CACEIS February 2023


CONTENT

CACEIS

EUROPEAN UNION

European Digital Identity Regulation (EDIR)

EP adopts Position on the proposed European digital identity framework (eID)

CACEIS

  • On February 9th 2023, the Members of Parliament (MEPs) of the European Parliament (EP) adopted its position on the proposed update of the European digital identity framework (eID), by 55 votes to 8, with 2 abstentions.

    The new eID would allow citizens to identify and authenticate themselves online (via a European digital identity wallet) without having to resort to commercial providers, as is the case today - a practice that raised trust, security and privacy concerns. It would also give users full control of their data and let them decide what information to share and with whom.

    In their amendments, MEPs propose to make the European Digital Identity Wallet a tool that can also read and verify electronic documents, and allow for peer-to-peer interactions. They propose measures to strengthen privacy and cybersecurity as well as to register all transactions to ensure third parties are held accountable.

    Using the EU wallet will always be voluntary. MEPs also want to ensure that citizens who choose not to adopt it are not treated differently to those who do. The scheme would require each member state to notify at least one “Wallet” under a national eID scheme to make them interoperable at EU level.

    The draft legislation includes provisions to securely request, obtain, store, combine and use personal identification data and electronic certificates, that can be used to authenticate online and offline and to access goods and public and private services.

  • Financial supervision

    ESMA publishes the first Trends, Risks and Vulnerabilities (TRV) Report of 2023

    CACEIS

  • On February 9th 2023, the European Securities and Markets Authority (ESMA) published the first Trends, Risks and Vulnerabilities (TRV) Report of 2023. Overall, risks in ESMA’s remit remain high, and investors should be prepared for further market corrections.

    The second half of 2022 was dominated by the slowdown of economic activity, high inflation, global tightening of financial conditions, the geopolitical environment and the materialisation of peripheral risks linked to leverage and liquidity, together with growing concerns over business practices in the crypto space.  These remain the defining drivers of risk in EU financial markets at the current juncture.

    Main findings:

    • Overall risk assessment: Contagion and operational risks are considered very high, as are liquidity and market risks. Credit risk stays high and is expected to rise, reflecting the growing concerns over public and corporate indebtedness. Risks remain very high in securities markets and for asset management. Risks to infrastructures and to consumers both remain high, though now with a worsening outlook, while environmental risks remain elevated.
    • Market environment: The tightening of financial conditions globally has weighed on economic activity, while inflation remains very high. Volatility in energy markets stayed elevated despite a general decline in prices. Structural vulnerabilities expose markets and participants to the risk that shocks to markets could be amplified by liquidity supply and demand imbalances.
    • Securities markets: Equity prices were volatile in 2022 with markets partially recovering Q22 losses based on news flow around relatively stable inflation and positive corporate earnings.
    • Asset management: The EU fund sector has seen outflows and low performance across most fund types in 2022, as assets under management experienced their sharpest decline since the Global Financial Crisis. Maturity mismatches in Commercial Real Estate Funds persist, and the impact of the UK Gilt market turmoil on leveraged Liability-Driven Investment Funds in 2022 confirmed existing concerns over fund liquidity risk management and excessive leverage, as well as contagion risks given strong systemic interconnections.
    • Consumers: Investor sentiment remains weak, against the backdrop of economic uncertainty. Inflation acts as a drag on real investment returns and contributes to falling household savings.
    • Infrastructures and services: Central clearing volumes grew further, as margins collected by EU CCPs for interest rate and commodity derivatives rose with rises in prices and volatility in underlying instruments, while some migration from ETD to OTC energy derivatives was observed.
    • Market-based finance: Capital market financing decreased sharply in 2022, turning negative for the first time since the Covid-19 related market stress in early 2020. The drop in activity is linked to high investor uncertainty, tighter credit standards for firms, high corporate debt levels and a rapid increase in the overall cost of external financing in the euro area.
    • Sustainable finance: Net-zero pledges have come under growing scrutiny, with the energy crisis jeopardising decarbonisation objectives. More broadly, the focus on greenwashing has increased while investors increasingly appear to differentiate between products based on their sustainability credentials, as reflected in steady net flows into SFDR Article 9 funds. Despite this, ESG markets continued to grow, with this trend showing resilience to broader market developments.
    • Crypto-assets and financial innovation: Crypto-asset valuations have now fallen by almost 70% year-on-year, driven by macro-economic factors and several high-level collapses in 2022. The recent failure of FTX, formerly one of the largest centralised crypto exchanges, triggered some large market corrections across crypto-assets. Contagion within the crypto sector has been substantial, reflected in further price drops of key crypto instruments and knock-on bankruptcies among service providers. Given low exposures by EU market participants, material spill-over effects of the crypto turmoil into the EU finance sector and the real economy have not been registered so far.
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    ESMA updates Q&A on the application of the UCITS Directive (3/2/2023)

    CACEIS

  • On February 3rd 2023, the European Securities and Markets Authority (ESMA) published Questions and Answers (Q&A) Application of the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive. 

    Question 5e has been updated: Article 52(1)(b) of the UCITS Directive requires a UCITS not to invest more than 20% of its assets in deposits made with the same body. Does the term “body” referred to in the aforementioned article mean “credit institution” as mentioned in Article 50(1)(f) of the UCITS Directive or does it include also any other counterparty which is not a credit institution?

  • EP adopts the ELTIF Regulation II

    CACEIS

  • On February 15th 2023, the European Parliament adopted the European Long-Term Investment Funds (ELTIFs) Regulation

    The changes to ELTIFs that were adopted with 492 votes to 109 and 27 abstention boost regulatory oversight and investor protection safeguards in order to accelerate the uptake of ELTIFs, also by retail investors. This in turn should support the financing of long-term projects such as infrastructure projects, real estate or SMEs throughout the EU.

    All ELTIFs marketed in the EU have to be authorised and MIFID compliant. A test to establish whether an investment product is suitable for retail investors and clear warnings referring to it being sometimes illiquid long-term investment or to value fluctuations will be necessary. A retail investor will have to explicitly consent when investing in a product assessed as not suitable. Finally, MEPs highlighted the need to promote independent financial literacy as key to making ELTIFs more accessible and popular among individual investors.

    To foster a more vibrant market, MEPs extended the possibility for ELTIFs to invest in listed companies. Recognising FinTechs’ important role in promoting digital innovation and the overall efficiency of European Union financial markets, they also ensured that ELTIFs could invest in such companies within five years of their authorisation.

    As hundreds of billions of euro in additional investments will be needed to cover the long-term financing gap in the European Union and to reach the 2030 energy and climate targets, MEPs ensured that the regulation refers to the European Green Deal (alongside the “digital agenda for Europe”) as one of the priorities into which long-term investments should be channelled. Moreover, ELTIFs will be able to invest in European green bonds issued under the EU Green Bond Standards, if they meet the requirements of the ELTIF framework on issuance characteristics and long-term focus.

    The Parliament's position reflects what had been previously agreed between the institutions. The Council should therefore be in a position to approve the Parliament's position.

    The act would then be adopted in the wording which corresponds to the Parliament's position.

    The new rules should apply nine months after their publication in the EU Official journal.

  • SMSG publishes advice to ESMA on ESMA’s consultation on Guidelines on funds’ names using ESG or sustainability-related terms

    CACEIS

  • On February 21st 2023, the European Securities and Markets Authority (ESMA) published Securities and Markets Stakeholder Group's (SMSG) advice to ESMA on ESMA’s consultation on Guidelines on funds’ names using ESG or sustainability-related terms. In the wake of the ESAs’ consultation on greenwashing, ESMA consults on future Guidelines on funds’ names using ESG or sustainability related terms. The SMSG finds that the two consultations are closely related while timelines as well as scope are different. The greenwashing consultation involves all three ESAs working on a 2-year timeline, while the “naming” consultation applies to funds only and have a timeline of less than one year. There is also a difference in mandate, the ESAs having received a formal mandate from the EC on the greenwashing theme while the funds’ naming consultation is not based on such a formal mandate. That said the SMSG finds that many of the topics looked at in the greenwashing discussion fit very well also in the funds’ naming discussion. The SMSG considers that it is good that ESMA initiates a discussion about the name of products, as names are - especially for the retail market - a powerful marketing tool. Regrettably, too often the name may even be the only reference looked at, or the only information taken in by some investors. In any case, the SMSG is of the opinion that the name of a fund should not be misleading. There is also room to be clearer in the name – as part of a wider discussion on potentially misleading statements - subject to the consideration that in practice very little information can normally be conveyed by a name. In addition, legitimately, as for any other product, names need not use vocabulary directly connected to the fund’s strategy or assets. The name is not necessarily connected to an asset management type of vocabulary.

  • EFAMA publishes response to ESMA’s proposed guidelines on the use of ESG terms in fund names

    CACEIS

  • On February 21st 2023, the European Fund and Asset Management Association (EFAMA) published its response to the ESMA consultation on guidelines on funds’ names using ESG or sustainability-related terms.

    EFAMA is in favour of setting common rules in order to avoid misleading information and to enhance trust and clarity in the market, especially in the fast-evolving ESG landscape. However, we suggest that ESMA delays their proposed guidelines until the lack of clarity on what constitutes a “sustainable investment” is rectified and they have worked together with the European Commission to resolve interoperability issues between the guidelines and SFDR, MiFID/IDD etc.

    If ESMA proceeds with the numerical threshold approach, there are a number of important elements which would still need to be addressed.

    • Cash, cash equivalents, and derivatives used for hedging should be excluded from an 80% ratio calculation to allow for efficient fund management, especially during extraordinary market circumstances.
    • The lack of clarity on what exactly qualifies as a sustainable investment under SFDR, calls into question the appropriateness of a separate threshold of 50%.
  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    ESMA publishes Business Requirements Document MIDFW - MiFID II data forward to NCAs

    CACEIS

  • On February 9th 2023, the European Securities and Markets Authority (ESMA) published Business Requirements Document MIDFW - MiFID II data forward to NCAs.

    This document specifies the functional and non-functional business requirements of the IT solution required by ESMA to achieve the transmission of the MiFID II data, that is collected from Trading Venues (Regulated Markets, Multilateral Trading Facilities, Organised Trading Facilities), Systematic Internalisers, Approved Publication Arrangements and Consolidated Tape Providers, to the National Competent Authorities.

    The intended audiences of the current BRD are:

    • ESMA policy and IT staff,
    • ITMG members, as well as
    • Market Data Standing Committee (MDSC)
    • anyone having a professionally justified interest in the MIDFW business requirements

    This Business Requirement Document (BRD) is intended to be used as an input for design stages of the project. The solution will be described in the Functional Specifications Document (FSD).

  • ESMA publishes Functional Specifications Document MIDFW - MiFID II data forward to NCAs

    CACEIS

  • On February 9th 2023, the European Securities and Markets Authority (ESMA) published Functional Specifications Document MIDFW - MiFID II data forward to NCAs.

    The Functional Specifications Document (FSD) specifies the technical specifications of the MIDFW IT solution required by ESMA to achieve the transmission of the MiFID II data, that is collected from Trading Venues (Regulated Markets, Multilateral Trading Facilities, Organised Trading Facilities), Systematic Internalisers, Approved Publication Arrangements and Consolidated Tape Providers, to the National Competent Authorities. 

    Under MIDFW, the ESMA EAMFT system will be used for collecting the files, submitted to HUBDE by the reporting entities, and making it available to the NCAs through HUBEX. An additional mechanism will be employed to determine the recipient NCA under the jurisdiction of which each submitting entity falls.

    The processing of the files’ contents which rely on FIRDS, FITRS and DVCAP systems is out of the scope of the current document.

    This document is intended to:

    a) ESMA IT staff;

    b) IT Management and Governance Group (ITMG);

    c) IT Vendors.

    This FSD will be used as input for the implementation of the MIDFW solution. 

  • Sustainable Finance / Green Finance

    EP adopts position on the proposed revision of the Energy Performance of Buildings Directive

    CACEIS

  • On February 9th 2023, the European Parliament adopted its position on climate neutrality by 2050.

    The Industry, Research and Energy Committee adopted its position on the proposed revision of the Energy Performance of Buildings Directive (EPBD) by 49 votes to 18, with 6 abstentions.

    Its main objectives are to substantially reduce greenhouse gas (GHG) emissions and energy consumption in the EU building sector by 2030, and make it climate neutral by 2050. It also aims to increase the rate of renovations of energy-inefficient buildings and improve information on energy performance.

    According to the adopted text, all new buildings should be zero-emission from 2028, while new buildings occupied, operated or owned by public authorities from 2026 (the Commission proposed 2030 and 2027 respectively). All new buildings should be equipped with solar technologies by 2028, where technically suitable and economically feasible, while residential buildings undergoing major renovation have until 2032 to comply.

    Residential buildings would have to achieve at least energy performance class E by 2030, and D by 2033. Non-residential and public buildings would have to achieve the same classes by 2027 and 2030 respectively (Commission proposed F and E).

    All measures needed to achieve these targets would be established by each member state in national renovation plans. To take into account EU countries’ diverse building stocks, the letter G should correspond to the 15% worst-performing buildings in the national stock.

    National renovation plans should include support schemes with realistic targets and measures to facilitate access to grants and funding. Member states need to put in place free-of-charge information points and cost-neutral renovation schemes. Financial measures should provide an important premium for deep renovations, especially of the worst-performing buildings, and targeted grants and subsidies should be made available to vulnerable households.

    EU countries should ensure that the use of fossil fuels in heating systems, for new buildings and buildings undergoing major renovation, deep renovation, or renovation of the heating system, is not authorised from the date of transposition of this Directive. They should be totally phased out by 2035, unless the European Commission allows their use until 2040, MEPs say.

    The draft legislation will be put to a vote by the full House during the 13-16 March plenary session and become Parliament’s negotiating position. MEPs will then enter into negotiations with Council to agree on the final shape of the bill.

