December 2019


CONTENT

CACEIS

EUROPEAN UNION

Benchmarks Regulation (BMR)

ESMA updates its Q&As on the Benchmarks Regulation

  • On 11 December 2019, the European Securities and Markets Authority (ESMA) issued an update of its Question and Answers (Q&As) on the European Benchmarks Regulation (BMR).Following the publication in the Official Journal of the European Union of Regulation (EU) 2019/2089 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks, the modified Q&A provide clarification on the transitional provisions applicable to third country benchmarks.
    The purpose of this document is to promote common supervisory approaches and practices in the application of the BMR. It provides responses to questions posed by the public, market participants and competent authorities in relation to the practical application of the BMR. The content of the Q&A is aimed at competent authorities under the Regulation to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by ESMA. It also provides guidance to market participants by providing clarity on the BMR requirements.

  • EU publishes Regulation (EU) 2019/2175 on Benchmarks Regulation

  • On 27 December 2019, the European Union published in the Official Journal Regulation (EU) 2019/2175 of the European Parliament and of the Council of 18 December 2019 amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority), Regulation (EU) No 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority), Regulation (EU) No 600/2014 on markets in financial instruments, Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds, and Regulation (EU) 2015/847 on information accompanying transfers of funds.
    Following the financial crisis, the EU overhauled its financial system, including how it is regulated and overseen. It introduced a single rulebook, i.e. a set of regulations agreed at EU level and directly applicable in all EU member states, and created the ESAs. These authorities play a key role in ensuring that the financial markets across the EU are well regulated, strong and stable. They contribute to the development and consistent application of the single rulebook, solve cross-border problems, and thereby promote both regulatory and supervisory convergence.
    This Regulation reviews the tasks, powers, governance and funding of the ESAs , so as to adapt the authorities to the changed context in which they operate. The reform also includes provisions reinforcing the role of the EBA as regards risks posed to the financial sector by money laundering activities.

  • Central Securities Depositary Regulation (CSDR)

    ESMA updates CSDR Q&As

  • On 3 December 2019, the European Securities and Markets Authority (ESMA) updated its Questions and Answers regarding the implementation of the Central Securities Depositories Regulation (CSDR).

    The first Q&A clarifies that instructions involving “delivery without matching” at the level of the CSD would no longer be permitted under the future settlement discipline regime under CSDR (i.e. once the RTS on settlement discipline enters into force), except for those instructions which relate to transfers of financial instruments between different accounts opened in the name of the same participant or managed by the same account operator.

    The second Q&A clarifies that the “passive matching” functionality at CSD level, which creates the corresponding required matching instruction for the receiving participant based on the instruction of the delivering participant would be in line with the RTS on settlement discipline under CSDR.

  • European Market Infrastructure Regulation (EMIR)

    EC publishes Regulation specifying technical standards regarding counterparty credit risk associated with covered bonds and securitisations

  • On 16 December 2019, the European Commission published the text of Commission Delegated Regulation supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to regulatory technical standards on the specification of criteria for establishing the arrangements to adequately mitigate counterparty credit risk associated with covered bonds and securitisations and amending Delegated Regulations (EU) 2015/2205 and (EU) 2016/1178.

    1. Regarding covered bonds, arrangements under covered bonds shall be considered to adequately mitigate counterparty credit risk, where OTC derivative contracts in connection with covered bonds comply with all of the following criteria: 

    • those contracts are registered or recorded in the cover pool of the covered bond in accordance with national legislation on covered bonds; 
    • those contracts are not terminated in case of resolution or insolvency of the covered bond issuer or the cover pool; 
    • the counterparty to the OTC derivative contract concluded with covered bond issuers or with cover pools for covered bonds ranks at least pari passu with the covered bond holders;
    • the covered bond is subject to a regulatory collateralisation requirement of at least 102%.

    2. Regarding securitisations, arrangements under securitisations shall be considered to adequately mitigate counterparty credit risk where OTC derivative contracts concluded by securitisation special purpose entities in connection with securitisations satisfy all of the following criteria: 

    • the counterparty to the OTC derivative concluded with the securitisation special purpose entity in connection with the securitisation ranks at least pari passu with the holders of the most senior securitisation tranche except where the counterparty to the OTC derivative concluded with the securitisation special purpose entity in connection to the securitisation is the defaulting or the affected party; 
    • the securitisation special purpose entity in connection with the securitisation with which the OTC derivatives contract is associated is subject, on an ongoing basis, to a level of credit enhancement of the most senior securitisation note of at least 2 % of the outstanding notes.

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

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

    ESMA updates Q&As on investor protection under MiFID II/ MiFIR

  • On 4 December 2019, the European Securities and Markets Authority (ESMA) updated  its Questions and Answers on the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR). The update includes Q&As on costs and charges and product intervention.

    The Q&As on MiFID II and MiFIR investor protection and intermediaries topics provides new answers on:
    Information on costs and charges

    • Ex-post information in case of portfolio management;
    • Relationship Article 50(9) and Article 60 of the Delegated Regulation in case of portfolio management.

    Product intervention:  the application of national product intervention measures in case of services provided on a cross-border basis.

  • ESMA issues MiFID II/MiFIR Review Report No.1

  • BACKGROUND

    On 5 December 2019, the European Securities and Markets Authority (ESMA) published a first review report on the development of prices for market data and on the consolidated tape for equity, following the application of the Markets in Financial Instruments Directive (MiFID II) for nearly two years.


    WHAT'S NEW?

    The MiFID II package includes provisions that aim to improve the quality and availability of market data and reduce costs for market participants when purchasing data. The provisions impose obligations on trading venues and approved publication arrangements (APAs) to make pre- and post-trade data available separately and to do so on a reasonable commercial basis (RCB). MiFID II also introduced the requirements for a consolidated tape for equity instruments. In the report, ESMA sets out its assessment of, and recommendations on, the development in prices for pre- and post-trade transparency data from regulated markets, multilateral trading facilities, organised trading facilities, approved publication arrangements and CTPs and on the functioning of the CT for equity. Due to the uncertainty around the timing and conditions of the U.K.'s departure from the EU, ESMA's recommendations to address the identified deficiencies cover the position before and after Brexit (i.e. the recommendations are tailored for either the EU28 or the EU27).

    ESMA's view is that the objectives of the RCB provisions have not been achieved as the RCB information provided by trading venues and APAs does not assist users to understand market data policies and how the price for market data is set. ESMA is proposing various workstreams to improve the existing approach to RCB, including some legislative changes and issuing supervisory guidance to enhance the usability and comparability of information disclosed. ESMA intends to work with national regulators to ensure that the RCB requirements are enforced and will assess whether, after allowing time for application of the guidance, to recommend that the EU adopts price regulation if the current situation does not improve.

    Regarding the requirements for the provision of disaggregated data, ESMA notes that there has been a limited demand for disaggregated data and that data disaggregation has not contributed to reducing market data costs. ESMA is therefore not recommending any legislative changes and considers that the further guidance on RCB and increased enforcement should address concerns about the prices of disaggregated data.

    In ESMA's view, the objective of making market data available free of charge 15 minutes after publication by the trading venues and APAs has not been achieved. Although many trading venues and APAs make the data available to retail investors, they do not do so for commercial users. ESMA is recommending that the MiFID II requirements on this should be made specifically applicable to trading venues.

