CACEIS July August 2021


CONTENT

CACEIS

EUROPEAN UNION

Market Abuse Directive & Regulation (MAD / MAR)

EC publishes Draft Commission Delegated Regulation supplementing Regulation (EU) No 596/2014 with regard to regulatory technical standards containing a template document for cooperation arrangements with third countries

CACEIS

  • On 2 July 2021, the European Commission published a Commission Delegated Regulation (EU) …/... supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards containing a template document for cooperation arrangements with third countries.

    Article 1 requires NCAs to use, where possible, the template document developed in the Annex where they conclude cooperation agreements with supervisory authorities of third countries that concern the subject matter of the RTS.

    Article 2 establishes how exchange of personal data should be handled in the context of cooperation arrangements entered into pursuant to this RTS. Specifically, where such data is transferred pursuant to administrative arrangements under Article 46(3) of Regulation (EU) 2016/679 (GDPR), those arrangements must be annexed to the cooperation arrangement in order to form a single body of rules governing cooperation between authorities. 

    Article 3 provides that the timeline for the entry into force of the Regulation. 

    The Annex contains a template for cooperation arrangements concerning the exchange of information between EU NCAs with authorities in third countries and the enforcement of obligations arising under MAR in third countries. The template contains different sections aimed to describe, inter alia: (i) the scope of the cooperation, (ii) the list of cases in which cooperation may be denied, (iii) the content of the assistance to be provided, (iv) description of the procedure for sending and processing requests for assistance, (v) permissible uses of information, (vi) description of the rules on confidentiality of the information disclosed.

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

    ESMA publishes updated Q&As on MiFIR data reporting

    CACEIS

  • On 20 July 2021, the European Securities and Markets Authority (ESMA) published updated Q&As on MiFIR data reporting.

    The update concerns the following element:

    • LEI of the issuer (Question 6)
  • EU publishes Commission Delegated Regulation (EU) 2021/1254 of 21 April 2021 as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive

    CACEIS

  • On 2 August 2021, the Commission Delegated Regulation (EU) 2021/1254 of 21 April 2021 correcting Delegated Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive was published in the Official Journal of the European Union (OJ).

    Delegated Regulation (EU) 2017/565 are corrected for following reasons:

    • Errors appeared in Article 1(1) of Commission Delegated Regulation (EU) 2017/565 as it was requiring the application of Article 59(4), Article 60 and Chapter IV of that Regulation, instead of Article 64(4), Article 65 and Chapter VIII.
    • Errors appeared in several cross-references in Annex I to Delegated Regulation (EU) 2017/565, more precisely under ‘Client assessment’, ‘Order handling’, ‘Client order and transactions’, ‘Reporting to clients’, ‘Communication with clients’ and ‘Organisational requirements’.
  • ESMA publishes translations of the Guidelines on the MiFID II/ MiFIR obligations on market data

    CACEIS

  • On 18 August 2021, the European Securities and Markets Authority (ESMA) published the translations of the Guidelines on the MiFID II/ MiFIR obligations on market data.

    By 18 October 2021, NCAs to which these guidelines apply must notify ESMA whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the guidelines.

    These guidelines apply from 1 January 2022.

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

    EU proposes to extend the PRIIPS KID transitional arrangements to 30 June 2022

    CACEIS

  • On 15 July 2021, the European Commission published a proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 1286/2014 as regards the extension of the transitional arrangement for management companies, investment companies and persons advising on, or selling, units of undertakings for collective investment in transferable securities (UCITS) and non-UCITS.

    Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a KID. This arrangement currently applies until 31 December 2021.

    This Regulation is accompanied by amendments to Commission Delegated Regulation (EU) 2017/653. Given the time needed to implement those amendments to Delegated Regulation (EU) 2017/653 and to reduce legal uncertainty, this Regulation extends the transitional arrangement to 30 June 2022.

  • Prospectus Regulation

    ESMA publishes disclosure and investor protection guidance on SPACs

    CACEIS

  • On 15 July 2021, the European Securities and Markets Authority (ESMA) issued a Public Statement on the prospectus disclosure and investor protection issues raised by special purpose acquisition companies (SPACs).

    The statement, in view of both the complexity and the diversity of SPAC transactions, sets out ESMA’s expectations on how issuers should satisfy the specific disclosure requirements of the Prospectus Regulation to enhance the comprehensibility and comparability of SPAC prospectuses.

    It also highlights ESMA’s view that SPAC transactions may not be appropriate investments for all investors due to risks relating to dilution, conflicts of interests in relation to sponsors’ incentives and the uncertainty as to the identification and evaluation of the target company. In addition, ESMA emphasises the importance of the proper application of the MiFID II product governance rules and their role in ensuring investor protection.

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

    EBA publishes final draft technical standards to improve supervisory cooperation for investment firms

    CACEIS

  • On 5 July 2021, the European Banking Authority (EBA) published final draft regulatory technical standards (RTS) and Implementing Technical Standards (ITS) on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms. 

    These draft standards, developed in consultation with the European Securities and Markets Authority (ESMA), provide a solid framework for (i) cooperation in the supervision of investment firm groups through colleges of supervisors and (ii) for information exchange for investment firms operating within the EU through branches or the free provision of services. 

    These draft standards are part of the phase 2 mandates of the EBA roadmap on investment firms, and aim at improving cooperation and information exchanges between the supervisors of investment firms.

    The final draft RTS on colleges of supervisors for investment firm groups specify the conditions under which colleges of supervisors exercise their tasks. The final draft RTS on colleges are structured around four main sections: (1) establishment of colleges, (2) functioning of colleges; (3) planning and coordination of supervisory activities in going concern situations; and (4) planning and coordination of supervisory activities in preparation for and during emergency situations.

    The  final draft RTS and ITS on information exchange between the competent authorities of home and host Member States complement the RTS on colleges of supervisors and address situations where investment firms operate in another Member State through branches or the free provision of services, where colleges may not be established. In particular, the final draft RTS specify the information that competent authorities in the host Member State and those in the home Member State shall exchange, whereas the final draft ITS establish standard forms, templates, and procedures for sharing the information specified in the RTS.

  • Here are three Commission Delegated Regulation with regard the Prudential Requirements for Investment Firms Directive & Regulation (IFD / IFR)

    CACEIS

  • Here are three Commission Delegated Regulation with regard the Prudential Requirements for Investment Firms  Directive & Regulation (IFD / IFR).

    1. On 6 August 2021, the European Commission published a Commission Delegated Regulation (EU) supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for subjecting certain investment firms to the requirements of Regulation (EU) No 575/2013.

    Article 5(6) of Directive (EU) 2019/2034 (‘the Directive’) empowers the Commission to adopt, following submission of draft standards by the European Banking Authority (EBA), and in accordance with Articles 10 to 14 of Regulation No (EU) 1093/2010, delegated acts to specify the criteria for subjecting certain investment firms to the CRR. In accordance with Article 10(1) of Regulation No (EU) 1093/2010 establishing the EBA, the Commission shall decide within three months of receipt of the draft standards whether to endorse the drafts submitted. The Commission may also endorse the draft standards in part only, or with amendments, where the Union's interests so require, having regard to the specific procedure laid down in those Articles.

    For the purposes of Article 5(1)(a) of Directive (EU) 2019/2034, the activities of an investment firm shall be considered to be carried out on such a scale that the failure or distress of the investment firm could lead to systemic risk where the investment firm exceeds any of the following thresholds:

    (a) total gross notional value of non-centrally cleared over-the-counter derivatives of EUR 50 billion; 

    (b) total value of financial instruments underwriting and/or placing of financial instruments on a firm commitment basis of EUR 5 billion; 

    (c) total value of granted credits or loans to investors to allow them to carry out transactions of EUR 5 billion; and 

    (d) total value of debt securities outstanding of EUR 5 billion.

    Investment firms that are clearing members and that offer clearing services to other financial sector entities, which are not clearing members themselves, shall be considered for the purposes of Article 5(1)(b) of Directive (EU) 2019/2034.

    2. On 13 August 2021, the European Commission published Commission Delegated Regulation supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying appropriate criteria to identify categories of staff whose professional activities have a material impact on the risk profile of an investment firm or of the assets that it manages.