  • EU publishes RTS on gas and nuclear energy activities

    CACEIS

  • On February 17th 2023, the European Union published Commission Delegated Regulation (EU) 2023/363  of 31 October 2022 amending and correcting the regulatory technical standards (RTS) laid down in Delegated Regulation (EU) 2022/1288 as regards the content and presentation of information in relation to disclosures in pre-contractual documents and periodic reports for financial products investing in environmentally sustainable economic activities.

    Delegated Regulation (EU) 2023/363 amends the existing SFDR RTS to align them with the Taxonomy Complementary Climate Delegated Act, which includes specific nuclear and gas energy activities in the list of environmentally sustainable economic activities covered by the EU Taxonomy.

    The amendments are intended as limited adjustments of the existing regulatory framework and include revised pre-contractual and periodic disclosure templates and minor technical revisions.

    The Regulation entersinto force on 20 February 2023.

  • BELGIUM

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

    Belgium publishes Royal Decree of 8 February 2023 amending the Royal Decree of 30 July 2018 on the modalities of operation of the UBO register

    CACEIS

  • On February 17th 2023, Belgium published Royal Decree of 8 February 2023 amending the Royal Decree of 30 July 2018 on the modalities of operation of the UBO register.

    The Royal Decree of 30 July 2018 on the operating procedures of the register UBO contains provisions on the operation of the UBO register. The objective of this register is to have a centralized database of all persons who own or control one of the legal entities identified in the law of 18 September 2017 on the prevention of money laundering capital and terrorist financing and limiting the use of cash.

    In particular, the new provisions modify the procedure for consulting the UBO register, in order to comply with the judgment of the Court of Justice of the European Union of 22 November 2022. From now on, members of the general public will have to meet three (non-cumulative) conditions in order to access information on the beneficial ownership of companies, non-profit association (association sans but lucratif, asbl), foundations, trusts, trusts and similar legal arrangements. 

    Pending IT developments to adapt the UBO register to these new legal provisions, requests for consultation can be sent by email to ubobelgium@minfin.fed.be

    The draft Royal Decree amends the Royal Decree of 30 July 2018.

  • Directive on the protection of persons who report breaches of Union law (Whistleblowers Directive)

    FSMA publishes Circular 2023_03 on the Rules of procedure for the receipt and processing of alerts on violations by FSMA and protection measures for whistleblowers and other protected persons

    CACEIS

  • On February 15th 2023, the Financial Services and Markets Authority (FSMA) published a Circular on the Rules of procedure for the receipt and processing of alerts on violations by FSMA and protection measures for the alerters and other protected persons.

    Circular FSMA_2023_03 specifies and clarifies the procedural rules applicable to the receipt and processing by the FSMA of reports of violations of the legislation whose compliance it monitors. It also explains the protective measures provided for in this context. This circular implements Article 14, § 5, of the Act of 28 November 2022 on the protection of persons who report violations of EU or national law found within a legal entity in the private sector, which enters into force on 15 February 2023.

    The FSMA has also adapted its Q&A section on the FSMA's Whistleblower Contact Point webpage to take account of this new law.

  • BRAZIL

    Investment advice

    CVM issues Resolutions 178 and 179 on New Regulatory Framework for investment advisor activity and transparency of remuneration practices

    CACEIS

  • On February 14th 2023, Comissão de Valores Mobiliários (CVM)  issued CVM Resolutions 178 and 179 on a new regulatory framework for investment advisor activity and for the transparency of remuneration practices in the securities intermediation segment. 

    CVM Resolution 178 and parts of 179 enter into force on 1/6/2023 and the remaining portions of CVM Resolution 179 enter into force on 2/1/2024.

    CVM Resolution 179 introduces changes in other rules issued by the Municipality, in particular CVM Resolution 35, with the main objective of increasing transparency for the investor about the remuneration practices of the securities intermediation activity. The main innovations are:

    • Requirement for disclosure of qualitative and quantitative information on forms and arrangements of remuneration and potential conflicts of interest
    • Creation of quarterly remuneration statement

    CVM Resolution 178 begins to discipline investment advisors, replacing CVM Resolution 16. The main innovations of the new standard are:

    • Possibility of investment advisors without exclusive relationship
    • Flexibility regarding the corporate type adopted by corporate investment advisors
    • Greater transparency to the investor
    • Creation of the responsible director of the investment advisor legal entity
    • Detailing of aspects related to supervision that intermediaries must exercise on investment advisors

    Subject to certain conditions, the new rules allow FIFs offered to retail investors to invest up to 100% of their net assets in foreign securities, including foreign investment funds. Under the previous regulatory framework, the limit for retail funds was set to the 20% of the net assets.

  • FRANCE

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

    France publishes Decree No.2023-63 on customer identity verification for products and services with low ML/TF risk / Publication du décret n°2023-63 relatif à la vérification de l'identité des clients pour des produits et services à faible risque BC/FT

    CACEIS

  • On February 3rd 2023, Legifrance (France's Official Journal) published Decree No. 2023-63 on customer identity verification for certain products and services with a low risk of money laundering and terrorist financing. Target audiences: savers and users of banking services, credit institutions, issuers of electronic money, French Prudential Supervision and Resolution Authority (ACPR). The purpose of this Decree is to relax the anti-money laundering provisions laid down in the Monetary and Financial Code for financial services with a low risk of criminal diversion. The simplified due diligence measures apply more specifically to obligations to identify and verify the identity of customers of payment service providers for small cash transactions carried out for the payment of everyday bills. These new provisions, which primarily target disadvantaged groups outside traditional banking channels, fulfil the objective of social and economic inclusion, within the limits set by the European framework for combating money laundering and terrorist financing. The text enters into force the day after its publication in the Official Journal of the French Republic.

    Version française

    Le 3 février 2023, Legifrance a publié le décret n° 2023-63 relatif à la vérification de l'identité du client pour certains produits et services à faible risque de blanchiment de capitaux et de financement du terrorisme. Publics cibles : épargnants et usagers des services bancaires, établissements de crédit, émetteurs de monnaie électronique, Autorité de Contrôle Prudentiel et de Résolution (ACPR). Ce décret a pour objet d'assouplir les dispositions anti-blanchiment prévues par le code monétaire et financier pour les services financiers à faible risque de détournement criminel. Les mesures de vigilance simplifiées s'appliquent plus spécifiquement aux obligations d'identification et de vérification de l'identité des clients des prestataires de services de paiement pour les petites opérations en espèces effectuées pour le paiement des factures courantes. Ces nouvelles dispositions, qui ciblent prioritairement les publics défavorisés en dehors des circuits bancaires traditionnels, répondent à l'objectif d'inclusion sociale et économique, dans les limites fixées par le cadre européen de lutte contre le blanchiment de capitaux et le financement du terrorisme. Le texte entre en vigueur le lendemain de sa publication au Journal officiel de la République française.

  • AMF implements EBA Policy on compliance management and the AML/CFT compliance officer / L'AMF met en œuvre les politiques de l'ABE sur la gestion de la conformité ainsi que l'agent de conformité LBC/FT

    CACEIS

  • On February 22nd 2023, the Autorité des marchés financiers (AMF) published a policy document to incorporate the guidelines of the European Banking Authority (EBA) on policies and procedures in relation to compliance management and the role and responsibilities of the AML/CFT compliance officer.

    On 14 June 2022 the EBA published guidelines on policies and procedures in relation to compliance management and the role and responsibilities of the AML/CFT compliance officer. These guidelines aim to ensure a common understanding, by competent authorities and credit or financial institutions, and appropriate implementation of AML/CFT internal governance arrangements throughout the European Union, in accordance with the requirements of the European Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing.

    These guidelines set clear expectations of the role, tasks and responsibilities of the AML/CFT compliance officer and the management body. They specify that credit or financial institutions should appoint one member of their management body who will ultimately be responsible for the implementation of the AML/CFT obligations, and clarify the tasks and functions of that person.

    They also describe the roles and responsibilities of the AML/CFT compliance officer, when this person is appointed by the management body pursuant to the proportionality criteria. When the credit or financial institution is part of a group, the guidelines prescribe that a group AML/CFT compliance officer should be appointed and clarify this person’s tasks and responsibilities.

    Version française

    Le 22 février 2023, l'Autorité des marchés financiers (AMF) a publié un document d'orientation visant à intégrer les orientations de l'Autorité bancaire européenne (ABE) sur les politiques et procédures en matière de gestion de la conformité et le rôle et les responsabilités du déontologue LBC/FT. Le 14 juin 2022, l'ABE a publié des orientations sur les politiques et procédures relatives à la gestion de la conformité ainsi que sur le rôle et les responsabilités du responsable de la conformité LBC/FT. Ces lignes directrices visent à assurer une compréhension commune, par les autorités compétentes et les établissements de crédit ou financiers, et une mise en œuvre appropriée des dispositifs de gouvernance interne en matière de LBC/FT dans l'ensemble de l'Union européenne, conformément aux exigences de la directive européenne relative à la prévention de l'utilisation du système financier aux fins de blanchiment de capitaux et de financement du terrorisme. Ces lignes directrices établissent des attentes claires quant au rôle, aux tâches et aux responsabilités du responsable de la conformité LBC/FT et de l'organe de direction. Elles précisent que les établissements de crédit ou financiers doivent nommer un membre de leur organe de direction qui sera responsable en dernier ressort de la mise en œuvre des obligations de LBC/FT, et précisent les tâches et fonctions de cette personne. Elles décrivent également les rôles et responsabilités du responsable de la conformité LBC/FT, lorsque cette personne est désignée par l'organe de direction en application des critères de proportionnalité. Lorsque l'établissement de crédit ou l'établissement financier fait partie d'un groupe, les lignes directrices prévoient la nomination d'un responsable de la conformité LBC/FT du groupe et précisent les tâches et les responsabilités de cette personne.

  • Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT Regulation)

    AMF recalls the application of the EU DLT Pilot Regime from 23 March 2023 / L'AMF rappelle l'application du régime pilote EU DLT à compter du 23 mars 2023

    CACEIS

  • On January 23rd 2023, the Autorité des marchés financiers (AMF) published a communication recalling the application of the EU DLT Pilot Regime from 23 March 2023.

    Following a Call for evidence published last year seeking feedback from stakeholders on the application of the EU’s financial legislation for DLT market infrastructures, the European Securities and Markets Authority (ESMA) issued a Report on the DLT Pilot Regime and compensatory measures on supervisory data in September 2022. It concluded that modifying the MiFIR regulatory technical standards on transparency and data reporting was not necessary. However, ESMA published some Q&As to provide clarification on the practical implementation of the Pilot Regime. This Q&A document may evolve in the future to cater for new questions.

    In its report, ESMA also makes recommendations in relation to compensatory measures that national competent authorities should request to ensure the integrity, completeness, consistency, usability and comparability of the supervisory data collected from DLT market infrastructures.

    The AMF also wishes to remind potential applicants that ESMA published a “Final report on guidelines on standard forms, formats and templates to apply for permission to operate a DLT Market Infrastructure” in December 2022. These guidelines contain such forms, formats and templates to be used by interested applicants who wish to submit an application, be they new entities or already established ones, as well as for those wishing to request exemptions under the applicable MiFID2/MiFIR and CSDR requirements.

    The AMF highly recommends that potential applicants take the English-version guidelines into consideration, whilst awaiting for official translations into European Union languages to be finalised, and reach out to the AMF should they wish to commence discussions on the Pilot regime.

    The AMF also wishes to provide a reminder that any information relating to an authorisation request to operate a DLT market infrastructure, or any exemption request in relation to the EU DLT Pilot Regime must be submitted on a durable medium. The AMF further recommends that such information be submitted electronically and preferably in English.

    The French Parliament is currently discussing a draft bill to amend France’s domestic legislation (“projet de loi portant diverses dispositions d’adaptation au droit de l’Union européenne dans les domaines de l’économie, de la santé, du travail, des transports et de l’agriculture“) in order to align it with the European Pilot Regime framework. It will also clarify the role of the French national competent authorities for the purposes of the application of the Pilot regime.

    Further, following recommendations made by the Haut Comité Juridique de Place (HCJP) published on 20 May 2022 on the review of digital securities (English version unavailable), France’s legal framework for DLT-registered securities is currently being adapted to fully cater to the needs of French DLT market infrastructures, and to make it more attractive for issuers of DLT financial instruments.

    Two categories of securities in French law will constitute financial instruments admitted to trading on a DLT market infrastructure for the purposes of the Pilot regime regulation: securities that are registered within a DLT pursuant to Order  n° 2017-1674 (the so-called “Blockchain Order”), and bearer securities registered within a DLT according to the provisions of the Pilot regime regulation.

    Finally, the draft bill currently being discussed will organise the attribution of roles among authorities at the French level – the Banque de France, the Autorité de contrôle prudentiel et de résolution (ACPR) and the AMF – concerning the three different types of regulated entities that can request the specific authorisations and exemptions under the Pilot Regime. The AMF will be the entry point for regulated markets (that seek to operate a DLT MTF) and central security depositaries, and the ACPR for investment firms.

