On 11 April 2022, the European Securities and Markets Authority (ESMA) updated the list of Securities Settlement Systems.

On 8 April 2022, the European Union Agency for Cybersecurity (ENISA) published:

• ENISA Cybersecurity Market Analysis Framework
• EU Cybersecurity Market Analysis – IoT in Distribution Grids

The framework consists of a toolbox designed to facilitate the performance of cybersecurity market analyses. It offers a range of analysis approaches based on innovative market modelling specifically adapted to the cybersecurity market.

Target audience:

• EU institutions, bodies and Agencies (EUIBAs);
• Member States/public authorities (e.g. Cybersecurity Authorities);
• ENISA stakeholder groups (e.g. ENISA Advisory Group);
• Further relevant stakeholder groups (e.g. ECCG, SCCG, NLOs)
• Industry and industry associations (Ecosystem of Certification, EU TIC Council, vendors / manufacturers, ECSO);
• Research institutions and research related entities and
• Consumer organisations/associations.

On 7 April 2022, the European Commission (EC) informed on the launch of the EU Digital Finance Platform.

The Digital Finance Platform aims to connect innovative financial firms and supervisors across the EU. The Platform offers an Observatory with interactive features such as a European Fintech Map and information on events and research material. It also includes a Gateway with a single access point to supervisors, with information about national innovation hubs, regulatory sandboxes and licensing requirements, and functionalities enabling cross-border testing. 

Additional features will be launched in 2023.

On 29 April 2022, the European Securities and Markets Authority (ESMA) updated its guidelines tracker.

On 12 April 2022, the European Commission published consultation on the functioning of the Money Market Fund Regulation.

This consultation is targeted at relevant stakeholders and users of money market funds (MMFs), and in particular to investors and managers of MMFs, to understand the impact of existing rules on these stakeholders and users.

The Money Market Fund Regulation (EU Regulation 2017/1131 - MMFR) requires the Commission to submit a report to the co-legislators assessing the adequacy of this Regulation from a prudential and economic point of view. This should be based on a robust and comprehensive evaluation of current rules. The following questionnaire aims at complementing the information collected by other initiatives and work (including recent work by ESMA, ESRB/ECB, FSB) on the functioning of the existing rules on money market funds, in particular about the impact of the MMFR on the different economic aspects of MMFs and the role of MMFs in the EU economy

On 13 April 2022, the ESMA published translations of MAR Guidelines on delay in the disclosure of inside information and interactions with prudential supervision.

These guidelines provide a non-exhaustive and indicative list of legitimate interests of the issuers that are likely to be prejudiced by immediate disclosure of inside information and situations in which delay of disclosure is likely to mislead the public, according to Article 17(11) of Regulation (EU) No 596/2014.

These guidelines apply to Competent Authorities designated under Article 22 of MAR and issuers.

These guidelines apply from 13/06/2022.

On 5 April 2022, the European Commission (EC) published Opinion of the European EESC on the Review of the Markets in Financial Instruments Regulation (MiFIR) (consolidated tape).

The EESC attaches great importance to ensuring non-discriminatory, free access to market data for all, in particular small and medium-sized enterprises as well as retail investors more generally. The EESC calls on the European Commission to reduce existing information asymmetries.

On the controversial issue of a ban on receiving payments for the transmission of client orders for execution purposes or "payment for order flow" (PFOF), the EESC recommends strengthening the following principle: financial intermediaries may only select the trading venue or counterparty for the execution of their clients' transactions with a view to achieving the best execution for their clients. The EESC supports the European Commission's view that tangible or intangible remuneration of financial intermediaries by trading venues or counterparties for the transfer of execution orders is fundamentally inconsistent with this.

On 8 April 2022, the European Securities and Markets Authority (ESMA) published complementary annual transparency calculations.

The calculations include:

• The liquidity assessment as per Articles 1 to 5 of CDR 2017/567;
• the determination of the most relevant market in terms of liquidity as per Article 4 of CDR 2017/587 (RTS 1);
• The determination of the average daily turnover relevant for the determination of the pre-trade and post-trade large in scale thresholds;
• The determination of the average value of the transactions and the related the standard market size; and
• The determination of the average daily number of transactions on the most relevant market in terms of liquidity relevant for the determination of the tick-size regime.

Market participants are invited to:

• Monitor the release of the transparency calculations for equity and equity-like instruments on a daily basis to obtain the estimated calculations for newly traded instruments and the four-weeks calculations applicable to newly traded instruments after the first six-weeks of trading; and
• Refer to Q&A #3 in Section 3 Equity transparency, for the temporary parameters to be applied in the case of one or more of the transparency parameters is not published.

On 12 April 2022, the ESMA published translations of the guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements.

These guidelines apply in relation to Article 25(3) and (4) of MiFID II and Articles 55 to 57 of the Delegated Regulation. These guidelines also apply in relation to the organisational requirements of Article 16(2), (5) to (7) MiFID II and Article 21, 72 and 76 of the Delegated Regulation, as well as Articles 24(1), (4) and (5) and 25(1), (5) and (6) of MiFID II, insofar as they relate to the appropriateness assessment.

These guidelines apply from six months of the date of publication of the guidelines on ESMA’s website in all EU official languages.

These guidelines are based on Article 16(1) of the ESMA Regulation. The purpose of these guidelines is to clarify the application of certain aspects of the MiFID II appropriateness and execution-only requirements in order to ensure the common, uniform, and consistent application of, respectively, Article 25(3) of MiFID II and of Articles 55 and 56 of the MiFID II Delegated Regulation as well as of Article 25(4) of MiFID II and of Article 57 of the MiFID II Delegated Regulation. 

ESMA expects these guidelines to promote greater convergence in the application of, and supervisory approaches to, the MiFID II appropriateness and execution-only requirements, by emphasising a number of important issues, and thereby enhancing the value of existing standards. By helping to ensure that firms comply with regulatory standards, ESMA anticipates a corresponding strengthening of investor protection.

On 13 April 2022, the Commission Delegated Regulation (EU) 2022/629 amending the regulatory technical standards laid down in Delegated Regulation (EU) 2017/583 as regards adjustment the liquidity thresholds and trade percentile used to determine the size specific to the instrument applicable to certain non-equity instruments, was published in the Official Journal of the European Union (OJ).

Article 17 of Delegated Regulation (EU) 2017/583 is amended as follows:

(a) paragraph 1 is replaced by the following:

‘1. For determining the bonds for which there is not a liquid market for the purposes of Article 6 and according to the methodology specified in Article 13(1), point (b), the approach for the liquidity criterion “average daily number of trades” shall be taken applying the “average daily number of trades” corresponding to stage S3 (7 daily trades).’;

(b) paragraph 3 is replaced by the following:

‘3. For determining the size specific to the financial instrument for the purposes of Article 5 and according to the methodology specified under Article 13(2), point (b)(i), the approach for the trade percentile to be applied shall be used applying the trade percentile corresponding to the stage S3 (50th percentile).

For determining the size specific to the financial instrument for the purposes of Article 5 and according to the methodology specified under Article 13(2), points (b)(ii) to (iv), the approach for the trade percentile to be applied shall be used applying the trade percentile corresponding to the stage S1 (30th percentile).’

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

On 19 April 2022, the European Securities and Markets Authority (ESMA)  published FIRDS Reference Data XML Schema v1.2.1.

On 13 April 2022, the Corrigendum to Commission Delegated Regulation (EU) 2021/2268 of 6 September 2021 amending the regulatory technical standards laid down in Commission Delegated Regulation (EU) 2017/653, was published in the Official Journal of the European Union (OJ).

Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) and in particular Article 8(5) and Article 10(2), provides retail investors with information that is understandable, not misleading, and relevant for different types of PRIIPs, performance scenarios shown in the key information documents should not provide an overly positive outlook for potential future returns. 

The underpinning methodology for the presentation of performance scenarios should therefore be adapted to avoid relying on a statistical method which produces performance scenarios that could amplify observed returns. 

The underpinning methodology for the presentation of performance scenarios should also be adapted to ensure that those scenarios are based on a longer period of observed returns, capturing both periods of positive and negative growth, thus providing more stable performance scenarios over time and minimising pro-cyclical outcomes. The ability of the methodology for the presentation of performance scenarios to provide appropriate forward-looking estimates has been demonstrated through back-testing which compared the outcomes of that methodology with actual observed performance of PRIIPs.

Several Articles of the Delegated Regulation (EU) 2017/653 have been amended in accordance to the Corrigendum.

On 11 April 2022, the European Commission published Commission Delegated Regulation (EU) supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards for own funds requirement for investment firms based on fixed overheads.

The draft RTS specify the deductions to be applied for the calculation from the figures resulting from the applicable accounting standards that are the basis for the calculation of the fixed overheads. Criteria are introduced specifying the notion of material change in the activity of an investment firm.

The draft RTS clarify the additional items to be deducted from the total expenses by commodity and emission allowance dealers on account of the particularity of the activities conducted by those undertakings.

On 6 April 2022, the European Commission (EC) published Commission Delegated Regulation (EU) supplementing Regulation (EU) 2019/2088 of the European Parliament and of the Council with regard to regulatory technical standards specifying the details of the content and presentation of the information in relation to the principle of ‘do no significant harm’, specifying the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts, and the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in pre-contractual documents, on websites and in periodic reports.

The regulatory technical standards in this Regulation:

• prescribe the information that must be annexed to pre-contractual and periodic product documentation
• require a mandatory reporting template to describe how principal adverse impacts on sustainability factors are taken into consideration in investment decisions. 
• divide indicators into a core set of universal mandatory indicators that will always lead to principal adverse impacts and additional opt-in indicators to identify, assess and prioritise the consideration of additional principal adverse impacts. 
• require a summary section, and information on policies on the identification of principal adverse impacts, actions taken and planned to mitigate the principal adverse impacts (for instance, reduction of carbon emissions by means of engagement or other policies), or adherence to international standards and historical comparisons. 
• include rules on the statement of no consideration of adverse impacts on sustainability factors by financial market participants and financial advisers.

This Regulation shall apply from 1 January 2023.

On 8 April 2022, the Agence française anticorruption (AFA) published the final version of the practical guide on anti-corruption accounting controls in companies.

Rigorous and organized accounting, drawn up in accordance with the standards in force, contributes significantly to the prevention and detection of corruption. In order to strengthen the security of its activities, the company is required to implement dedicated, identified and formalized accounting controls, referred to as anti-corruption accounting controls, targeting the risk situations highlighted in the corruption risk map.

Drafted in collaboration with the Haut Conseil du Commissariat aux Comptes, the Compagnie Nationale des Commissaires aux Comptes, the Ordre des Experts Comptables, the Association des Directeurs Financiers et de Contrôle de Gestion and the Institut Français de l'Audit et du Contrôle Interne, the guide, published today in its final version, aims at informing companies, their managers as well as compliance and accounting professionals on the content of anti-corruption accounting controls and at assisting them in their implementation. It is a tool for companies, educational and illustrated by best practices.

It has been enriched with elements gathered during the public consultation with professional federations, law firms and consultants specialized in anti-corruption compliance, to whom the Agency thanks for their contributions. Nearly 160 consolidated observations from eight contributions have been analyzed in depth by the AFA. At the end of this analysis, nearly two thirds of the comments led the Agency to complete or amend the initial draft guide.