    The Regulation:

    • sets out criteria to define managerial responsibility, control functions and business unit. 
    • specifies that the provisions apply on a consolidated, and individual basis. When applying the criteria on a consolidated basis, the consolidating firm shall base the criteria, on the impact on the consolidated risk profile. 
    • specifies that investment firms shall identify staff members or categories of staff as having an impact on a firm’s risk profile or assets it manages where those staff members or categories of staff meet any of the qualitative or quantitative criteria.
    • specifies the calculation of amounts for quantitative criteria in order to ensure there consistent application

    The qualitative criteria identify staff with material managerial responsibilities and staff with decision-making powers who have a material impact on an investment firm’s risk profile or assets it manages. 

    The quantitative criteria aim to ensure that a sufficient level of scrutiny by investment firms and competent authorities are applied when identifying staff whose professional activities have a material impact on an investment firm’s risk profile or assets it manages. It is presumed that staff with a high level of total remuneration have a higher impact on an investment firm’s risk profile or assets it manages than staff with significantly lower remuneration levels. 

    The result of the application of all the qualitative and quantitative criteria should be documented by investment firms so that competent authorities can ensure that investment firms have applied the criteria in line with the regulation. 

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

    3. On 13 August 2021, the European Commission (EC) published Commission Delegated Regulation supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying the classes of instruments that adequately reflect the credit quality of the investment firm as a going concern and possible alternative arrangements that are appropriate to be used for the purposes of variable remuneration.

    The act:

    • sets out the conditions which have to be fulfilled by all classes of instruments to ensure that instruments provide for appropriate incentives for long-term and prudent risk-taking and that the requirements on variable remuneration in Directive 2013/36/EU are not circumvented.
    • establishes conditions for Additional Tier 1 instruments.
    • provides for conditions that apply to Tier 2 instruments.
    • provides for conditions applicable to instruments that are not Common Equity Tier 1, Alternative Tier 1 or Tier 2 instruments (‘Other Instruments’) and as such are not own funds instruments and Regulation (EU) No 575/2013 does not set out any specific provisions regarding such instruments.
    • introduces a write-down and conversion mechanism for Tier 2 and Other Instruments in line with the processes for Additional Tier 1 instruments which apply under Regulation (EU) No 575/2013 and regulatory technical standards adopted pursuant to that Regulation. 
    • requirements that must be met by alternative arrangements in order to be approved by competent authorities.

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

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

    EP publishes report on the proposal for a regulation of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology

    CACEIS

  • On 5 August 2021, the European Parliament (EP) published its report on the proposal for a regulation of the European Parliament and of the Council on a  pilot regime for market infrastructures based on distributed ledger technology.

    The amendments under EP's report follow the ECB's opinion of of 28 April 2021. The key changes are as followings:

    • A DLT market infrastructure should be defined as a DLT multilateral trading facility (DLT MTF), a DLT securities settlement system (DLT SSS), or a DLT trade and settlement system (DLT TSS). Those DLT market infrastructures should be able to cooperate with other market participants in order to test innovative solutions based on DLT, on each segment of the value chain of the financial services.
    • New entrants should also be able to access the pilot regime, provided that they ensure compliance with the same requirements as those applicable to authorised investment firms or market operators under Directive 2014/65/EU (MiFID).
    • Where CSDs operated by members of the ESCB, or by other national bodies performing similar functions, or by other public bodies charged with or intervening in the management of public debt in the Union, operate a DLT SSS, they should not be required to seek specific exemptions or permissions from a competent authority.
    • A DLT TSS should be a DLT market infrastructure operated by an investment firm, a market operator or a central securities depository that receives a specific permission under this Regulation to combine the activities of both a DLT MTF and a DLT SSS. 
    • DLT market infrastructure should be limited to securities, such as shares, bonds, including sovereign bonds, exchange-traded funds (ETFs), and units of collective investment undertakings (UCITS).
    • An investment firm or a market operator operating a DLT MTF should be able to be permitted to record and settle DLT financial instruments on a distributed ledger. 
    • A DLT SSS should be able to be permitted, at its request, to admit to trading DLT financial instruments and perform similar roles as the ones performed by a DLT MTF.
    • It would be undesirable to have two parallel regimes for DLT-based and non-DLT based market infrastructures. If the pilot regime provided for in this Regulation is successful, it could be made permanent by amending the relevant Union financial services legislation in such a way that establishes a single, coherent framework.

    The Regulation will apply 9 months after the date of entry into force of this Regulation. 

  • Sustainable Finance / Green Finance

    Here are five Commission Delegated Regulation concerning sustainability risks and sustainability factors to be taken into account

    CACEIS

  • Here are five Commission Delegated Regulation concerning sustainability risks and sustainability factors to be taken into account.

    1. On 2 August 2021, the Commission Delegated Regulation (EU) 2021/1255 of 21 April 2021 amending Delegated Regulation (EU) No 231/2013 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers was published in the Official Journal of the European Union (OJ).

    This Regulation clarifies the current obligation of AIFMs to integrate sustainability risks . The clarification does not introduce ranking amongst different risks. This Regulation also clarifies some of implications of Regulation on sustainability-related disclosures in the financial services sector, namely where AIFMs disclose information with regard to the consideration of adverse sustainability impacts.

    2. On 2 August 2021, the Commission Delegated Regulation (EU) 2021/1257 of 21 April 2021 amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the integration of sustainability factors, risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules on conduct of business and investment advice for insurance-based investment products was published in the Official Journal of the European Union (OJ).

    Insurance undertakings and insurance intermediaries manufacturing insurance products:

    • should duly consider sustainability-related objectives when identifying groups of customers for whose needs, characteristics and objectives the insurance product is compatible.
    • should disclose sustainability factors of their products in a transparent way that allows insurance distributors to engage in dialogues with customers or potential customers in order to have sufficiently granular understanding of the customers’ individual sustainability preferences
    • have to take into account possible conflicts of interest that may arise in relation to sustainability factors.

    The sustainability factors of an insurance product should be presented in a transparent manner to enable insurance distributors to provide the relevant information to their customers or potential customers.

    3. On 2 August 2021, the Commission Delegated Directive (EU) 2021/1270 of 21 April 2021 amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for Undertakings for Collective Investment in Transferable Securities (UCITS) was published in the Official Journal of the European Union (OJ).

    This Directive clarifies the current obligation of undertakings for collective investment in transferable securities (UCITS) to integrate sustainability risks. The clarification does not introduce ranking amongst different risks. This Directive also clarifies some of implications of Regulation on sustainability-related disclosures in the financial services sector, namely where management companies of UCITS disclose information with regard to the consideration of adverse sustainability impacts.

    Member States shall adopt and publish, by 31 July 2022 at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

    4. On 2 August 2021, the Commission Delegated Regulation (EU) 2021/1253 of 21 April 2021 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms was published in the Official Journal of the European Union (OJ).

    Investment firms providing financial advice and portfolio management should 

    • carry out a mandatory assessment of sustainability preferences of their clients or potential clients. 
    • take these sustainability preferences into account in the selection process of the financial instruments that are recommended to those clients.
    • prepare a report to the client that explains how the recommendation to the client meets his investment objectives, risk profile, capacity for loss bearing and sustainability preferences (ex-post information disclosure).
    • take into account sustainability risks, either in qualitative or quantitative terms, when complying with the organisational requirements and to integrate sustainability risk into their risk management policies.

    5. On 2 August 2021, the Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations was published in the Official Journal of the European Union (OJ).

    Investment firm which manufactures financial instruments for sale to clients 

    • duly consider sustainability related objectives when specifying the type(s) of client for whose needs, characteristics and objectives the financial instrument is compatible with.
    • disclose sustainability factors of the financial instruments in a transparent way that allows investment firms to engage in dialogues with clients or potential clients in order to have sufficiently granular understanding of the clients’ individual sustainability preferences.
    • In the context of the review, explicitly take clients’ sustainability related objectives into account.

    Member States shall adopt and publish, by 21 August 2022 at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

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

    European Commission introduces new set of measures to enhance the EU's AML/CFT regime

    CACEIS

  • On 20 July 2021, the European Commission presented an ambitious package of legislative proposals to strengthen the EU's anti-money laundering and countering terrorism financing (AML/CFT) rules. The package also includes the proposal for the creation of a new EU authority to fight money laundering. 