    Version française

    Le 23 janvier 2023, l'Autorité des marchés financiers (AMF) a publié une communication rappelant l'application du régime pilote DLT de l'UE à compter du 23 mars 2023. À la suite d'un appel à contributions publié l'année dernière pour solliciter les commentaires des parties prenantes sur l'application de la législation financière de l'UE aux infrastructures de marché DLT, l'Autorité européenne des marchés financiers (ESMA) a publié en septembre un rapport sur le régime pilote DLT et les mesures compensatoires sur les données prudentielles 2022. Elle a conclu qu'il n'était pas nécessaire de modifier les normes techniques de réglementation MiFIR sur la transparence et la communication des données. Cependant, l'ESMA a publié quelques questions-réponses pour apporter des éclaircissements sur la mise en œuvre pratique du régime pilote. Ce document de questions-réponses peut évoluer à l'avenir pour répondre à de nouvelles questions. Dans son rapport, l'ESMA formule également des recommandations concernant les mesures compensatoires que les autorités nationales compétentes devraient demander pour garantir l'intégrité, l'exhaustivité, la cohérence, l'utilisabilité et la comparabilité des données de surveillance collectées auprès des infrastructures de marché DLT. L'AMF souhaite également rappeler aux candidats potentiels que l'ESMA a publié en décembre 2022 un « Rapport final sur les lignes directrices relatives aux formulaires, formats et modèles standard pour demander l'autorisation d'exploiter une infrastructure de marché DLT ». Ces lignes directrices contiennent de tels formulaires, formats et modèles à utilisé par les candidats intéressés qui souhaitent soumettre une candidature, qu'il s'agisse de nouvelles entités ou d'entités déjà établies, ainsi que pour ceux qui souhaitent demander des exemptions en vertu des exigences MiFID2/MiFIR et CSDR applicables. L'AMF recommande vivement aux candidats potentiels de prendre en considération les lignes directrices de la version anglaise, en attendant la finalisation des traductions officielles dans les langues de l'Union européenne, et de se rapprocher de l'AMF s'ils souhaitent engager des discussions sur le régime Pilote. L'AMF souhaite également rappeler que toute information relative à une demande d'autorisation d'exploitation d'une infrastructure de marché DLT, ou toute demande d'exemption relative au régime pilote DLT de l'UE doit être transmise sur un support durable. L'AMF recommande en outre que ces informations soient transmises par voie électronique et de préférence en anglais. Le Parlement français discute actuellement d'un projet de loi modifiant la législation nationale française ("projet de loi portant diverses dispositions d'adaptation au droit de l'Union européenne dans les domaines de l'économie, de la santé, du travail, des transports et de l'agriculture“) afin de l'aligner sur le cadre du régime pilote européen. Elle précisera également le rôle des autorités nationales compétentes françaises aux fins de l'application du régime Pilote. Par ailleurs, suite aux recommandations du Haut Comité Juridique de Place (HCJP) publiées le 20 mai 2022 sur la révision des titres numériques (version anglaise non disponible), le cadre juridique français des titres au nominatif pur est en cours d'adaptation pour répondre pleinement aux besoins des infrastructures du marché DLT français, et de le rendre plus attractif pour les émetteurs d'instruments financiers DLT. Deux catégories de valeurs mobilières constitueront en droit français des instruments financiers admis aux négociations sur une infrastructure de marché DLT pour l'application du Règlement du régime pilote : les valeurs mobilières inscrites au nominatif d'une DLT en application de l'ordonnance n° 2017-1674 (dite « Blockchain Ordre »), et titres au porteur inscrits au sein d'un DLT selon les dispositions du règlement Régime Pilote. Enfin, l'avant-projet de loi en cours de discussion organisera la répartition des rôles entre les autorités au niveau français - la Banque de France, l'Autorité de contrôle prudentiel et de résolution (ACPR) et l'AMF - concernant les trois différents types d'entités réglementées qui peuvent demander les autorisations et exemptions spécifiques dans le cadre du régime pilote. L'AMF sera le point d'entrée pour les marchés réglementés (qui souhaitent opérer un MTF DLT) et les dépositaires centraux de titres, et l'ACPR pour les entreprises d'investissement.

  • Sustainable Finance / Green Finance

    AMF proposes minimum environmental standards for financial products belonging to the Art.9 and 8 categories of SFDR / L'AMF propose des normes environnementales minimales pour les produits financiers appartenant aux catégories Art.9 et 8 du SFDR

    CACEIS

  • On February 13th 2023, the Autorité des marchés financiers (AMF) proposed the introduction of minimum environmental requirements in European law that must be met by financial products in order to be classified as Article 8 or Article 9 under the Sustainable Finance Disclosure Regulation (SFDR). The SFDR was designed by the EU co-legislators and the Commission as an Environmental, Social and Governance (ESG) transparency regime for financial entities and products. The regulation therefore requires financial market participants to publish information on their sustainability communications and practices. The SFDR does not impose minimum requirements and does not define the concept of sustainable investment. Consequently, the current Article 8 and Article 9 classification does not aim to assess the nature or extent of the manager's commitment to sustainability. The AMF notes, however, that the use of this categorisation by financial market participants may be misinterpreted by savers as a guarantee that they are participating in the financing of a more sustainable European economy. It therefore seems necessary to take new steps in order to avoid this ambiguity and to better meet the expectations of savers. It is desirable that the European Commission proposes to introduce minimum criteria concerning environmental impacts for financial products categorised under Article 8 or Article 9.  Such an initiative does not necessarily mean a reversal of the broader ambition of the transparency regime which covers all of the ESG criteria. As a first step, and given the European sustainable finance agenda, it could be targeted at the environmental dimension. Drawing on existing market practices and regulations, the AMF makes the following recommendations, which could be implemented very quickly in European law and would be a useful addition to the current regulatory framework:

    • Minimum environmental criteria should be established for the classification of products as Article 9 or Article 8. - Compliance with these criteria would be subject to national supervision. The criteria for Article 9 should continue to be more stringent than those for Article 8.
    • A minimum proportion of portfolio assets for Article 9 funds should consist of investments aligned with the Taxonomy. This percentage could increase over time as the European economy advances towards sustainability.
    • Financial market participants that manage Article 8 and 9 funds should adopt a binding ESG approach in their investment decision-making process. The EU framework for minimum criteria should identify a set of acceptable ESG approaches that can be implemented by financial players.
    • Article 9 funds should exclude investments in fossil fuel activities that are not aligned with the European Taxonomy. Investment in such activities would be possible for Article 8 products provided that they meet strict conditions that ensure that these activities are engaged in an orderly transition. 

    In a more exploratory approach, the AMF also proposes to introduce the concept of transition and engagement policies.  It has identified possible avenues for a quantitative definition of assets in transition.

    Version française

    Le 13 février 2023, l'Autorité des marchés financiers (AMF) a proposé l'introduction d'exigences environnementales minimales dans le droit européen auxquelles doivent satisfaire les produits financiers pour être classés à l'article 8 ou à l'article 9 au titre du règlement sur la divulgation en matière de finance durable (SFDR). Le SFDR a été conçu par les colégislateurs de l'UE et la Commission comme un régime de transparence environnementale, sociale et de gouvernance (ESG) pour les entités et les produits financiers. Le règlement impose donc aux acteurs des marchés financiers de publier des informations sur leurs communications et pratiques en matière de développement durable. Le SFDR n'impose pas d'exigences minimales et ne définit pas la notion d'investissement durable. Par conséquent, la classification actuelle des articles 8 et 9 ne vise pas à évaluer la nature ou l'étendue de l'engagement du gestionnaire en matière de durabilité. L'AMF note toutefois que l'utilisation de cette catégorisation par les acteurs des marchés financiers peut être interprétée à tort par les épargnants comme une garantie qu'ils participent au financement d'une économie européenne plus durable. Il apparaît donc nécessaire de prendre de nouvelles mesures afin de lever cette ambiguïté et de mieux répondre aux attentes des épargnants. Il est souhaitable que la Commission européenne propose d'introduire des critères minimaux concernant les impacts environnementaux pour les produits financiers relevant de l'article 8 ou de l'article 9. Une telle initiative ne signifie pas nécessairement un renversement de l'ambition plus large du régime de transparence qui couvre l'ensemble des critères ESG. Dans un premier temps, et compte tenu de l'agenda européenne de la finance durable, il pourrait être ciblé sur la dimension environnementale. S'appuyant sur les pratiques de marché et la réglementation existantes, l'AMF formule les recommandations suivantes, qui pourraient être transposées très rapidement en droit européen et compléteraient utilement le cadre réglementaire actuel :

    • Des critères environnementaux minimaux pour la classification des produits en tant qu'article 9 ou article 8; le respect de ces critères étant soumis à un contrôle national et les critères de l'article 9 continuant à être plus stricts que ceux de l'article 8.
    • Une proportion minimale des actifs du portefeuille des fonds relevant de l'article 9 doit être constituée d'investissements alignés sur la taxonomie. Ce pourcentage pourrait augmenter au fil du temps à mesure que l'économie européenne progresse vers la durabilité.
    • Les acteurs des marchés financiers qui gèrent les fonds des articles 8 et 9 devraient adopter une approche ESG contraignante dans leur processus décisionnel d'investissement. Le cadre de l'UE pour les critères minimaux devrait identifier un ensemble d'approches ESG acceptables pouvant être mises en œuvre par les acteurs financiers.
    • Les fonds de l'article 9 devraient exclure les investissements dans les activités liées aux combustibles fossiles qui ne sont pas alignées sur la taxonomie européenne. L'investissement dans de telles activités serait possible pour les produits de l'article 8 à condition qu'ils remplissent des conditions strictes garantissant que ces activités sont engagées dans une transition ordonnée.

    Dans une démarche plus exploratoire, l'AMF propose également d'introduire la notion de politiques de transition et d'engagement, en identifiant des pistes possibles pour une définition quantitative des actifs en transition.

  • AFG responds to ESMA's Consultation on its draft guidelines on the ESG naming of funds / L'AFG répond à la consultation de l'ESMA sur son projet de lignes directrices sur le naming ESG des fonds

    CACEIS

  • On February 16th 2023, the Association Française de Gestion (AFG) responded to ESMA's consultation on its draft guidelines on the ESG naming of funds. At the end of November, ESMA launched a consultation on draft guidelines on the use of the terms "ESG" and "sustainable" in fund designations. ESMA wishes to introduce constraints to allow communication in the naming of funds with ESG terms, sustainable terms or derivatives of these terms. ESMA expects to publish its final guidelines in Q2 or Q3 2023, for application 3 months after publication. A transition period will be provided for existing funds. The AFG responded to the consultation by highlighting the following points:

    • Questions about the timing of this initiative, which could come up against other initiatives and publications (response of the European Commission to the responses of ESAs, consultations of ESAs on greenwashing...). And in this context, the need for the guidelines to be aligned and integrated into this future European work.
    • It is recalled that the introduction of "thresholds" on elements that are not or poorly defined ("sustainable investment" in particular) could have an impact on the development of the sustainable finance market. In this context, the need for clarification on various elements.
    • The use of these thresholds could also be confusing: investors may not have a different view of the terms "ESG" and "sustainable", as MiFID sustainability preferences also refer to the term "sustainable" (without necessarily linking it to sustainable investing in the sense of SFDR).
    • The AFG also comments more precisely on ESMA's proposals and proposes alternatives (on the different thresholds, on derivatives or on impact).

    Version française

    Le 16 février 2023, l'Association Française de Gestion (AFG) a répondu à la consultation de l'ESMA sur son projet de lignes directrices sur le designation ESG des fonds. Fin novembre, l'ESMA a lancé une consultation sur un projet de lignes directrices sur l'utilisation des termes « ESG » et « durable » dans les désignations de fonds. L'ESMA souhaite introduire des contraintes pour permettre la communication dans le nommage des fonds avec des termes ESG, des termes durables ou des dérivés de ces termes. L'ESMA prévoit de publier ses lignes directrices finales au T2 ou au T3 2023, pour une application de 3 mois après la publication. Une période de transition sera prévue pour les fonds existants. L'AFG a répondu à la consultation en soulignant les points suivants :

    a) Interrogations sur le timing de cette initiative, qui pourrait se heurter à d'autres initiatives et publications (réponse de la Commission européenne aux réponses des AES, consultations des AES sur le greenwashing...). Et dans ce contexte, la nécessité d'aligner et d'intégrer les lignes directrices dans ce futur travail européen;

    b) Il est rappelé que l'introduction de « seuils » sur des éléments non ou mal définis (« investissement durable » notamment) pourrait avoir un impact sur le développement du marché de la finance durable. Dans ce contexte, le besoin de clarification sur divers éléments est fort;

    c) L'utilisation de ces seuils peut également prêter à confusion : les investisseurs peuvent ne pas avoir une vision différente des termes « ESG » et « durable », car les préférences de durabilité MiFID font également référence au terme « durable » (sans nécessairement le lier à l'investissement durable dans sens de SFDR);

    d) L'AFG commente également plus précisément les propositions de l'ESMA et propose des alternatives (sur les différents seuils, sur les dérivés ou sur l'impact).

  • AMAFI responds to ESMA's consultation on Guidelines on funds' names using ESG / L'AMAFI répond à la consultation de l'ESMA sur les lignes directrices sur les noms de fonds utilisant l'ESG

    CACEIS

  • On February 27th 2023, the AMAFI (Association Française des Marchés Financiers) responded to the ESMA Consultation Paper on Guidelines on funds' names using ESG.

    AMAFI welcomes the opportunity to answer ESMA’s consultation paper on Guidelines on funds’ names using ESG or sustainability related terms. Although AMAFI is not an association representing the fund industry, it takes the opportunity to respond to this consultation paper since it represents firms who work closely with asset managers and because it is involved in different initiatives regarding sustainable finance. Particularly, we are currently working on two initiatives: 

    • The development of a professional standard for ESG structured products,
    • The treatment of derivatives in the sustainable finance regulation and more specifically how they should be accounted for in Taxonomy alignment ratios. 

    The treatment of derivatives is a topical matter which raises many questions as stated during the Open Hearing of the consultation and for which regulatory guidance is needed. AMAFI has been working for several months to clarify the role of derivatives in sustainable finance, starting with a paper explaining their main usage overall in the economy (AMAFI / 21-47). The AMAFI also had the opportunity to provide comments on this matter to the European Union Platform on Sustainable Finance (PSF) in relation to its work on how to account for them in the Taxonomy GAR (AMAFI / 22-37). Currently, it is working on a methodology for the treatment of derivatives in the Taxonomy. 