Version française

Le 8 avril 2022, l'Agence française anticorruption (AFA) a publié la version définitive du guide pratique sur les contrôles comptables anticorruption en entreprise.

Une comptabilité rigoureuse et organisée, établie selon les normes en vigueur, contribue significativement à la prévention et à la détection de la corruption. Afin de renforcer la sécurité de ses activités, l'entreprise est tenue de mettre en œuvre des contrôles comptables dédiés, identifiés et formalisés, dits contrôles comptables anti-corruption, ciblant les situations à risque mises en évidence dans la cartographie des risques de corruption.

Rédigé en collaboration avec le Haut Conseil du Commissariat aux Comptes, la Compagnie Nationale des Commissaires aux Comptes, l'Ordre des Experts Comptables, l'Association des Directeurs Financiers et de Contrôle de Gestion et l'Institut Français de l'Audit et du Contrôle Interne, le guide, publié aujourd'hui dans sa version définitive, vise à informer les entreprises, leurs dirigeants ainsi que les professionnels de la conformité et de la comptabilité sur le contenu des contrôles comptables anti-corruption et à les accompagner dans leur mise en œuvre. Il s'agit d'un outil pour les entreprises, pédagogique et illustré par les meilleures pratiques.

Il a été enrichi d'éléments recueillis lors de la consultation publique auprès de fédérations professionnelles, de cabinets d'avocats et de consultants spécialisés dans la conformité anticorruption, que l'Agence remercie pour leurs contributions. Près de 160 observations consolidées issues de huit contributions ont été analysées en profondeur par l'AFA. A l'issue de cette analyse, près des deux tiers des observations ont conduit l'Agence à compléter ou modifier le projet de guide initial.

On 28 April 2022, the Autorité des marchés financiers (AMF) published their guide to fees and contributions due to the AMF. 

This guide presents the system of fees and contributions due to the AMF by service providers, asset management players, as well as issuers and their shareholders. Readjusted by the new finance law for 2022, it also includes the practical terms and conditions for the payment of these fees and contributions.

Version française

Le 28 avril 2022, l'Autorité des marchés financiers (AMF) a publié son guide des droits et contributions dus à l'AMF. 

Ce guide présente le régime des droits et contributions dus à l'AMF par les prestataires de services, les acteurs de la gestion d'actifs, ainsi que les émetteurs et leurs actionnaires. Réajusté par la nouvelle loi de finances pour 2022, il comprend également les modalités pratiques de paiement de ces droits et contributions.

On 11 April 2022, the Système unifié de rapport financier (e-surfi) published a technical note on LEI transition schedule.

Version française

Le 11 avril 2022, le Système unifié de rapport financier (e-surfi) a publié une note technique sur le calendrier de transition du LEI.

On 22 April 2022, the Autorité de contrôle prudentiel et de résolution (ACPR) complied with the European Banking Authority (EBA) Guidelines on sound remuneration policies for investment firms (EBA/GL/2021/13).

The purpose of this notice is to ensure compliance with the European Banking Authority's Guidance (EBA/GL/2021/13) on sound remuneration policies under Directive (EU) 2019/2034, with which the ACPR declares to comply. 

Version française

Le 22 avril 2022, l'Autorité de contrôle prudentiel et de résolution (ACPR) s'est mise en conformité avec les orientations de l'Autorité bancaire européenne (ABE) sur les politiques de rémunération saines des entreprises d'investissement (ABE/GL/2021/13).

Le présent avis a pour objet d'assurer la conformité aux orientations de l'Autorité bancaire européenne (ABE/GL/2021/13) sur les politiques de rémunération saines en vertu de la directive (UE) 2019/2034, auxquelles l'ACPR déclare se conformer.

On 22 April 2022, the Autorité de contrôle prudentiel et de résolution (ACPR) complied with the Guidelines of the European Banking Authority relating to the internal governance of investment firms (EBA/GL/2021/14).

The Autorité de contrôle prudentiel et de résolution (ACPR) has declared itself compliant with the European Banking Authority's Guidelines (EBA/GL/2021/14) on internal governance under Directive (EU) 2019/2034.

These Guidelines are applicable as of April 30, 2022 by investment firms subject to the supervision of the ACPR, to which Section 2 of Directive (EU) 2019/2034 applies, in accordance with its Article 25. These investment firms must make every effort to comply with these Guidelines, in accordance with the provisions of Article 16 of Regulation (EU) n°1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing the European Banking Authority.

Version française

Le 22 avril 2022, l'Autorité de contrôle prudentiel et de résolution (ACPR) s'est déclarée conforme aux lignes directrices de l'Autorité bancaire européenne relatives à la gouvernance interne des entreprises d'investissement (ABE/GL/2021/14).

L'Autorité de contrôle prudentiel et de résolution (ACPR) s'est déclarée conforme aux lignes directrices de l'Autorité bancaire européenne (ABE/GL/2021/14) relatives à la gouvernance interne en vertu de la directive (UE) 2019/2034.

Ces lignes directrices sont applicables à compter du 30 avril 2022 par les entreprises d'investissement soumises au contrôle de l'ACPR, auxquelles s'applique la section 2 de la directive (UE) 2019/2034, conformément à son article 25. Ces entreprises d'investissement doivent tout mettre en œuvre pour se conformer aux présentes lignes directrices, conformément aux dispositions de l'article 16 du règlement (UE) n°1093/2010 du Parlement européen et du Conseil du 24 novembre 2010 instituant l'Autorité bancaire européenne.

On 21 March 2022, the Chambre des représentants published Draft law transposing Directive (EU) 2019/1153 of the European Parliament and of the Council of 20 June 2019 laying down rules facilitating the use of financial and other information for the prevention, investigation or prosecution of certain criminal offences and repealing Council Decision 2000/642/JHA.

The objcetive of this bill is to partially transposes Directive (EU) 2019/1153. More specifically, it aims to give law enforcement agencies easier access to financial information from other member states, so that they can act more effectively against serious crime and terrorism. The Financial Intelligence Units (FIUs, in Belgium CTIF) must be able to exchange information quickly and easily in the fight against money laundering and terrorist financing. Most of the provisions of the directive in this respect are already included in Belgian law, but there are still some legislative changes to be made, among others with regard to the CTIF and the Central agency for seizure and confiscation (OCSC). These are therefore included in the current draft.

On 25 April 2022, the The Belgian Ultimate Beneficial Owner (UBO) register updated the UBO FAQ.

The purpose of this FAQ is to answer the questions that information providers and practitioners

could arise. It consists of two parts:

• the first part deals with legal issues, in particular how UBOs must be identified according to the legal form of the information provider;
• the second part contains technical questions related to access to the UBO register, the registration of beneficial owners and the assignment of mandates and roles.

The explanatory document concerning the StAKs has been removed from the site: the rules relating to foreign entities are found in the general FAQ.

On 29 April 2022, the Financial Services and Markets Authority (FSMA) published a communication on cryptocurrencies.

As from 1 May 2022, any legal person established in Belgium that wants to provide exchange services between virtual currencies and legal currencies, or custody wallet services, within Belgium will have to register with the FSMA in advance.

Providers already operating on 1 May 2022 must notify the FSMA of the exercise of their activity before 1 July 2022 and apply for registration before 1 September 2022.

On 22 April 2022, the Financial Services and Markets Authority (FSMA) published Communication FSMA_2022_13 updating its cartography of MiFID activities.

This communiction applies to regulated firms which provide investment services.

The update of the cartography of MiFID activities, introduced in 2012 by the FSMA, is justified by the changes introduced since 2018 by MIFID II.

The cartography: 

• has more “yes/no” questions and requires fewer numbers;
• mapping no longer requests transaction data;
• the data relating to the execution of orders is replaced by a link referring to the RTS 28 reporting;
• has been adapted according to the MiFID II rules and developments observed within the sector;
• request basic data by brand and/or segment.

The first communication of information according to the new mapping of MiFID activities will be carried out via a web application and will relate to the services provided and the activities carried out during the calendar year 2021.

The new reporting rules will apply as from 30 June 2022.

On 1 April 2022, the Federal Council of Ministers  approved three draft laws on the status and supervision of stock exchange companies and portfolio management and investment advisory companies.

The following bills are sent to the Council of State for its opinion:

• Draft law on the status and supervision of stock exchange companies and laying down various provisions.
• Draft law on the status and supervision of stock exchange companies with regard to certain accelerated appeal procedures before the Council of State.
• Draft law amending the Law of 25 October 2016 on access to the activity of providing investment services and on the statute and supervision of portfolio management and investment advisory firms, and laying down other miscellaneous provisions to transpose Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms.

On 14 April 2022, the Bundesrat published a draft law to supplement the regulations for the implementation of the Digitization Directive and to change other regulations.

Online notarizations of applications to the commercial register are declared admissible for all legal entities. Furthermore, applications to the register of cooperatives, partnerships and associations are included in the scope of application of the notarial procedure for online notarizations.

The scope of application of the notarial procedure for online notarization is to be extended to include GmbHs established in kind, powers of attorney for the formation of a GmbH and unanimously adopted resolutions to amend the GmbH memorandum and articles of association (so-called resolutions amending the memorandum and articles of association), including capital measures (increase and reduction of the share capital).

On 29 April 2022, the Bundesrat published a draft law introducing virtual general meetings of public limited companies and amending other regulations. 

To enable stock corporations to make permanent use of the virtual shareholders' meeting as an additional form of meeting in the future, a possibility is created in the AktG for the articles of association of the companies to provide for corresponding provisions or authorizations of the Board of Management. The holding of the meeting as a virtual General Stockholders' Meeting will be subject to a number of additional requirements, such as full video and audio transmission of the meeting and ensuring the right to ask questions and speak electronically. In addition, the aim is to organize the virtual General Stockholders' Meeting in such a way that the exercise of rights by the stockholders is largely the same as in the case of a meeting in person. In view of the fact that the information and decision-making processes relevant for the meeting are in some cases different at a virtual shareholders' meeting than at a presence meeting, shareholders are also to be given the opportunity to submit comments in advance of the shareholders' meeting. In this way, this draft of a "virtual shareholders' meeting act" takes account of the fact that communication at a virtual shareholders' meeting is in some cases different from that at an attendance meeting. Nevertheless, in this format, the course of the meeting and the exercise of shareholders' rights are to be based as closely as possible on the processes of the face-to-face meeting. The possible risks for issuers are taken into account through adjustments to the right of rescission.

On 24 April 2022, the Deutscher Bundestag published draft law amending the stock exchange act.

The draft law provides for the deletion of Section 10 (3) of the Stock Exchange Act combined with a minor addition to Section 10 (1) of the Stock Exchange Act. This leads to a significant lowering of the material hurdles for access to information by the financial authorities, in particular at the stock exchanges and stock exchange supervisory authorities.

