure that as many consumers and firms can come through the other side in the best shape possible.
    • The FCA will look to consult later this summer on finding a way in which funds could safely transition to a structure in which liquidity promises to investors are better aligned with the liquidity of fund assets.
    • The FCA will have an opportunity to look again at its rulebook, focusing less on tick box compliance and more on promoting outcomes that serve the public interest.
  • FCA publishes CP20/10: Extending implementation deadlines for the Certification Regime and Conduct Rules

    CACEIS

  • On 17 July 2020, the Financial Conduct Authority (FCA) published Consultation paper CP20/10: Extending implementation deadlines for the Certification Regime and Conduct Rules.

    This consultation proposes making changes to our rules to effect this change. It also proposes making a corresponding extension to the deadline for training staff in the Conduct Rules and reporting Directory Person data to 31 March 2021. Extending the deadlines will ensure they remain consistent and will provide extra time for firms that need it, and enable them to deliver effective training on the Conduct Rules. The proposals seek to reduce the burden to firms affected by the pandemic, while ensuring that regulatory standards and consumer protection are upheld.

    The FCA are consulting alongside the parliamentary process to give regulated firms certainty and finalise policy as soon as possible. The FCA expects accountable Senior Managers to ensure that all Certified Persons are fit and proper. Firms should not wait to remove staff who are not fit and proper from certified roles. Similarly, accountable Senior Managers must ensure that Conduct Rules training is effective, so that staff are aware of the Conduct Rules and understand how they apply to them in their jobs. These programs will require planning, time and effort to deliver effectively. 

    This applies to

    • All FCA solo-regulated firms authorized to provide financial services under Financial Services and Markets Act 2000 (FSMA) would be able to use the extension proposed. 
    • Appointed Representatives (ARs) would also be in scope of the proposed extension to the reporting deadline for Directory Persons.
    • These proposals do not apply to benchmark administrators.  

    The FCA is asking for comments on the consultation by 14 August 2020. 

  • FCA publishes CP20/12: Consultation on delay to the implementation of the European Single Electronic Format

    CACEIS

  • On 22 July 2020, the Financial Conduct Authority (FCA) published Consultation paper CP20/12: Consultation on delay to the implementation of the European Single Electronic Format. The FCA will receive comments by 28 August 2020.

    The FCA sets out proposed rule changes to postpone by 1 year the mandatory European Single Electronic Format (ESEF) requirements for annual financial reporting under the Transparency Directive (TD). Under these proposals:

    • The requirement for all issuers to publish their annual financial reports in XHTML web browser format, replacing the current PDF format, would be pushed back to financial years starting on or after 1 January 2021, for publication from 1 January 2022.
    • The requirement for issuers who prepare consolidated annual financial statements in accordance with International Financial Reporting Standards (IFRS) to tag basic financial information would be pushed back to financial years starting on or after 1 January 2021, for publication from 1 January 2022.
    • The requirement for issuers who prepare IFRS consolidated annual financial statements to tag notes to the financial statements would be pushed back to financial years starting on or after 1 January 2023, for publication from 1 January 2024. 

    This proposal applies to issuers with transferable securities admitted to trading on UK regulated markets, or who are considering admission to trading on a UK regulated market. It is also of interest to:

    • Issuers with securities admitted to our Official List or considering a listing.
    • Firms advising issuers or advising persons investing in them.
    • Firms or persons investing or dealing in UK listed securities or securities admitted to trading on a UK regulated market. 
    • Firms providing research and analysis on issuers, and accountants and other advisors and service providers helping issuers with the preparation and publication of their annual financial statements.
  • PRA publishes Statement on EBA Guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 outbreak

    CACEIS

  • On 28 July 2020, the Prudential Regulation Authority (PRA) published its Statement on EBA Guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 outbreak.

    The PRA is exercising the options available in the EBA Guidelines to ensure that the disclosures are implemented in a proportionate manner, including by 

    (i) waiving the application of the disclosure templates for firms that are not identified as global systemically important institutions (G-SIIs) or other systemically important institutions (O-SIIs), and 

    (ii) applying the disclosure templates at the highest level of consolidation in their jurisdiction.  