    Some of the provisions of this consultation echo industry discussions at AMAFI. As such, the AMAFI will focus on questions 6, 7 and 9 of the proposed Guidelines.

    Version française

    Le 27 février 2023, l'AMAFI (Association Française des Marchés Financiers) a répondu au document de consultation de l'ESMA sur les lignes directrices sur les noms de fonds utilisant l'ESG.

    L'AMAFI se félicite de l'opportunité de répondre au document de consultation de l'ESMA sur les lignes directrices sur les noms de fonds utilisant des termes liés à l'ESG ou à la durabilité. Bien que l'AMAFI ne soit pas une association représentative de l'industrie des fonds, elle saisit l'occasion pour répondre à cette note de consultation car elle représente des entreprises qui travaillent en étroite collaboration avec les sociétés de gestion et parce qu'elle est impliquée dans différentes initiatives en matière de finance durable. En particulier, elle travaille actuellement sur deux initiatives :

    • l'élaboration d'une norme professionnelle pour les produits structurés ESG,
    • le traitement des dérivés dans la réglementation de la finance durable et plus précisément la manière dont ils doivent être comptabilisés dans les ratios d'alignement de la taxonomie.

    Le traitement des produits dérivés est un sujet d'actualité qui soulève de nombreuses questions comme indiqué lors de l'audience publique de la consultation et pour laquelle des orientations réglementaires sont nécessaires. L'AMAFI travaille depuis plusieurs mois à clarifier le rôle des dérivés dans la finance durable, en commençant par une note expliquant leurs principaux usages en général dans l'économie (AMAFI/21-47). L'AMAFI a également eu l'occasion d'apporter des commentaires à ce sujet à la Plateforme de l'Union Européenne sur la Finance Durable (PSF) dans le cadre de ses travaux sur leur prise en compte dans la Taxonomie GAR (AMAFI/22-37). Actuellement, elle travaille sur une méthodologie pour le traitement des produits dérivés dans la taxonomie.

    Certaines dispositions de cette consultation font écho aux discussions sur l'industrie chez AMAFI. A ce titre, l'AMAFI se concentrera sur les questions 6, 7 et 9 des lignes directrices proposées.

  • GERMANY

    Alternative investment fund managers Directive (AIFMD)

    BVI publishes ECON Final Report on AIFMD Review

    CACEIS

  • On February 3rd 2023, the Bundesverband Investment und Asset Management e.V. (BVI) published ECON Final Report on AIFMD Review.

    The BVI published the Committee on Economic and Monetary Affairs (ECON) of the EU Parliament final report on the AIFMD review including changes to the UCITS directive. In comparison to that of the EU Commission, this already contains the end 2021 and the amendments proposed by the Council last summer new content, especially in the areas of investor protection and sustainability:

    • ECON emphasizes the principle of honest and fair investor treatment in relation to the amount and reasonableness of costs and fees, which should be examined in more detail by ESMA. The differences in costs between private and institutional investors.
    • For activities outsourced outside of collective asset management, a stricter standard of liability towards customers apply.
    • When granting permission, the fund company must prove that it also can comply with the requirements of the EU Disclosure Regulation (SFDR).
    • Fund companies should include ESG risks and sustainability goals and take into account the remuneration principles of the employees.
    • ESMA should be empowered to set regulatory technical standards in relation to an appropriate naming the funds.
    • The white-label business should be more strongly valued and compared to conflict of interest management be reported to the competent supervisory authorities.

    Other significant proposed changes relate to the use of liquidity management tools, regular reporting with new detailed content, the management of loan funds (“loan-originating AIFs”) and the provision of custody services outside of the country of domicile.

  • Directive on the protection of persons who report breaches of Union law (Whistleblowers Directive)

    Deutsche Bundestag rejects proposed text of the Whistleblowers Law

    CACEIS

  • On February 16th 2023, the Deutsche Bundestag rejected a proposed text of the Whistleblowers Law.

    The proposal refers to the Act on better protection of whistleblowers and on the implementation of the Directive on the protection of persons reporting on breaches of Union law.

    In its 1030th session on February 10, 2023, the Federal Council decided to in accordance with the law passed by the German Bundestag on December 16, 2022 Article 74 paragraph 2 i. V. m. paragraph 1 number 27 and Article 80 paragraph 2 not agree to the Basic Law.

  • Liquidity

    BVI publishes Position on Draft BaFin Circular on criteria for exemption from liquidity requirements pursuant to Art. 43(1)(2) of Regulation (EU) 2019/2033 (IFR)

    CACEIS

  • On February 10th 2023, the Bunderverband Investment und Asset Management e.V. (BVI) published its position on the Draft BaFin Circular on the criteria for exemption from liquidity requirements pursuant to Art. 43(1)(2) of Regulation (EU) 2019/2033 (IFR) (Business reference: WA 44-FR 44146-2022/0001).

    According to Art. 43(1)(2) IFR, the competent authorities can exempt small securities institutions from holding liquid assets in the amount of at least one third of the fixed costs. With the present in a draft circular, BaFin sets the guidelines of the EBA on such exceptions from the Liquidity requirements according to Art. 43(4) IFR. In it, the EBA has already specified which services provided by securities institutions can lead to a liquidity risk. On this basis should the competent authorities identify those investment institutions which, because of the services they provide, are not exempted from the liquidity requirements of the IFR or a should receive exemption.

    BaFin has already declared to the EBA that it will follow these guidelines in the form of a circular wanting to come by the end of February 2023. We therefore welcome the implementation of the EBA guidelines in a circular. However, the present draft does not yet achieve the goal of a 1:1 implementation comprehensively fair. We see deviations from the EBA guidelines under section A, number 3) of the Draft of a BaFin circular on liquidity risks. We therefore ask for a corresponding Adaptation to the requirements of the EBA guidelines.

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

    BaFin publishes Circular on IFs exemption from liquidity requirements

    CACEIS

  • On February 28th 2023, the Federal Financial Supervisory Authority (BaFin) published Circular on exemption from liquidity requirements for investment institutions.

    An exemption under Article 43(1)(2) IFR will only be granted to an investment institution on an individual basis. The Federal Institute takes all relevant information into account when making its decision. In addition to the other information provided by the applicant, information from 

    a) the regulatory reporting system, 

    b) accounting and financial reporting, 

    c) the internal accounting system of the securities institution, 

    d) the institution's internal process to ensure adequate liquidity, 

    e) the institution's internal process to ensure adequate capital resources, 

    f) the resolution plans, if available, 

    g) a monthly statement of the cash inflows and outflows for the last two calendar years and the current year and a monthly forecast for the remainder of the current year and the two future calendar years. 

    BaFin makes its decision based on whether the funds that would be required for the orderly resolution or restructuring can be exempted from the liquidity requirements. BaFin also takes into account stress conditions that can lead to an increased risk of mismatches between outflows and inflows, in particular in connection with off-balance sheet items or legal costs. 

    The notice of exemption should be provided with conditions and a right of revocation. In particular, the obligation of the securities institution to inform the Federal Financial Supervisory Authority and the competent central administration of the Deutsche Bundesbank about all circumstances of their activities that could be relevant to the liquidity situation of the institution can be considered as a condition. A revocation is particularly possible when the criteria that justified the exemption are no longer met or if BaFin considers compliance with the liquidity requirement of Article 43 paragraph 1 subparagraph 1 IFR to be necessary due to a potential future need for liquidity. In the event of a revocation, BaFin can determine the point in time from which the securities institution must again comply with the liquidity requirement. This point in time must not be more than 90 days after notification of the revocation.

  • Whistleblower protection

    BaFin publishes FAQs on Whislteblowing

    CACEIS

  • On February 13th, the Federal Financial Supervisory Authority (BaFin) has issued FAQs on Whistleblowing advising on the whistleblower reporting process.

    More specifically:

    After receiving the information reported, a confirmation of receipt with reference number is sent. The information is forwarded to the colleagues at BaFin responsible for the particular specialist field and might also be forwarded to other authorities in charge.

    The information can be reported to BaFin’s Contact Point for Whistleblowers using the electronic whistleblowing system, by post, e-mail, telephone or in person.

    Upon report of the information, a confirmation from the team members of the Contact Point for Whistleblowers is sent.

    Team members of the Contact Point for Whistleblowers are not in a position to:

    • Intervene in private civil law disputes
    • Ensure that money inappropriately or fraudulently invested is returned
    • Answer general questions, i.e. is this a trustworthy product? What are the risks associated with this investment?

    In case of questions on reporting information or identity protection, team members of the Contact Point for Whistleblowers should be contacted.

    The Contact Point for Whistleblowers does not answer enquiries which are not related to topics concerning the procedure for reporting information, the various possibilities of accessing the Contact Point for Whistleblowers and whistleblower protection.

    Persons who can turn to the Contact Point for Whistleblowers are those who have gained knowledge of irregularities at a company and wish to draw the attention to these irregularities.

    Legal provisions can be found on  the establishment of a Contact Point for Whistleblowers and the protection offered to whistleblowers in section 4d of the German Act Establishing the Federal Financial Supervisory Authority (Finanzdienstleistungsaufsichtsgesetz – FinDAG), section 53 of the German Money Laundering Act (Geldwäschegesetz – GwG) and the BaFin Whistleblower Regulation (BaFin-Hinweisgeberverordnung - BaFinHwgebV).

    The information can be reported anonymously on IT-based whistleblowing system.

    It is technically impossible to trace the source information reported on an electronic whistleblowing system. Information can also be reported anonymously by post, telephone or in person.

    The team members of BaFin’s Contact Point for Whistleblowers check out every lead they receive.

    The Contact Point for Whistleblowers is not responsible for complaints and enquiries  from customers of a bank or insurance company who have a personal issue in connection with this business relationship or wish to complain about insurance or loan agreements to BaFin.

  • HONG KONG

    Governance

    HKMA publishes Notice under ss.169 and 399 of SFO publishing amendments to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct)

    CACEIS

  • On February 24th 2023, the Hong Kong Monetary Authority (HKMA) published Notice under ss.169 and 399 of SFO publishing amendments to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct).

    The Notice contains information on:

    • Investor identification: on-exchange orders and off-exchange trades reportable to Stock Exchange of Hong Kong (SEHK). It will become effective on 20 March 2023.
    • Reporting of OTC securities transactions. It will become effective on 25 September 2023.
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    HKMA publishes Circular on observations from review of selling processes of investment products

    CACEIS

  • On February 27th 2023, the Hong Kong Monetary Authority (HKMA) published Circular on observations from review of selling processes of investment products.

    The HKMA has been maintaining dialogues with the industry on supervision and compliance practices to ensure Balanced and Responsive Supervision (BRS). In view of market developments and industry feedbacks, the HKMA has streamlined a number of investor protection measures and provided guidance on flexibility allowed in the selling processes over the past few years, with a view to bringing about enhancement in customer experience while according customer protection. Notwithstanding this, the HKMA has heard feedback from various stakeholders about lengthy selling processes of investment products.

    Against this backdrop, the HKMA has conducted a review on the selling processes of investment products of selected registered institutions (RIs) covering both retail banks and private banks. From the review, the HKMA has noted some misunderstandings of RIs on the regulatory standards that may have lengthened their investment product selling processes. In line with the BRS approach, this circular shares observations noted from the review, alongside the relevant regulatory standards, including the flexibility already allowed, on product risk disclosure, assessment of customer’s investment horizon and concentration risk, execution-only transactions and audio-recording of the selling processes. Key observations are exhibited in the Annex.

    RIs have the flexibility to design their own investment product selling processes having regard to their business strategies, risk management and controls, so long as such selling processes are in compliance with the applicable requirements and expected standards. It is hoped that by sharing these observations and providing clarifications, this circular can enhance understanding of the applicable requirements and standards expected of RIs. RIs are encouraged to review their policies, procedures and practices in light of these observations, and design proper and reasonable measures and controls so that the selling processes can be streamlined as appropriate and that customer experience can be enhanced while according protection to customers. RIs are also reminded to provide adequate training and support to staff for the implementation of the measures and controls.

  • IRELAND

    COVID-19 Regulatory Measures

    CBI updates Regulatory flexibility for Securities Markets, Investment Management, Investment Firms and Fund Service Providers in light of COVID-19

    CACEIS

  • On February 28th 2023, the Central Bank of Ireland (CBI) updated the Regulatory Flexibility for Securities Markets, Investment Management, Investment Firms and Fund Service Providers in light of COVID-19.

    During 2020, in recognition of the challenges faced by firms and market participants as a result of the COVID-19 crisis, the Central Bank allowed flexibilities for regulated firms in specified areas, including the suspension of certain due diligence arrangements and periodic on-site visits to outsourcing providers and delegates by fund service providers.

    Many of these measures have now expired under their own terms and, with the lifting of COVID-19 restrictions, the Central Bank no longer considers the remaining flexibility to be necessary.

    As of 28 February 2023, the Central Bank has confirmed that providers and delegates by fund service providers should resume in accordance with the relevant requirements.

    The Central Bank will allow flexibility as regards the deadlines for the submission of each of the “Return Types” listed in Table A for each of the corresponding “Regulated Entity Types” and “Applicable Periods”.

  • Regulation on Sustainability-Related Disclosures in the Financial Services Sector (SDR)

    CBI issues Process clarifications for UCITS and AIFs pre-contractual documentation updates in relation to the Commission Delegated Regulation (EU) 2023/363

    CACEIS

  • On February 20th 2023, the Central Bank of Ireland (CBI) issued Process clarifications for UCITS and AIFs pre-contractual documentation updates in relation to the Commission Delegated Regulation (EU) 2023/363.