The draft law represents a balanced approach between the concern to maintain cooperative collaboration with trading participants and issuers on the one hand, and on the other hand to take account of the changed understanding of transparent relationships with integrity in the financial markets and in the tax system. In particular, tax avoidance scandals related to stock market trading in the gray area of legality are detrimental to the interests of investor protection and thus to the willingness to invest in the financial markets. Particularly in times of low interest rates and corona-related economic problems, stock market investments are of increased importance for financial investments and corporate financing. However, investor confidence can only be ensured with transparent conditions in stock exchange trading and equal treatment of all investors also in the taxation of trading in financial instruments. It is therefore in the mutual interest of all stakeholders, such as investors, stock exchanges and their governing bodies, as well as stock exchange supervisory authorities, to effectively combat the abuse of tax avoidance in the financial market sector in cooperation with the tax authorities. This requires efficient structures for the possible exchange of information with the tax authorities, which the secrecy requirements of the Stock Exchange Act have so far failed to meet. 

On 24 April 2022, the Deutscher Bundestag published a draft law on the protection of cooperatives.

A legal definition of the impermissible form of capital investment cooperative is provided in the Cooperatives Act in order to signal to both consumers and cooperatives (to be established) which funding purposes are not in line with the cooperative concept. The cooperative auditing associations will be required to inform the German Federal Financial Supervisory Authority (BaFin) and the supervisory authority without delay of any potential violations of the German Investment Code or the German Investment Act by audited cooperatives so that the latter can take action on the basis of the information provided. In addition, the authorities responsible for supervising the cooperative auditing associations are also given the option of informing BaFin of violations of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) or the German Investment Act (Vermögensanlagengesetz, VermAnlG) that of which they have become aware in the course of their supervisory activities.

On 8 April 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published branch cessation notification form.

On 13 April 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published FAQs on the MiFID II code of conduct according to §§ 63ff. Securities Trading Act.

In it, it makes it clear that securities services companies must always inform their customers about inducements before the transaction is concluded, even if means of distance communication are used. Subsequent disclosure – as is possible under certain conditions for the costs associated with the transaction – is not permitted.

The following question was added:

5. Contrary to section 70 ( 1) sentence 1 no. 2 WpHG , is it permissible for an investment services enterprise to disclose any inducements together with the costs and fees in the case of a transaction concluded via means of distance communication only immediately after the transaction has been concluded if the requirements pursuant to section 63 ( 7 ) Sentence 12 WpHG are fulfilled?

On 19 April 202, the BVI Bundesverband Investment und Asset Management e.V. published their comments to the ESMA Consultation Paper “Guidelines on certain aspects of the MiFID II suitability requirements”.

On 11 April 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) issued a warning about fake website stock exchange supervision.net.

This is an attempt at fraud. BaFin recommends that you never accept this offer of help and that you do not give out any login data, passwords, credit card numbers, account details or similar data.

The fraudulent website stock exchange supervision. net is not to be confused with the website of the German stock exchange supervisory authority, which can be accessed at www.boersenaufsicht.de.

On 22 April 2022, the Securities and Futures Commission (SFC) published Circular to REIT managers and applicants - Consequential amendments to the REIT Code in relation to conduct requirements for bookbuilding and placing activities.

This circular sets out consequential amendments to the Code on Real Estate Investment Trusts (REIT Code) which dovetail with the amendments to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct) in relation to bookbuilding and placing activities. The REIT Code amendments are in line with similar consequential amendments made to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (Listing Rules) released.

The amendments to the REIT Code provide that Chapter 3A of the Listing Rules and the other Listing Rule provisions relating to the sponsor-overall coordinator, overall coordinator and other capital market intermediaries shall apply in the case of offerings involving bookbuilding activities for interests in a REIT by a new REIT applicant or an SFC-authorised REIT. 

On 21 April 2022, the Securities and Futures Commission (SFC) published Circular to Intermediaries - Commencement of End-To-End (E2E) Test for the Hong Kong Investor Identification Regime (HKIDR).

The E2E Test for systems relating to the HKIDR will commence from 16 May 2022 until 15 July 2022. It is mandatory for all Relevant Regulated Intermediaries (RRIs) to participate in the E2E Test. RRIs should refer to the SFC’s Circular dated 31 March 2022 for downloading the HKIDR File Transfer Connectivity Guide and relevant E2E test package published by the Stock Exchange of Hong Kong (SEHK) in order to get ready for the mandatory E2E Test.

Responsible Officers of the relevant licensed corporations and Executive Officers of the relevant registered institutions can register for an E2E test account starting from 25 April 2022 via the SFC’s WINGS platform. There will be three rounds of test account registration/update the choice of which will depend on the readiness of individual RRIs. An RRI must complete its test account registration/update in one of the three rounds in order to participate in the mandatory E2E Test. 

RRIs who wish to participate in the E2E Test on 16 May 2022 should apply for the E2E test account via the SFC’s WINGS platform on or before 12pm on 13 May 2022. RRIs may also choose to apply for or update the E2E test account by 12pm on 2 June 2022 or 24 June 2022 respectively in order to participate in the E2E Test. RRIs can perform the E2E Test upon the activation or information update of the test account.

On 8 April 2022, the S.I. No. 169 of 2022 - Central Bank Reform Act 2010 (Sections 20 and 22) (Amendment) Regulations 2022 was published in the Irish Statute Book.

These Regulations amend the Central Bank Reform Act 2010 (Sections 20 and 22) Regulations 2011 ( S.I. No. 437 of 2011 ) by the amendments to the list of pre-approval controlled functions.

On 1 April 2022, the Irish Funds Industry Association (IF) informed that:

• Central Bank of Ireland approves, in principle, QIAIFs with a low level of exposure to cash settled Bitcoin futures, the first type of indirect crypto exposure approved for a QIAIF
• Assets in Irish domiciled funds surpassed €4 trillion for the first time in 2021
• Irish domiciled ETF assets represent 66 per cent of the total European ETF market.

On 27 April 2022, the Central Bank of Ireland (CBI) published Supervisory Statement on the application of the Sustainable Finance Disclosure Regulation.

Readers will recall that the ESAs previously issued a joint supervisory statement in February 2021 to address how firms can comply during the interim period between the application of the Level 1 Regulation and the Level 2 RTS.  This supervisory statement aims to promote an effective and consistent application and national supervision of the SFDR, thus creating a level playing field and protecting investors. 

The updated supervisory statement (which replaces the previous supervisory statement) sets out the new timeline.  It also clarifies that financial product disclosure obligations under Article 5 and 6 of the Taxonomy Regulation should include an “explicit quantification” of the extent to which investments underlying the financial product are taxonomy-aligned. It provides advice on the use of estimates and confirms that while estimates should not be used to calculate the taxonomy-alignment of in-scope financial products, where information is not readily available from investee companies’ public disclosures, FMPs may rely on equivalent information on taxonomy-alignment obtained directly from investee companies or from third party providers.

On 5 April 2022, the Central Bank of Ireland updated ts Guidance on the Transparency Regulatory Framework to reflect the formatting requirements for the annual financial report prepared in accordance with the European Single Electronic Format (‘ESEF’) Regulation.

A PDF version of the annual financial report does not meet an issuer’s obligations under the Transparency Regulations. The issuer should make it clear on their website that the ESEF compliant accounts are those that comply with the Transparency Regulations.

Issuers must also submit to the Central Bank the annual financial report prepared in accordance with the requirements of the ESEF Regulation.

Annual financial reports submitted in other formats do not meet the requirements of the Transparency Regulations.

On 26 April 2022, the Banca d'Italia published provisions on the ownership structure of banks and financial intermediaries.

The consultation is aimed at gathering comments and observations on provisions; in addition to implementing the rules on the ownership structure of intermediaries contained in the TUB (Legislative Decree 385/1993) and in the TUF (Legislative Decree 58/1998) modified last year (by legislative decree 182/2021), the provisions carry out an overall reorganization of the Bank's regulations of Italy. 

The supervisory provisions governing the acquisition are submitted to public consultation e the change in qualified shareholdings (i.e., equal or higher shares of voting rights or capital 10, 20, 30, 50% or such as to attribute control or significant influence) in banks, intermediaries financials, trust companies, payment institutions, electronic money institutions, SIMs and managers.

On 22 April 2022, the Banca d'Italia published amendments to the ExtraMOT Market and ExtraMOT Pro3 Segment Rules.

The Rules of ExtraMOT Market and ExtraMOT Pro3 segment are modified to introduce the possibility of grouping not guaranteed contracts into balances calculated based on the criteria defined within the pre-settlement grouping service, in line with the rules of the other not guaranteed markets managed by Borsa Italiana.

Following transmission to the pre-settlement service and prior to forwarding to foreign settlement systems, the individual contracts shall be grouped into balances based on the criteria described in the X-TRM Service Instructions. 

In view of the introduction of the grouping, specific provisions for the implementation of the market participants’ obligation to establish effective forms of control to monitor the contractual positions taken and ensure the orderly conduct of trades are introduced. 

In particular, the requirement is established for market participants to adopt internal procedures that enable (i) the reconciliation of contracts concluded on the market with the grouped balances forwarded to the foreign settlement services; (ii) the identification of unsettled contracts; and (iii) if a grouped balance can only be partially settled, the input of settlement instructions aimed at maximizing the settlement of contracts concluded on the market, subject to notification to Borsa Italiana.

The amendments will enter into force on the 2nd of May 2022.

On 22 April 2022, the Banca d'Italia published CONSOB's amendments concerning the instructions accompanying the rules of the markets settlement of not guaranteed contracts on the EuroMOT.

With the communication of the 24th of June 2021 Consob approved the amendments to the Instructions accompanying the Rules of the Market regarding the settlement of not guaranteed contracts on the EuroMOT Segment. 

The Instructions accompanying the Rules of the Markets for the MOT market, EuroMOT segment, have been amended to introduce the possibility of grouping not guaranteed contracts into balances calculated based on the criteria defined within the pre-settlement grouping service, in line with the rules of the other not guaranteed markets managed by Borsa Italiana. 

Balance grouping criteria and forwarding to foreign settlement systems In line with the current operational and regulatory framework, immediately after the conclusion of not guaranteed contracts in the EuroMOT segment, Borsa Italiana shall transmit the contracts to the X-TRM service for forwarding to foreign settlement systems. 

Following transmission to the pre-settlement service and prior to forwarding to foreign settlement systems, the individual contracts shall be grouped into balances based on the criteria described in the X-TRM Service Instructions.

The amendments will enter into force on the 2nd of May 2022.

On 8 April 2022, the Law of 1 April 2022 amending the Criminal Code by transposing Directive (EU) 2019/713 of the European Parliament and of the Council of 17 April 2019 on combating fraud and counterfeiting of non-cash means of payment and replacing Council Framework Decision 2001/413/JHA was published in the Legilux (Journal Officiel du Grand-Duché de Luxembourg).

Anyone who has counterfeited, altered, or falsified, an instrument of payment other than those referred to in Article 160 shall be punished by imprisonment from four months to five years and a fine of 1,250 euros to 75,000 euros.

The same penalty shall be imposed on anyone who receives, detains, transports, issues, imports, procures or puts into circulation such an instrument of payment, knowing at the time that the person received it that it came from one or more of the offences.

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Le 8 avril 2022, la loi du 1er avril 2022 modifiant le code pénal en transposant la directive (UE) 2019/713 du Parlement européen et du Conseil du 17 avril 2019 concernant la lutte contre la fraude et la contrefaçon des moyens de paiement autres que les espèces et remplaçant la décision-cadre 2001/413/JAI du Conseil a été publiée au Legilux (Journal Officiel du Grand-Duché de Luxembourg).