    As confirmed in the update on Friday 10 July 2020, the PRA expects that UK banks and building societies which 

    (i) are, or are controlled by, G-SIIs or O-SIIs designated by the PRA in the most recent list and 

    (ii) have retail deposits equal to or greater than £50 billion on an individual or consolidated basis, should make disclosures similar to those prescribed by the EBA Guidelines, but incorporating the modifications. The PRA expects such firms to make these disclosures for the highest level of consolidation in the UK.

  • BoE publishes statement on COVID-19 - IFRS 9 and capital requirements

    CACEIS

  • On 26 August 2020, the Bank of England (BoE) published a statement on COVID-19 - IFRS 9 and capital requirements.

    The FCA published draft updated guidance for firms in relation to mortgage payment deferrals. That guidance explains that, at the end of the existing, widely available COVID-19 specific payment deferrals, if the borrowers involved are not able to resume payments in full immediately with all deferred sums either paid in full or capitalised, tailored forbearance arrangements provided in accordance with the draft updated guidance should be considered.  

    Such tailored forbearance arrangements are likely to be as good an indicator of SICR, credit impairments or defaults as forbearance was prior to the pandemic. 

    The Bank of England considers the guidance in this statement to be consistent with IFRS and the EU Capital Requirements Regulation (CRR). It is the responsibility of firms to satisfy themselves that they have prepared their annual and interim financial reports in accordance with the applicable reporting frameworks and for auditors to reach their own audit or review conclusions about those reports. 

    It is for firms to ensure they comply with the requirements of CRR.

  • Cryptoasset / Cryptocurrency / Virtual Currency

    UK Government launches consultation on Cryptoasset promotions

    CACEIS

  • On 20 July 2020, the UK Government launched a consultation on Cryptoasset promotions. This consultation closes on 26 October 2020.

    The government proposes to expand the perimeter of the financial promotions regime in order to enhance consumer protection while the government continues to consider its approach to the broader challenges of cryptoasset regulation.

    This would ensure that cryptoasset promotions are held to the same high standards for fairness, clarity and accuracy that apply to the traditional financial services industry.

  • Financial supervision

    UK Government publishes Joint Statement between UK and the Switzerland on deepening cooperation in financial services

    CACEIS

  • On 1 July 2020, the UK Government publishes Joint Statement between UK's Her Majesty’s Treasury and the Swiss Federal Department of Finance on deepening cooperation in financial services. They have agreed a shared ambition to conclude an international agreement that will enhance the cross-border market for financial services between the UK and Switzerland. 

    Both sides are committed to protecting investors, consumers, market integrity and financial stability, as well as maintaining world-leading regulatory standards. The objective is to improve the cross-border market for financial services between the UK and Switzerland, with an intended focus on the provision of services to wholesale and sophisticated clients in the fields of insurance, banking, asset management and capital markets (including market infrastructure).  

    In that spirit, this joint statement signals both sides’ intention to negotiate an ambitious future relationship that will build on the strengths of the UK and Swiss financial centres to deliver benefits to consumers, the financial services sector and the broader global economy. 

  • Outsourcing

    FCA publishes statement on EIOPA Guidelines on outsourcing to cloud service providers

    CACEIS

  • On 8 July 2020, the Financial Conduct Authority (FCA) published its statement on EIOPA Guidelines on outsourcing to cloud service providers.

    The FCA has notified EIOPA that the Guidelines are not applicable to regulated activities within the UK’s jurisdiction, as they will enter into force on 1 January 2021, after the EU withdrawal transition period is expected to end.  

    The FCA will continue to apply the FCA FG16/5 Guidance for firms outsourcing to the cloud and other third-party IT services in the UK, first published in 2016 and last updated in September 2019. The FCA will keep this guidance under review and, where appropriate, consult to update this to ensure it remains consistent with relevant international standards.

  • Packaged Retail and Insurance-based Investment Products (PRIIPs)

    UK Government publishes Policy paper on the Amendments to the PRIIPs Regulation

    CACEIS

  • On 30 July 2020, the UK Government published Policy paper on the Amendments to the PRIIPs Regulation. 

    This policy statement provides an update on HM Treasury’s proposed approach to bringing forward amendments to the onshore PRIIPs Regulation to avoid consumer harm and provide the appropriate certainty to industry once the UK ceases to be bound by the EU regime.