    The package consists of four legislative proposals:

    • A Regulation establishing a new EU AML/CFT Authority;
    • A Regulation on AML/CFT, containing directly-applicable rules, including in the areas of Customer Due Diligence and Beneficial Ownership;
    • A sixth Directive on AML/CFT (“AMLD6”), replacing the existing Directive 2015/849/EU (the fourth AML directive as amended by the fifth AML directive), containing provisions that will be transposed into national law, such as rules on national supervisors and Financial Intelligence Units in Member States;
    • A revision of the 2015 Regulation on Transfers of Funds to trace transfers of crypto-assets (Regulation 2015/847/EU).

    On 11 August 2021, the European Commission extended the closing dates of the consultations on the four legislative proposals from 17 September to 6 October 2021.

  • Benchmarks Regulation (BMR)

    Here are five Commission Delegated Regulation concerning the Benchmarks Regulation

    CACEIS

  • Here are five Commission Delegated Regulation concerning the Benchmarks Regulation.

    1. On 13 August 2021, the Commission Delegated Regulation (EU) 2021/1348 of 6 May 2021 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria under which competent authorities may require changes to the compliance statement of non-significant benchmarks was published in the Official Journal.

    Concerning the criteria at the level of the administrator, the Commission Delegated Regulation specify competent authorities may require changes to the compliance statement referred to in Article 26(3) of Regulation (EU) 2016/1011 where they consider that such statement is not clear about why the administrator concerned should be allowed not to comply with one or more of the requirements referred to in Article 26(1) of Regulation (EU) 2016/1011, and more particularly where there is a lack of clarity about: (a) the organisational structure of the administrator concerned and the conflicts of interest that may arise as a result of its structure; (b) the identification and management of conflicts of interest related to the employees of the administrator concerned, the persons whose services are placed at its disposal or under its control and the persons directly involved in the provision of the non-significant benchmark; (c) the process of oversight of the provision of the non-significant benchmark, taking into account the vulnerability of the benchmark concerned and the scale of the administrator’s organisation; (d) the control framework for the provision or publication of the non-significant benchmark or for making it available, including the administrator’s exposure to operational risk, business continuity risk or to the risk of disruption of the benchmark provision process.

    Concerning the criteria at the level of the benchmark or family of benchmarks, the Commission Delegated Regulation specify competent authorities may require changes to the compliance statement referred to in Article 26(3) of Regulation (EU) 2016/1011 where they consider that such statement is not clear about why the concerned administrator should not to comply with one or more of the requirements referred to in Article 26(1) of Regulation (EU) 2016/1011, and more particularly where there is a lack of clarity about: (a) the level of control over the provision of the input data and whether, taking into account the nature of the input data, that level of control is sufficient to ensure the accuracy, integrity and reliability of the input data; (b) the transparency of the procedures for consulting on any material change to the non-significant benchmark’s methodology, taking into account the complexity of that methodology and the nature of the input data used; (c) the process of reporting instances of manipulation or attempted manipulation of the non-significant benchmark, particularly in relation to the monitoring of input data and contributors; (d) where the non-significant benchmark is based on input data from contributors, the code of conduct and whether, taking into account the nature of the input data, it includes safeguards for the integrity of the input data used; (e) the capacity of the administrator to review and report on its compliance with the non-significant benchmark’s methodology and with Regulation (EU) 2016/1011; (f) where input data is contributed by a supervised contributor, whether that is done with appropriate controls to ensure the accuracy, integrity and reliability of the input data.

    2. On 13 August 2021, the Commission Delegated Regulation (EU) 2021/1349 of 6 May 2021 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for the competent authorities’ compliance assessment regarding the mandatory administration of a critical benchmark was published in the Official Journal.

    The competent authorities’ assessment referred to in Article 21(2), point (b), of Regulation (EU) 2016/1011 concerns either how a critical benchmark is to be transitioned to a new administrator or how that benchmark is to be ceased to be provided. It is therefore appropriate to specify two sets of criteria to be considered by competent authorities, depending on which scenario they are assessing.

    Where a critical benchmark is to be transitioned to a new administrator, the new administrator should be able to ensure the continuity of the provision of the critical benchmark in such a way that supervised entities can continue to use it without interruption and in compliance with Regulation (EU) 2016/1011. It is therefore necessary to specify the criteria that a competent authority should consider when assessing whether the new administrator can ensure such continuity.

    This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Securities and Markets Authority (ESMA).

    The Regulation describes the criteria the competent authorities shall consider, when assessing how a critical benchmark is to be transitioned to a new administrator as well as the criteria for assessing the cessation of the provision of a critical benchmark.

    3. On 13 August 2021, the Commission Delegated Regulation (EU) 2021/1350 of 6 May 2021 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council with regard to regulatory technical standards specifying the requirements to ensure that an administrator’s governance arrangements are sufficiently robust was published in the Official Journal.

    In order to be robust, the governance arrangements of benchmark administrators should provide for an organisational structure that in a clear and documented manner specifies procedures for management decision making, internal reporting lines and the allocation of functions and responsibilities of the persons involved in the provision of a benchmark.

    Robust governance arrangements should allow to identify and to manage possible conflicts of interest that may arise within the organisational structure of benchmark administrators. Therefore, the governance arrangements of benchmark administrators should in particular specify the structure of the management body and its roles and responsibilities.

    The Regulation specifies the governance arrangements of benchmark administrators shall be approved by the management body, if any, as well as the content of such governance arrangements that should be delivered in a clear and well documented manner.

    The Regulation describes the governance arrangements of benchmark administrators shall, as part of their organisational structure, specify in a clear and well documented manner the accountability of the specific persons that are listed in the document.

    Finally, the governance arrangements of benchmark administrators shall ensure that all of their managers or employees, and any other natural person whose services are placed at their disposal or under their control and who are directly involved in the provision of a benchmark, are aware of their responsibilities and of the procedures that must be followed for the proper discharge of those responsibilities. Where a benchmark administrator is part of a group, the governance arrangements of that administrator shall detail any functions related to any concerned services and activities in the provision of the benchmark that have been outsourced, including to group entities, in accordance with Article 10 of Regulation (EU) 2016/1011.

    4. On 13 August 2021, the Commission Delegated Regulation (EU) 2021/1351 of 6 May 2021 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council with regard to regulatory technical standards specifying the characteristics of the systems and controls for the identification and reporting of any conduct that may involve manipulation or attempted manipulation of a benchmark was published in the Official Journal.

    The Regulation describes the adequate systems and effective controls referred to in Article 14(1) of Regulation (EU) 2016/101 and what elements they should include concerning the level appropriate to the nature, complexity and risk of manipulation of the benchmark.

    The adequate systems and effective controls referred to in Article 14(1) of Regulation (EU) 2016/1011 shall be operated by employees of the administrator who are adequately and regularly trained to: (a) detect and identify any suspicious input data that could be the result of benchmark manipulation or attempted manipulation; (b) promptly report any such findings to their internal reporting line.

    The adequate systems and effective controls referred to in Article 14(1) of Regulation (EU) 2016/1011 shall be documented in an input data integrity policy indicating: (a) the risk of benchmark manipulation; (b) a general description of the adequate systems and effective controls, including their compliance with the requirements laid down in Article 1; (c) a general description of the training of the employees of the administrator involved in the operation of the adequate systems and effective controls, as referred to in Article 2; (d) the name and contact details of the persons responsible for the adequate systems and effective controls.

    5. On 13 August 2021, the Commission Delegated Regulation (EU) 2021/1352 of 6 May 2021 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council with regard to regulatory technical standards specifying the conditions to ensure that the methodology for determining a benchmark complies with the quality requirements was published in the Official Journal.

    For the methodology for determining a benchmark to be robust and reliable, that methodology should specify the nature of the input data used and any criteria to be applicable in circumstances in which the quantity or quality of input data falls below the standards necessary for the methodology to determine the benchmark accurately and reliably, it should be subject to an assessment of the relationship between the key assumptions used and the sensitivity of the benchmark computed by that methodology, it should be capable of representing the underlying market or economic reality that it seeks to measure and it should incorporate factors including parameters and input data that are most relevant to measure the underlying market.

    The Regulation describes:

    • Conditions to ensure that the benchmark methodology is robust and reliable
    • Conditions to ensure that the benchmark methodology has clear rules identifying how and when discretion may be exercised in the determination of the benchmark
    • Conditions to ensure that the benchmark methodology is rigorous, continuous and capable of validation including, where appropriate, back-testing against available transaction data
    • Conditions to ensure that the benchmark methodology is resilient and ensures that the benchmark can be calculated in the widest set of possible circumstances, without compromising its integrity
    • Conditions to ensure that the benchmark methodology is traceable and verifiable.
  • Central Securities Depositary Regulation (CSDR)

    EFAMA publishes letter on the CSDR Settlement Discipline implementation timeline

    CACEIS

  • On 15 July 2021, the European fund and Asset Management Association (EFAMA), together with 15 trade associations, representing buy-side, sell-side and market infrastructures, wrote to ESMA and the European Commission regarding the timeline for implementation of the mandatory buy-in rules as part of the CSDR Settlement Discipline Regime.