    The Central Bank has established a streamlined filing process for pre-contractual document updates based on the revised requirements within the Commission Delegated Regulation (EU) 2023/363 as regards the content and presentation of information in relation to disclosures in pre-contractual documents and periodic reports for financial products investing in environmentally sustainable economic activities.

  • LUXEMBOURG

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

    Chambre des députés publishes artice on the new law on the register of beneficial owners / La Chambre des députés publie un article sur la nouvelle loi du registre des bénéficiaires effectifs

    CACEIS

  • On February 1st 2023, the Chambre des députés published an artice titled "towards a new law on the register of beneficial owners".

    Justice Minister Sam Tanson confirmed to MPs, meeting on 1 February in the Committee on Justice, that the drafting of a new law concerning the register of beneficial owners was underway.

    This is to comply with the judgment of the Court of Justice of the European Union (CJEU) of 22 November 2022. It should be recalled that the judgment stipulates that public access to the register of beneficial owners – as it was in force until the Court's judgment – does not respect the Charter of Fundamental Rights of the European Union and more specifically the fundamental right to respect for private life (Article 7) and the protection of personal data (Article 8).

    Version française

    Le 1er février 2023, la Chambre des députés a publié un article intitulé "vers une nouvelle loi sur le registre des bénéficiaires effectifs".

    Le ministre de la justice, Sam Tanson, a confirmé aux députés, réunis le 1er février au commité de la justice, que la rédaction d'une nouvelle loi concernant le registre des bénéficiaires effectifs était en cours.

    Il s'agit de se conformer à l'arrêt de la Cour de justice de l'Union européenne (CJUE) du 22 novembre 2022. Il convient de rappeler que l'arrêt stipule que l'accès du public au registre des bénéficiaires effectifs - tel qu'il était en vigueur jusqu'à la décision de la Cour – ne respecte pas la Charte des droits fondamentaux de l'Union européenne et plus particulièrement le droit fondamental au respect à la vie privée (article 7) et à la protection des données personnelles (article 8).

  • CSSF publishes Circular Letter announcing the launch of the 2022 Financial Crime Questionnaire / La CSSF publie une Lettre Circulaire annonçant le lancement du Questionnaire de crimes financiers pour 2022

    CACEIS

  • On January 7th 2023, Commission de Surveillance du secteur financier (CSSF) published Circular Letter announcing the launch of the 2022 Financial Crime Questionnaire.

    According to the Circular Letter, the annual online questionnaire for the year 2022 collecting standardized key information concerning money laundering and terrorism financing (ML/TF) risks to which the professionals under supervision are exposed and the implementation of related risk mitigation and targeted financial sanctions  measures was launched on 15 February 2023. 

    Answers to the questions will have to be submitted through the CSSF eDesk Portal by 31 March 2023 (at the latest).

    Version française

    Le 7 janvier 2023, la Commission de Surveillance du secteur financier (CSSF) a publié une lettre circulaire annonçant le lancement du Financial Crime Questionnaire 2022. Selon la Lettre circulaire, le questionnaire annuel en ligne pour l'année 2022 recueillant des informations clés standardisées concernant les risques de blanchiment de capitaux et de financement du terrorisme (BC/FT) auxquels les professionnels sous surveillance sont exposés et la mise en œuvre des mesures d'atténuation des risques et des sanctions financières ciblées associées sera lancé le 15 février 2023. Les réponses aux questions devront être soumises via le portail CSSF eDesk avant le 31 mars 2023 (au plus tard).

  • Cybersecurity

    CSSF publishes an important cybersecurity alert / La CSSF publie une importante alerte de cybersécurité

    CACEIS

  • On February 24th 2023, the Commission de Surveillance du secteur financier (CSSF) published a warning on unpatched Microsoft exchange vulnerabilities.

    The Luxembourg House of Cybersecurity informed the CSSF of an important cyber-security alert that has been issued by CIRCL, the Computer Incident Center Luxembourg. CIRCL published a Technical Report 72 ‘Vulnerable Microsoft Exchange server metrics leading to alarming situation’.

    CIRCL identified a significant number of Microsoft Exchange servers (533 in total) that are left unmaintained when it comes to patching them with the latest security updates.

    What are the risks for your organisation?

    •  a potential compromise of the server
    •  accessing of private, confidential and/or business related data by third parties
    •  unwanted modification or deletion of data
    •  exfiltration of data
    •  lateral movement and infection of other parts of the infrastructure
    •  financial loss through blackmailing
    •  productivity and financial loss by re-installing the infrastructure
    •  reputation loss

    What can you do as an organisation?

    •  If you’re running your own infrastructure: manually check if the currently running version is the most recent, if not, apply upgrades.
    •  If you have a service provider that is supposed to take care about the security updates: ask them to report the installed version and the most recent version available. If there’s a discrepancy, insist on the upgrade. Ask for monthly status, review current contracts if necessary.

    Version française

    Le 24 février 2023, la Commission de Surveillance du secteur financier (CSSF) a publié un avertissement sur les vulnérabilités Microsoft Exchange non corrigées.

    La Luxembourg House of Cybersecurity a informé la CSSF d'une importante alerte de cybersécurité émise par le CIRCL, le Computer Incident Center Luxembourg qui a publié un rapport technique 72 « Des mesures de serveur Microsoft Exchange vulnérables menant à une situation alarmante ».

    CIRCL a identifié un nombre important de serveurs Microsoft Exchange (533 au total) qui ne sont pas maintenus lorsqu'il s'agit de les corriger avec les dernières mises à jour de sécurité.

    Quels sont les risques pour votre organisation ?

    •  une potentielle compromission du serveur
    •  l'accès à des données privées, confidentielles et/ou commerciales par des tiers
    •  modification ou suppression non désirée de données
    •  exfiltration de données
    •  mouvement latéral et infection d'autres parties de l'infrastructure
    •  perte financière par chantage
    • perte de productivité et financière en réinstallant l'infrastructure
    • perte de réputation

    Que pouvez-vous faire en tant qu'organisation ?

    •  Si vous utilisez votre propre infrastructure : vérifiez manuellement si la version d'exécution en cours  est la plus récente, sinon appliquez les mises à niveau.
    •  Si vous avez un fournisseur de services censé s'occuper des mises à jour de sécurité : demandez-lui de signaler la version installée et la version la plus récente disponible. S'il y a une différence, insistez pour la mise à niveau. Demandez le statut mensuel, passez en revue les contrats en cours si nécessaire.
  • European Market Infrastructure Regulation (EMIR)

    ABBL publishes its views on the impacts of EMIR review proposal / L'ABBL publie son point de vue sur les impacts de la proposition de révision d'EMIR

    CACEIS

  • On February 2023, Association des Banques et Banquiers, Luxembourg (ABBL) published its views on the impacts of EMIR review proposal.

    3 impacts have been identified by ABBL:

    Impact 1: active accounts

    The new obligation for banks (financial counterparties):

    • to have directly or indirectly an active account with an EU CCP
    • to clear at least part of the transactions on derivatives subject to the clearing obligation in this EU CCP.

    The ESAs will determine, through a regulatory technical standard (RTS), the proportion of derivatives to be cleared via active accounts.

    Impact 2 : reporting requirement

    Another impacting point will be the reporting requirements for clearing members and clients established in the EU, or part of a group, subject to consolidated supervision in the EU and clearing in a recognised third country CCP. They will have to report to their national competent authority on the scope of their clearing activity in such CCP. This reporting will be set by regulatory technical standards and developed by the ESAs.

    As a result, it will be necessary to assess and implement the report requirements and the expansion of the scope of data to be captured, which will increase costs for financial counterparties.

    impact 3 : CRD

    Amendements to the CRD have been proposed with the aim at monitoring banks' concentration risks towards third country CCPs, which would empower competent authorities to require the reduction of banks exposures towards such CCPs.

    Among others, this topic is addressed in the Working Group "Market Infrastructures" and related to the Financial Markets and Intermediation Committee (FMIC).

    Version française

    En février 2023, l'Association des Banques et Banquiers, Luxembourg (ABBL) a publié son point de vue sur les impacts de la proposition de révision EMIR. 3 impacts ont été identifiés par l'ABBL.

    Impact 1 : comptes actifs

    La nouvelle obligation pour les banques (contreparties financières) :

    a) avoir directement ou indirectement un compte actif auprès d'une contrepartie centrale de l'UE,

    b) compenser au moins une partie des transactions sur dérivés soumises à l'obligation de compensation dans cette contrepartie centrale de l'UE. Les AES détermineront, par le biais d'une norme technique de réglementation (RTS) la proportion de dérivés à compenser via des comptes actifs.

    Impact 2 : obligation de déclaration

    Un autre point impactant sera les exigences de déclaration pour les membres compensateurs et les clients établis dans l'UE, ou faisant partie d'un groupe, soumis à une surveillance consolidée dans l'UE et compensés dans une contrepartie centrale de pays tiers reconnue. Ils devront communiquer à leur autorité nationale compétente l'étendue de leur activité de compensation dans cette contrepartie centrale. Ce reporting sera fixé par des normes techniques réglementaires et développés par les AES. En conséquence, il sera nécessaire d'évaluer et de mettre en œuvre les exigences de déclaration et l'élargissement du périmètre des données à capturer, ce qui augmentera les coûts pour les contreparties financières.

    Impact 3 : CRD

    Des amendements à la CRD ont été proposés dans le but de surveiller les risques de concentration des banques envers les contreparties centrales de pays tiers, ce qui donnerait aux autorités compétentes le pouvoir d'exiger la réduction des expositions des banques envers ces contreparties centrales. Entre autres, ce sujet est traité dans le groupe de travail "Infrastructures de marché" et est lié au Comité des marchés financiers et de l'intermédiation (FMIC).

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

    ALFI publishes a statement on on upcoming trilogue negotiations concerning the AIFMD review / L'ALFI publie une déclaration sur les prochaines négociations en trilogue concernant la révision de l'AIFMD

    CACEIS

  • On February 14th 2023, the Association of the Luxembourg Fund Industry (ALFI) published a statement on upcoming trialogue negotiations concerning the AIFMD review. The following sections summarize the Luxembourg fund industry’s view on key aspects under review:

    • Delegation: ALFI believes that delegation needs could be addressed by expanding the information required as per the managers’ authorisation application file, supplemented by an obligation to notify material changes to the NCA. This would be preferable over complexifying again reporting requirements.
    • Liquidity Management Tools (LMTs): ALFI is convinced that LMTs should be available in all EU Members States, as suggested by the EU institutions. Given that the characteristics and use of LMTs are diverse and stress situations vary in terms of length or intensity, a maximum of liberty should be granted to the AIFM or UCITS management company to decide whether an LMT should be (de-)activated.
    • Loan-originating AIFs: Imposing a cap on leverage would limit the ability to hedge risks via derivatives. A qualitative limit, based on the AIFM’s assessment and responsibility, would better address the various risks at stake.
    • Depositaries: in ALFI’s opinion a passport for depositaries would add new risks of overlapping existing rules to be complied with by industry players which are already subject to a high level of regulatory scrutiny. The depositary in the home country is a stable and valuable point of contact for the regulator, who helps the proper implementation of the AIFMD’s requirements and thereby protects investors.

    Version française

    Le 14 février 2023, l'Association luxembourgeoise de l'industrie des fonds d'investissement (ALFI) a publié une déclaration sur les prochaines négociations en trilogue concernant la révision de l'AIFMD. Les sections suivantes résument le point de vue de l'industrie luxembourgeoise des fonds sur les principaux aspects examinés :

    • Délégation : l'ALFI estime que les besoins de délégation pourraient être satisfaits en élargissant les informations requises conformément au dossier de demande d’habilitation des gérants, complété par une obligation de notification des changements significatifs à l'ANC. Cela serait préférable plutôt que de complexifier à nouveau les exigences en matière de rapports.
    • Outils de gestion de la liquidité (LMT) : L'ALFI est convaincue que les LMT devraient être disponibles dans tous les États membres de l'UE, comme le suggèrent les institutions de l'UE. Étant donné que les caractéristiques et l'utilisation des LMT sont diverses et que les situations de stress varient en termes de durée ou d'intensité, un maximum de liberté devrait être laissé au gestionnaire de FIA ??ou d'OPCVM pour décider si un LMT doit être (dés)activé.
    • FIA originant des prêts : imposer un plafond à l'effet de levier limiterait la capacité à couvrir les risques via des dérivés. A la limite qualitative, sur la base de l'évaluation et de la responsabilité de l'AIFM, permettrait de mieux répondre aux différents risques en jeu.
    • Dépositaires : selon l'ALFI, un passeport pour les dépositaires ajouterait de nouveaux risques de chevauchement des règles existantes à respecter par les acteurs de l'industrie qui sont déjà soumis à un niveau élevé de contrôle réglementaire. Le dépositaire dans le pays d'origine est un point de contact stable et précieux pour le régulateur, qui aide à la bonne mise en œuvre des exigences de l'AIFMD et protège ainsi les investisseurs.
  • ALFI responds to ESMA Consultation on Guidelines on funds’ names using ESG or sustainability-related terms / L'ALFI répond à la consultation de l'ESMA sur les lignes directrices des noms de fonds utilisant des termes ESG ou liés à la durabilité

    CACEIS

  • On February 20th 2023, the Association of the Luxembourg Fund Industry (ALFI) responded to the ESMA consultation regarding Guidelines on funds’ names using ESG or sustainability-related terms. In its response, ALFI agrees that it is of utmost importance to protect investors against unsubstantiated or exaggerated sustainability claims and to have harmonized requirements to achieve this goal. However, ALFI also articulated some concerns regarding the approach suggested by ESMA, in particular regarding the underlying terminology, the way to construct the threshold mechanism, the timing and the scope of the proposed guidelines. ALFI proposed as an alternative solution to focus on requiring clear demonstration of the underlying methodologies and the binding elements of the fund’s investment strategy.