    The proposed amendments target the most pressing concerns with the PRIIPs Regulation and are intended to ensure that UK retail investors are provided with more appropriate PRIIPs disclosures.

    In the longer term, HM Treasury intends to conduct a more wholesale review of the disclosure regime for UK retail investors.

  • Register of beneficial owners

    RBO updates FAQ on Discrepancies & Non-Compliance Notices

    CACEIS

  • On 28 August 2020, the Register of Beneficial Ownership (RBO) updated the FAQ on Discrepancies & Non-Compliance Notices (section 15).

    The FAQ provides for the definition of discrepancy depending on the person concerned as well as the procedures to follow to report such discrepancy.

  • Regulatory fees

    FCA publishes PS20/7: FCA regulated fees and levies 2020/21

    CACEIS

  • On 2 July 2020, the Financial Conduct Authority (FCA) published final 2020/21 regulatory fees and levies including feedback on its consultation.

    All fee payers will be affected by this Policy Statement. This PS is not directly relevant to retail financial services consumers or consumer groups, although fees are indirectly met by financial services consumers.

    Firms can use our online fees calculator to calculate their individual fees based on the final rates in this PS. This includes FCA periodic fees and the Financial Ombudsman Service, Money and Pensions Advice Service, Devolved Authorities and illegal money lending levy final rates in Appendix 1 (where applicable) of this PS. The fees calculator will also cover PRA (where applicable) fees and FSCS levies.

    The FCA will invoice fee-payers from July 2020 onwards for their 2020/21 periodic fees and levies. 

  • PRA publishes PS16/20 - Regulated fees and levies: Rates proposals 2020/21

    CACEIS

  • On 7 July 2020, the Prudential Regulation Authority (PRA) published Policy Statement PS16/20 - Regulated fees and levies: Rates proposals 2020/21, which provides feedback to responses to Consultation Paper (CP) 4/20. This PS is relevant to all firms that currently pay PRA fees or are expecting to do so within the 2020/21 fee year. The changes are regarding to:

    • the fee rates to meet the PRA’s 2020/21 AFR; 
    • simplifying the variation of permission regulatory transaction fees; 
    • updating the hourly rates for special project fees for restructuring to reflect current PRA costs; 
    • to update the definitions for the A3 and A4 fee blocks; 
    • how the PRA intends to distribute a surplus from the 2019/20 AFR; and 
    • how the PRA intends to distribute the retained penalties for 2019/20. 
  • Senior Managers & Certification Regime (SM&CR)

    FCA informs on the launch of its enhanced Financial Services Register

    CACEIS

  • On 13 July 2020, the Financial Conduct Authority (FCA) informed that the be replacing its existing Financial Services Register with an enhanced Financial Services Register later this month (27 July). The FCA will then add a directory of certified and assessed persons to the Register later this year.

    The enhanced Register will have a new look and include improvements the FCA made in response to user feedback. The changes will make it easier to find and understand information on the Register. The FCA will provide more details when it launches.

    Firms will need to update any links they have to pages on the current Financial Services Register, other than those to the homepage, once the enhanced Register launches. All current links will be redirected to the enhanced Register’s homepage. The existing Financial Services Register will cease to be available from 6pm on Friday 24 July so that work can take place over the weekend to make the enhanced Register ready for the start of business on Monday 27 July.

  • Shareholders' Rights Directive (SRD II)

    UK publishes S.I. 2020 No. 717 - The Companies (Shareholders’ Rights to Voting Confirmations) Regulations 2020

    CACEIS

  • On 9 July 2020, the UK Statutory Instrument S.I. 2020 No. 717 - The Companies (Shareholders’ Rights to Voting Confirmations) Regulations 2020 was published on the UK legislation.

    These Regulations implement certain provisions contained in article 3c of the Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement (SRD II), in particular:

    • insert a new section to impose an obligation on a traded company to provide a confirmation of receipt of those votes which are cast electronically. 
    • insert a new section to provide a shareholder with the right to request information from the company which enables them to determine that their vote has been validly recorded and counted. 