Quiconque aura contrefait, altéré ou falsifié un instrument de paiement autre que ceux visés à l'article 160 sera puni d'un emprisonnement de quatre mois à cinq ans et d'une amende de 1.250 euros à 75.000 euros.

Sera puni de la même peine quiconque aura reçu, détenu, transporté, émis, importé, procuré ou mis en circulation un tel instrument de paiement, sachant au moment où il l'aura reçu qu'il provient d'une ou plusieurs des infractions.

On 19 April 2022, the Commission de Surveillance du secteur financier (CSSF) published communication on monitoring the quality of transaction reports received under Article 9 of EMIR.

The communication concerns the obligation for counterparties and CCPs to report to Trade Repositories (TRs) the details of any derivative contract they have concluded and of any modification or termination of the contract as set out in Article 9 of Regulation (EU) No 648/2012 (EMIR). 

The CSSF informs on the quality and completeness campaigns that the CSSF conducted during the year 2021, as well as on the topics that are the subject of dedicated campaigns during the year 2022.

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Le 19 avril 2022, la Commission de Surveillance du secteur financier (CSSF) a publié une communication sur le contrôle de la qualité des déclarations de transactions reçues en vertu de l'article 9 d'EMIR.

La communication concerne l'obligation pour les contreparties et les contreparties centrales de déclarer aux référentiels centraux (TR) les détails de tout contrat dérivé qu'elles ont conclu et de toute modification ou résiliation du contrat, comme le prévoit l'article 9 du règlement (UE) n° 648/2012 (EMIR). 

La CSSF informe sur les campagnes de qualité et d'exhaustivité que la CSSF a menées au cours de l'année 2021, ainsi que sur les sujets qui font l'objet de campagnes dédiées au cours de l'année 2022.

On 4 April 2022, the Commission de Surveillance du secteur financier (CSSF) published a reminder on investment fund managers being invited to eclare via the dedicated eDesk application the performance fee models applicable to Luxembourg UCITS or AIF they manage.

In the context of the guidelines ESMA34-39-992 on performance fees applicable to UCITS and certain types of AIFs (the “Guidelines”) published by the European Securities and Markets Authority’s (“ESMA”) in November 2020 and the CSSF communication dated 22 September 2021, the CSSF would like to remind Investment Fund Managers (“IFM”), that they must undertake a self-assessment and declare, where applicable, which performance fee models are used (the “PF Declaration”) by the investment funds they manage, including Luxembourg-based unregulated funds managed by an AIFM established in Luxembourg and authorised pursuant to Chapter 2 of the AIFM Law.

As previously indicated in the said CSSF communication of 22 September 2021, the Guidelines aim to promote greater convergence and standardisation in the field of performance fees. In particular, they aim to ensure that performance fee models used by IFMs comply with the principles of acting honestly and fairly in conducting their business activities and acting with due skill, care and diligence in the best interest of the fund that they manage, in such a way as to prevent undue costs being charged to the fund and its investors. Finally, the Guidelines aim at establishing a common standard in relation to the disclosure of performance fee models to investors, as the latter should be adequately informed about the existence of performance fees and about their potential impact on the investment return.

The CSSF issued Circular CSSF 20/764 on 18 December 2020 and integrated the Guidelines into its administrative practices and regulatory approach with a view to promoting supervisory convergence in this field at European level as of 6 January 2021, the date of application of the Guidelines. The CSSF would like to emphasise once again that proper disclosures to investors of performance fee models in compliance with the Guidelines are mandatory.

IFMs are requested for Luxembourg-based UCITS or AIFs they manage to complete a dedicated PF Declaration via the eDesk application on performance fees. This eDesk application is updated on a regular basis in order to implement new operational features to support the PF Declarations to the CSSF. Detailed information on those new features can be viewed in the dashboard of the eDesk application under the “What’s new” section.

Latest new features encompass among others the possibility for IFMs:

• to ensure maintenance of previously submitted PF Declarations that need to be updated (update feature) due to changes made to the initial PF Declaration, after the launch of new sub-funds or new classes, or after any other ongoing changes made in respect to performance fees to the fund, existing sub-funds or share classes, as the case may be. The IFM is responsible to ensure that PF Declarations are kept up-to-date on an ongoing basis,
• to declare performance fee models for unregulated funds they manage.

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Le 4 avril 2022, la Commission de Surveillance du secteur financier (CSSF) a publié un rappel sur les gestionnaires de fonds d'investissement invités à déclarer via l'application eDesk dédiée les modèles de commissions de performance applicables aux OPCVM ou FIA luxembourgeois qu'ils gèrent.

Dans le cadre des lignes directrices ESMA34-39-992 sur les commissions de performance applicables aux OPCVM et à certains types de fonds alternatifs (les "lignes directrices") publiées par l'Autorité européenne des marchés financiers ("ESMA") en novembre 2020 et de la communication de la CSSF du 22 septembre 2021, la CSSF souhaite rappeler aux gestionnaires de fonds d'investissement ("GFI") qu'ils doivent entreprendre une auto-évaluation et déclarer, le cas échéant, quels modèles de commission de performance sont utilisés (la " Déclaration PF ") par les fonds d'investissement qu'ils gèrent, y compris les fonds non réglementés basés au Luxembourg et gérés par un gestionnaire établi au Luxembourg et agréé conformément au chapitre 2 de la loi AIFM.

Comme indiqué précédemment dans ladite communication de la CSSF du 22 septembre 2021, les lignes directrices visent à promouvoir une plus grande convergence et standardisation dans le domaine des commissions de performance. En particulier, elles visent à garantir que les modèles de commissions de performance utilisés par les GFI respectent les principes d'honnêteté et d'équité dans l'exercice de leurs activités commerciales et d'agir avec la compétence, le soin et la diligence nécessaires dans le meilleur intérêt du fonds qu'ils gèrent, de manière à éviter que des coûts indus soient imputés au fonds et à ses investisseurs. Enfin, les lignes directrices visent à établir un standard commun en ce qui concerne la divulgation des modèles de commission de performance aux investisseurs, ces derniers devant être correctement informés de l'existence de commissions de performance et de leur impact potentiel sur le rendement des investissements.

La CSSF a publié la circulaire CSSF 20/764 le 18 décembre 2020 et a intégré les lignes directrices dans ses pratiques administratives et son approche réglementaire en vue de promouvoir la convergence de la surveillance dans ce domaine au niveau européen à partir du 6 janvier 2021, date d'application des lignes directrices. La CSSF tient à souligner une fois de plus qu'il est obligatoire de divulguer aux investisseurs les modèles de commissions de performance conformément aux lignes directrices.

Les GFI sont priés, pour les OPCVM ou FIA basés au Luxembourg qu'ils gèrent, de remplir une déclaration PF dédiée via l'application eDesk sur les commissions de performance. Cette application eDesk est mise à jour régulièrement afin d'implémenter de nouvelles fonctionnalités opérationnelles pour soutenir les Déclarations CP à la CSSF. Des informations détaillées sur ces nouvelles fonctionnalités peuvent être consultées dans le tableau de bord de l'application eDesk sous la section "What's new".

Les dernières nouvelles fonctionnalités comprennent entre autres la possibilité pour les GFI :

• d'assurer la maintenance des Déclarations PF précédemment soumises qui doivent être mises à jour (fonction de mise à jour) en raison de changements apportés à la Déclaration PF initiale, après le lancement de nouveaux compartiments ou de nouvelles classes, ou après tout autre changement continu apporté aux commissions de performance du fonds, des compartiments existants ou des classes d'actions, selon le cas. L'IFM est chargé de s'assurer que les Déclarations PF sont tenues à jour de manière continue,
• de déclarer les modèles de commissions de performance pour les fonds non réglementés qu'ils gèrent.

On 6 April 2022, the Commission de Surveillance du secteur financier (CSSF) published a communication on the deadline for filing real estate levy.

The Administration des contributions directes (ACD – Luxembourg Inland Revenue) reminds that the relevant investment vehicles must file the statements in respect of the real estate levy by 31 May 2022 at the latest.

A fine will be imposed in case of non-filing, late filing or incomplete or false statement.

The ACD communicated the following useful links:

• Communication of the Administration des contributions directes (only in French): impotsdirects.public.lu/fr/archive/Actualites/actu04042022.html
• Link to the procedures: impotsdirects.public.lu/fr/formulaires/collectivites.html
• Additional information on real estate levy (only in French): impotsdirects.public.lu/fr/echanges_electroniques/prel-immo.html

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Le 6 avril 2022, la Commission de Surveillance du secteur financier (CSSF) a publié une communication relative au délai de dépôt du prélèvement immobilier.

L'Administration des contributions directes (ACD - Luxembourg Inland Revenue) rappelle que les véhicules d'investissement concernés doivent déposer les déclarations au titre du prélèvement immobilier au plus tard le 31 mai 2022.

Une amende sera infligée en cas de non-dépôt, de dépôt tardif ou de déclaration incomplète ou fausse.

L'ACD a communiqué les liens utiles suivants :

• Communication de l'Administration des contributions directes : impotsdirects.public.lu/fr/archive/Actualites/actu04042022.html
• Lien vers les procédures : impotsdirects.public.lu/fr/formulaires/collectivites.html
• Informations complémentaires sur la taxe foncière : impotsdirects.public.lu/fr/echanges_electroniques/prel-immo.html

On 11 April 2022, the CSSF published AIFM reporting communication with the channels description  of the CSSF controls and description of the feedback files.

The document describes the controls that the CSSF applies to the AIFMD reporting files that AIFMs are required to submit to the CSSF upon the basis of articles 3 (3)(d), 24 (1), (2) and (4) of the AIFMD Regulation 231/2013. Guidance on different aspects can be found in the ESMA guidelines and in the CSSF FAQ. Technical details and naming conventions are described in the CSSF circular 14/581.

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Le 11 avril 2022, la CSSF a publié la communication sur le reporting AIFM avec les chaînes description des contrôles de la CSSF et description des fichiers de retour.

Le document décrit les contrôles que la CSSF applique aux fichiers de reporting AIFMD que les gestionnaires sont tenus de soumettre à la CSSF sur la base des articles 3 (3)(d), 24 (1), (2) et (4) du règlement AIFMD 231/2013. Des conseils sur différents aspects peuvent être trouvés dans les lignes directrices de l'ESMA et dans la FAQ de la CSSF. Les détails techniques et les conventions de dénomination sont décrits dans la circulaire 14/581 de la CSSF.

BACKGROUND

The European Banking Authority’s Guidelines on Outsourcing (EBA/GL/2019/02) specify the internal governance arrangements, including sound risk management, that institutions should implement when they outsource functions, in particular with regards to the outsourcing of critical or important functions. These Guidelines develop the expectation for governance on outsourcing arrangements as well as the requirements for each stage of the outsourcing arrangement’s lifecycle.

With a view to contribute to supervisory convergence at the European level, the CSSF has integrated the EBA’s Guidelines on Outsourcing arrangements (EBA/GL/2019/02) into its administrative practice and regulatory approach via the Circular 22/806.

WHAT'S NEW?