    MiFID II also introduced requirements for CTPs, including requiring a CTP to collect post-trade information published by trading venues and APAs and to consolidate this into a continuous live data stream made available to the public, both for equity instruments and non-equity products. The relevant MiFID II provisions for the non-equity tape entered into effect on September 3, 2019, however, the provisions for an equity CTP have been applicable since January 2018. To date, there are no authorized EU CTPs.

    ESMA's report discusses the reasons why an equity CTP has not been established and the risks of there not being an EU equity CTP. ESMA recommends that the key factors for implementation of an equity CTP would include: (i) mandatory contributions by trading venues and APAs, with the CT sharing revenues with all contributors; (ii) a CT that consolidated all equity and equity-like instruments; (iii) a single CT to provide the most cost-efficient provision of data; and (iv) a strong governance framework for the CT. ESMA acknowledges that the value of a CT would be higher if it included U.K. data, but considers that an EU27 CT would also add value. According to ESMA, the establishment of a CT under the recommended framework would take at least five years from the decision to do so until it went live.


    WHAT'S NEXT?

    This report is submitted to the European Commission and is expected to feed into the review report on development in prices for pre- and post-trade transparency data and on the CT for equity instruments to be presented by the European Commission to the European Parliament and Council.   

    In the area of market data, ESMA will start working on supervisory guidance on the application of the provision to provide market data on an RCB.  

    ESMA stands ready to provide technical advice on the legislative amendments necessary for establishing an equity CT as well as to launch a negotiated procedure for the appointment of a CT as envisaged in MiFID II.

  • Prospectus Regulation

    ESMA updates Q&As on Prospectus Regulation

  • On 4 December 2019, the European Securities and Markets Authority (ESMA) updated its Questions and Answers on the Prospectus Regulation with two new Q&As.  

    The two Q&As provide clarification on the following issues in relation to the Prospectus Regulation:

    • The inclusion of pro-forma summaries in base prospectuses;
    • The application of prospectus disclosure annexes where securities do not fall neatly within a specific disclosure regime.
  • Prudential Requirements for Investment Firms Directive & Regulation (IFD / IFR)

    EU publishes Regulation (EU) 2019/2033 and Directive (EU) 2019/2034 on the prudential requirements of investment firms

  • On 5 December 2019, EU publishes Regulation (EU) 2019/2033 and Directive (EU) 2019/2034  of 27 November 2019 on the prudential requirements of investment firms.

    The Regulation aims at reducing the differences in the application of the existing prudential framework in different Member States threatening the level playing field for investment firms within the Union.

    A specific prudential regime is required for investment firms which are not systemic by virtue of their size and interconnectedness with other financial and economic actors. Systemic investment firms should, however, remain subject to the existing prudential framework under Regulation (EU) No 575/2013 and Directive 2013/36/ EU.

    Those prudential requirements should be calibrated in a manner proportionate to the type of investment firm, the best interests of the clients of that type of investment firm and the promotion of the smooth and orderly functioning of the markets in which that type of investment firm operates. They should mitigate identified areas of risk and help ensure that, if an investment firm fails, it can be wound down in an orderly manner with minimal disruption to the stability of financial markets.

    The Directive sets out new requirements on investment forms to disclose, on an annual basis, certain information, including information on profits made, taxes paid and any public subsidies received, unless they qualify as small and non?interconnected.

  • ESMA updates its Q&As on the Securitisation Regulation

  • On 15 November 2019, the European Securities and Markets Authority (ESMA) updated its Questions and Answers (Q&As) on the Securitisation Regulation (Regulation 2017/2402). 

    The majority of Q&As in this document provide clarification on different aspects of the templates contained in the draft technical standards on disclosure which were recently published by the European Commission. 

    In particular, the Q&As clarifies how several specific fields in the templates should be completed and also contains clarifications relating to STS notifications and securitisation repositories, by following new topics:

    • Confirmation of submission completeness 
    • Handling of corrections 
    • Designated first contact point for investors and competent authorities 
    • Interest Rate Floor 
    • Credit impaired obligor
    • Balloon Amount
    • Non-Payments on equal ranking Underlying Exposures 
    • Noteholder Consent 
    • Collection of Other Reserves 
    • Obligor Must Pay Breakage On Swap
    • Sponsor 
    • Payment Date 
    • Total Shortfalls In Principal & Interest Outstanding 
    • Liquidation Expense
    • Calculation methods for fields regarding financial statement information (e.g. revenue, operating expenses, capital expenditure, etc.)
    • Financial information for self-employed workers and other micro-company structures 
    • Risk Weight Approach 
    • Material Amendment to Transaction Documents 
    • Any Other Information Line Number.
  • Regulation on International Accounting Standards (IAS)

    EU publishes Commission Regulation (EU) 2019/2075 adopting certain international accounting standards

  • On 6 December 2019, the European Union published in its Official Journal the Commission Regulation (EU) 2019/2075 of 29 November 2019 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Accounting Standards 1, 8, 34, 37 and 38, International Financial Reporting Standards 2, 3 and 6, Interpretations 12, 19, 20 and 22 of the International Financial Reporting Interpretations Committee and Interpretation 32 of the Standing Interpretations Committee.
    The text takes into account the amendments to references in the conceptual framework in International Financial Reporting Standards issued by the International Accounting Standards Board  on 29 March 2018.  The objective of the amendments is to update existing references in several standards and interpretations to previous frameworks with references to the revised conceptual framework.

  • EU publishes Commission Regulation (EU) 2019/2104 adopting certain international accounting standards as regards IAS 1 and 8

  • On 10 December 2019, the Commission Regulation (EU) 2019/2104 of 29 November 2019 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Accounting Standards (IAS) 1 and 8 was published in the Official Journal of the European Union (OJ). More specifically, the following IAS are amended: 

    • IAS 1 Presentation of Financial Statements; 
    • IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; 
    • IAS 10 Events after the Reporting Period; 
    • IAS 34 Interim Financial Reporting; and 
    • IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

    Each company shall apply the amendments, at the latest, as from the commencement date of its first financial year starting on or after 1 January 2020.

  • Sustainable Finance / Green Finance / Benchmark

    EU publishes Regulation (EU) 2019/2088 on sustainability related disclosures and Regulation (EU) 2019/2089 introduce new elements in relation to benchmarks

  • On 9 December 2019, the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability?related disclosures in the financial services sector was published in the Official Journal of the EU together with Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks.
    The sustainability?related disclosures Regulation sets out rules to strengthen and improve the disclosure of information by manufacturers of financial products and financial advisors towards end-investors. First proposed by the Commission in May 2018 as part of the Sustainable Finance Action Plan and the Capital Markets Union, these rules are an integral part of the EU efforts, under the EU's sustainable development agenda and the carbon neutrality agenda, to connect finance with needs of the real economy. They also support the 2012 United Nations' Sustainable Development Goals and the 2016 Paris Climate Agreement targets.
    The new regulation sets out how financial market participants and financial advisors must integrate environmental, social or governance (ESG) risks and opportunities in their processes, as part of their duty to act in the best interest of clients. It also sets uniform rules on how those financial market participants should inform investors about their compliance with the integration of ESG risks and opportunities. By so doing, it addresses information asymmetries on sustainability issues between end-investors and financial market participants or financial advisors. The availability of information is considered as crucial to the integration of risks related to the impact of ESG events on the value of investments, for example in assets located in flood-prone areas. The regulation also requires the disclosure of adverse impact on ESG matters, such as in assets that pollute water or devastate bio-diversity, to ensure the sustainability of investments.
    The regulation will enter into force twenty days after its publication, i.e. on 29 December 2019, and will be applicable from 10 March 2021 on.
    The Regulation on EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures introduced the following elements:

    • an EU Climate Transition Benchmark: benchmark portfolio has fewer carbon emissions when compared to the assets that comprise a standard capital-weighted benchmark; and
    • an EU Paris-Aligned Benchmark: benchmark's carbon emissions savings exceed the asset’s carbon footprint.
    • delegated acts to specify the minimum standards for low-carbon and positive carbon impact benchmarks;  
    • minimum technical requirements for both climate benchmarks and for technical advice on ESG disclosures.
  • EC and EU Parliament comments the European Green Deal

  • On 11 December 2019, the European Commission issued a communication to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions on the European Green Deal.
    This Communication sets out a European Green Deal for the European Union (EU) and its citizens. It resets the Commission’s commitment to tackling climate and environmental-related challenges that is this generation’s defining task.
    The European Green Deal comprises a package of measures that should enable European citizens and businesses to benefit from sustainable green transition. The following key initiatives are to be launched:

    • Climate ambition; 
    • Clean, affordable and secure energy; 
    • Industrial strategy for a clean and circular economy; 
    • Sustainable and smart mobility; 
    • Greening the Common Agricultural Policy / ‘Farm to Fork’ Strategy;
    • Preserving and protecting biodiversity; 
    • Towards a zero-pollution ambition for a toxic free environment; 
    • Mainstreaming sustainability in all EU policies; 
    • The EU as a global leader; and 
    • Working together – a European Climate Pact."

    On the same day the European Parliament held an extraordinary plenary session to discuss the European Green Deal. As regards the financial services sector, it was announced that a strategy for green financing and a Sustainable Europe Investment Plan (SEIB) will be developed as part of the European green Deal."

  • EU reaches political agreement on an EU-wide classification system for sustainable investments (Taxonomy)

  • On 18 December 2019, the European Commission updates on the political agreement between the European Parliament and the Council on the creation of the world's first-ever “green list” – a classification system for sustainable economic activities, or taxonomy.

    This will create a common language that investors can use everywhere when investing in projects and economic activities that have a substantial positive impact on the climate and the environment. It will help scale up private and public investments to finance the transition to a climate-neutral and green economy, redirecting capital to economic activities and projects that are truly sustainable. This political agreement underlines the EU's commitment to implementing the Paris Agreement and  reach climate-neutrality by 2050.

    The proposed regulation is meant to address two challenges:

    • reduce fragmentation resulting from market-based initiatives and national practices;
    • reduce "greenwashing", i.e. the practice of marketing financial products as "green" or "sustainable", when in fact they do not meet basic environmental standards.

    The future framework will based on six EU environmental objectives: climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; and protection and restauration of biodiversity and ecosystems.

    In order to qualify as environmentally sustainable, economic activities will have to fulfil the following requirements:

    • contribute substantively to at least one of the six environmental objectives listed above;
    • not significantly harm any of the environmental objectives;
    • be carried out in compliance with minimum social safeguards;
    • comply with specific ‘technical screening criteria’.
  • BELGIUM

    Benchmarks Regulation (BMR)

    FSMA authorises EMMI as administrator of the EONIA benchmark

  • On 13 December 2019 FSMA authorized EMMI as administrator of the EONIA benchmark. 

    On 2 July 2019 the FSMA already authorized EMMI as administrator of the EURIBOR benchmark. The authorization was at the time restricted to the EURIBOR benchmark and did not include the EONIA benchmark. This limitation has now been removed by the decision of the FSMA of 10 December 2019.

  • DAC 6

    Belgian Chamber of representatives adopts Draft Law on the transposition of DAC 6

  • On 10 December 2019 the Belgian Chamber of representatives adopted the draft law on the transposition of DAC 6. 

    The Belgian legislator thus ensures the transposition on time of this European directive which will generate more transparency and reporting obligations for businesses and a better exchange of information between tax administrations.

  • FRANCE

    Financial Market Amendment Law

    The General Regulation of the AMF introduces the new regime for digital asset service providers (PSAN) / Le règlement général de l’AMF introduit le nouveau régime des prestataires de services sur actifs numériques (PSAN)

  • On 18 December 2019, France published in the Official Journal Decree of 5 December 2019 on the approval of amendments to the General Regulation of the AMF.

    Version française

    Le 18 décembre 2019, la France publie au Journal Officiel l'Arrêté du 5 décembre 2019 homologuant les modifications du règlement général de l’AMF.

  • Ministry of Economy summarises the changes entering into force as per Law PACTE / Le Ministère de l'Economie annonce les changements applicables suite à la Loi PACTE

  • On 31 December 2019, the Ministère de l'Economie  informed on Novelties entered into force 1 January 2020 according to the Law PACTE.

    Concerning the Financial Sector:

    • Modernization of products available for life insurance and retirement savings products and greening of life insurance contracts
      Article 72 of the PACTE Law will enter into force on 1 January 2020 and will allow insurance companies to market new Eurogrowth products in life insurance and retirement savings contracts. In line with the modernization of Eurogrowth brought about by the PACTE law, these new products will offer more readable performances for savers and simpler operation for insurers, while preserving the principle of capital protection at maturity.
    • Obligation for multi-media life insurance contracts to offer at least one unit of account composed of labelled assets (Greenfin, ISR, Solidaire)
      Multi-media life insurance contracts concluded from 1 January 2020 must refer to at least one fund labelled "Solidaire", "Greenfin", or "Socially Responsible Investment" (SRI).

    Version française

    Le 31 décembre 2019, le Ministère de l'Economie a annoncé les changements mis en œuvre au 1er janvier 2020 selon la Loi PACTE.

    Concernant les changements dans le secteur financier:

    • Modernisation des produits disponibles pour l’assurance vie ainsi que des produits d’épargne retraite et verdissement des contrats d’assurance-vie
      L'article 72 de la loi PACTE entrera en vigueur le 1er janvier 2020 et permettra aux organismes d’assurance de commercialiser de nouveaux supports Eurocroissance dans les contrats d’assurance vie et d’épargne retraite. Conformément à la modernisation d’Eurocroissance apportée par la loi PACTE, ces nouveaux supports offriront des performances plus lisibles pour les épargnants et un fonctionnement plus simple pour les assureurs, tout en préservant le principe d’une protection du capital à l’échéance.
    • Obligation pour les contrats d'assurance-vie multi-supports de proposer au moins une unité de compte composée d'actifs labellisés (GreenFin, ISR, Solidaire)
      Grâce à l’entrée en vigueur de l’article 72 de la loi PACTE, les contrats d’assurance vie multi-supports conclus à partir du 1er janvier 2020 devront faire référence à au moins un fonds labellisé "Solidaire", "Greenfin", ou « "Investissement socialement responsable" (ISR).
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    AMF updates Instruction DOC-2016-02 applicable to management companies managing loans-granting AIFs / L'AMF met à jour l'instruction DOC-2016-02 applicable aux sociétés de gestion gérant des FIA octroyant des prêts

  • BACKGROUND

    On 17 December 2019, the Autorité des marchés financiers (AMF) updated its doctrine concerning Instruction DOC-2016-02 on the Organisation of management portfolio companies managing loans-granting AIFs.