    These Regulations apply to companies whose shares carry voting rights and are admitted to trading on a regulated market within the EEA, defined as a “traded company”.

  • FCA publishes draft Securities Financing Transactions Regulation (SFTR) registration form

    CACEIS

  • On 24 June 2020, the Financial Conduct Authority (FCA) published Draft advance application for registration for Trade Repositories providing services under the Securities Financing Transactions Regulation(SFTR) - SFTR Trade Repository form.

    This form is a draft and is subject to change. Legislation referred to in this form may be amended before transition period completion date. References to legislation should be read as thatlegislation that is expected to apply after the end of the transition period. For example, references to Commission Delegated Regulation 2019/359 are to that Regulation as it is anticipated it will be amended.

  • INTERNATIONAL

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

    The Wolfsberg Group publishes new AML guidance to support source of wealth and source of funds due diligence

    CACEIS

  • On 7 August 2020, the Wolfsberg Group, published new guidance targeted at private banking and wealth management divisions within financial institutions (FIs) to support the undertaking of source of wealth (SoW) and source of funds (SoF) checks.

    Based on the principles of the application of a risk-based approach (RBA), different customers will require a different level of due diligence (DD) for SoW and SoF. Ultimately, FIs need to put controls in place commensurate to the risks identified with their customer base to gain comfort that their customers’ wealth and funds do not emanate from illicit activity.

  • The Wolfsberg Group publishes a statement on Developing an Effective AML/CTF Programme

    CACEIS

  • On 12 August 2020, the Wolfsberg Group publishes a statement on Developing an Effective Anti-Money Laundering (AML)/Counter-Terrorism Financing (CTF) Programme. 

    This document outlines steps that Financial Institutions (FIs) can take to evolve their AML/CTF regimes to meet the key elements of an effective programme, which were set out in the Group’s December 2019 statement on Effectiveness:

    1. Complying with AML/CTF laws and regulations
    2. Providing highly useful information to relevant government agencies in defined priority areas
    3. Establishing a reasonable and risk-based set of controls to mitigate the risks of an FI being used to facilitate illicit activity

    The Group believes that the approach it has outlined will enable FIs to optimise the detection and deterrence of illicit activity, while at the same time reducing friction on innocent customers and helping governments achieve their financial inclusion objectives.

    As AML/CTF regimes around the world continue to focus on effectiveness, the Group remains committed to collaborating with policy makers, supervisors, law enforcement agencies and other stakeholders to develop this approach further.

  • Benchmarks Regulation (BMR)

    FSB and Basel Committee set out supervisory recommendations for benchmark transition

    CACEIS

  • On 9 July 2020, the Bank of International Settlement (BIS) and the Financial Stability Board (FSB) published a report on Supervisory issues associated with benchmark transition. Continued reliance of financial markets on LIBOR poses clear risks to global financial stability. Transition away from LIBOR by end-2021 requires significant commitment and sustained effort from both financial and non-financial institutions across many jurisdictions. The report includes insights on remaining challenges to transition based on surveys undertaken by the FSB, the BCBS and the International Association of Insurance Supervisors (IAIS). It sets out recommendations for authorities to support financial institutions' and their clients' progress in transitioning away from LIBOR.

    Most FSB jurisdictions have a strategy in place to address LIBOR transition, as opposed to only half of the surveyed non-FSB jurisdictions. Authorities in LIBOR jurisdictions are relatively more advanced in taking initiatives to facilitate and monitor benchmark transition. Financial institutions in these jurisdictions have shown better progress, although significant challenges remain. In light of the expected cessation of LIBOR after end-2021, authorities should strengthen their efforts in facilitating financial and non-financial institutions to transition away from LIBOR.

    The report includes three sets of recommendations to support LIBOR transition that should generally be applicable to all jurisdictions with LIBOR exposures.