In addition to implementing the EBA’s Guidelines on Outsourcing arrangements, the new Circular clarifies certain conditions and reminds organizations of their local requirements. These include:

• Responsibility of the management body;
• Intragroup outsourcing;
• Compliance of branches;
• Respect of the professional secrecy and compliance with GDPR in outsourcing arrangements;
• Competent authorities’ rights;
• Outsourcing arrangements relating to internal control functions and financial and accounting functions;
• Storage of end-of-day accounting position data backup within the EEA;
• Service provider’s independence from the statutory auditor;
• Supervisory condition for outsourcing (e.g. notification of the competent authority, outsourcing to a service provider located in Luxembourg, etc.);
• Confidentiality and integrity of data and systems throughout the outsourcing chain, in particular respect of the principles of “need to know” and “least privilege”;
• Commitment of the service provider to erase the data and systems of the in-scope entity within a reasonable timeframe when the contract is terminated; and
• Outsourcing of ICT system management/operation service in Luxembourg and abroad.

The new Circular applies to IFMs when performing ICT outsourcing. When an IFM outsources ICT, the Circular CSSF 18/698 applies as a baseline in relation to Chapter 4 (The bodies of IFM) and Chapter 5 (Arrangements regarding the central administration and internal governance) and is complemented by the new Circular in relation to outsourcing governance.

Amongst others, the main specific requirements that IFMs must respect when performing ICT outsourcing are the implementation of an outsourcing policy, documentation of the ICT outsourcing in the outsourcing register, and notification of the regulator for critical or important contemplated ICT outsourcing. The CSSF FAQs related to the Circular on outsourcing arrangements provide insightful clarifications on the application of the Circular to IFMs.

IFMs governed by Article 125-1 of Chapter 16 are not expected to comply with the new Circular, however Chapter 1 of part VI of Circular CSSF 18/698 applies.

The new Circular clarifies the definition of “Own ICT systems” and “Client ICT systems” under the requirements applicable to support PFS. The latter corresponds to systems that support the services provided to their clients by the Support PFS irrespective of whether they belong to the client or to the support PFS. According to the Circular, under certain conditions, support PFS may partially outsource their ICT operator services, i.e. some of the management/operational services of client ICT systems. Amongst others, some of these conditions are:

• That the service provision is complementary;
• The prior approval of all concerned regulated financial sector clients is obtained;
• The prior consent of their regulated clients is obtained if the service provider may have access to data subject to professional secrecy;
• The competent authority is provided with a detailed oversight plan and exit plan on a yearly basis; and
• The prior approval of the relevant authority for such outsourcing is obtained.

In-scope entities will be required to perform a simple prior notification for all outsourcing arrangements of a critical or important function (including ICT outsourcing and business process outsourcing). This notification process applies to (a) planned new critical or important outsourcing arrangements, (b) material changes to existing critical or important outsourcing arrangements, and (c) changes to outsourcing arrangements that lead to an outsourced function becoming critical or important. Support PFS and their branches will, under certain circumstances, need to get the prior approval of the competent authority for their outsourcings.

The in-scope entities are expected to notify that the (planned) outsourcing arrangement complies with the new Circular. To do so, the notification template of the CSSF should be used and submitted at least three months before the planned outsourcing comes into effect. The notice period is reduced to one month when resorting to a Luxembourg-based support PFS governed by Articles 29-1 to 29-6 LFS.

In-scope entities may implement the outsourcing arrangement at the end of the notice period (three months or one month). They do not have to wait for the approval/non-objection of the authority to implement the planned outsourcing arrangements based on the information provided in the FAQs and, under the condition, that they reflect the potential concerns expressed by the relevant authority. The CSSF’s FAQs related to the Circular on outsourcing arrangements provide insightful clarifications on prior notification process.

WHAT'S NEXT?

30 June 2022 is now the definitive milestone for in-scope entities.

As of 30 June 2022, CSSF will amend the Circulars CSSF 12/552 as amended, CSSF 20/758 as amended, IML 95/120, IML 96/126, IML 98/143 as amended, CSSF 04/155.

At a later date, CSSF will amend the Circulars CSSF 16/644 as amended, CSSF 18/697, CSSF 18/698.

As of 30 June 2022, CSSF will repeal the Circulars CSSF 13/554, CSSF 15/611, CSSF 17/654 as amended (Cloud Circular), CSSF 17/656 as amended, CSSF 19/714, CSSF 21/777, CSSF 21/785.

Entities must review and amend existing outsourcing arrangements to be compliant with the requirements of the Circular, complete the documentation of all existing outsourcing arrangements in line with this Circular following the first renewal date of each existing outsourcing arrangement—but by no later than 31 December 2022.

Where in-scope entities assess the review and amendment of outsourcing arrangements of critical or important functions existing prior to 30 June 2022 will not be finalized by 31 December 2022, they must inform their competent authority in a timely manner, including the measures planned to complete the review or the possible exit strategy.

With regards to ICT outsourcing notifications that were submitted before 22 April 2022, based on the information provided in the FAQs document, the CSSF will treat them according to the same supervisory approach meaning that the in-scope entity may implement the outsourcing arrangement as soon as the notice period has expired.

While the Circular applies as from 30 June 2022 to all outsourcing arrangements entered into, reviewed or amended on or after this date, the prior notification requirement for ICT outsourcing applies with immediate effect. Such a notification is to be submitted at least three months before the planned outsourcing comes into effect. When resorting to a Luxembourg-based support PFS governed by Articles 29-1 to 29-6 LFS, this notice period is reduced to one month.

In addition to revising existing outsourcing arrangements, in-scope entities must revise their outsourcing policy and governance as well as process to ensure that any new outsourcing arrangements will comply with new regulatory requirements.

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BACKGROUND

Les lignes directrices de l'Autorité bancaire européenne sur l'externalisation (ABE/GL/2019/02) précisent les dispositifs de gouvernance interne, y compris la bonne gestion des risques, que les établissements doivent mettre en œuvre lorsqu'ils externalisent des fonctions, en particulier en ce qui concerne l'externalisation de fonctions critiques ou importantes. Ces lignes directrices développent les attentes en matière de gouvernance sur les accords d'externalisation ainsi que les exigences pour chaque étape du cycle de vie de l'accord d'externalisation.

En vue de contribuer à la convergence de la surveillance au niveau européen, la CSSF a intégré les Guidelines on Outsourcing arrangements de l'ABE (ABE/GL/2019/02) dans sa pratique administrative et son approche réglementaire via la Circulaire 22/806.

WHAT'S NEW?

En plus de mettre en œuvre les lignes directrices de l'ABE sur les accords d'externalisation, la nouvelle circulaire clarifie certaines conditions et rappelle aux organisations leurs exigences locales. Il s'agit notamment de :

• La responsabilité de l'organe de direction ;
• L'externalisation intra-groupe ;
• La conformité des succursales ;
• Respect du secret professionnel et conformité au GDPR dans les accords d'externalisation ;
• Les droits des autorités compétentes ;
• Modalités d'externalisation relatives aux fonctions de contrôle interne et aux fonctions financières et comptables ;
• Stockage de la sauvegarde des données de position comptable de fin de journée au sein de l'EEE ;
• Indépendance du prestataire de services par rapport au commissaire aux comptes ;
• Condition de surveillance de l'externalisation (par exemple, notification de l'autorité compétente, externalisation vers un prestataire de services situé au Luxembourg, etc) ;
• Confidentialité et intégrité des données et des systèmes tout au long de la chaîne d'externalisation, en particulier le respect des principes du "besoin de savoir" et du "moindre privilège" ;
• Engagement du prestataire de services à effacer les données et les systèmes de l'entité du champ d'application dans un délai raisonnable lorsque le contrat prend fin ; et
• Externalisation du service de gestion/exploitation des systèmes TIC au Luxembourg et à l'étranger.

La nouvelle circulaire s'applique aux GFI lors de l'externalisation des TIC. Lorsqu'un IFM externalise des TIC, la circulaire CSSF 18/698 s'applique comme base de référence en ce qui concerne le chapitre 4 (Les organes de l'IFM) et le chapitre 5 (Dispositions concernant l'administration centrale et la gouvernance interne) et est complétée par la nouvelle circulaire en ce qui concerne la gouvernance de l'externalisation.

Les principales exigences spécifiques que les GFI doivent respecter lors de l'externalisation des TIC sont, entre autres, la mise en œuvre d'une politique d'externalisation, la documentation de l'externalisation des TIC dans le registre d'externalisation et la notification du régulateur pour les externalisations critiques ou importantes envisagées. Les FAQ de la CSSF relatives à la circulaire sur les accords d'externalisation fournissent des clarifications utiles sur l'application de la circulaire aux GFI.

Les GFI régis par l'article 125-1 du chapitre 16 ne sont pas censés se conformer à la nouvelle circulaire, mais le chapitre 1 de la partie VI de la circulaire CSSF 18/698 s'applique.

La nouvelle circulaire clarifie la définition des "systèmes TIC propres" et des "systèmes TIC clients" dans le cadre des exigences applicables au soutien des PSF. Ces derniers correspondent aux systèmes qui soutiennent les services fournis à leurs clients par le PSF d'appui, indépendamment du fait qu'ils appartiennent au client ou au PSF d'appui. Selon la circulaire, sous certaines conditions, les PSF de support peuvent externaliser partiellement leurs services d'opérateur TIC, c'est-à-dire certains des services de gestion/exploitation des systèmes TIC des clients. Ces conditions sont, entre autres, les suivantes :

• que la prestation de services soit complémentaire ;
• l'accord préalable de tous les clients réglementés du secteur financier concernés est obtenu ;
• l'accord préalable de leurs clients réglementés est obtenu si le prestataire de services peut avoir accès à des données soumises au secret professionnel ;
• l'autorité compétente reçoit un plan de surveillance et un plan de sortie détaillés sur une base annuelle ; et
• l'approbation préalable de l'autorité compétente pour cette externalisation est obtenue.

Les entités du champ d'application seront tenues d'effectuer une simple notification préalable pour tous les accords d'externalisation d'une fonction critique ou importante (y compris l'externalisation des TIC et des processus d'entreprise). Ce processus de notification s'applique (a) aux nouveaux accords d'externalisation critiques ou importants prévus, (b) aux modifications importantes des accords d'externalisation critiques ou importants existants, et (c) aux modifications des accords d'externalisation qui conduisent à ce qu'une fonction externalisée devienne critique ou importante. Les PSF de soutien et leurs succursales devront, dans certaines circonstances, obtenir l'approbation préalable de l'autorité compétente pour leurs externalisations.

Les entités du champ d'application sont censées notifier que l'accord d'externalisation (prévu) est conforme à la nouvelle circulaire. Pour ce faire, le modèle de notification de la CSSF doit être utilisé et soumis au moins trois mois avant que l'externalisation prévue ne prenne effet. Le délai de notification est réduit à un mois en cas de recours à un PSF d'appui basé au Luxembourg et régi par les articles 29-1 à 29-6 LFS.

Les entités du champ d'application peuvent mettre en œuvre l'accord d'externalisation à la fin de la période de préavis (trois mois ou un mois). Elles ne doivent pas attendre l'approbation/la non-objection de l'autorité pour mettre en œuvre les accords d'externalisation prévus sur la base des informations fournies dans les FAQ et, à la condition, qu'ils reflètent les préoccupations potentielles exprimées par l'autorité compétente. Les FAQ de la CSSF relatives à la circulaire sur les accords d'externalisation fournissent des éclaircissements utiles sur le processus de notification préalable.