    WHAT'S NEW?

    This instruction applies to portfolio management companies who wish that a French or foreign AIF they manage can grant loans, including when the granting of loans is exercised on an ancillary basis. The AIFs concerned are in particular the European long-term investment funds (ELTIF), Professional Specialised (PSF), Professional private equity investment funds (FPCI), Securitization vehicles (OT) and specialized financing organizations mentioned in Articles L. 214-154, L. 214-160 and L. 214-166-1 of the Monetary and Financial Code. 

    In addition, the instruction also specifies the manner in which foreign management companies, which manage a French AIF granting loans, must declare the loans granted in application of article R. 214-203-8 of the Monetary and Financial Code.

    A portfolio management company wishing that one of the AIFs it manages grants loans needs to request an authorization of an extension of its authorization to the AMF to include the granting of loans in its activity program. This instruction describes the requirements to be met for such an authorization or extension of authorization. 

    The lending activity is separate from the selection of receivables which only allows the repurchase of existing loans. The loans mentioned in this instruction can be of different types and subject to the laws of different jurisdictions.

    WHAT'S NEXT?

    The next update of the Instruction by the AMF will mainly rely on future European legislative amendments regarding Investment Funds. 

    Version française

    BACKGROUND

    Le 17 décembre 2019, l'Autorité des marchés financiers (AMF) a mis à jour l'instruction DOC-2016-02 sur Organisation des sociétés de gestion de portefeuille pour la gestion de FIA qui octroient des prêts.

    WHAT'S NEW?

    Cette instruction s’applique aux sociétés de gestion de portefeuille qui souhaitent qu’un FIA français ou étranger qu’elles gèrent puisse octroyer des prêts, y compris lorsque l’octroi de prêts est exercé à titre accessoire. 

    Les FIA concernés sont notamment les fonds européens d’investissement de long terme (ELTIF), les fonds professionnels spécialisés (FPS), les fonds professionnels de capital investissement (FPCI), les organismes de titrisation (OT) et organismes de financement spécialisés mentionnés respectivement aux articles L. 214-154, L. 214-160 et L. 214- 166-1 du code monétaire et financier. 

    Par ailleurs, l’instruction précise également la manière dont les sociétés de gestion étrangères qui gèrent un FIA français qui prête doivent déclarer les prêts octroyés en application de l’article R. 214-203-8 du code monétaire et financier.

    Une société de gestion de portefeuille souhaitant qu’un des FIA qu’elle gère octroie des prêts demande à l’AMF, selon le cas, un agrément ou une extension d’agrément pour prévoir cette activité dans son programme d’activité dans les conditions des articles 11 et suivants de l’instruction AMF DOC-2008-032. 

    La présente instruction décrit les exigences à respecter pour une telle demande d’agrément ou d’extension d’agrément. L’activité d’octroi de prêt est distincte de la sélection de créances qui ne permet que le rachat de prêts existants. Les prêts mentionnés dans cette instruction peuvent être de types différents et soumis à des droits de différentes juridictions.

    WHAT'S NEXT?

    La prochaine mise à jour de l'instruction par l'AMF portera principalement sur les futurs modifications législatives européennes concernant les fonds d'investissements.

  • Shareholders' Rights Directive (SRD II)

    Decree No 2019-1486 introduces new minority shareholders rights at general meetings / Le Décret n°2019-1486 accorde de nouveaux droits aux actionnaires minoritaires aux assemblées générales

  • On 29 December 2019, France published in the Official Journal  Decree No 2019-1486 of 27 December 2019 concerning the period in which shareholders in minority are allowed to ask for the summon of a general assembly for a separation, fusion and partial provision of assets and votes.

    The decree provides for the period during which one or more shareholders with at least 5 % of the share capital may request the appointment of a representative to convene the Special General Meeting of their company to vote on the approval of the transaction. The decree also adapts the provisions relating to mail-in voting forms to take into account the fact that abstentions will henceforth be counted as votes not cast.

    Version française

    Le 29 décembre 2019, la France a publié au Journal Officiel Décret n°2019-1486 du 27 décembre 2019 relatif au délai durant lequel des actionnaires minoritaires peuvent demander la convocation d’une assemblée générale pour approuver certaines opérations de fusions, de scissions ou d’apports partiels d’actifs et aux votes au sein des assemblées générales d’actionnaires.

    Le décret prévoit le délai durant lequel un ou plusieurs actionnaires réunissant au moins 5 % du capital social peuvent demander la désignation d’un mandataire aux fins de convoquer l’assemblée générale extraordinaire de leur société pour qu’elle se prononce sur l’approbation de l’opération. Ce décret adapte par ailleurs les dispositions relatives aux formulaires de vote par correspondance pour tenir compte du fait que les abstentions seront désormais comptées comme des votes non exprimés.

  • GERMANY

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

    BaFin issues Circular 14/2019 (AML) on third countries with strategic deficiencies in AML/CFT systems

  • On 18 December 2019, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published Circular 14/2019 (AML) on third countries with strategic deficiencies in their AML/CFT systems.
    The circular is addressed to all obliged entities under the German Anti-Money Laundering Act and concerns: 

    • Commission Delegated Regulation (EU) 2016/1675 of 14 July 2016 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council by identifying high-risk third countries with strategic deficiencies; 
    • FATF Public Statement of 18 October 2019 on Iran and North Korea; and 
    • Information Report by FATF of 18 October 2019 on countries subject to monitoring.
  • Germany issues the Law transposing AMLD V

  • On 19 December 2019, the Law transposing the fifth European Anti-Money Laundering Directive (AMLD V) into German law was published in the German Official Journal.
    It was adopted by the German parliament on 14 November 2019 and approved by the German Federal Council (Bundesrat) on 29 November 2019.
    The law amends the existing Money Laundering Act and other laws affecting the financial sector and extends the scope of the money laundering legal obligations to the real-estate sector, in particular by including public auctions and by making changes to the suspicions reporting requirements.
    In addition, it includes crypto deposit-taking business as financial service in the Banking Act (KWG), thereby imposing a more comprehensive regulatory regime on firms active in the crypto asset sector.
    The majority of the law will enter into force on 1 January 2020.

  • DAC 6

    German Federal Council approves draft law transposing DAC 6 as adopted by German Parliament

  • On 13 December 2019, the German Federal Council (Bundesrat) informed the public that the German parliament (Bundestag) adopted the Law introducing the obligation to report cross-border tax arrangements.
    This  law transposes the Directive (EU) 2018/822 amending Directive 2011/16/EU as regards the mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (commonly referred as "DAC 6") into German law.
    The German parliament had already adopted the draft law in October 2019. However, the Bundesrat did not approve the draft law but requested several changes, as it was of the opinion that the efforts and costs imposed by the reporting obligations would not be proportionate.
    The parliament took note of the comments and revised the draft law accordingly.
    The Bundesrat will now discuss the revised draft law and potentially adopt it in its meeting on 20 December 2019.