    • Identification of transition risks and challenges: authorities and standard-setting bodies to issue public statements to promote awareness and engage with trade associations, and authorities to undertake regular surveys of LIBOR exposure and to request updates from financial institutions.
    • Facilitation of LIBOR transition: authorities to establish a formal transition strategy supported by adequate resources and industry dialogue. Supervisory authorities should consider increasing the intensity of supervisory actions when the preparatory work of individual banks is unsatisfactory.
    • Coordination: authorities to promote industry-wide coordination, maintain dialogue on the adoption of fallback language, consider identifying legislative solutions, where necessary, and exchange information on best practices and challenges. The FSB and the standard-setting bodies will coordinate at the international level to identify key common metrics for monitoring transition progress.
  • Brexit

    ISDA publishes Brexit FAQs - Version 8

    CACEIS

  • On 21 July 2020, the International Swaps and Derivatives Association (ISDA) updated Brexit FAQs. 

    These FAQs address the possible UK position post-Brexit, i.e. after the conclusion of the exit process under Article 50 of the Lisbon Treaty.

    Market participants should take independent legal advice on the points addressed in these July 2020 FAQs. 

    The following Regulatory FAQs are updated to the position as at 30 June 2020 :

    • Q16, Q16.1, Q16.2 : Access to the EU financial markets 
    • Q17 : EMIR
    • Q20 : CCP
    • Q21, Q22 : Trade Repositories Financial Services Contracts Regime
    • Q30: Derivative transactions transfer
    • Q31: Clear derivative transactions
    • Q32: European Benchmark Regulation 

    These questions therefore do not reflect any developments after that date. All other FAQs remain the same as in the previous version, version 7, and have not been updated.

  • Central Securities Depositary Regulation (CSDR)

    ISDA publishes Position Paper on CSDR Settlement Discipline Regime

    CACEIS

  • On 1 July 2020, the International Swaps and Derivatives Association (ISDA) published a position paper outlining their members’ concerns in relation to the settlement discipline regime under CSDR (effective February 2021), which has a number of unintended consequences for derivatives contracts, particularly regarding margin transfer and physically settled derivatives business. 

    The paper requests legislative changes and/or regulatory interpretations to address these concerns on:

    • Focus of CSDR and overlap with EMIR
    • Contradictory outcomes for EMIR purposes
    • Exemption for short-dated operations
    • Robust existing framework for settlement failures under derivatives transactions
    • Clarifications respectfully requested
    • Issues arising from application of the CSDR settlement discipline regime to derivatives.
  • COVID-19 Regulatory Measures

    BIS proposes Principles for operational resilience

    CACEIS

  • On 6 August 2020, the Bank of International Settlement (BIS) proposed Principles for operational resilience that aim to mitigate the impact of potentially severe adverse events by enhancing banks' ability to withstand, adapt to and recover from them, recognizing that a concerted operational resilience effort may not prevent a significant shock resulting from a specific hazard.

    In recent years, the growth of technology-related threats has increased the importance of banks' operational resilience. The Covid-19 pandemic has made the need to address these threats even more pressing. Given the critical role played by banks in the global financial system, increasing banks' resilience to absorb shocks from operational risks, such as those arising from pandemics, cyber incidents, technology failures or natural disasters, will provide additional safeguards to the financial system as a whole.

    Comments on any element of this paper should be submitted by Friday, 6 November 2020. 

  • FATF publishes 12 Month Review of Revised FATF Standards - Virtual Assets and VASPs

    CACEIS

  • On 7 July 2020, the Financial Action Task Force (FATF) published a review of the implementation of its revised Standards on virtual assets and virtual asset service providers, 12 months after the FATF finalized these amendments. The June 2019 revisions to the FATF Standards clearly placed anti-money laundering and counter-terrorism financing (AML/CFT) requirements on virtual assets and virtual asset service providers (VASPs). The FATF also agreed to undertake a 12-month review by June 2020 to measure how jurisdictions and the private sector have implemented the revised Standards, as well as monitoring for any changes in the typologies, risks and the market structure of the virtual assets sector.

    This report sets out the findings of the review. The report reviews the implementation of the revised Standards and sets out:

    • how money laundering and terrorism financing risks and the virtual asset market have changed since June 2019;
    • jurisdictions’ progress in implementing the revised Standards;
    • the private sector’s progress in implementing the revised Standards, including the development of technical solutions for the implementation of the travel rule;
    • issues identified with the revised FATF Standards and Guidance; and
    • FATF’s next steps regarding virtual assets.