WHAT'S NEXT?

30 June 2022 is now the definitive milestone for in-scope entities.

As of 30 June 2022, CSSF will amend the Circulars CSSF 12/552 as amended, CSSF 20/758 as amended, IML 95/120, IML 96/126, IML 98/143 as amended, CSSF 04/155.

At a later date, CSSF will amend the Circulars CSSF 16/644 as amended, CSSF 18/697, CSSF 18/698.

As of 30 June 2022, CSSF will repeal the Circulars CSSF 13/554, CSSF 15/611, CSSF 17/654 as amended (Cloud Circular), CSSF 17/656 as amended, CSSF 19/714, CSSF 21/777, CSSF 21/785.

Entities must review and amend existing outsourcing arrangements to be compliant with the requirements of the Circular, complete the documentation of all existing outsourcing arrangements in line with this Circular following the first renewal date of each existing outsourcing arrangement—but by no later than 31 December 2022.

Where in-scope entities assess the review and amendment of outsourcing arrangements of critical or important functions existing prior to 30 June 2022 will not be finalized by 31 December 2022, they must inform their competent authority in a timely manner, including the measures planned to complete the review or the possible exit strategy.

With regards to ICT outsourcing notifications that were submitted before 22 April 2022, based on the information provided in the FAQs document, the CSSF will treat them according to the same supervisory approach meaning that the in-scope entity may implement the outsourcing arrangement as soon as the notice period has expired.

While the Circular applies as from 30 June 2022 to all outsourcing arrangements entered into, reviewed or amended on or after this date, the prior notification requirement for ICT outsourcing applies with immediate effect. Such a notification is to be submitted at least three months before the planned outsourcing comes into effect. When resorting to a Luxembourg-based support PFS governed by Articles 29-1 to 29-6 LFS, this notice period is reduced to one month.

In addition to revising existing outsourcing arrangements, in-scope entities must revise their outsourcing policy and governance as well as process to ensure that any new outsourcing arrangements will comply with new regulatory requirements.

On 11 April 2022, the Eidgenössische Finanzmarktaufsicht (FINMA) published two forms on a request for approval of a Swiss and foreign collective investment schemes.

Version française

Le 11 avril 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié deux formulaires de demande d'agrément pour les placements collectifs de capitaux suisses et étrangers.

On 25 April 2022, the Autoriteit Financiële Markten (AFM) found that the quality of the assurance reports on investment restrictions must be improved.

In the 4th quarter of 2021, the Netherlands Authority for the Financial Markets (AFM) investigated the assurance reports on investment restrictions submitted by UCITS managers for the year 2020. This has revealed some irregularities. In addition, the quality of the reports must be further improved.

Managers of UCITS are subject to investment restrictions. The AFM supervises compliance with this, including by assessing the assurance reports on investment restrictions. These should reflect the extent to which UCITS managers have complied with requirements indicating what the UCITS manager may invest in. The assurance reports must also reflect what has been done by the administrator to end the overrun.

UCITS managers are obliged to spread risk when investing. For each financial instrument, the Decree on the Supervision of the Conduct of a Financial Undertaking (BGfo) indicates whether it is permitted to invest and by what percentage. Investment restrictions exist to protect investors. Research into the assurance reports has shown that some investment restrictions have been exceeded. For example, it has emerged that over a longer period of time a position of more than 35% in government bonds has been taken. It has also been found that limits on investing in financial instruments issued by the same institution and on deposits with a bank have been exceeded. The AFM expects UCITS managers to prevent investment restrictions from being exceeded. If the exceedance takes place outside the control of the administrator, measures must be taken to end the exceedance as soon as possible. An overrun beyond the control of the manager concerns, for example, an (unforeseen) increase in the value of a financial instrument at a time when the manager cannot respond to it, because the increase in value occurs outside office hours and the manager is closed for that reason.

The AFM expects assurance reports to be of good quality and complete. The research has shown that this is not always the case. The points for improvement are:

1. The exceedance should be better indicated. Just a reference to the relevant legal article is not sufficient. Specific reference to an article member from the BGfo – and in some cases to one or more parts of article members – is mandatory.
2. Indicate more clearly how the exceedance occurred.
3. More clearly indicate what has been done to end the exceedance.
4. Not only active but also passive exceedances must be reported.

The AFM gains insight into material irregularities detected by depositaries – including exceeding investment restrictions – in managers of UCITS by means of the depositary reports. In the coming years, the AFM will also use the information from the depositary reports when assessing the assurance reports on investment restrictions.

On 11 April 2022, the De Nederlandsche Bank (DNB) informed on the request of periodic reporting for trust offices.

As every year, DNB asks trust offices for a report that we use in our supervision. This year the report consists of two forms.

The first form is the integrity risk reporting form (hereinafter: IRAP form). The IRAP form was formerly called the Institution Specific Information Form, also known as the ISI form.

The second form is the Governance, Behaviour & Culture and Risk Management form (hereinafter: GGC RM form).

DNB has recently made both forms and the accompanying announcement letter available on their website. They have already sent the announcement letter by post to all trust offices. They ask every trust office to submit a complete and correctly completed IRAP form and GGC RM form to us by 9 June 2022 at the latest.

The forms include the organisation and clients of the trust office in the calendar year 2021 and the position as at 31 December 2021. They are an important source for us to arrive at a risk profile per trust office and for our analysis of risk management in the sector. Based on the risk profiles and the sector analyses, we carry out our integrity supervision in a risk-based manner. In order to get the best possible picture of the integrity risks of a trust office, it is important that the trust offices provide us with factually correct and complete data in a timely manner. We will explicitly monitor this and hold trust offices to account if they fail to submit the forms in a timely and correct manner.

On 29 April 2022, the Comisión Nacional Bancaria y de Valores (CNBV) published communication no.27 on ESG self-diagnostic tool and climate-related risks.

As part of the efforts of the National Banking and Securities Commission (CNBV) in collaboration with the Global Institute for Green Growth (GGGI) with support from the UK Government through its UK PACT (Partnering for Accelerated Climate Transitions) Programme, they developed the ESG Self-Diagnosis Tool and climate-related risks.

This tool is aimed at the member institutions of the Financial System in Mexico, with the aim of generating a diagnosis on the level of integration of environmental, social and governance (ESG) factors and climate-related risks in their operation and disclosure of non-financial information.

With this launch, one of the main objectives established within the framework of the ESG Standards Disclosure Group, belonging to the Sustainable Finance Committee (CFS), which has led the CNBV since the creation of both, carried out by the Financial System Stability Council in 2020, materializes.

For each of the pillars framed by this Tool, ESG factors, climate-related risks and corporate governance for sustainability are included, a series of questions are presented that will allow financial institutions to know their progress and areas of opportunity in terms of integration, monitoring, disclosure and transparency in these angles. The institutions will also obtain specific recommendations to close the identified gaps.

On 30 April 2022, the Secretaría de Hacienda y Crédito Público (SHCP) published communication no.32 on generating a climate conducive to investment, a priority strategy of the Government of Mexico.

The Mexican Government's strategy to create a climate conducive to investment is based on three fundamental pillars: providing certainty about the macroeconomic policy framework, defining a new frontier of production potential, and adherence to the USMCA.

The Government's goal is that fiscal budgets are bankable and sustainable with the goal of public debt, which has allowed us to maintain a debt of 50% of GDP, which is much lower than that of our peer countries. In that sense, the commitment of the Government of Mexico with the mandate of the Congress of the Union that establishes a margin of indebtedness of between 2.7 and 2.8% of GDP.

One of the essential objectives is to expand the productive frontier that allows opening investment opportunities in regions where there have not been, such as basic infrastructure development projects in railways and roads in the southeast of the country. As part of the boost to investment in infrastructure,  ten industrial parks for storage are being developed in the area, with budgetary investment, which in turn will trigger private investment with the installation of various companies. In this regard, the necessary resources have been possible thanks to the fact that the budget was reorganized, from less productive to more productive purposes. In addition, resources from development banks, as well as multilateral banks, have been used, and greater use will be made of multilateral credit lines.

As part of the strategy to attract capital, the government works very closely with the Mexican financial sector,.The objective is to eliminate duplicate procedures or those that involve a lot of burden for financial institutions, in order to reduce costs.

There is a green, climate change, gender and equality agenda, to which the social line is being added, which allows us to access financing through the issuance of green bonds that include components of social development, since social goals are fully compatible with today's needs.

In turn, Mexico has been very careful and prudent in managing the fiscal deficit, and stressed that nearshoring will attract foreign investment so that companies bring value chains not only from the United States but from Japan, Singapore and other countries in the world.

On 30 April 2022, Spain published Resolution of 20 April 2022, of the Institute of Accounting and Auditing of Accounts, by which the internal quality control standards are published, "Quality management in audit firms that perform audits of financial statements" (NIGC1-ES), "Reviews of the Quality of Orders" (NIGC2-ES), and the Technical Standard of Audit "Management of the quality of an audit of financial statements" [NIA-ES 220 (Revised)].

The Standards which are the subject of this Resolution shall enter into force as follows: 

• The quality management systems of auditors and audit firms shall be designed and implemented in accordance with the requirements established in International Quality Management Standard 1 "Quality Management in Audit Firms Performing Audits of Financial Statements", adapted for application in Spain as NIGC1-ES, on 1 January 2023. The assessment of the quality management system as required by paragraphs 53-54 of that Standard shall be carried out within one year of that date. 
• The International Standard on Quality Management 2 "Quality reviews of financial statement audit engagements", adapted for application in Spain as ISA2-ES, will be applicable to audit engagements on financial statements for financial years beginning on or after 1 January 2023. 
• The Technical Auditing Standard "Quality Management of an Audit of Financial Statements", resulting from the adaptation of International Standard on Auditing 220R "Quality Management of an Audit of Financial Statements", as ISA-ES 220 (Revised), shall apply to audit work on financial statements for financial periods beginning on or after 1 January 2023. 
• In any case, these standards shall apply to audit work contracted or commissioned on or after 1 January 2024, irrespective of the financial periods to which the financial statements that are the subject of the audit work relate.

On 8 April 2022, the Comicion Nacional del Mercado del valores (CNMV) opened a consultation on the draft Circular on the prospectus for CISs and the registration of the key investor document (KID).

The CNMV has submitted to public consultation the draft Circular on the prospectus for CISs and the registration of the key investor document (KID), which substitutes Circular 2/2013, of 9 May, on the key investor document and the collective investment schemes prospectus. 

The Circular, included in the 2022 CNMV Activity Plan, is necessary in view of the forthcoming entry into force (on 1 January 2023) of Regulation (EU) No 1286/2014 of the European Parliament and of the Council, of 26 November 2014, on key information documents for packaged retail and insurance-based investment products (PRIIPs). 

The key objectives of the Circular are: 

• Eliminate the provisions relating to the content of the key investor document contained in Circular 2/2013, of 9 May, as said document is regulated under the PRIIPs Regulation. Furthermore, the Circular contains aspects on how to submit CIS KIDs to the CNMV for their registration. 
• Remove from the prospectus’ content certain information that is not required under Directive 2009/65/EC of the European Parliament and of the Council, of 13 July 2009, on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS Directive), which should be included in the PRIIPs KID, thus avoiding reiterations. 