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

    BaFin publishes fact sheet and templates for derivatives reporting

  • On 2 December 2019, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published a fact sheet and a template for the purpose of submitting the reports on derivatives that are required by § 38 of the German Regulation on derivatives (Derivateverordnung, DerivateV).
    The reports on derivatives must be submitted by management companies for each UCITS, whereas  no reports need to be submitted for open-ended AIFs or specialized AIFs.

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

    BaFin continues to allow publication of transactions later than required by MiFIR

  • On 17 December 2019, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) announced that it will continue to allow transactions in financial instruments to be published later than required by the European Markets in Financial Instruments Regulation (MiFIR) in the context of post-trade transparency requirements.
    BaFin will prolong the respective measures, three general rulings currently limited to the time until 1 January 2020, to be valid until 1 January 2021.

  • Shareholders' Rights Directive (SRD II)

    Germany issues Law transposing SRD II

  • On 19 December 2019, the Law transposing the second Shareholders' Rights Directive of the EU (SRD II) into German law was published in the German Official Journal.
    The Law introduces many changes to the German Stock Corporation Act of considerable practical and economic importance. These relate, for example, to improved shareholder information, the more effective exercise of shareholder rights and the more comprehensive identification of shareholders, especially in cross-border contexts. New disclosure requirements for influential proxy advisers and institutional investors such as insurance companies and pension funds shall ensure greater transparency.
    The law also contains important changes regarding the business of listed joint-stock companies with related parties, i.e. in particular with major shareholders. To avoid abuse, they must be approved by the Supervisory Board or a Supervisory Board committee and must be made public. Thus, the law secures the sustainable existence of the company, avoids conflicts of interest and protects minority shareholders in the sense of a balanced corporate constitution.
    The law also contains rules on executive compensation. In the future, the Supervisory Board must develop a compensation system and submit it to the Annual General Meeting, which sets out a clear framework for the Supervisory Board on how to determine the remuneration of the Management Board. This remuneration system must include a compensation cap. A detailed annual compensation report will also be required on the actual payments made. The Supervisory Board, in which the employees of the company are represented, draws up the compensation system. The remuneration system shall be submitted to the general meeting as a body of shareholders and consequently the owner of the company for advice. If the upper compensation limit is too high, the Annual General Meeting can reduce it to a binding amount.
    The Law will enter into force on 1 January 2020, except for Article 7, which repeals the Regulation on replacing the expenses of credit institutions as of 3 September 2020.

  • HONG KONG

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

    SFC issues Circular on streamlined requirements for eligible ETFs adopting a master-feeder structure

  • On 16 December 2019, the Securities and Futures Commission (SFC) issued a circular on the streamlined requirements for eligible exchange traded funds (ETFs) adopting a master-feeder structure.
    According to the document, the SFC is prepared to consider authorizing an index tracking feeder ETF that invests in an overseas-listed master ETF without SFC authorization on a case-by-case basis, having regard to the following principles:
    a) there are satisfactory safeguards and measures in place to address investor protection concerns; and
    b) there are demonstrable benefits to the Hong Kong market, taking into account factors such as the size and significance of the master ETF, its track record and whether its underlying index is widely accepted.

  • IRELAND

    Code of Conduct

    CBI updates Q&A on the Minimum Competency Code 2017 and Minimum Competency Regulations 2017

  • On 6 December 2019, the Central Bank of Ireland (CBI) published Q&A on the Minimum Competency Code 2017 and Minimum Competency Regulations 2017.

    The latest version amended response to Q7.4, and added new questions 9.5 and 9.6:

    Q9.5: Is it possible to complete more than one hour of Continuing Professional Development (CPD) per year relating to ethics? The answer is as followings:
    The standards in the MCC apply to persons exercising certain controlled functions within firms. Such persons must complete CPD that is related to the competencies set out in Appendix 3 of the MCC 2017, including at least one hour relating to ethics. While more than one hour relating to ethics may be completed, the overall CPD completed by an individual must cover a range of the competencies required for the activities undertaken by that individual. As the aim of the CPD is to ensure that the person’s technical knowledge remains up to date, it would not be appropriate for the bulk of the CPD completed to focus on only one topic.

    Q9.6 Can modules relating to culture, inclusion and diversity be included to meet the CPD requirement? The answer is as followings:
    While important for all regulated firms, a knowledge and understanding of culture, inclusion and diversity relate to the general operation of the firm rather than technical knowledge of the individual undertaking a controlled function within the scope of the MCC. In addition, these topics are not included in the competencies set out in Appendix 3 of the MCC. Therefore, CPD relating to culture, inclusion and diversity would not meet the requirements of the MCC.

  • ITALY

    Financial market infrastructure

    Borsa Italia publishes amendments to the Regulations of the markets organization (Resolution n. 21194 of 18 December 2019) regarding rules governing the admission of AIFs

  • On 18 December 2019 Borsa Italia approved Resolution n. 21194.

    The amendments to the Regulation of the markets and the related Instructions concern the following topics:

    a) the revision of the rules governing the admission of AIFs (Alternative Investment Funds) registered abroad into the MIV market and other fine tuning initiatives;

    b) information requirements in the EtfPlus market and the ATFund system.

  • LUXEMBOURG

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

    CSSF publishes identification forms about the responsible person in respect of AML/CFT requirements and control of respect of AML/CFT requirements

  • On 2 December 2019, the Commission de Surveillance du Secteur Financier (CSSF)  published a new identification form for the persons responsible for the compliance with the professional obligations as regards the fight against money laundering and terrorist financing of an investment fund and the CSSF also updated the identification form to indicate the AML/CFT compliance officer of an investment fund to the CSSF.

  • CSSF updates AML/CFT IFM market entry forms

  • On 16 December 2019, the Commission de Surveillance du secteur financier (CSSF) updated the AML/CFT IFM market entry forms which must be completed and added as enclosure to any submission of an application for the set-up of an authorized or registered Investment Fund Manager.

    It must also be renewed when requesting approval of an additional license, a license extension or a change in the shareholder structure of the IFM. This aims at providing license or shareholder related information and to update any information previously submitted which is no longer valid. 

  • CSSF issues Circular CSSF 19/732: Prevention of Money Laundering and Terrorist Financing: Clarifications on the Identification and Verification of the Identity of the Ultimate Beneficial Owner(s)

  • On 20 December 2019 CSSF published Circular CSSF 19/732. The purpose of this circular is to provide guidance to all professionals subject to AML/CFT supervision of the CSSF on the practical implementation of the identification requirements of the ultimate beneficial owner as well as on the reasonable measures that should be taken to verify the identity requirements, so that they are satisfied that they know who the ultimate beneficial owners are. The identification goes beyond the mere collection of a name or document or check in a registry. This circular has thus to be read in conjunction with other CSSF circulars and regulations related to AML/CFT, as well as the applicable legal and regulatory framework. The examples provided in this circular are meant to assist the professionals in meeting their obligations but are not intended to be exhaustive examples. Professionals should develop AML/CFT policies, procedures, systems and controls that are adequate and effective considering the nature, scale and complexity of their respective businesses as well as their overall exposure to ML/FT risks.