    Version française

    Le 20 février 2023, l'Association luxembourgeoise de l'industrie des fonds d'investissement (ALFI) a répondu à la consultation de l'ESMA concernant les lignes directrices sur les noms de fonds utilisant des termes ESG ou liés à la durabilité. Dans sa réponse, l'ALFI convient qu'il est de la plus haute importance de protéger les investisseurs contre les allégations de durabilité non fondées ou exagérées et d'avoir des exigences harmonisées pour atteindre cet objectif. Cependant, l'ALFI a également exprimé certaines préoccupations concernant l'approche suggérée par l'ESMA, en particulier concernant la terminologie sous-jacente, la manière de construire le mécanisme de seuil, le calendrier et la portée des lignes directrices proposées. L'ALFI a proposé comme solution alternative de se concentrer sur l'exigence d'une démonstration claire des méthodologies sous-jacentes et des éléments contraignants de la stratégie d'investissement du fonds.

  • CSSF updates form for any notification of branch establishment and amendments to the information included / La CSSF met à jour le formulaire pour toute notification sur l'établissement d'une succursale et les modifications des informations incluses

    CACEIS

  • On February 21st 2023, the Commission de Surveillance du secteur financier (CSSF) updated the form for any notification regarding branch establishment and amendments to the information included in such a notification (21.02.2023).

    The form concerns investment fund managers (AIFM, Chapter 15, Chapter 16) and covers:

    • Branch details 
    • Activities
    • Programme operations
    • Information on EEA funds to be managed

    Version française

    Le 21 février 2023, la Commission de Surveillance du Secteur Financier (CSSF) a mis à jour le formulaire pour toute notification concernant l'établissement d'une succursale et les modifications des informations incluses dans une telle notification (21.02.2023). Le formulaire concerne les gestionnaires de fonds d'investissement (AIFM, Chapitre 15, Chapitre 16) et couvre : 

    • Détails de la succursale;
    • Activités;
    • Programme d'exploitation;
    • Informations sur les fonds EEE à gérer.

     

     

     

  • Outsourcing arrangements

    CSSF publishes new notification template for critical or important ICT outsourcing / La CSSF publie un nouveau modèle de notification pour l'externalisation de TIC critique ou important

    CACEIS

  • On February 17th 2023, the Commission de Surveillance du secteur financier (CSSF) published new notification template for critical or important ICT outsourcing. The new notification template is to be used as of 20 February 2023 by In-Scope Entities to notify the CSSF of critical or important ICT outsourcing arrangements in accordance with points 59 and 60 of Circular CSSF 22/806 on outsourcing arrangements. In order not to penalise In-Scope Entities that are well advanced in the preparation of a notification based on the previous template, In-Scope Entities may introduce notifications using the previous template during a transitional period until 20 March 2023. After this date only notifications received with the new template will be considered as notified in line with the instructions and forms available in accordance with point 59 of Circular CSSF 22/806.

    Version française

    Le 17 février 2023, la Commission de Surveillance du secteur financier (CSSF) a publié un nouveau modèle de notification pour l'externalisation des TIC critiques ou importantes. Le nouveau modèle de notification est à utiliser à partir du 20 février 2023 par les Entités du champ d'application afin de notifier à la CSSF les accords d'externalisation des TIC critiques ou importants conformément aux points 59 et 60 de la circulaire CSSF 22/806 relative à l'externalisation dispositions. Afin de ne pas pénaliser les Entités du champ d'application qui sont bien avancées dans la préparation d'une notification basée sur le modèle précédent, les entités du champ d'application peuvent introduire des notifications utilisant le modèle précédent pendant une période transitoire jusqu'au 20 mars 2023. Après cette date, seules les notifications reçues avec le nouveau modèle seront considérées comme notifiées conformément aux instructions et formulaires disponibles conformément au point 59 de la circulaire CSSF 22/806.

  • Register of beneficial owners

    RBE clairifies the procedure for entities' access to their data in the RBE / Le RBE clarifie la procédure d'accès des entités immatriculées à leurs données au RBE

    CACEIS

  • On February 1st 2023, RBE - Register of Beneficial Owners clairified the procedure for entities' access to registered entities to their data in the RBE. The procedure allows entities to access their own RBE data by means of a confidential code, which will be sent progressively by post to the head office of each registered entity that has registered to the RBE.

    Version française

    Le 1er février 2023, le RBE - Registre des Bénéficiaires Effectifs a précisé la procédure d'accès des personnes morales immatriculées à leurs données au RBE. La procédure permet aux entités d'accéder à leurs propres données RBE en utilisant un code confidentiel qui sera envoyé au fur et à mesure par voie postale au siège social de chaque entité inscrite au RBE.

  • Specialised professionals of the financial sector (PFS)

    CSSF publishes presentation from 2023 AML/CFT Conference dedicated to Specialised PFS / La CSSF publie la présentation de la Conférence LBC/FT 2023 dédiée aux PSF spécialisés

    CACEIS

  • On February 8th 2023, the Commission de Surveillance du secteur financier (CSSF) published the presentation from 2023 AML/CFT Conference for  Specialised Professionals of the Financial Sector (PFS).

    The presentation agenda tackles: 

    • Risk self-assessment and RC report: purpose and content
    • ML/TF Vertical risk assessment: legal persons and arrangements
    • Vertical risk assessment: terrorist financing
    • Insights from the Financial Intelligence Unit (FIU) for Specialised PFS
    • AML/CFT Expert working group for Specialised PFS
    • Register of fiducies and trusts: obligations and requirements

    Version française

    Le 8 février 2023, la Commission de Surveillance du secteur financier (CSSF) a publié la présentation de la Conférence LBC/FT 2023 sur les Professionnels Spécialisés du Secteur Financier (PSF). L'ordre du jour de la présentation a abordé

    a) l'auto-évaluation des risques et le rapport Responsable du Contrôle : objet et contenu;

    b) l'évaluation des risques verticaux BC/FT: personnes morales et constructions juridiques;

    c) l'évaluation des risques verticaux: financement du terrorisme;

    d) les renseignements de la Cellule de Renseignement Financier (CRF) pour les PSF spécialisés;

    e) le groupe de travail d'experts LBC/FT pour les PSF spécialisés; et f) le registre des fiducies et des trusts: obligations et exigences.

  • MONACO

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

    Monaco publishes Sovereign Ordinance No. 9.729 of 1 February 2023 on the coordination and monitoring committee of the national strategy to combat ML/FT and the proliferation of weapons of mass destruction and corruption

    CACEIS

  • On February 3rd 2023, Monaco published Sovereign Ordinance No. 9.729 of 1 February 2023 on the coordination and monitoring committee of the national strategy to combat money laundering, the financing of terrorism (ML/FT) and the proliferation of weapons of mass destruction and corruption.

    A Committee for the Coordination and Monitoring of the National Strategy to Combat ML/FT and the Proliferation of Weapons of Mass Destruction and Corruption is hereby established. Its mission is to serve as a coordination and monitoring mechanism for all matters relating to the fight against money-laundering (AML), the fight against the financing of terrorism (CFT) and the fight against the financing of the proliferation of weapons of mass destruction.

    The main Committee's missions are as the following:

    • Develop and monitor the implementation of the National Strategy and Action Plan to Combat Money Laundering, the Financing of Terrorism and the Proliferation of Weapons of Mass Destruction (WPD), in coordination with the competent authorities;
    • Coordinate and lead the identification and risk assessment of AML/CFT and WMD proliferation risks, which is carried out at regular intervals;
    • Request, collect and analyse statistics and all relevant information from the competent authorities to continuously assess the effectiveness of the system for combating ML/FT and the proliferation of WMD;
    • Ensure the existence of effective methods of operational cooperation and coordination between competent authorities with regard to their policies and activities in the fight against ML/FT and the proliferation of WMD;
    • Coordinate with the Advisory Committee on the Freezing of Funds and Economic Resources, which is responsible for the implementation of economic sanctions decreed by the United Nations, the European Union and the French Republic, the implementation of such sanctions.
  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    Monaco publishes Sovereign Ordinance No. 9.737 of 2 February 2023 amending Sovereign Ordinance No. 1.284 of 10 September 2007 implementing Law No. 1.338 of 7 September 2007 on financial activities, as amended

    CACEIS

  • On February 10th 2023, Monaco published Sovereign Ordinance No. 9.737 of 2 February 2023 amending Sovereign Ordinance No. 1.284 of 10 September 2007 implementing Law No. 1.338 of 7 September 2007 on financial activities, as amended.

    The Ordinance:

    • Defines the notion of "professional investor":  entities authorized or regulated in Monaco or abroad to carry out financial activities; companies meeting at least two criteria set up by this Ordinance; institutional investors;  governments, central banks, international institutions. Investors other than those aforementioned, including natural persons, may be considered as professional investors if their investment skills, experience and knowledge enable them to assess the merits and risks of the services or transactions envisaged ; and if the investor meetings one criteria listed by this Orinance.
    • Clarifies the application of the exceptions provided by Article 29 of the Law: Article 2 of the Ordinance specifies the conditions for the application of Article 29 of the Law relating to solicited or unsolicited approaches carried out in the Principality of Monaco when these are related to a client of a licensed company.
    • States the professional certifications required under Article 23 of the Law: Article 3 of the Ordinance provides that the “Association Monégasque des Activités Financières” (“AMAF”) organizes training sessions, determines the content of the courses and organizes exams, which are sanctioned by a professional certificate. In this respect, Article 3 of the Ordinance specifies which persons are required to obtain a professional certification. In addition, the Ordinance specifies the procedures for the implementation of training sessions by requiring the mentioned categories of persons to be registered within six months of taking up their duties in the approved company for which they carry out their activity. In contrast to the above, the Ordinance offers the possibility to be exempted from any application of the obligations relating to professional certification for some persons.
    • Explains the procedures and the establishment of a Professional Certifications Commission: Under the terms of the Ordinance, a Professional Certifications Commission is set up to give an opinion on any matter falling within the scope of the Ordinance and the regulations drawn up by the AMAF in consultation with the “Commission de Contrôle des Activités Financières” (“CCAF“). The Professional Qualifications Commission shall comprise certains members specified by the Ordinance.
  • NETHERLANDS

    Prospectus/Transparency

    AFM reminds replacement of service document with Comparison Card for financial services providers

    CACEIS

  • On February 28th 2023, the Autoriteit Financiële Markten (AFM) reminded the replacement of the service document with the Comparison Card for financial services providers.

    Financial service providers must provide a comparison card to consumers from 1 April 2023. This is intended for advice and mediation in products that fall under the commission ban. The comparison map replaces the current service document. There is a transition period of 6 months.

    The purpose of the customized information document, called the comparison map, is to present information more comprehensibly to the customer so that they can make a more informed choice. The need for the tightened document arose from an evaluation of the commission ban. This showed that the service document is of limited effectiveness and is only used as a reference work by a small group of consumers.

    On 10 January 2023, the Council of State adopted the Decree on comparison map for financial service providers. The comparison card replaces the service document as of 1 April 2023. Financial service providers have 6 months during the transition period to replace the service document they already provide to consumers with the comparison card. The DVD generator will no longer be available from April 1, 2023.

    The comparison map can be created in the AFM Portal from 1 April. In an online application, the financial service provider can enter all the necessary information. The standard document is then created and can be downloaded as a PDF. Financial service providers must provide the comparison map to the customer and publish it in an easily findable place on their own website or other digital channels. A page has been set up on the AFM website with all information about the comparison map and a manual that can be used when drawing up a comparison map via the online comparison map application.

  • SPAIN

    Directive on the protection of persons who report breaches of Union law (Whistleblowers Directive)

    Spain publishes Law 2/2023, of 20 February, regulating the protection of persons who report on regulatory and anti-corruption infringements

    CACEIS

  • On February 21st 2023, the  Law 2/2023, of 20 February, regulating the protection of persons who report on regulatory and anti-corruption infringements was published in the Boletín Oficial del Estado. This law transposes Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons reporting breaches of Union law. The text refers as "informants" the persons called "whistleblowers" in the Directive (EU) 2019/1937. The scope of application is extended to all persons who, by virtue of their activity, have privileged access to information, irrespective of the nature of the relationship between that person and the organisation. The admission of the anonymous complainant to the internal system (art. 7.3) and to the external channel (art. 17.1 and art. 21.1) is also taken into account. The obligation to establish internal complaints systems is extended to the private sector, regardless of the size of the workforce, to political parties, trade unions, employers' organisations and their foundations, provided that they receive or manage public funds (Art. 10.1 c). The law protects those who report on infringements of Union law provided for in the Directive, as well as serious and very serious criminal and administrative offences., including the information of infractions related to labor and social security regulations, without prejudice to the provisions of Art. 2.3 of the Law. The processing of personal data necessary to ensure the protection of persons who report regulatory infringements will be lawful. Such processing shall be governed by the provisions of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016, this organic law and the Law on the protection of persons reporting on regulatory and anti-corruption offences. No additional measures were taken as to the protection of the "informant", other than those disclosed in the Directive and in Art. 35. In accordance with Art. 6 of the Directive, the informants should have reasonable grounds to believe that the information they provide  is truthful at the time of communication or disclosure, even if they do not provide conclusive evidence. The information disclosed and the means of communication should also fall within the scope of application of this Law. The reasons behind the informant are irrelevant in determining whether that person should be protected. Finally, it should be noted that the Spanish Congress approved the Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law on the on 16/02/2023 more than a year after the transposition deadline set by the EU (17/12/2021).