    The Joint Associations welcome the Report from the Commission on the CSDR Review published in July 2021 and fully support the Commission’s intention to consider amendments to the mandatory buy-in regime, subject to an impact assessment.

    In light of this, the Joint Associations request ESMA and the Commission to take action to ensure that the mandatory buy-in rules for non-CCP transactions are not subject to application on 1 February 2022, when the relevant RTS is currently set to enter into force, and to provide clarity to market participants on the matter on an urgent basis.

    The Joint Associations remain committed to further improving settlement efficiency in Europe’s capital markets.

  • European Market Infrastructure Regulation (EMIR)

    ESMA publishes methodology for assessing third country CCPs systemic importance

    CACEIS

  • On 13 July 2021, the European Securities and Markets Authority (ESMA) published a methodology for assessing third country CCPs systemic importance.

    This document gives an indication of the methodology for ESMA to conduct an assessment of whether or not a CCP, or some of its clearing services, are of such substantial system importance that the CCP should not be recognised to provide certain clearing services or activities.

    The methodology for ESMA’s assessment has been developed based on the requirements of Article 25 (2c) of EMIR and includes 

    i) an extended tiering methodology; 

    ii) reflections to identify how compliance with the conditions for TC CCPs recognition would not sufficiently address EU financial stability risks; and 

    iii) a set of elements to take into consideration in the analysis of costs, benefits, and consequences, including a comprehensive analysis of risks related to both recognition and non-recognition.

    ESMA will request the TC CCP to provide the information required for their tiering assessment. Data will be collected at the clearing service level and by asset class where relevant.

  • ESMA publishes the List of third-country central counterparties recognised to offer services and activities in the Union

    CACEIS

  • On 20 August 2021, the European Securities and Markets Authority (ESMA) published the List of third-country central counterparties recognised to offer services and activities in the Union.

    The central counterparties (CCPs) established in a third country listed in the document have been recognised to offer services and activities in the Union in accordance with Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR).

  • Here are six EU decisions recognizing the legal, supervisory and enforcement arrangements of Brazil, Australia, Singapore, Canada, Hong Kong, USA as equivalent concerning OTC derivatives, CCPs and trade repositories

    CACEIS

  • Here are six EU decisions recognizing the legal, supervisory and enforcement arrangements of Brazil, Australia, Singapore, Canada, Hong Kong, USA as equivalent concerning OTC derivatives, CCPs and trade repositories.

    1. On 6 July 2021, the Commission Implementing Decision (EU) 2021/1108 of 5 July 2021 on the recognition of the legal, supervisory and enforcement arrangements of the United States of America for derivatives transactions supervised by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Farm Credit Administration and the Federal Housing Finance Agency as equivalent to certain requirements of Article 11 of Regulation (EU) No 648/2012 of the European Parliament and Council on OTC derivatives, central counterparties and trade repositories was published in the Official Journal.

    For the purposes of Article 13(3) of Regulation (EU) No 648/2012, the legal, supervisory and enforcement arrangements of the United States of America for the exchange of collateral that apply to transactions regulated as ‘swaps’ as defined in section 721 of the Dodd-Frank Act or ‘security-based swaps’ as defined in section 761 of the Dodd-Frank Act and that are not cleared by a central counterparty shall be considered as equivalent to the requirements of Article 11(3) of Regulation (EU) No 648/2012, where at least one of the counterparties to those transactions is established in the USA and considered a Covered Swap Entity by the Board of Governors of the Federal Reserve System (‘the FRS’), the Office of the Comptroller of the Currency (‘the OCC’), the Federal Deposit Insurance Corporation (‘the FDIC’), the Farm Credit Administration (‘the FCA’) or the Federal Housing Finance Agency (‘the FHFA’), and that the counterparty is subject to the Swap Margin Rule laid down in Title 12 of the Code of Federal Regulations, respectively in Part 45 (for the OCC), 237 (for the FRS), 349 (for the FDIC), 624 (for the FCA) and 1221 (for the FHFA) (together ‘the Swap Margin Rule’).

    2. On 6 July 2021, the Commission Implementing Decision (EU) 2021/1107 of 5 July 2021 on the recognition of the legal, supervisory and enforcement arrangements of Hong Kong for derivatives transactions supervised by the Hong Kong Monetary Authority as equivalent to certain requirements of Article 11 of Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories was published in the Official Journal. 

    For the purposes of Article 13(3) of Regulation (EU) No 648/2012, the legal, supervisory and enforcement arrangements of Hong Kong for timely confirmation, portfolio compression and reconciliation, valuation and dispute resolution that are applicable to non-centrally cleared derivative transactions regulated by the Hong Kong Monetary Authority (‘HKMA’) shall be considered equivalent to the requirements set out in paragraphs 1 and 2 of Article 11 of that Regulation where at least one of the counterparties to such a transaction is an authorised institution as defined in section 2(1) of the Banking Ordinance and subject to the risk mitigation requirements set out in the HKMA’s Supervisory Policy Manual module CR-G-14 entitled ‘Non-centrally Cleared OTC Derivatives Transactions – Margin and Other Risk Mitigation Standards’.

    3. On 6 July 2021, the Commission Implementing Decision (EU) 2021/1106 of 5 July 2021 on the recognition of the legal, supervisory and enforcement arrangements of Australia for derivatives transactions supervised by the Australian Prudential Regulation Authority as equivalent to certain requirements of Article 11 of Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories was published in the Official Journal. 

    For the purposes of Article 13(3) of Regulation (EU) No 648/2012, the legal, supervisory and enforcement arrangements of Australia for the exchange of collateral that are applied to non-centrally cleared derivative transactions regulated by APRA shall be considered equivalent to the requirements of Article 11(3) of Regulation (EU) No 648/2012, where the following conditions are satisfied: (a) at least one of the counterparties to those transactions is an APRA covered entity as defined under Prudential Standard CPS 226; (b) where variation margin is required to be provided under Regulation (EU) No 648/2012, variation margin is provided on the same day on which it is calculated. By way of derogation from point (b), where it is established between the counterparties that variation margin cannot consistently be provided on the same day on which it its calculated, the legal, supervisory and enforcement arrangements of Australia shall also be considered as equivalent to the requirements of Article 11(3) of Regulation (EU) No 648/2012 where variation margin is provided within 2 working days of its calculation and the margin period of risk used to calculate the initial margin is adjusted accordingly.

    4. On 6 July 2021, the Commission Implementing Decision (EU) 2021/1105 of 5 July 2021 on the recognition of the legal, supervisory and enforcement arrangements of Singapore for derivatives transactions supervised by the Monetary Authority of Singapore as equivalent to certain requirements of Article 11 of Regulation (EU) No 648/2012 of the European Parliament and Council on OTC derivatives, central counterparties and trade repositories was published in the Official Journal. 

    5. On 6 July 2021, the Commission Implementing Decision (EU) 2021/1104 of 5 July 2021

    on the recognition of the legal, supervisory and enforcement arrangements of Canada for derivatives transactions supervised by the Office of the Superintendent of Financial Institutions as equivalent to certain requirements of Article 11 of Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories was published in the Official Journal. 

    For the purposes of Article 13(3) of Regulation (EU) No 648/2012, the legal, supervisory and enforcement arrangements of Canadafor the exchange of collateral that are applied to non-centrally cleared derivative transactions regulated by OSFI, with the exeption of phisically settled commodity derivatives, shall be considered as equivalent to the requirements set out in Article 11(3) of Regulation (EU) No 648/2012 as further specified in Delegated Regulation (EU) 2016/2251, where the following conditions are satisfied: (a) at least one of the counterparties to those transactions is established in Canada and is subject to the margin requirements of Canada; (b) transactions are marked-to-market and, where variation margin is required to be provided under Regulation (EU) No 648/2012, variation margin is exchanged on the same day on which it is calculated; By way of derogation from point (b), where it is established between the counterparties that variation margin cannot consistently be provided on the same day in which it is calculated, the legal, supervisory and enforcement arrangements of Canada shall also be considered as equivalent to the requirements of Article 11(3) of Regulation (EU) No 648/2012 where variation margin is provided within two business days of its calculation and the margin period of risk used to calculate initial margin is adjusted accordingly.