    The report finds that, overall, both the public and private sectors have made progress in implementing the revised FATF Standards. 35 out of 54 reporting jurisdictions advised that they have now implemented the revised FATF Standards, with 32 of these regulating VASPs and three of these prohibiting the operation of VASPs. The other 19 jurisdictions have not yet implemented the revised Standards in their national law. While the supervision of VASPs and implementation of AML/CFT obligations by VASPs is generally nascent, there is evidence of progress. In particular, there has been progress in the development of technological solutions to enable the implementation of the ‘travel rule’ for VASPs, even though there remain issues to be addressed by the public and private sectors.

    The virtual asset sector is fast-moving and technologically dynamic, which means continued monitoring and engagement between the public and private sectors is necessary. As set out in the report, the FATF has agreed to continue its focus on virtual assets and undertake the following actions. The FATF will:

    • continue its enhanced monitoring of virtual assets and VASPs and undertake a second 12-month review of the implementation of the revised FATF Standards on virtual assets and VASPs by June 2021 and consider whether further updates are necessary;
    • release updated Guidance on virtual assets and VASPs, addressing issues including so-called stablecoins, anonymous peer-to-peer transactions and travel rule implementation;
    • continue to promote the understanding of money laundering and terrorist financing risks involved in transactions using virtual assets and the potential misuse of virtual assets for money laundering and terrorist financing purposes by publishing red flag indicators and relevant case studies by October 2020;
    • continue and enhance its engagement with the private sector, including VASPs, technology providers, technical experts and academics, through its Virtual Assets Contact Group; and
    • continue its program of work to enhance international cooperation amongst VASP supervisors.
  • Cryptoasset / Cryptocurrency / Virtual Currency

    FATF publishes report to G20 on So-called Stablecoins

    CACEIS

  • On 7 July 2020, the Financial Action Task Force (FATF) published report to G20 on So-called Stablecoins.

    So-called stablecoins have the potential to spur financial innovation and efficiency and improve financial inclusion. While so-called stablecoins have so far only been adopted on a small-scale, new proposals have the potential to be mass-adopted on a global scale, particularly where they are sponsored by large technology, telecommunications or financial firms.

    In the same way as any other large-scale value transfer system, this propensity for mass-adoption makes them attractive to criminals and terrorists to launder their proceeds of crime and finance their terrorist activities.

    In October 2019, the G20 asked the FATF to consider the anti-money laundering and counter-terrorism financing issues relating to so-called stablecoins. This report sets out the FATF’s views on so-called stablecoins and addresses the following:

    • what the characteristics of so-called stablecoins are;
    • what the money laundering and terrorist financing risks of so-called stablecoins are ;
    • how the FATF Standards apply to so-called stablecoins and the different businesses involved in the so-called stablecoin; and
    • how the FATF plans to enhance the global anti-money laundering and counter-terrorism financing framework for virtual assets and so-called stablecoins.
  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    ISDA publishes paper on Review of the MIFID II/MIFIR Framework

    CACEIS

  • On 2 July 2020, the International Swaps and Derivatives Association (ISDA) published a paper on the Review of the MIFID II/MIFIR Framework.

    In this paper, ISDA sets out five areas where a recalibration of the rules would be appropriate:

    • Reporting and post-trade transparency:
    • Re-calibration of the pre-trade transparency regime for certain asset classes;
    • Limitation of the mandatory systematic internaliser regime to ‘traded on a trading-venue’ (ToTV) instruments only;
    • Re-focus of the commodity derivatives position limits regime to meet the stated policy objective;
    • The derivatives trading obligation (DTO).

    ISDA strongly supports a ‘Refit’ approach to MIFID II/MIFIR rather than a complete re-write of the existing legislation.

  • 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)
    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)
    Mireille Mol, Legal & Compliance (Netherlands)
    Alessandra Cremonesi, Legal Fund Structuring (Switzerland)
    Samuel Zemp compliance office (CACEIS Bank Switzerland Branch)
    Neil Coxhead, Managing Director & Head of Regional Coverage (UK Branch)
    Michele Tuen, Head of Trustee and Legal, Trustee and Legal (Hong Kong)
    Marc Weijkamp, AH Legal (Netherlands)

    Design
    CACEIS Group Communications

    Photos credit
    CACEIS, Adobe Stock

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