  • Benchmarks Regulation (BMR)

    CSSF issues Communication regarding Benchmark Regulation

  • On 24 December 2019, the Commission de Surveillance du secteur financier (CSSF) publishes a  Communication regarding Benchmark Regulation.

    Concerning the extension of the transitional provisions: the CSSF draws the Concerned Entities’ attention to the fact that the transitional provisions provided for by the Benchmark Regulation have been extended until 31 December 20212 with respect to the use of benchmarks provided by third country administrators and benchmarks which have been declared as critical by the European Commission.

    Concerning information and fallback provisions Concerned Entities are strongly urged to be prepared for the cessation of EONIA and LIBOR and should regularly monitor the developments and actions of the European working groups established in this respect and consider their recommendations taking into account the most recent developments as well as requirements concerning the prospectus.

    Moreover, the communication indicates new restrictions imposed on Concerned Entities as of 1 January 2020.

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

    CSSF issues circular CSSF 19/733 on liquidity risk management for UCITs

  • On 20 December 2019 CSSF issues circular CSSF 19/733.  The objective of this Circular is to implement the IOSCO recommendations on Liquidity risk management for open-ended undertakings for collective investment  in Luxembourg.

    The IOSCO recommendations address the structural vulnerabilities associated with asset management activities in the area of liquidity risk that were identified by the Financial Stability Board (FSB) in the sense that they could potentially pose financial stability risks. They point to the importance of an effective liquidity risk management to safeguard the interests and protection of investors, to maintain the orderliness and robustness of UCIs and markets, and to help reduce systemic risk, all of which support financial stability.

    The CSSF expects entities in scope to implement the IOSCO recommendations and to draw on the related IOSCO good practices for the implementation of a robust and effective liquidity risk management process for each of their managed open-ended UCIs. 

  • IT Outsourcing

    CSSF updates various forms and the FAQs regarding IT outsourcing of material activity

  • In December 2019 the Commission de Surveillance du Secteur Financier (CSSF) updated different documents related to IT outsourcing :

    1) the Authorisation request form for IT outsourcing of material activities

    2) the Frequently Asked Questions (FAQs) on the assessment of IT outsourcing materiality

    • What does “IT outsourcing” mean?
      IT outsourcing means an arrangement of any form between the institution and a service provider (including of the same group) by which that service provider performs an IT process, an IT service or an IT activity that would otherwise be undertaken by the institution itself. 
    • How to assess the materiality of an IT outsourcing? An IT outsourcing is considered material if at least one of the following statements is met:
      • From a technical point of view, the outsourced IT operational functions, activities or services safeguard the security and continuity of critical parts of the IT infrastructure.
      • From a business point of view, the outsourced IT operational functions, activities or services support a material activity. In case of failure or dysfunction of the IT operational functions, activities or services, there is a major impact on the business activity.

    3) Form A – Form for the prior notification by any institution intending to outsource to a cloud computing infrastructure to support a material activity and use an institution authorized under Articles 29-3 and 29-4 of the LFS.

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

    CSSF issues communication addressed to investment funds regarding PRIIPs assessment

  • On 11 December 2019, the Commission de Surveillance du Secteur Financier (CSSF) issued Press release 19/60 to point out that investment funds created after October 2019 must also complete the PRIIPs  assessment through the eDesk portal.
    The communication is addressed to all SIFs, Part II UCIs and SICARs and reminds all funds which failed to complete the PRIIPs assessment by 31 October 2019 to comply with the regulation.

  • Reporting

    CSSF publishes Circular CSSF 19/731 on the Documents to be submitted to the CSSF and to the European Central Bank on an annual basis

  • On 12 December 2019, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 19/731 on the Documents to be submitted to the CSSF and to the European Central Bank on an annual basis, which aims to amend CSSF Circular 19/710 relating to the documents to be submitted on an annual basis by credit institutions. The main amendments are on:

    • The format of the document submissions: Beside the paper format, there will be required documents should be submitted by electronic format in a secure e-file or SOFiE channels.
    • New documents to be submitted:
    1. The short-form report on consolidated annual accounts including particularly the external auditors opinion, the annual accounts, related explanatory annexes, the management report;
    2. Documents to be submitted by 30 March at the latest (either to ECB or CSSF): consolidated ICAAP report (if applicable), ILAAP report, if it is separated from the ICAAP report, consolidated ILAAP report (if applicable);
    3. Documents to be submitted one month at the latest following the Ordinary General Meeting: Management letter if it is not included in the analytical report;
    4. Documents to be submitted 3 month at the latest following the Ordinary General Meeting: Annual long form consolidated audit report drawn up by the statutory auditor, management letter concerning consolidated situation, analytical reports on the revision of subsidiaries, analytical reports on the revision of certain holdings.
    5. Document to be submitted according to the individual submission plan which is adopted by the ECB and is communicated by the CSSF: Recovery plan.
    6. Documents to be submitted by 01 March at the latest: The table and the summary report introduced by CSSF regulation N ° 16-07 of 26 October 2016 relating to the out-of-court resolution of complaints, and the circular CSSF 17/671 as amended.
    7. Documents to be submitted 2 month at the latest after the closing of the financial statements of the depositary: Annex 1 of the CSSF circular 18/697:List of information on depositary functions to be kept updated and to be provided to the CSSF on a periodic, ad hoc or annual basis.
  • Supervisory Reporting

    CSSF updates on the Status of problematic EBA Validation Rules

  • On 18 December 2019, the Commission de Surveillance du secteur financier (CSSF) published the  Excel file named “Status of problematic EBA Validation Rules” and its complementing document. The Excel file contains both 

    (1) a list of EBA “Problematic” Validation rules that has been subject to questioning either by reporting entities or by the CSSF itself and 

    (2) the latest official list of EBA Validation rules.

    EBA Problematic Validation rules generally lead to the opening, either by the reporting entity or by the CSSF, of an EBA Q&A after the problematic nature of the rule has been assessed by the CSSF. Furthermore, reporting entities are encouraged to contact the CSSF in case they are struggling to comply with one of the problematic validation rules as those could hold for some reporting entities under certain conditions. Therefore, those rules shall not be blindly ignored only because of their presence on the list.

    This document applies to CRR institutions (namely “credit institutions” and “investment firms”) as well as the software providers offering their services to those institutions. 

  • NETHERLANDS

    Financial Services Compensation Scheme

    DNB issues template for annual investor compensation scheme survey

  • On 12 December 2019, the De Nederlandsche Bank (DNB) published the template to be used for the purposes of the annual investor compensation scheme survey.
    The investor compensation scheme aims to compensate individuals and "small" companies if a financial institution that falls under the scheme is unable to meet its obligations related to investment services. Under the scheme, money and / or financial instruments (for example, securities, bonds or derivatives) are covered that are entrusted to a licensed bank, investment firm, manager of an investment institution / UCITS or financial institution. Through the annual report, DNB gains insight into the covered assets and the trends therein. The report for 2020 relates to the reference date 31/12/2019. Submission of the Excel reporting template takes place via the electronic platform DLR, the deadline for submission is 2 March 2020.