    6. On 6 July 2021, the Commission Implementing Decision (EU) 2021/1103 of 5 July 2021 on the recognition of the legal, supervisory and enforcement arrangements of Brazil for derivatives transactions entered into by Brazilian institutions under the regulation of the Central Bank of Brazil as equivalent to certain requirements of Article 11 of Regulation (EU) No 648/2012 of the European Parliament and Council on OTC derivatives, central counterparties and trade repositories was published in the Official Journal. 

    For the purposes of Article 13(3) of Regulation (EU) No 648/2012, the legal, supervisory and enforcement arrangements of Brazil for timely confirmation, daily valuation and portfolio reconciliation that are applied to transactions regulated as OTC derivatives by the Banco Central do Brasil (‘BCB’) and the Comissão de Valores Mobiliários (‘CVM’) and that are not centrally cleared by a CCP shall be considered as equivalent to the corresponding requirements set out in paragraphs 1 and 2 of Article 11 of Regulation (EU) No 648/2012, where at least one of the counterparties to those transactions is an in-scope counterparty for the purpose of the margin rules of Brazil.

  • Governance

    EBA publishes its final Guidelines on internal governance

    CACEIS

  • On 2 July 2021, the European Banking Authority (EBA) published its revised Guidelines on internal governance. The update takes into account the amendments introduced by the fifth Capital Requirements Directive (CRD V) and the Investment Firms Directive (IFD) in relation to credit institutions’ sound and effective governance arrangements, in particular with regard to gender diversity, money laundering, financing terrorist risk and the management of conflicts of interest, including in the context of loans and other transactions with members of the management body and their related parties. The final revised Guidelines will apply from 31 December 2021.

    The revised Guidelines further specify and reinforce the framework regarding loans to members of the management body and their related parties. Those loans may constitute a specific source of actual or potential conflict of interest and, therefore, specific provisions have been explicitly included in the Directive CRD. In the same way, other transactions with members of the management body and their related parties have the potential to create conflicts of interest and, therefore, the EBA is providing guidance on how to properly manage them.

    Finally, in line with the requirement to have a gender-neutral remuneration policy, the revised Guidelines provide new guidance on the code of conduct to ensure that credit institutions take all necessary measures to avoid any form of discrimination and guarantee equal opportunities to staff of all genders. In addition, institutions should monitor the gender pay-gap.

  • EBA and ESMA publish final guidance on fit and proper requirements

    CACEIS

  • On 2 July 2021, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) published their revised final joint Guidelines on the assessment of the suitability of members of the management body and key function holders. These Guidelines take into account the amendments introduced by the revised Capital Requirements Directive (CRD V) and the Investment Firms Directive (IFD), and their effect on the assessment of the suitability of members of the management body, in particular with regard to money laundering and financing terrorism risks, and gender diversity. The joint final Guidelines will apply from 31 December 2021.

    In addition, a gender balanced composition of the management body is of particular importance. Institutions should respect the principle of equal opportunities for any gender and take measures to improve a more gender balanced composition of staff in management positions so as to ensure a more gender balanced pool of candidates for positions within the management body.

    The joint Guidelines also take into account the recovery and resolution framework introduced by the Bank Recovery and Resolution Directive (BRRD) and provide further guidance in this regard. As part of early intervention measures and during resolution, the suitability of newly appointed members of the management body and the management body collectively are relevant and require an assessment. The Guidelines provide further details on how the exchange of information between resolution authorities and competent authorities should work.

    Finally, the joint Guidelines take into account the new legislative framework for investment firms adopted in 2019 by the Investment Firms Regulation (IFR) and IFD, for the identification of the investment firms subject to the various guidelines.

  • EBA publishes its final revised Guidelines on sound remuneration policies

    CACEIS

  • On 2 July 2021, the European Banking Authority (EBA) published its revised Guidelines on sound remuneration policies. This update takes into account the amendments introduced by the fifth Capital Requirements Directive (CRD V) in relation to institutions’ sound remuneration policies and, in particular, the requirement that remuneration policies should be gender neutral. The final Guidelines also consider supervisory practices and clarify some aspects of retention bonuses and severance pays. The revised Guidelines will apply from 31 December 2021.

    The principle of equal pay for male and female workers for equal work or work of equal value is laid down in Article 157 of the Treaty on the Functioning of the European Union (TFEU). Institutions need to apply this principle in a consistent manner. In this context, the final revised Guidelines specify further that institutions should implement a gender-neutral remuneration policy. All institutions are also required to apply sound and gender-neutral remuneration policies to all staff.

    Additional guidance is provided on the application of waivers based on institutions’ total balance sheet and for staff with a low variable remuneration that have been introduced with CRD V regarding the requirements to defer and pay out in instruments a part of the variable remuneration of identified staff.

    The final Guidelines also clarify how the remuneration framework applies on a consolidated basis to financial institutions that are subject to a specific remuneration framework (for example, firms subject to the Investment Firms Directive (IFD), the Undertakings for Collective Investment in Transferable Securities Directive (UCITS), or the Alternative Investment Fund Managers Directive (AIFMD)).

    Finally, the sections on severance payments and retention bonuses have been revised based on supervisory experience regarding cases where such elements have been used by institutions to circumvent requirements regarding the link to performance or the maximum ratio.

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

    European Commission adopts Draft Directive amending UCITS IV Directive as regards the use of key information documents by management companies of undertakings for collective investment in transferable securities

    CACEIS

  • On 16 July 2021, the European Commission adopted Draft Directive amending UCITS IV Directive as regards the use of key information documents by management companies of undertakings for collective investment in transferable securities.

    Article 32 of Regulation No 1286/2014 on key information documents for packaged retail and insurance-based investment products provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. The Directive proposes to extend the transitional arrangement in Regulation No 1286/2014 to 30 June 2022.

    Articles 78 to 82, and 94 of the UCITS IV Directive also specify the main principles of key investor information. Commission Regulation (EU) No 583/20102 lays down further rules on its content and format.

    At the moment as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation No 1286/2014 and a key investor information document in accordance with the UCITS IV Directive. To avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS, the Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with Regulation No 1286/2014 is considered as satisfying the key investor information requirements in the UCITS IV Directive.

  • ESMA publishes the translations of Guidelines on marketing communications under the Regulation on cross-border distribution of funds

    CACEIS

  • On 2 August 2021, the European Securities and Markets Authority (ESMA) published the translations of Guidelines on marketing communications under the Regulation on cross-border distribution of funds.

    These guidelines apply 6 months after the date of the publication of the guidelines on ESMA’s website in all EU official languages, i.e, 2 February 2022.

  • Here are updated Q&As from the ESMA on UCITS and AIFMD

    CACEIS

  • Here are updated Q&As from the ESMA on UCITS and AIFMD.

    1. On 16 July 2021, the European Securities and Markets Authority (ESMA) published updated Q&As  on the UCITS Directive.

    The new questions concern the following elements:

    • Question 5: Application of the guidelines to funds with multiple portfolio managers
    • Question 6: Crystallisation of performance fees in case of the creation of a new UCITS/compartment/share class in the course of the financial year

    2. On 16 July 2021, the European Securities and Markets Authority (ESMA) published updated Q&As on the application of the AIFMD.

    The new questions concern the following elements:

    • Question 84 : Which risk is measured by NET DV01? How shall it be reported?
    • Question 85: Which risk is measured by NET CS01?  How shall it be reported?
    • Question 86: Which risk is measured by Net Equity Delta? How shall it be reported?
    • Question 7 : In case the authorised AIFM has delegated the portfolio management function to different delegated portfolio managers, would it be admissible to pay a performance fee to those delegated portfolio managers who have overperformed during the performance reference period, despite a global underperformance of the fund during the same performance reference period?
    • Question 8: In case of creation of a new compartment/share class in an existing AIF in the course of its financial year or in case of creation of a new AIF, can performance fees be crystallised after less than 12 months from the date of creation of such a new AIF/compartment/share class?
  • FRANCE

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

    TRACFIN and H3C jointly publish AML/CFT guidelines / TRACFIN et H3C ont publié conjointement des lignes directrices

    CACEIS

  • On 13 July 2021, the Tracfin (Traitement du renseignement et action contre les circuits financiers clandestins) and Haut Conseil du Commissariat aux Comptes (H3C) jointly published AML/CFT guidelines.