The wording of the new Circular will also indicate how to submit the content of the prospectus for CISs relating to the disclosure requirements on sustainability stemming from European regulations.

The deadline for interested parties to send their comments is 27 May 2022. 

On 19 April 2022, the Comicion Nacional del Mercado del valores (CNMV) published a  Technical Guide for the assessment of appropriateness and adopts the ESMA Guidelines relating to certain aspects of the requirements of appropriateness and execution-only of MiFID II.

The technical guide details, inter alia:

• The relevance that entities must give to the information on the client's financial knowledge and the need to collect this information, ruling out that considering only the client's previous investment experience when evaluating suitability is sufficient. In addition, it is pointed out that when the convenience of complex instruments is evaluated, specific questions should be included about their nature, characteristics and main risks and guidelines are offered regarding the way in which this aspect can be asked.
• In the case of the evaluation of complex instruments, in general, it is not prudent to presume suitability based exclusively on the positive assessment of financial knowledge, but a minimum level of training of the client, of prior investment experience, should also be required. , or a combination of both, with a higher degree of demand the greater the complexity of the product. This is without prejudice to the fact that exceptions to this general approach may be accepted, provided that they are justified and based on objective data.

Additionally, the technical guide indicates that entities must apply controls regarding the reliability, coherence and reasonableness of the information obtained from customers, in line with the public communication made by the CNMV on 5 February 2019.

The technical guide updates and replaces the criteria contained in the Procedural Guide to Assessing Appropriateness and Suitability, of 17 June 2010, with regard to the evaluation of appropriateness, taking into account the regulations that have emerged since then , the documents and guidelines published by ESMA, as well as the supervisory experience gathered since their publication.

On 12 April 2022, the Financial Conduct Authority (FCA) updated its instructions on financial sanctions, which including information on notifying the FCA and the Office of Financial Sanctions Implementation (OFSI).

Firms should provide the authorities with sufficient information, including but not limited to: 

• the country that has imposed the sanction(s) including the relevant sanctions regime 
• when the measures came into force 
• who is affected by the sanction(s)  
• firm’s analysis of how the sanction(s) impact firm’s activities.

Firms should also provide any general or specific licences that have been issued by any authority that are relevant. The authorities expect firms to notify them without undue delay if they are subject to sanctions. 

For all enquiries about asset freezing or other financial sanctions, or to make a report if firms suspect they or a customer of the firm have breached restrictions, firms should contact OFSI.

On 25 April 2022, the Financial Conduct Authority (FCA) updated instructions on Benchmarks Regulation.

The updates concern next steps: The FCA will seek views on retiring 1-month and 6-month synthetic sterling LIBOR at the end of 2022, and on when to retire 3-month sterling synthetic LIBOR, via a public consultation around the end of Q2 / early Q3 2022.

On 12 April 2022, the UK Government published outcome of the consultation on corporate re-domiciliation.

Given the consultation focused on the principles of a re-domiciliation regime, it was understandable that some respondents expressed the view that further detail on the design of the regime would be helpful. The consultation offered a high-level overview of the proposed regime design, but it represented only the early stages of the policy development process.

On 14 April 2022, the Bank of England (BoE) published:

• Consultation Paper - Outsourcing and third party risk management: Central Counterparties 
• Consultation Paper - Outsourcing and third party risk management: Central Securities Depositories 
• Consultation Paper - Outsourcing and third party risk management Recognised Payment System Operators and Specified Service Providers 

In these CPs, the BoE sets out and invites comments on its proposals around outsourcing and third party risk management in FMIs. These proposals are set out in three draft supervisory statements for central counterparties (CCPs), central securities depositaries (CSDs) and recognised payment system operators (RPSOs) & specified service providers (SSPs). They aim to: 

• facilitate greater resilience and adoption of the cloud and other new technologies as set out in the Bank of England’s response to the Future of Finance (FoF) report;
• set out the Bank’s requirements and expectations in relation to outsourcing and third party risk management in FMIs; and
• complement the Bank’s Supervisory Statements on FMI operational resilience.

On 21 April 2022, the Bank of England (BoE) published a report from Post-Trade Task Forcem entitled "Charting the Future of Post-Trade".

The Report sets out some key challenges where change would be particularly impactful in current post-trade processes.  It focusses on three core areas (non-economic trade data, client onboarding and uncleared margin), and makes recommendations to address these issues.

The Task Force proposed the creation of a new post-trade industry leadership group made up of experts from across the industry, to implement these recommendations and continue the benefits of the cross-industry dialogue. In summary, the recommendations ask this group to: 

• develop, adopt and promote a set of best practices around (i) sharing LEIs early in trade life-cycles; and (ii) efficient, electronic processes for sharing SSIs. 
• work to improve adoption of best practices; define, gather and publish industry-wide metrics; and investigate the creation of a fully digitised system 
• convene forums to discuss: standardising document requirements; making existing platforms more interoperable; and/or creating a single passporting platform.

On 7 April 2022, the Financial Conduct Authority (FCA) published a new strategy to improve outcomes for consumers and in markets throughout the UK.

As the FCA’s remit is broad and growing, the three-year strategy prioritises resources to prevent serious harm, set higher standards and promote competition. The regulator will also, for the first time, hold itself accountable against published outcomes and performance metrics.

A key focus of the strategy is shutting down problem firms, which do not meet basic regulatory standards. 

On 7 April 2022, the Financial Conduct Authority (FCA) published CP22/7 - FCA regulated fees and levies: rates proposals for 2022/23.

This applies to:

• all FCA fee-payers
• any businesses considering applying for authorisation or registration.

This CP explains how the FCA proposes to recover the costs of carrying out this work, covering:

• annual funding requirement (AFR) and its allocation across fee-blocks
• details of the FCA periodic fees for authorised firms
• FCA fees for other bodies
• the new structure of application fees the FCA introduced in January 2022
• how the FCA handles the revenue from financial penalties imposed on firms.

On 21 April 2022, the S.I. 2022 No. 466 - The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2022 was published in the UK legislation.

This instrument supplements the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2021 (SI 2021/90) (“the 2021 Order”) and relates to the regulation of the pre-paid funeral plans sector by the Financial Conduct Authority (“FCA”). The 2021 Order amended the regulatory framework for providers of pre paid funeral plan contracts so that, from 29 July 2022, firms will generally need to be appropriately authorised by the FCA under the Act in order to enter into or carry out funeral plan contracts.

A minor amendment to paragraph 18 of Schedule 1 to the Collective Investment Schemes Order prescribes arrangements that do not amount to collective investment schemes for the purposes of section 235(5) of the Act.

On 21 April 2022, the Financial Conduct Authority (FCA) published form for Annex 3 Article 23/FUND 3.2.2R Disclosures.

The form should be completed for each AIF or sub-fund/compartment of an AIF, unless the cross-reference is applicable to more than one sub-fund or compartment of an AIF in which case please select the appropriate box below and list the sub-funds or compartments relevant to each cross-reference document. References to AIFs should be interpreted to apply to sub-funds where applicable.

On 22 April 2022, the Bank of England (BoE) published Staff Working Paper No. 975 – Reducing liquidity mismatch in open-ended funds: a cost-benefit analysis.

Macroprudential authorities increasingly find themselves needing to assess, and act on, risks from outside the traditional banking system. How should they think about the costs and benefits of these actions? This paper presents an approach to cost-benefit analysis for one topical issue related to non-banks – liquidity mismatch in open-ended funds (OEFs). In particular, this paper analyses the benefits and costs of more extensive use of swing pricing by UK corporate bond OEFs.

On 20 April 2022, the Financial Conduct Authority (FCA) published PS22/3 - Diversity and inclusion on company boards and executive management.

The FCA has finalised rules requiring listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management, making it easier for investors to see the diversity of their senior leadership teams.

The FCA’s approach sets positive diversity targets for listed companies. If they cannot meet them, they need to explain why not. This approach allows flexibility for smaller firms or those based overseas. The rules also allow companies to decide how best to collect data from employees to show they are meeting the targets.  

The rules will apply to listed companies for financial accounting periods starting from 1 April 2022. The FCA will review the rules in 3 years’ time to make sure they are working and to check if the diversity targets are still appropriate. 

On 25 April 2022, the Financial Conduct Authority (FCA) updated its instructions on the Market Abuse Regulation. The updates concern managers’ transactions.

PDMRs and PCAs should notify the issuer and the FCA within three working days of the date of the transaction. The issuer should disclose to the public within two working days of receiving the notification from the PDMR and PCA. PDMRs within issuers are also prohibited from conducting certain personal transactions during a closed period. The interpretation of the application of the closed periods around preliminary results is clarified in 7.9 of ESMA’s questions and answers on EU MAR.

On 7 April 2022, the Financial Conduct Authority (FCA) published MiFID Transparency Waiver form.

This form should be used if firms apply for a waiver in accordance with article 4 or article 9 of MiFIR and relevant Regulatory Technical Standards (RTS) RTS 1 and RTS 2.

On 25 April 2022, the Financial Conduct Authority (FCA) published PS22/4 - Temporary asset retention requirement for certain firms subject to the proposed British Steel Pension Scheme consumer redress scheme.

This policy statement will affect firms that provided BSPS members with advice to transfer between 26 May 2016 and 29 March 2018, and their insurers.

The temporary asset retention rules require firms to have sufficient funds to meet redress liabilities if they provided unsuitable BSPS advice. This will help make sure the firms responsible for redress liabilities meet the cost of those liabilities, rather than the costs falling to other Financial Services Compensation Scheme (FSCS) levy payers, and ultimately being passed on to consumers.

The asset retention rules take effect at 12.01am on 27 April 2022 and will continue until 31 January 2023.

Any firm who provided advice to BSPS members resulting in members transferring out of the scheme between 26 May 2016 and 29 March 2018 (or who was responsible for an appointed representative that provided such advice) should take immediate action to decide whether they are in scope of these rules.

On 1 April 2022, the Financial Conduct Authority (FCA) updated its instructions on UK SFTR.

In April 2021, the FCA extended a period of forbearance for the reporting of LEIs of non-EEA third country issuers under UK SFTR. This was put in place to reduce potential market disruption resulting from the large number of non-EEA third country issuers without a LEI. This forbearance is due to expire on 13 April 2022. 

Whilst industry has made further progress in wider LEI coverage, many non-EEA third country issuers have still not acquired a LEI which may impact reporting under UK SFTR after 13 April 2022.

In recognition of this, the FCA has extended the period during which reports under UK SFTR without the LEI of a non-EEA third country issuer will be accepted until 13 October 2022. 

Reporting counterparties should report a LEI for non-EEA third country issuers where one is available and continue engaging with non-EEA third country issuers to encourage them to acquire a LEI if not.

On 7 April 2022, the UK Government published a letter to the Bank of England and the Financial Conduct Authority (FCA) in relation to its role in supporting the government’s ambition of a greener financial services industry.

The Government has taken a balanced approach: committed to accelerated investment in low- and zero carbon technologies, while supporting our strong and evolving UK hydrocarbon industry. 

Where practical and relevant, the Committee should have regard to the Government’s energy security strategy and the important role that the financial system will play in supporting the UK’s energy security - including through investment in transitional hydrocarbons like gas - as part of the UK’s pathway to net zero.