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

    AFM sees room for improvement for investment firms’ compliance with MiFID II

  • On 10 December 2019, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) issued a report on the results of its investigations of ten investment firms on their compliance with the second European Markets in Financial Instruments Directive (MiFID II).
    The report concludes that the investment firms which were part of the AFM’s investigation in 2018 and 2019 need to make improvements in the field of costs transparency, product governance and commissions. A total of ten investment firms were included in the AFM’s investigation.

    More precisely, the investigation report sets out the background and scope of the AFM’s investigation, the results for each of the aforementioned fields, and a number of observations together with concrete tools for improvement.
    The AFM emphasizes that MiFID II compliance remains a point of focus for the AFM. The AFM expects all investment firms to use the tools offered in the investigation report to test their practices and implement improvements where necessary.

  • Sustainable Finance / Green Finance

    DNB issues position paper on sustainability in the financial sector

  • On 17 December 2019, the De Nederlandsche Bank (DNB) published a position paper in preparation for a roundtable session on the sustainability of the financial sector with the standing committee on finance (vaste commissie voor Financiën).
    The paper summarizes the results of various DNB reports in recent years on climate and sustainability risks and describes how this knowledge has been integrated in DNB’s supervisory approach. In addition, the position paper addresses the importance of predictable policy and transparency for a successful transition to a sustainable economy, and the importance of international cooperation and an international approach in this regard.

  • SWITZERLAND

    Accounting

    Switzerland issues FINMA Accounting Regulation (RelV-FINMA)

  • On 17 December 2019, the Ordinance of the Swiss Financial Market Supervisory Authority FINMA from 31 October 2019 on accounting (FINMA Accounting Regulation, RelV-FINMA) was published in the Schweizer Bundesblatt (Swiss Official Journal).
    The ordinance is relevant for banks, securities firms and financial group/conglomerates and sets out the requirements regarding the creation of financial statements as well as the publication of business and/or financial interim reports.

    It enters into force on 1 January 2020.

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

    Switzerland amends Ordinance on the reporting office for money laundering cases (MGwV)

  • On 17 December 2019, the amendment of 27 November 2019 to the Ordinance on the reporting office for money laundering cases (MGwV) was published in the Schweizer Bundesblatt (Swiss Official Journal).
    The amendments concern the reporting process, the interactions between the reporting office and the reporting entities, the minimum content of the reports, requirements concerning the analysis of the reports as well as the rules for transmitting the received information to prosecution authorities and the information system to be used.

    The ordinance will enter into force on 1 January 2020.

  • Financial institutions

    Switzerland issues Ordinance on entry into force of Financial Institutions Law (FINIG)

  • On 17 December 2019, the Ordinance of 6 November 2019 on the final entry into force of the Financial Institutions Law of 15 June 2018 (FINIG) was published in the Schweizer Bundesblatt (Swiss Official Journal).
    According to the ordinance, the date of entry into force of FINIG is set to be 1 January 2020.

  • Switzerland issues Financial Institutions Ordinance (FINIV)

  • On 17 December 2019, the Ordinance of 6 November 2019 on financial institutions (Financial Institutions Ordinance, FINIV) was published in the Schweizer Bundesblatt (Swiss Official Journal).
    The ordinance is based on the Financial Institutions Law (FINIG) of 15 June 2018 and sets out:

    • the authorization requirements for financial institutions; 
    • the obligations of financial institutions; and
    • the supervision of financial institutions. 

    It applies to all financial institutions that are active on the Swiss market and/or based in Switzerland and will enter into force on 1 January 2020. 

  • Financial market infrastructure

    FINMA updates its Guidelines on Financial Market Regulation

  • On 16 December 2019, the Swiss Financial Market Supervisory Authority (FINMA) has issued its Guidelines on Financial Market Regulation, as adjusted on 5 December 2019.
    This update of the internal Guidelines took place following consultation with interested parties (federal authorities, academia, financial sector) and was coordinated with the Federal Department of Finance (FDF). The Guidelines highlight how FINMA ensures a transparent and efficient regulatory process. They reflect the new Ordinance to the Financial Market Supervision Act (FINMASA).

  • FINMA provides guidance on exchange of collateral pursuant to the new FMIO

  • On 16 December 2019, the Eidgenössische Finanzmarktaufsicht (FINMA) published FINMA Guidance 04/2019 from 13 December 2019 on the exchange of collateral and the extension of transitional period for equity options under the new Financial Market Infrastructure Ordinance (FMIO).
    FINMA clarifies that it is contributing to the harmonization of the Swiss regulatory framework for OTC derivatives trading with international standards by extending the transitional provision specified in Article 131 para. 5bis FMIO from 4 January 2020 to 4 January 2021 based on Article 131 para. 6 FMIO. The duty to exchange collateral thus now applies from 4 January 2021 for non-centrally cleared OTC derivatives transactions that are options on individual equities, index options or similar equity derivatives such as derivatives on baskets of equities.

  • SFAMA updates FAQ on FinSA/FinIA

  • On 24 December 2019, the Swiss Funds & Asset Management Association (SFAMA) published an updated version of its Frequently Asked Questions (FAQ) about the Financial Services and Financial Institutions Acts (FinSA/FinIA).
    The update is made in view of the entry into force of the FinSA/FinIA on 1 January 2020 which will change Switzerland's financial market architecture profoundly. The fund and asset management industry will be particularly affected since collective investment scheme legislation is being significantly amended under the FinSA/FinIA. Various matters were unclear from the perspective of the fund and asset management industry, specifically with regard to the deletion of certain rules in the CISA and their integration into the FinSA and FinIA.
    The purpose of the FAQis to provide answers to the most important of these questions and contribute to establishing a uniform practice during and after the envisaged transitional periods. In the course of November 2019, SFAMA conducted various member workshops at which these questions were also discussed. The key questions were additionally discussed in various SFAMA expert committees and task forces. The outcomes of these discussions have been integrated into this document. These FAQ focus on the fund and asset management business. FINMA has acknowledged the German version of the present document.

  • Financial services

    Switzerland issues Financial Services Law (FIDLEG)

  • On 17 December 2019, the Federal Law of 15 June 2018 on financial services (Financial Services Law) was published in the Schweizer Bundesblatt (Swiss Official Journal).
    The objective of the law is to protect clients of financial services providers and create comparable conditions for the provision of financial services across the financial sector. Thus, it is aimed at promoting the Swiss financial market place and enhance Switzerland's competitiveness.
    More specifically, the law sets out the requirements for a diligent and transparent provision of financial services and regulates the offering of financial instruments. It is addressed to financial services providers, intermediaries and originators of financial products and will enter into force on 1 January 2020. 

  • Switzerland issues Financial Services Ordinance (FIDLEV)

  • On 17 December 2019, the Ordinance of 6 November 2019 on financial services (Financial Services Ordinance, FIDLEV) was published in the Schweizer Bundesblatt (Swiss Official Journal).
    The ordinance regulates the requirements for: 

    • the diligent and transparent provision of financial services; and 
    • the offering of securities and other financial instruments. 

    It applies to financial services provided within Switzerland or for clients based in Switzerland and sets out detailed rules on conduct and organisation of financial services providers as well as on the register of financial advisers. Moreover, it establishes the requirements concerning investment prospectuses  and further information documents that must be issued by financial services firms.
    The ordinance enters into force on 1 January 2020, although a transition period is granted for certain provisions specified in the ordinance. 