  • CNMV approves the Code of good practice for investors

    CACEIS

  • On February 22nd 2023, the Comicion Nacional del Mercado del valores (CNMV) approved the Code of good practice for investors. The aim of the Code is to promote greater engagement of shareholders in the life of the companies in which they invest. The most relevant aspects of the Code are as follows: - Principle of proportionality:the scope of the recommendations can be adjusted to any entity, independently of its size, in terms of the absolute and relative magnitude of its investments, or in terms of the size, complexity and resources of the investee companies. - Willfulness: this sets out a principled approach to engagement in the investee companies and on their exposure to sustainability risk. Adherence to the Code is voluntary as the Code adopts the “apply and explain” model. As such, entities that decide to adhere to the Code should indicate in their annual report how they applied the different principles of the Code the previous year, under the principle of proportionality and, therefore, taking into consideration their conditions and circumstances. - Transitional regime: a transitional period of three years has been established. Institutions that decide to use the transitional period must publicly commit to implement all the principles before February 2026, by publishing, at the time of adhering, a concrete plan and timetable for adaptation, explaining the degree of annual progress in each of the years. However, it is considered that Principle 6 on conflict of interests management policy should be applied from the outset, as it is inherent to the operations of any investor or manager.

  • SWITZERLAND

    Pension Funds

    AMAS publishes sample of declaration for providers of discretionary asset management services to pension funds / L'AMAS publie un modèle de déclaration pour les prestataires de gestion de fortune discrétionnaire aux caisses de pension

    CACEIS

  • On February 9th 2023, Asset Management Association Switzerland (AMAS) published sample of declaration for providers of discretionary asset management services to pension funds. This declaration is based on the applicable provisions set down in the law and ordinances, in particular Art. 48f et seqq. of the Occupational Pensions Ordinance 2 (OPO 2), as applicable to all Swiss pension funds. This declaration need only be issued by providers of discretionary asset management services to pension funds, i.e., providers who have concluded a direct asset management agreement with a pension fund and who receive remuneration from the pension fund for their activities under that asset management agreement.

    Version française

    Le 9 février 2023, l'Asset Management Association Switzerland (AMAS) a publié un modèle de déclaration pour les prestataires de services de gestion de fortune discrétionnaire aux caisses de pension. Cette déclaration est fondée sur les dispositions applicables prévues par la loi et les ordonnances, notamment l'art. 48f et suiv. de l'Ordonnance sur la prévoyance professionnelle 2 (OPO 2), applicable à toutes les caisses de pension suisses. Cette déclaration ne doit être délivrée que par les prestataires de services de gestion de fortune discrétionnaire aux fonds de pension, c'est-à-dire les prestataires qui ont conclu un contrat de gestion de fortune directe avec un fonds de pension et qui perçoivent une rémunération du fonds de pension pour leurs activités dans le cadre de ce contrat de gestion de fortune.

  • UNITED KINGDOM

    Cryptoasset / Cryptocurrency / Virtual Currency

    UK Government sets out plans to regulate crypto and protect consumers

    CACEIS

  • On February 1st 2023, the UK Government issued its latest proposals concerning the regulation of cryptoassets. 

    These proposals build on HM Treasury’s previous work which focused on stablecoins and the financial promotion of cryptoassets. They deliver on the government’s announcement last April setting out plans for the UK to become a global hub for cryptoasset technology. The government has already started to lay the legislative foundations to bring stablecoins and cryptoassets into financial services regulation via the Financial Services and Markets Bill (FS&M Bill).

    The government reports that both retail and institutional participation in the cryptoasset sector continues to grow. On the retail side, the government finds that most recent surveys show that 5-10% of UK adults now own cryptoassets, an increase of more than 100% over the past 1-2 years. Institutional participation has been limited but is also growing.

    Focus on the consultation and call for evidence regarding the future financial services regulatory regime for cryptoassets: it  focuses on the future regulatory framework for cryptoassets used within financial services rather than the wider application of distributed ledger technology (DLT) in financial services or the use of cryptoassets outside financial services. With these proposals, the UK Government is pursuing a number of policy objectives including protecting UK financial stability and market integrity. As with its previous consultations the proposals are guided by three core design principles –same risk, same regulatory outcome,; proportionate and focused; and agile and flexible. 

    The approach to regulating cryptoassets in the UK will also be in phases. 

    This consultation closes on 30 April 2023.

    The UK government has also issued a policy statement on its approach to the regulation of cryptoasset financial promotions. This follows a consultation in 2020 on plans to legislate to bring certain cryptoassets into the scope of financial promotion rules. The policy statement outlines plans to introduce a temporary, bespoke exemption from the financial promotion restriction in section 21 of FSMA for certain cryptoasset promotions.

    Since it published its consultation response in January 2022, the government has received feedback highlighting growing industry concern that the proposals it consulted on would significantly restrict or effectively ban cryptoasset financial promotions. Industry stakeholders flagged that most crypto firms are not FCA authorised, meaning that they could not communicate their own promotions under the proposed rules, and noted evidence of a lack of suitable authorised persons in the market willing and able to approve crypto promotions.

    The government plans to introduce the statutory instrument (SI) giving effect to the planned cryptoasset financial promotions regime, including the bespoke exemption, “as Parliamentary time allows”. The measure will have a reduced implementation period of 4 months (rather than 6 months) from the date the SI is made in Parliament. The detailed rules for the regime will be set independently by the FCA.  

    The exemption announced by the government is intended to be time limited and will be reviewed alongside the future regulatory approach to cryptoassets.

  • European Market Infrastructure Regulation (EMIR)

    FCA and BoE publish PS 23/2 on changes to reporting requirements, procedures for data quality and registration of Trade Repositories under UK EMIR

    CACEIS

  • On February 24th 2023, the Financial Conduct Authority (FCA) publishes jointly with the Bank of England (BoE) Policy Statement (PS) 23/2 on changes to reporting requirements, procedures for data quality and registration of Trade Repositories under UK EMIR.

    This joint FCA/BoE PS sets out the final amendments to Technical Standards and new rules for Trade Repositories (TR) in relation to the derivatives reporting framework under UK EMIR. The two authorities also respond to feedback in CP21/31.

    The FCA and BoE consulted on:

    • Proposal 1. to amend the framework for reporting details of derivatives trades under UK EMIR to align the UK derivatives reporting framework with international guidance from the Committee on Payments and Market Infrastructures and International Organization of Securities Commissions (CPMI-IOSCO): the FCA has implemented this by introducing the EMIR Technical Standards on the Minimum Details of the Data to be Reported to TRs 2023 and EMIR Technical Standards on the Standards, Formats, Frequency and Methods and Arrangements for Reporting 2023. In line with its proposals, consequential amendments are being made to UK versions of Commission Delegated Regulation (EU) No 149/2013, Commission Delegated Regulation (EU) No 151/2013 and Commission Delegated Regulation (EU) No 2016/957.
    • Proposal 2. to amend and streamline the registration process for TRs: the FCA has implemented this by amending the UK versions of Commission Delegated Regulation (EU) No 150/2013 and Commission Implementing Regulation (EU) No 1248/2012.
    • Proposal 3. to require TRs to establish procedures and policies to ensure the effective reconciliation of data between TRs, verify the completeness and correctness of the data reported, and the orderly transfer of data between TRs: the FCA has implemented this by introducing a new sourcebook in the FCA Handbook, called the European Market Infrastructure Regulation Rules, or EMIRR for short.

    In addition to the former, the two institutions have made the following changes:

    • The introduction of a new reportable field to permit the reporting of an ‘Execution Agent’ where counterparties choose to make use of one;
    • The amendment of the time by which TRs are to provide the information necessary for specified parties to review their UK EMIR reporting submissions from 06:00 UTC to 09:00 UTC.
    • A clarification that a TR may generate a unique transaction identifier (UTI) as part of the UTI generation waterfall process.
    • An amendment to Article 3 of the Technical Standards on the Standards, Formats, Frequency and Methods and - Arrangements for Reporting so to include central counterparties.

    This PS will primarily affect:

    • counterparties in scope of the reporting requirements under UK EMIR,
    • TRs registered, or recognised, under UK EMIR,
    • third party service providers who offer reporting services to counterparties subject to UK reporting under EMIR, and
    • it may also be of interest to trade associations, law firms and consultancy firms and be relevant to authorities in other G20 jurisdictions who are implementing, or considering, similar changes to their derivatives reporting regimes.

    The requirements we set out in this PS will come into effect on 30 September 2024, except for certain amendments which relate to the format and details of applications for registration of TRs, which come into force immediately. 

    The FCA and BoE are also publishing, alongside this PS, draft Validation Rules and XML schemas to support implementation of the amended Technical Standards and new rules.

  • Financial Market Infrastructure (FMI)

    BoE publishes policy statement on FMI outsourcing and third party risk management

    CACEIS

  • On February 8th 2023, Bank of England (BoE) published Policy Statement on Financial Market Iinfrascruture (FMI) outsourcing and third party risk management.

    The Bank’s outsourcing and third party risk management policy for FMIs aims 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; 
    • Complement the Bank’s Supervisory Statements on FMI operational resilience.

    The policy has been issued in the form of Supervisory Statements (SSs) for central counterparties (CCPs), central securities depositaries (CSDs) and recognised payment system operators (RPSOs) & specified service providers (SSPs) and they set out the Bank of England’s requirements and expectations relating to FMIs’ outsourcing and third party risk management. 

    The Bank also issued an outsourcing and third party risk management part to be added to the Code of Practice applying to relevant RPSOs and SSPs. 

    The finalization of this policy follows the Bank’s consultation on this topic in 2022.

    The Bank of England has published:

    • A Policy Statement (PS) which provides feedback to responses to the three CPs published in April 2022
    • Three SSs for outsourcing and third party risk management for each category of FMI
    • An outsourcing and third party risk management part to add to the Code of Practice  applying to relevant RPSOs and SSPs
  • Financial supervision

    FCA updates its Handbook Notice 107

    CACEIS

  • On February 24th 2023, Financial Conduct Authority (FCA) updates its Handbook Notice 107.

    The changes relate to the following:

    • EMIR Rules (Procedures for Ensuring Data Quality) Instrument 2023: In summary, this instrument makes changes to the Glossary of definitions to define EMIRR as the ‘European Market Infrastructure Regulation Rules sourcebook’, clarifies the Powers exercised by the FCA in making certain rules in GEN, and requires trade repositories to ensure effective reconciliation of data by trade repositories, the verification of compliance by counterparties and Central Counterparties (CCPs) with the EMIR reporting obligation, and the verification of the completeness and correctness of the data reported. This instrument comes into force on 30 September 2024. Feedback has been published in a separate Policy Statement
    • FCA Standards Instrument: Technical Standards (EMIR Reporting and Data Quality and Miscellaneous Amendments) Instrument 2023: In summary, this instrument makes changes to the table of reportable fields under UK EMIR, sets out notifications and reconciliation processes for counterparties, mandates certain delegated reporting requirements, and requires the use of standardised XML schemas and of certain global identifiers. This instrument comes into force on 30 September 2024. Feedback has been published in a separate Policy Statement.
    • Technical Standards (EMIR Registration of Trade Repositories and Miscellaneous Amendments) Instrument 2023: In summary, this instrument makes changes to the details and format of the application for registration as a trade repository, and to the rules governing access by relevant authorities to certain transaction data. This instrument comes into force on 24 February 2023, except Part 1 of Annex A, which comes into force on 30 September 2024. Feedback has been published in a separate Policy Statement.
    • FCA Registration Function Under the Co-Operative and Community Benefit Societies Act 2014 Guide Instrument 2023: In summary, this instrument makes changes to move Finalised Guidance (FG) 15/12 from its static PDF format on our website to the FCA Handbook to make it more accessible and capable of future updates. This instrument comes into force on 24 February 2023. Feedback is published in Chapter 3 of this Notice.
    • Enforcement Guide (Amendment) Instrument 2023: In summary, this instrument makes changes to update the Enforcement Guide (EG) to reflect the application of Regulation 74C to include Annex 1 financial institutions. This change aligns EG with the amended Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). This instrument comes into force on 24 February 2023. Feedback is published in Chapter 3 of this Notice.
    • Training and Competence Sourcebook (Amendment No 11) Instrument 2023: In summary, this instrument makes changes to enable us to provide firms and consumers with the most up-to-date information in relation to our qualifications table and the Glossary definition of accredited bodies. This will also enable us to ensure the financial workforce have the appropriate skills and knowledge needed to continue to deliver good outcomes for consumers using their services. This instrument comes into force on 31 March 2023. Feedback is published in Chapter 3 of this Notice.
    • Handbook Administration (No 63) Instrument 2023 on British Steel Pension Scheme (BSPS).
  • FCA updates updates the Regulatory Initiatives Grid (February 2023)

    CACEIS

  • On February 28th 2023, the Financial Conduct Authority (FCA) updated the Regulatory Initiatives Grid.

    This Grid from the Financial Services Regulatory Initiatives Forum sets out the regulatory pipeline. It is published twice a year to help manage the operational impact on firms of implementing initiatives from the Forum members. It also helps firms and other stakeholders plan for forthcoming initiatives. The Grid provides detail on the timing of initiatives over a 24-month horizon and highlights key examples of closely interconnected initiatives to help stakeholders easily identify these.

    The FCA has now published the latest version of the Grid (February 2023). This was delayed from November 2022 to allow Forum members the opportunity to consider the potential implications on the regulatory pipeline and initiatives in the upcoming Grid of the Government’s Edinburgh Reforms, which were announced in December 2022. These initiatives are reflected, where appropriate, in the latest Grid.

    This will be the first Grid of 2023 and the next will be published towards the end of the year. However, in recognition of the length of time between those publications, and in recognition of the impact of the Financial Services and Markets Bill, the FCA aims to provide a short update after Royal Assent, which is subject to Parliamentary timing, informing the sector on any important and imminent changes.

  • FCA publishes its Asset Management Supervision Strategy

    CACEIS

  • On February 3rd 2023, the Financial Conduct Authority (FCA) published its Asset Management Supervision Strategy in the Asset Management Portfolio Letter.