On 6 April 2022, the U.S. Securities and Exchange Commission (SEC) proposed new Regulation SE under the Securities Exchange Act of 1934 (the Exchange Act) to create a regime for the registration and regulation of security-based swap execution facilities (SBSEFs). The new regulatory framework was one of the major reforms required under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) relating to the over-the-counter derivatives market.

The proposed new Regulation SE under the Securities Exchange Act of 1934 (the Exchange Act) to create a regime for the registration and regulation of security-based swap execution facilities (SBSEFs). The new regulatory framework was one of the major reforms required under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) relating to the over-the-counter derivatives market.

The Commission previously proposed rules regarding SBSEFs in three separate releases between 2010 and 2013. Given the length of time that has passed since they were issued and the significant market changes that have taken place in the interim, the Commission is withdrawing all previously proposed rules, rule amendments, and interpretations regarding SBSEFs.

On 25 April 2022, the Comissão de Valores Mobiliários (CVM) published Circular Letter CVM/SMI/GME 01/2022 on the guidance for securities bookkeepers on sending the information referred to in Art. 12 of CVM Resolution 33.

The objective is to emphasize the obligation, on the part of securities bookkeepers, to send the CVM on the execution and termination of securities bookkeeping contracts.

The information must be sent through the CVMWeb system until the 5th business day of each month. It must be in XML format and include the list of contracts maintained by the registrar.

As of May, the file must be forwarded exclusively through the CVMWeb System.

On 26 April 2022, the Comissão de Valores Mobiliários (CVM) published Circular Letter CVM/SIN 03/22 on the technical guidance clarifying changes in the regulation of non-resident investors.

The Circular Letter is mainly focused on guiding the requirements of the CVM to obtain the exemption from registration, as well as operational issues involving sending information and charging the Inspection Fee.

On 4 April 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) launched public hearing on the rules and procedures for registration of managed portfolios.

The managed portfolio management activity entered self-regulation in 2020. The change meets the market's own demand for the creation of standards and practices that would bring more security to managers and investors.

With the new rule, managers will be responsible for registering and sending monthly information from managed portfolios, being able to hire third parties for this function. The data forwarding by the ANBIMA Input system should be performed between the first and tenth business day of the month after the reference month, based on the information collected on the last working day. Sending information will allow the creation of a database that can be used by the market to track the numbers of that industry.

The standard also provides for the follow-up of rules related to the confidentiality of information, as provided by the General Data Protection Law.

To collaborate with the construction of the database, managers must be aware of some practices, such as integrity, punctuality and regularity in sending information.

On 7 April 2022, the Comissão de Valores Mobiliários (CVM) published Circular Letter CVM/SIN 02/22 on the new version of the Investment Fund Management System (SGF).

Fund managers can access the system, through their CVMWeb login and password, and must start registering new types of investment funds exclusively through this system . The User's Manual is available on the SGF's home screen, with the step-by-step instructions.

The system is intended for the management of fund registration information. The sending of periodic information (Daily Report, Monthly Profile, CDA, balance sheets and audited Financial Statements), already in force through the CVMWEB Document Submission System, will not undergo any change.

The registration operations for all relevant types of funds should only be carried out by the SGF.

On 4 April 2022, Banco de la República published Minutes of the meeting of the board of directors of Banco de la República on 31 March 2022.

At its March 31 session, the Board of Directors of Banco de la República increased the policy interest rate by 100 basis points (p.b.) in a majority decision of 5 to 2, bringing it to 5.0%. Two members voted in favour of a 150 p.b increase.

The decision took into account the aspects summarized below.

• In the first two months of the year, consumer inflation maintained its upward trend and registered an annual variation of 8.01% in February, higher than that observed in December 2021 (5.62%). Food and regulated foods continued to exert pressures on the price index, with annual variations in February of 23.3% and 8.91% respectively. Inflation without food or regulated increased from 2.49% in December of the previous year to 4.11% annually in February.
• On the external front, Russia's invasion of Ukraine, in a global environment in which disruptions in global supply chains and supply constraints persist, could generate additional inflationary pressures on different raw materials, including oil, natural gas, coal, fertilizers and various agricultural products, given the importance of these countries in the production and export of these resources.
• Inflation expectations have continued to rise for the short term as shown by the monthly survey of the Bank of the Republic. In it, economic analysts had, in the median, responses of a total inflation expectation of 6.42% for 2022 (4.48% in the January survey) and 3.83% for 2023 (3.50% in the January survey). The cumulative effects of the shocks received have also been translated into an increase in the different measures of inflation expectations in the medium term. In the case of measures derived from the financial markets, between January and March EIB inflation expectations (discounting liquidity and inflation risk premiums) increased from 3.68% to 4.57% and from 3.65% to 4.14% for the terms of 2 and 5 years respectively.
• Available indicators show that economic activity maintains the momentum it brought from the previous year. While the economic tracking indicator (ISE) for January indicated an annual growth of 7.8%, the monthly survey of industry and commerce showed that manufacturing activity presented an annual expansion of 15.1% in January, and real retail sales increased by 20.9%. On the other hand, the unemployment rate in the national total fell from 15.5% in February 2021 to 12.9% in February 2022. In this context, the technical team revised upwards its growth forecast for 2022 from 4.3% to 4.7%. This revision implies in the models of the technical team that excess productive capacity would continue to reduce at a faster rate than expected, especially if the potential output of the economy has been affected by the lag in investment and strong supply shocks.

Based on the above considerations, there is consensus in the Board of Directors on the need to continue advancing in the process of adjusting monetary policy through an increase in the interest rate that contributes to maintaining inflation expectations at levels in line with the target and to moderate the spread of supply shocks and increases in international prices to other items of the family basket, as reflected in the increase in core inflation indicators. Agreeing that the increase helps the gradual convergence of inflation to the established target, there remained a difference of opinion among the members of the Board of Directors on the specific amount of the interest rate increase that should be adopted on this occasion. Five of them favored a 100 p.b. increase and two members voted for a 150 p.b increase.

On 5 April 2022, Banco de la República published a communication on the International Monetary Fund (IMF) Article IV consultation on Colombia.

In this review, the IMF highlights that Colombia's strong economic policy frameworks and comprehensive response to the pandemic supported the economy's resilience.

The Executive Board of the International Monetary Fund (IMF) met on March 25 to conclude Colombia's annual review under Imf Article IV and published the team paper that was discussed at that meeting, as well as a press release illustrating the discussion at the IMF board level and the statement by Colombia's representative to the IMF board.

In this review, the Fund highlights that Colombia's strong economic policy frameworks and comprehensive response to the pandemic supported the economy's resilience. Credible monetary policy guided by the inflation-targeting strategy, exchange rate flexibility, effective financial sector supervision and regulation, fiscal rule and the medium-term fiscal framework, as well as the soundness of institutions, have helped the country cope with external shocks and promote economic growth. It is mentioned that, over the past two years, the authorities have used the flexibility of their macroeconomic framework to provide a coordinated and timely response to mitigate the impact of the pandemic.

The IMF's Executive Board highlighted Colombia's economic recovery in 2021 as one of the fastest in the region. After a strong economic rebound last year, economic momentum is expected to continue through 2022, driven by strong household consumption and the recovery in investment and exports. The IMF expects the output gap to close in the first half of 2022. It notes that the projected increase in the price of commodity exports would lead to a reduction in the current account deficit in 2022.

In terms of prices, it is mentioned that inflation has increased mainly due to supply shocks in a context of strong consumption growth. This trend is expected to persist and remain above the central bank's target of 3% throughout 2022. However, inflation is expected to decline in the second half of the year and continue to converge towards the target level in 2023. In this regard, Directors also noted monetary tightening by the central bank as appropriate to control consumer price increases and avoid the second-round effects of supply shocks affecting inflation.

Among the main recommendations, they mention that Colombia's policies should be carefully recalibrated to support the economic recovery, control the upward trend in inflation, strengthen public finances and reduce external imbalances.

On 11 April 2022, the Superintendencia Financiera de Colombia (SFC) published a communication stating that Colombia is the first country in the Americas to publish a Green Taxonomy.

Colombia's Green Taxonomy is a response to the great environmental challenges, from the perspective of mobilising resources, both public and private, as it defines a classification system for economic activities and assets with significant contributions to the achievement of environmental objectives, facilitating the channelling of these resources to meet these goals.

For the development of the taxonomy, the country's environmental priorities were identified, aligned with the commitments, strategies and policies outlined by Colombia in this field. The environmental objectives identified are: climate change mitigation, adaptation to climate change, conservation of ecosystems and biodiversity, water management, soil management, circular economy, pollution prevention and control.

Firstly, it presents seven sectors, assets and economic activities that contribute to the environmental objective of climate change mitigation: energy, construction, waste management and emissions capture, water supply and treatment, transport, information and communication technologies and manufacturing.

Secondly, and under a cross-cutting approach, it presents three land use sectors: livestock, agriculture and forestry. Five environmental objectives were taken into account for these activities: climate change mitigation and adaptation, soil management, water management, and ecosystem conservation and biodiversity. It will be the first Green Taxonomy with an emphasis on land use, given that these sectors together are responsible for 59% of greenhouse gas emissions.

This tool becomes a useful navigation chart for companies and securities issuers, local and foreign investors, financial regulators, public and private entities, and financial consumers. The Green Taxonomy will allow leading actors in the Colombian capital market to more easily identify which activities contribute substantially to the fulfilment of environmental goals, facilitate the differentiation and classification of financial instruments denominated as green, increase transparency and support the monitoring of green investments and public spending.

The Colombian Green Taxonomy is an inter-institutional effort led by the Ministry of Finance and Public Credit and the Superintendencia Financiera, entities that also belong to the Green Taxonomy Roundtable together with the Ministry of Environment and Sustainable Development, the National Planning Department and the National Administrative Department of Statistics, in addition to technical and financial support from the World Bank Group.

On 7 April 2022, the International Monetary Fund (IMF) updated the Climate Change Indicators Dashboard —an international statistical initiative to address the growing need for data in macroeconomic and financial policy analysis related to climate change.

At this time, major updates include introducing new indicators as well as updating data for the existing indicators as follows:

• Two new indicators have been introduced: CO2 emissions and CO2 emissions intensities;
• CO2 emissions multipliers – previously published in the CID as CO2 emissions per unit of output – has been updated to 2018, with the number of industries covered increasing from 36 to 45, and the number of countries increasing from 64 to 66;
• Quarterly air emission accounts have been updated to 2021 Q3, with a breakdown by gas type;
• CO2 emissions embodied in international trade have been updated to 2018;
• CO2 emissions embodied in gross fixed capital formation financed by direct investment have been updated to 2018;
• CO2 emissions in output and cross-border trade by firm ownership have been updated to 2016;
• National Mitigation Targets have been updated based on the revised Nationally Determined Contributions submitted by countries to the United Nations Framework Convention on Climate Change (UNFCCC);
• National Greenhouse Gas Inventories have been updated to include disaggregated information for 6 sectors and 14 sub-sectors, and estimates for the years 1990-2020;
• Trade in Environmental Goods and in Low Carbon Technology Products have been updated with new and revised data through 2020, and selected bilateral data through 2021;
• Green Bonds indicators have been updated to 2021;
• Environmental Taxes have been updated to 2020; and,
• Environmental Protection Expenditures have been updated to 2020.