  • Financial supervision

    Federal Council adopts new Ordinance to Financial Market Supervision Act

  • On 13 December 2019, the Federal Council adopted a new Ordinance to the Financial Market Supervision Act (FINMASA).
    The new ordinance specifies FINMA's powers at the international level and in terms of regulation, and clarifies how they are related to the powers of the Federal Council and the FDF. Furthermore, it governs how regulatory principles are to be applied and how the aspects of proportionality, differentiation and international standards are to be taken into consideration in regulatory activities. Regarding the regulatory process, the ordinance specifies how those affected, the public and the administrative units involved are to be included. It additionally sets out the main features of the cooperation between FINMA and the FDF, as well as the mutual exchange of information.
    During the consultation, the new ordinance was largely regarded as a logical means of clarifying the FINMASA. Various submissions called for even more extensive and detailed requirements, but the Federal Council did not consider these to be expedient on the whole. A minority was fundamentally opposed to the proposal, referring to the administrative burden and a possible restriction of FINMA's powers. The Federal Council has taken account of these concerns in the ordinance that has now been adopted.

    The ordinance responds to Parliament's concerns and ensures that FINMA can continue to successfully play its important role for the financial centre. FINMA's independence will not be affected and its current regulatory instruments will remain unchanged.

    The ordinance will enter into force on 1 February 2020.

  • Switzerland issues Supervision Organization Ordinance (AOV)

  • On 17 December 2019, the Ordinance of 6 November 2019 on the organization of the supervision in the context of financial market supervision (Supervision Organization Ordinance, AOV) was published in the Schweizer Bundesblatt (Swiss Official Journal).
    The ordinance is based on the Financial Market Supervision Law (FINMAG) and regulates the authorization requirements and the supervisory activities of the supervisory bodies under Title 3 of FINMAG.
    The ordinance will enter into force on 1 January 2020 but provides for a transitional period which lasts until 31 December 2022.

  • Macro-prudential framework

    FINMA issues new report "Risk Monitor 2019"

  • On 10 December 2019, the Swiss Financial Market Supervisory Authority (FINMA) published for the first time a risk monitor report.
    This report provides an overview of what FINMA believes are the most important risks currently facing supervised institutions. Furthermore, each report will highlight one selected trend with the potential to impact on the Swiss financial market over the long term. The report also describes the focus of FINMA’s supervisory activity on the basis of the risks.
    The six principal risks identified by FINMA for its supervised institutions and the Swiss financial centre are the following: 

    • the persistent low interest-rate environment; 
    • a possible correction on the real estate and mortgage market, especially in the investment property segment; 
    • cyberattacks; 
    • a disorderly abolition of LIBOR benchmark interest rates; 
    • money laundering; and 
    • increased impediments to cross-border market access, particularly in the EU. 

    In addition, the report discusses the financial risks arising from climate change as one of the most important long-term risks identified by FINMA. Besides the risks highlighted in the risk monitor, FINMA also deals with numerous other more specific risks in its supervisory work. 

  • Own funds

    Switzerland issues Own Funds Ordinance (ERV)

  • On 17 December 2019, the Ordinance of 27 November 2019 on own funds and risk distribution for banks and securities dealers (Own Funds Ordinance, ERV) was published in the Schweizer Bundesblatt (Swiss Official Journal).
    The ordinance amends the Own Funds Ordinance of 1 June 2012 to introduce amongst others simplifications for especially liquid and well-capitalized banks of Categories 4 and 5.
    The ordinance will apply from 1 January 2020 but provides for a transitional period lasting mainly until 31 December 2021 (except for Leverage Ratio requirements which are gradually introduced until end of 2023).

  • UNITED KINGDOM

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

    UK publishes the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 transposing AMLD V

  • On 21 December 2019, the Statutory Instrument 2019 No. 1511 - the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 was published on UK legislation.

    These Regulations amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 by implementing  amendments made to Directive 2015/849/EU of the European Parliament and of the Council of 20th May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AMLD IV) by Directive 2018/843 of the European Parliament and of the Council of 30th May 2018 (AMLD V).

    In particular, the main amendments:

    • Add new categories of “relevant person”: The new businesses covered by the legislation are letting agents, art market participants (including operators of freeports), and providers of exchange or storage services for “cryptoassets” such as virtual currencies. The definition of tax adviser is extended to those who provide material aid or assistance on tax. 
    • Implement new provisions relating to risk assessments, policies, controls and procedures;
    • Make provision about training for agents ; about publishing directions; and about measures to be taken by supervisors to check the criminal convictions of people they approve.
    • Modify regulations in relation to customer due diligence measures to be taken by relevant persons. 
    • Require the Treasury or the Secretary of State to establish a mechanism to enable law enforcement authorities and the Gambling Commission to obtain information about safe-deposit boxes and about accounts held with banks, building societies and credit unions. 
    • - Modify regulations in relation to the duties of supervisory authorities; information sharing; and requirements for certain businesses to register with Her Majesty’s Revenue and Customs (“HMRC”) or with the Financial Conduct Authority (“FCA”). 
    • Modify regulations in relation to information and investigation, in particular conferring new powers on the FCA in relation to cryptoasset service providers; to  enforcement;  to appeals against directions imposed by the FCA. 
    • Insert a new part in relation to information-sharing between financial intelligence units including the UK’s National Crime Agency.

    Most of these Regulations come into force on 10th January 2020. The Regulation in relation to  amendment of requirement for customer due diligence for anonymous prepaid cards comes into force on 10th July 2020.  New regulation on bank account portal comes into force on 10th September 2020.

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

    FCA publishes new forms for MIFID investment firms regarding MiFID members of management bodies and Non-SMF Directors

  • In addition, the FCA and the PRA required on 9 December 2019 that all MIFID firms making changes to their management body or key function holders to provide these details as part of their application for the individual to hold a senior management function or internal transfer of an approved person (for firms and individuals subject to the senior managers regime) (Article 4 Information Form (SMR) shall be used for that purpose).

  • CONTACTS

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

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

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

    Local Expert Correspondents
    Jennifer Yeboah, Team Manager Legal (CACEIS Belgium)
    François Honnay, Head of Legal and Compliance (CACEIS Bank Belgium Branch)
    Tania Deltchev, Head of Legal (France)
    Stefan Ullrich, Head of Legal (Germany)
    Robin Donagh, Legal Advisor (Ireland)
    Razanajafy (Fara) Francois-Sim, Head of Compliance (CACEIS Ireland Limited)
    Costanza Bucci, Head of Legal & Compliance (Italy)
    Agathe Doleans, Deputy Chief Compliance Officer (Luxembourg)
    Fernand Costinha, Head of Legal (Luxembourg)
    Gérald Stadelmann, Head of Legal (Luxcellence Luxembourg)
    Mireille Mol, Legal & Compliance (Netherlands)
    Alessandra Cremonesi, Legal Fund Structuring (Switzerland)
    Samuel Zemp compliance office (CACEIS Bank Switzerland Branch) 
    Elbaz Yves, Head of Compliance & Risk (UK)

    Design

    CACEIS Group Communications

    Photos credit
    CACEIS, Adobe Stock

    CACEIS
    1-3, place Valhubert
    75206 Paris CEDEX 13