    These guidelines constitute interpretative standards for the AML / CFT system: they explain the texts in force and provide professionals with insight into the implementation of their due diligence and reporting obligations (detection of anomalies, analysis of the facts leading to the suspicion, modalities and deadlines for declaration).

    The regulatory authority for the profession of auditor and the intelligence service under the authority of the Ministry of the Economy welcome this collaboration which contributes to the development of the mobilization of professionals with the public authorities in the fight against clandestine financial circuits.

    Version française

    Le 13 juillet 2021, le Tracfin (Traitement du renseignement et action contre les circuits financiers clandestins) et le Haut Conseil du Commissariat aux Comptes (H3C) ont publiés conjointement des lignes directrices à destination des commissaires aux comptes et relatives à la lutte contre le blanchiment des capitaux et le financement du terrorisme (LCB/FT).

    Les lignes directrices explicitent les textes en vigueur et apportent un éclairage aux professionnels dans la mise en œuvre de leurs obligations de vigilance et de déclaration (détection des anomalies, analyse des faits conduisant au soupçon, modalités et délais de déclaration).

    L’autorité de régulation de la profession de commissaire aux comptes et le service de renseignement placé sous l’autorité du Ministère de l’économie se félicitent de cette collaboration qui contribue au développement de la mobilisation des professionnels auprès des pouvoirs publics dans la lutte contre les circuits financiers clandestins.

  • France publishes Decree 2021-1127 on the procedures for consulting the information of registers of trusts and fiduciaries / La France publie Décret 2021-1127 sur les modalités de consultation des informations des registres des trusts et des fiducies

    CACEIS

  • On 29 August 2021, the Decree No. 2021-1127 of 27 August 2021 on the procedures for consulting the information contained in the registers of trusts and fiduciaries was published in the Official Journal. 

    The decree is issued for the application of Article L. 167 of the LPF, created by 2o of Article 14 of Ordinance No. 2020-115 of 12 February 2020 strengthening the national anti-money laundering and combating the financing of terrorism framework in the context of the transposition of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018, known as "AML5". 

    This ordinance revises the provisions relating to the transparency of information concerning trusts and other legal arrangements that have similar structures and functions. Article L. 167 of the LPF sets out the conditions for consulting the register of trusts mentioned in Article 1649 AB of the General Tax Code and the national register of trusts provided for in Article 2020 of the Civil Code. The decree specifies the terms and conditions of consultation of these registers by the authorities referred to in I of Article L. 167 of the LPF, the terms and conditions of consultation at the initiative of the persons referred to in II of the same article, as well as the terms and conditions of access to the information contained in these registers by the competent authorities of the Member States of the European Union and the information to be provided to the tax administration in support of their requests.

    The decree targets competent authorities, supervisory authorities and entities, referred to in I of Article L. 167 of the Book of Tax Procedures (LPF), subject to due diligence obligations in the context of their anti-money laundering and combating the financing of terrorism (AML/CFT) mission, as well as any other person covered by II of the same article.

    Version française

    Le 29 août 2021, le Décret no 2021-1127 du 27 août 2021 relatif aux modalités de consultation des informations contenues dans les registres des trusts et des fiducies a été publié au Journal Officiel.

    Le décret est pris pour l’application de l’article L. 167 du LPF, créé par le 2o de l’article 14 de l’ordonnance no 2020-115 du 12 février 2020 renforçant le dispositif national de lutte contre le blanchiment de capitaux et le financement du terrorisme dans le cadre de la transposition de la directive (UE) 2018/843 du Parlement européen et du Conseil du 30 mai 2018, dite « AML5 ».

    Cette ordonnance revoit les dispositions relatives à la transparence des informations concernant les trusts et des autres montages juridiques qui présentent des structures et fonctions similaires. L’article L. 167 du LPF prévoit les conditions de la consultation du registre des trusts mentionné à l’article 1649 AB du code général des impôts et du registre national des fiducies prévu par l’article 2020 du code civil. Le décret précise les modalités de consultation de ces registres par les autorités visées au I de l’article L. 167 du LPF, les modalités de consultation à l’initiative des personnes visées au II du même article, ainsi que les modalités d’accès aux informations contenues dans ces registres par les autorités compétentes des Etats membres de l’Union européenne et les informations à fournir à l’administration fiscale à l’appui de leurs demandes.

    Le décret concerne les autorités compétentes, autorités de contrôle et entités, visées au I de l’article L. 167 du livre des procédures fiscales (LPF), assujetties aux obligations de vigilance dans le cadre de leur mission de lutte contre le blanchiment et le financement du terrorisme (LCB-FT), ainsi que toute autre personne relevant du II du même article.

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

    France repeals the provisions on applicable management standards, capital requirements and control of large exposures/ La France abroge les dispositions relatives aux normes de gestion applicables, exigences de fonds propres et contrôle des grands risques

    CACEIS

  • On 1 August 2021, the Order of 28 July 2021 repealing Regulation 97-04 of 21 February 1997 on management standards applicable to investment firms other than portfolio management companies, the Order of 20 February 2007 on capital requirements applicable to credit institutions and investment firms, Regulation 93-05 of 21 December 1993 on the control of large exposures and Regulation 90-02 of 23 February 1990 on own funds was published in the Official Journal.

    This order repeals the provisions contained in Regulation 97-04 of 21 February 1997 on management standards applicable to investment firms other than portfolio management companies, the order of 20 February 2007 on capital requirements applicable to credit institutions and investment firms and Regulation (EU) 93-05 of 21 December 1993 on the supervision of large exposures, as these provisions are already contained in European provisions or in legislative or regulatory provisions. These repeals are part of the transposition of Directive (EU) No 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms.

    Version française

    Le 1 août 2021, l'Arrêté du 28 juillet 2021 abrogeant le règlement no 97-04 du 21 février 1997 relatif aux normes de gestion applicables aux entreprises d’investissement autres que les sociétés de gestion de portefeuille, l’arrêté du 20 février 2007 relatif aux exigences de fonds propres applicables aux établissements de crédit et aux entreprises d’investissement, le règlement no 93-05 du 21 décembre 1993 relatif au contrôle des grands risques et le règlement no 90-02 du 23 février 1990 relatif aux fonds propres a été publié au Journal Officiel.

    Cet arrêté abroge les dispositions présentes dans le règlement no 97-04 du 21 février 1997 relatif aux normes de gestion applicables aux entreprises d’investissement autres que les sociétés de gestion de portefeuille, l’arrêté du 20 février 2007 relatif aux exigences de fonds propres applicables aux établissements de crédit et aux entreprises d’investissement et le règlement (UE) no 93-05 du 21 décembre 1993 relatif au contrôle des grands risques car ces dernières sont déjà présentes dans les dispositions européennes ou des dispositions législatives ou règlementaires. Ces abrogations rentrent dans le cadre du travail de transposition de la directive (UE) no 2019/2034 du Parlement européen et du Conseil du 27 novembre 2019 concernant la surveillance prudentielle des entreprises d’investissement.

  • COVID-19 Regulatory Measures

    France extends the meeting, deliberation rules of assemblies, governing bodies of legal persons until 30 September 2021 / La France prolonge les règles de réunion, délibération des assemblées et organes de direction jusqu'au 30 septembre 2021

    CACEIS

  • On 29 July 2021, the Decree No. 2021-987 of 28 July 2021 extending the period of application of Decree No. 2020-418 of 10 April 2020 and Decree No. 2020-629 of 25 May 2020 was published in the Official Journal. 

    The purpose of the decree is to extend until 30 September 2021 the period of application of Decree No. 2020-418 of 10 April 2020, as amended, adapting the rules for meetings and deliberations of the assemblies and governing bodies of legal persons and entities without legal personality under private law because of the covid-19 epidemic and Article 1 of Decree No. 2020-629 of 25 May 2020, as amended, relating to the operation of the bodies of the provident institutions and to the joint guarantee fund provided for in Article L. 931-35 of the social security code.

    Version française

    Le 29 juillet 2021, le Décret no 2021-987 du 28 juillet 2021 prorogeant la durée d’application du décret no 2020-418 du 10 avril 2020 et du décret no 2020-629 du 25 mai 2020 a été publié au Journal Officiel.