    The FCA set out its policy and expectations for asset managers performing portfolio management, highlighting the below areas of supervisory priorities:

    • Product governance
    • ESG and Sustainable investing
    • Product liquidity management
    • Investment in operations and resilience
    • Financial resilience

    More particularly, CEOs should consider governance and controls changes in order to implement the requirements of the New Consumer Duty. A review is underway in 2024 to assess how firms have applied the new rules.

    In its July 2021 Dear Chair Letter to Authorised Fund Managers (AFMs), the FCA had published information on the design, delivery and disclosure of ESG and sustainable investment funds. A review of some firms’ ESG oversight practices is under way as well, which can constitute a guide for asset ESG portfolio management practice, along with the first TCFD-aligned disclosures in the ESG sourcebook (due in H1 2023) and the final rules on SDR and fund labels. The FCA will also assess how accurately asset managers actually deliver their plans/promises in their investor communications.

    The FCA wishes to ensure that asset managers apply correctly their liquidity risk management mechanisms while respecting regulatory requirements, including fair treatment of all investors. A multi-firm review on liquidity management is currently on the works at FCA which will showcase how asset managers can improve their governance, oversight, and controls practices.

    Asset managers need to implement an adequate operational business health monitoring and response measures, including meeting regulatory obligations when services are being outsourced or delegated. The FCA should be contacted in case of an operational or cyber failure following SUP15.3 guidelines. Policy Statement 21/3 on operational resilience should also be consulted in this respect.

    Last but not least, prudential concerns must be identified early and appropriate action taken, when aiming at financial resilience. The FCA also plans to issue soon its first observation on investment firms’  Future Regulatory Framework implementation, which can also be used as a guide for asset managers aiming at its consistent implementation.

  • FinTech / RegTech / BigTech / SupTech / Digital Economy

    BoE consults on the digital pound

    CACEIS

  • On February 7th 2023, Bank of England (BoE) published consultation paper on the digital pound. BoE invites responses to this consultation until 7 June 2023. 

    The Treasury and the Bank of England are consulting on a potential digital pound, or a retail central bank digital currency (CBDC) a digital pound would be issued by the Bank of England and could be used by households and businesses for everyday payments in-store and online. If introduced a digital pound would be interchangeable with cash and bank deposits, complementing cash. No decision has been taken at this stage to introduce a digital currency.

    What would a digital pound look like?

    • It would replicate the role of cash in a digital world, so that it is risk-free, highly trusted and accessible
    • £10 of a digital pound would always be worth the same as £10 of cash
    • Issued by the Bank of England, widely available and convenient to use
    • Subject to rigorous standards of privacy and data protection - neither Government nor the Bank would have access to personal data and holders would have the same level of privacy as a bank account
    • Accessed through digital wallets offered to consumers by the private sector through smartphones or smartcards
    • Intended for payments, online, in-store, and to friends and family, rather than savings, with no interest paid on holdings
    • Initial restrictions on how much an individual or businesses could hold
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    FCA publishes DP 23/2 on updating and improving the UK regime for asset management

    CACEIS

  • On February 20th 2023, the Financial Conduct Authority (FCA) published Discussion Paper 23/2 on Updating and improving the UK regime for asset management.

    Under the Future Regulatory Framework, the government has proposed making the FCA responsible for those retained EU laws that set requirements for firms. This means the FCA will need to decide whether its rules should in future copy those requirements.

    As a first step, the FCA has published DP23/2 to gather a broad range of views about the current UK regime for regulating funds and asset managers. It sets out a range of ideas about how the FCA might modernise and tailor the regime to improve outcomes for UK markets and consumers, and to support the UK’s position as a world-leading centre for asset management. Any changes are intended to be consistent with international standards and to enable technological development and innovation.

    Potential changes suggested in the paper include clarifying and enhancing the rules applicable to authorised fund managers and depositaries, improving the rules that apply to funds, and using technology and innovation to support better outcomes from authorised funds.

    Alongside DP23/2, the FCA plans to engage with a wide range of stakeholders in forums and roundtables as well as individual meetings. Depending on feedback, it will look at ways to develop some of the ideas covered in the paper using tools such as policy sprints.

    The deadline for feedback to DP23/2 is 22 May 2023. A Feedback Statement is planned for later this year, possibly as part of a consultation paper.

  • Investor protection / Consumer protection

    FCA supports firms through the transition to implementing the Consumer Duty

    CACEIS

  • On February 3rd 2023, the Financial Conduct Authority (FCA) announced support to firms through transition to implementing the Consumer Duty, which includes setting out in letters the expectations of the Duty and arranging a series of regional in-person events for specific groups of small and medium-sized firms.

    The Consumer Duty is a cornerstone of the FCA’s three-year strategy. It introduces a more outcomes-focused approach to consumer protection and sets higher expectations for the standard of care that firms give customers.? The FCA also believes the Duty will lead to a simplified and less reactive form of regulator, which will allow firms to innovate and compete more effectively.

    The FCA has published letters sent to the following sectors today: 

    • Asset Management, Custody & Fund Services and Alternatives,
    • Consumer investments,
    • Credit reference agencies and providers of credit information services,
    • General Insurance and pure protection firms
    • Life insurance
    • Mainstream consumer credit lenders,
    • Mortgage lenders and administrators,
    • Retail banks and building societies.

    Each of the letters sets out a reminder of the implementation timeline, key elements of the Duty and how it applies to firms; the FCA’s expectations for how firms should embed the Duty; feedback from the recent review of firms’ implementation plans; and the FCA’s approach to supervising the Duty as well as planned next steps.

    Other sectors (as bellow)  will receive letters very shortly:

    • Credit Unions,
    • Debt advice firms,
    • Debt purchasers, debt collectors and debt administrators,
    • Mortgage Intermediaries,
    • Motor Finance providers,
    • Payments Services and E-Money,
    • Retail Finance providers,
    • Credit brokers.
  • FCA publishes CP23/5 on the feedback on CP21/30 on debt packagers and further consultation on new rules and perimeter guidance

    CACEIS

  • On February 2nd 2023, the Financial Conduct Authority (FCA) published consultation paper CP23/5 on the feedback on consultation paper CP21/30 on debt packagers and further consultation on new rules and perimeter guidance.

    In November 2021, the FCA published CP21/30 which proposed to ban debt packagers from receiving referral fees, after the FCA found evidence that that there was an acute conflict of interest inherent in the debt packager business model and which firms did not appear able to manage. However, having reflected on the feedback it received to CP21/30, the FCA decided it would be appropriate to gather more evidence showing how debt packager firms manage this conflict of interest, in particular from parts of the market not as strongly represented in the FCA’s existing evidence base. The FCA has since analysed this further evidence, finding that it supports their original conclusions that debt packagers do not appear to manage the identified conflict of interest well.

    In CP23/5, the FCA is proposing to make the rules as set out in CP21/30, with minor amendments. The FCA is reconsulting to allow stakeholders to comment on the analysis of the expanded evidence base, to give feedback on the proposed implementation period and, given the passage of time since the original consultation, to allow the opportunity to raise any new issues or developments in the market of which the FCA should be aware. The FCA is also seeking views on proposed perimeter guidance to clarify the boundary of the regulated activity of debt counselling in relation to activities commonly carried out by unauthorised lead generators.

    This consultation applies to debt packager firms and appointed representatives who act as debt packagers. It will also be of interest to:

    • Individual Voluntary Arrangement (IVA) and Protected Trust Deed (PTD) providers and insolvency practitioners
    • Firms administering Debt Management Plans (DMP) and/or the Debt Arrangement Scheme (DAS) 
    • Not-for-profit debt advice providers (NFP)
    • Consumer groups

    The consultation is open until 2 March. 

  • Pension Schemes

    UK publishes a draft legislation on the Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023

    CACEIS

  • On January 30th 2023, the UK publishes a draft legislation on the Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023.

    These Regulations make amendments to the requirements relating to the administration and governance of occupational pension schemes and correct an error in the Pensions Dashboards Regulations 2022 (S.I. 2022/1220).

    These Regulations are being issued free of charge to all known recipients of the Pensions Dashboards Regulations 2022.

    Regulation 1 sets out when the new requirements will apply to schemes.

    Regulation 2 amends the Occupational Pension Schemes (Charges and Governance) Regulations 2015 (S.I. 2015/879) to exclude specified performance-based fees from the charge cap that applies to limit the charges that can be passed on to members of most occupational money purchase pension schemes. It also removes provisions allowing schemes to smooth or pro-rate the effects of performance-based fees for the purposes of the charge cap, as these are no longer required when most performance-based fees will be excluded from the charge cap.

    Regulation 3 amends the Occupational Pension Schemes (Investment) Regulations 2005 (S.I. 2005/3378) to require schemes to include an explanation of their policy about investing in illiquid assets in their default Statement of Investment Principles or, in the case of qualifying collective money purchase schemes, in their Statement of Investment Principles.

    Regulation 4 amends the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (S.I. 1996/1715) to require trustees or managers of occupational money purchase schemes to report on specified performance-based fees incurred by the scheme and on the different classes of assets in which they invest in their annual chair’s statement.

    Regulation 5 amends the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 (S.I. 2013/2734) so that the new disclosures about specified performance-based fees and asset allocation, which will be required in the annual chair’s statement, are included within the list of disclosures that must be made publicly available free of charge on a website.

    Regulation 6 corrects an error in the table in Part 1 of Schedule 2 to the Pensions Dashboards Regulations 2022, relating to the staging profile for master trust schemes that provide money purchase benefits only.

    Regulation 7 provides for a review of the impact of regulations 2 to 5 every 5 years, in accordance with the Small Business, Enterprise and Employment Act 2015 (c. 26).

  • Sanctions

    UK legislation updates the 2023 Sanctions Regulations

    CACEIS

  • On February 1st 2023, UK legislation updated  the 2023 Sanctions Regulations. 

    The Sanctions (Humanitarian Exception) (Amendment) Regulations 2023 (“the Regulations”) are made under the Sanctions and Anti-Money Laundering Act 2018 (“the Sanctions Act”).

    In implementation of the humanitarian exception established for UN sanctions regimes by United Nations Security Council Resolution 2664 (2022) adopted by the Security Council on 9th December 2002, the Regulations insert a humanitarian exception to the provisions implementing the asset-freeze in the listed sanctions regulations. 

    A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.

  • INTERNATIONAL

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

    ISDA response to ESMA’s Consultation on Draft ESG Fund Naming Guidelines

    CACEIS

  • On February 21st 2023, the International Swaps and Derivatives Association (ISDA) published a response to ESMA’s Consultation on Draft ESG Fund Naming Guidelines.

    ISDA responded to the European Securities and Markets Authority (ESMA) consultation on proposed guidelines on funds’ names using environmental, social and governance (ESG) or sustainability-related terms. In the response, ISDA highlights that a common cross-industry methodology for the calculation of the minimum proportions of sustainable investments for derivatives transactions is paramount to maintain ESMA’s goal of promoting standardized disclosures, and requests that ESMA gives the industry sufficient time to form a consensus on the calculation thresholds for derivatives.

  • Sustainable Finance / Green Finance

    ICMA responds to ESMA’s Guidelines on funds’ names using ESG or sustainability-related terms

    CACEIS

  • On February 20th 2023, the International Capital Market Association (ICMA) published a response to ESMA’s Guidelines on funds’ names using ESG or sustainability-related terms.

    In order to tackle the issue of greenwashing and enable investors to better navigate the landscape of products offered to them, ICMA considers it vital to differentiate between three main types of fund labels based on the sustainability objective they are seeking to achieve which should then also be reflected in the fund names:

    • Funds that focus on “ESG integration”, i.e., the consideration of ESG risks, opportunities and impacts that may be material to the future financial performance of a company or funds that employ strategies such as “exclusion/negative screening” or basic “ESG tilts”.
    • Funds that contain companies or financial instruments that are sustainable as measured by their effect on the environment and society.
    • Funds that contribute to a measurable improvement such as financing the transition to net-zero.
  • CONTACTS

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

    Editors
    Gaëlle Kerboeuf, Group General Secretary, Legal Department
    Marie Marion, Group Head of Transversal Functions, Compliance Department

    Permanent Editorial Committee
    Gaëlle Kerboeuf, Group General Secretary, Legal Department
    Marie Marion, Group Head of Transversal Functions, Compliance Department
    Corinne Brand, Group Communications Manager

    Local
    François Honnay, Head of Legal and Compliance (Belgium)
    Fanny Thomas, Legal Supervisor (France)
    Aude Levant, Group Compliance
    Yves Gaveau, Senior Expert Veille réglementaire AdF
    Stefan Ullrich, Head of Legal (Germany) 
    Robin Donagh, Legal Advisor (Ireland)
    Costanza Bucci, Head of Legal & Compliance (Italy)
    Luciana Vertulli, Compliance Officer (Italy) 
    Fernand Costinha, Head of Legal (Luxembourg)
    Julien Fetick, Senior Financial Lawyer (Luxembourg)
    Gérald Stadelmann, Head of Legal (Luxcellence Luxembourg)
    Simon Joux, Compliance Officer (Switzerland)
    Sarah Anderson, Head of Legal (UK)
    Olga Kitenge, Legal, Risk & Compliance (UK)
    Chelsea Chan, Head of Trustee and Legal (Hong Kong)
    Henk Brink (The Netherlands)
    Beatriz Sanchez Jete, Compliance (Spain)
    Arrate Okerantza Elejalde, Legal (Spain)
    Jessica Silva, Compliance (Brazil)
    Luiz Fernando Silva, Compliance (Brazil)
    Libia Andrea Carvajal, Compliance (Colombia)
    Daiana Garcia, Compliance (Colombia)
    Karim Martínez, Compliance (Mexico)
    Edgar Zugasti, Compliance (Mexico)

    Design
    CACEIS Group Communications

    Photos credit
    CACEIS, Adobe Stock

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