    Le décret porte prorogation jusqu’au 30 septembre 2021 de la durée d’application du décret no 2020-418 du 10 avril 2020 modifié portant adaptation des règles de réunion et de délibération des assemblées et organes dirigeants des personnes morales et entités dépourvues de personnalité morale de droit privé en raison de l’épidémie de covid-19 et de l’article 1er du décret no 2020-629 du 25 mai 2020 modifié relatif au fonctionnement des instances des institutions de prévoyance et au fonds paritaire de garantie prévu à l’article L. 931-35 du code de la sécurité sociale.

  • Directive on covered bonds

    Here are two decree French decrees transposing the Directive (EU) 2019/2162 on the issue of covered bonds and the public oversight of covered bonds / Voici deux décrets français transposant la directive (UE)2019/2162 sur l’émission d’obligations garanties

    CACEIS

  • Here are two decree French decrees transposing the Directive (EU) 2019/2162 on the issue of covered bonds and the public oversight of covered bonds.

    1. On 1 July 2021, the Order No 2021-858 of 30 June 2021 transposing Directive (EU) 2019/2162 of the European Parliament and of the Council of 27 November 2019 on the issue of covered bonds and the public oversight of covered bonds was published in the Official Journal. 

    Directive 2019/2162, the so-called "covered bonds", and its associated regulation were adopted on 27 November 2019. Covered bonds are debt instruments issued by certain credit institutions, mainly to refinance portfolios of real estate and public sector loans.

    Given the continuity between the existing covered bond regime and that of covered bonds to be issued after 8 July 2022, it did not seem necessary to include a transitional arrangement.

    The order: 

    • guarantees the ability of French institutions to: (i) mix different types of assets in the cover pool (e.g. real estate and public sector); (ii) mobilise claims between the originating institution and the covered bond issuer by way of pledge or promissory note rather than by perfect sale; and (iii) issue covered bonds with extendable maturities; 
    • organises a convergence between the rules on eligibility of claims to the cover pool and the rules set out in Article 129 of Regulation (EU) No 575/2013 which determine the eligibility of covered bonds for a more favourable supervisory treatment at investor banks; 
    • refers to two covered bond labels, a first label "European covered bonds" for bonds that comply with the provisions transposing the Directive and a second label "high quality European covered bonds" for bonds that also comply with the adaptation provisions of Article 129 of Regulation (EU) No 575/2013. These labels will make it easier for investors to assess the quality of covered bonds and will thus help to make the French covered bond market more attractive on the European stage.

    2. On 7 July 2021, the Decree no.2021-898 of 6 July 2021 transposing Directive (EU) 2019/2162 of the European Parliament and of the Council of 27 November 2019 on the issuance of covered bonds and the public oversight of covered bonds was published in the Official Journal. 

    The decree transposes Directive (EU) 2019/2162 of the European Parliament and of the Council of 27 November 2019 on the issuance of covered bonds and the public oversight of covered bonds, as regards measures falling within the scope of the regulation, in application of the legislative provisions covered by Order No. 2021-858 of 30 June 2021.

    Targets: real estate credit companies, housing finance companies, housing refinancing fund.

    Version française

    Voici deux décrets français transposant la directive (UE) 2019/2162 sur l’émission d’obligations garanties et la surveillance publique des obligations garanties.

    1. Le 1er juillet 2021, l'Ordonnance no.2021-858 du 30 juin 2021 portant transposition de la directive (UE) 2019/2162 du Parlement européen et du Conseil du 27 novembre 2019 concernant l’émission d’obligations garanties et la surveillance publique des obligations garanties a été publiée au Journal Officiel.

    La directive 2019/2162, dite « covered bonds », et son règlement associé ont été adoptés le 27 novembre 2019. Les obligations garanties (covered bonds) constituent des titres de créance émis par certains établissements de crédit, pour refinancer essentiellement des portefeuilles de crédits immobiliers et de crédits au secteur public.

    Eu égard à la continuité entre le régime des obligations garanties existantes et celui des obligations garanties qui seront émises après le 8 juillet 2022, il n'est pas apparu nécessaire d'y intégrer un dispositif transitoire.

    L'ordonnance :

    • garantit la capacité des établissements français de : (i) mélanger des actifs de différente nature dans le panier de couverture (par exemple, immobilier et secteur public) ; (ii) mobiliser des créances entre l'établissement qui a procédé à l'origination et l'établissement émetteur des obligations garanties par voie de nantissement ou de billet à ordre plutôt que par vente parfaite ; et (iii) émettre des obligations garanties dont la maturité est prorogeable ;
    • organise une convergence entre les règles d'éligibilité des créances au panier de couverture et les règles définies à l'article 129 du règlement (UE) n° 575/2013 qui déterminent l'éligibilité des obligations garanties à un traitement prudentiel plus favorable chez les banques investisseurs ;
    • fait référence aux deux labels d'obligations garanties, un premier label « obligations garanties européennes » pour les obligations qui respectent les dispositions transposant la directive et un second label « obligations garanties européennes de qualité supérieure » pour les obligations qui respectent également les dispositions d'adaptation de l'article 129 du règlement (UE) n° 575/2013. Ces labels permettront aux investisseurs d'évaluer plus facilement la qualité des obligations garanties et contribueront ainsi à renforcer l'attractivité du marché français d'obligations garanties sur la scène européenne.

    2. Le 7 juillet 2021, le Décret no 2021-898 du 6 juillet 2021 portant transposition de la directive (UE) 2019/2162 du Parlement européen et du Conseil du 27 novembre 2019 concernant l’émission d’obligations garanties et la surveillance publique des obligations garanties a été publié au Journal Officiel. 

    Le décret procède à la transposition de la directive (UE) 2019/2162 du Parlement européen et du Conseil du 27 novembre 2019 concernant l’émission d’obligations garanties et la surveillance publique des obligations garanties, pour ce qui concerne les mesures relevant du domaine du règlement, en application des dispositions législatives faisant l’objet de l’ordonnance no 2021-858 du 30 juin 2021.

    Publics concernés : sociétés de crédit foncier, sociétés de financement de l’habitat, Caisse de refinancement de l’habitat.

  • Information Technology (IT) / Information and Communications Technology (ICT)

    ACPR publishes Notice on IT risk management for companies in the banking, payment & investment services sector / L'ACPR publie une notice sur la gestion du risque IT pour les entreprises de la banque, services de paiement et services d'investissement

    CACEIS

  • On 7 July 2021, the Autorité de contrôle prudentiel et de résolution (ACPR) published a Notice on IT risk management for companies in the banking, payment and investment services sector.

    With this Notice, the ACPR wishes to provide explanations regarding the new provisions on IT risk management introduced by the Amending Order of 25 February 20211 in the Order of 3 November 2014 on the internal control of undertakings in the banking, payment and investment services sector subject to supervision by the ACPR. The effect of these changes is to bring the French regulatory framework into line with the European Banking Authority's (EBA) guidelines EBA/GL/2019/04 on information and communication technology (ICT) and security risk management (hereinafter "the EBA guidelines").

    The Notice aims to clarify the implementation of the new provisions of the Order. It places the elements of IT risk management in the general context of internal control and risk management. It refers to the principles set out in the EBA guidelines, clarifying them where necessary.

    Version française

    Le 7 juillet 2021, l'Autorité de contrôle prudentiel et de résolution (ACPR) a publié une notice sur la gestion du risque IT pour les entreprises de la banque, services de paiement et services d'investissement.

    Par cette Notice, l’ACPR souhaite apporter des explications à propos des nouvelles dispositions relatives à la gestion du risque informatique introduites par l’arrêté modificatif du 25 février 20211 dans l’arrêté du 3 novembre 2014 relatif au contrôle interne des entreprises du secteur de la banque, des services de paiement et des services d'investissement soumises au contrôle de l'Autorité de contrôle prudentiel et de résolution (ci-après « l’arrêté »). Ces évolutions ont pour effet de mettre le cadre règlementaire français en conformité avec les orientations de l’Autorité bancaire européenne (ABE) EBA/GL/2019/04 sur la gestion des risques liés aux technologies de l’information et de la communication (TIC) et à la sécurité (ci-après « les orientations ABE »).

    La Notice vise à clarifier les modalités de mise en œuvre des nouvelles dispositions de l’arrêté. Elle replace ainsi les éléments sur la gestion du risque informatique dans le contexte général du contrôle interne et de la gestion des risques. Elle se réfère pour cela aux principes figurant dans les orientations ABE, en les précisant en tant que de besoin.

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

    France transposes the directive on the cross-border distribution of collective investment schemes / La France transpose la directive sur la distribution transfrontalière d'organismes de placement collectif

    CACEIS

  • BACKGROUND

    France is responsible for ensuring the transposition, by 2 August 2021, of Directive (EU) 2019/1160 of the European Parliament and of the Council of June 20, 2019 amending Directives 2009/65/EC and 2011/61/EU as regards the cross-border distribution of collective investment schemes. This is the purpose of this ordinance, accompanied by regulatory measures for its implementation (decree in the Council of State, simple decree and amendment of the General Regulation of the Autorité des marchés financiers).

    WHAT'S NEW?

    Here are five decrees transposing the Cross-border fund distribution Directive & Regulation (CBD/CBR) in France.

    1. On 30 July 2021, the Order of 23 July 2021 approving amendments to the general regulations of the Autorité des marchés financiers was published in the Official Journal. 

    The Order amends Titles I (UCITS) and II (AIFs) of Book IV of the AMF General Regulation. These amendments are part of the transposition into French law of Directive (EU) 2019/1160 of 20 June 2019 on the cross-border distribution of collective investment schemes (known as the CBDF Directive), which is scheduled to come into force on 2 August 2021. 

    The amendments 

    (i) clarify the obligations of UCITS and AIF managers towards retail investors in each host Member State where they undertake marketing activities; 

    (ii) ensure that retail investors have access to the information to which they are entitled, while noting the prohibition in the CBDF Directive on Member States hindering marketing on their territory by requiring a local physical presence or the appointment of a third party; 

    (iii) they also provide a framework for the cessation of the marketing of units or shares of a UCITS or AIF in a host Member State.

    The amendments to the general regulations of the Autorité des marchés financiers, the text of which is attached to this order, are hereby approved.

    2. On 1 August 2021, the Order No. 2021-1009 of 31 July 2021 on the cross-border distribution of collective investment schemes was published in the Official Journal. 

    Article 1 of the Order amends the provisions applicable to UCITS. In particular, it transposes into the Monetary and Financial Code the new harmonized European regime governing the cessation of marketing of a UCITS within the European Union and the European Economic Area or EEA (i.e. the "de-notification" process), referring to the AMF General Regulation the transposition of the precise conditions governing this process. It also clarifies, by literally transposing the European Directive (EU) 2019/1160, the consequences of a modification by a UCITS of the notification file that had been sent to the AMF for the purpose of its marketing in other Member States, when this modification conflicts with the legislative and regulatory provisions applicable to UCITS.

    Article 2 of the ordinance amends the provisions applicable to AIFs. It transposes into the Monetary and Financial Code the process of cessation of marketing (or de-notification), resulting from Directive (EU) 2019/1160, and applicable, as for UCITS, to AIFs marketed in France or in other EU Member States or EEA member states (2o and d of 3o of Article 2). Like the provisions governing UCITS, it specifies the consequences of a change in the notification file sent to the AMF for the purpose of marketing in another Member State. Lastly, this article transposes into the Monetary and Financial Code the new harmonized European pre-marketing regime, which allows a French or EU management company to conduct canvassing activities aimed at assessing the interest of professional clients domiciled in EU Member States or EEA countries in units or shares of EU AIFs that it may eventually wish to market on a cross-border basis, under the conditions defined by decree and by the General Regulation of the AMF.

    3. On 1 August 2021, the Decree No. 2021-1011 of 31 July 2021 on the cross-border distribution of collective investment schemes was published in the Official Journal.

    The text provides for the regulatory implementation of the transposition of the Cross-Border Directive, in conjunction with the legislative adjustments made by way of ordinance and decree issued by the Council of State. In particular, this decree specifies the conditions under which a portfolio management company may undertake pre-marketing activities for an AIF in France or in another European Union Member State.

    4. On 1 August 2021, the Decree No. 2021-1012 of 31 July  2021 transposing Directive (EU) 2019/1160 of the European Parliament and of the Council of June 20, 2019 amending Directives 2009/65/EC and 2011/61/EU as regards the cross-border distribution of collective investment undertakings was published in the Official Journal.

    The text provides for the regulatory implementation of the transposition of the Cross-Border Directive, in conjunction with the legislative adjustments made by way of ordinance and decree issued by the Council of State. In particular, this decree specifies the conditions under which a portfolio management company may undertake pre-marketing activities for an AIF in France or in another European Union Member State.

    5. On 1 August 2021, the Order of 28 July 2021 amending the order of 6 September 2017 on the segregation of client funds of investment firms was published in the Official Journal.

    This Order amends the provisions of the Order of 6 September 2017 on the ring-fencing of client funds of investment firms in the context of the transposition of Directive (EU) No 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms. The amendments aim to extend the scope of this Order to credit and investment institutions (CIs).

    WHAT'S NEXT?

    On 2 August 2021, the Autorité des Marchés Financiers (AMF) amended its General Regulation and updated three policy documents in order to transpose into French law Directive (EU) 2019/1160 of 20 June 2019 on the cross-border distribution of collective investment undertakings (CBD). 

    On 12 August 2021, the Autorité des Marchés Financiers (AMF) updated its instructions DOC-2011-19, DOC-2011-20, DOC-2011-21, DOC-2011-22 and DOC-2011-23 relating to authorised UCITS and AIFs. It has also clarified and simplified a number of rules relating to the approval of changes made during the life of these funds. 

    Stakeholders need to take into account the recent fundamental legislative changes in order to remain compliant with the regulations.

    Version française

    BACKGROUND

    Il revient à la France d'assurer la transposition, d'ici le 2 août 2021, de la directive (UE) 2019/1160 du Parlement européen et du Conseil du 20 juin 2019 modifiant les directives 2009/65/CE et 2011/61/UE en ce qui concerne la distribution transfrontalière des organismes de placement collectif. Tel est l'objet de la présente ordonnance, accompagnée de mesures réglementaires d'application (décret en Conseil d'Etat, décret simple et modification du règlement général de l'Autorité des marchés financiers).

    WHAT'S NEW?

    Voici cinq décrets transposant la Directive et le Règlement EU visant à faciliter la distribution transfrontalière des organismes de placement collectif.

    1. Le 30 juillet 2021, l'Arrêté du 23 juillet 2021 portant homologation de modifications du règlement général de l’Autorité des marchés financiers a été publié au Journal Officiel. 

    L'ordonnance modifie les titres I (OPCVM) et II (FIA) du livre IV du règlement général de l'AMF. Ces modifications s'inscrivent dans le cadre de la transposition en droit français de la directive (UE) 2019/1160 du 20 juin 2019 sur la distribution transfrontalière des organismes de placement collectif (dite directive CBDF), dont l'entrée en vigueur est prévue le 2 août 2021. 

    Ces modifications :

    (i) clarifient les obligations des gestionnaires d'OPCVM et de fonds alternatifs envers les investisseurs de détail dans chaque État membre d'accueil où ils exercent des activités de commercialisation ; 

    (ii) garantissent que les investisseurs de détail ont accès aux informations auxquelles ils ont droit, tout en prenant note de l'interdiction faite par la directive CBDF aux États membres d'entraver la commercialisation sur leur territoire en exigeant une présence physique locale ou la désignation d'un tiers ; 

    (iii) elles fournissent également un cadre pour la cessation de la commercialisation des unités ou des parts d'un OPCVM ou d'un fonds alternatif dans un État membre d'accueil.

    Les modifications du règlement général de l’Autorité des marchés financiers, dont le texte est annexé au présent arrêté, sont homologuées.

    2. Le 1 août 2021, l'Ordonnance n° 2021-1009 du 31 juillet 2021 relative à la distribution transfrontalière des organismes de placement collectif a été publiée au Journal Officiel.

    L'article 1er de l'ordonnance modifie les dispositions applicables aux OPCVM. Il transpose notamment dans le code monétaire et financier le nouveau régime européen harmonisé régissant la cessation de la commercialisation d'un OPCVM au sein de l'Union européenne et de l'Espace économique européen ou EEE (i.e. processus de la « dé-notification »), renvoyant au règlement général de l'Autorité des marchés financiers la transposition des conditions précises encadrant ce processus. Il précise par ailleurs, en transposant littéralement la directive européenne (UE) 2019/1160, les conséquences d'une modification par un OPCVM du dossier de notification qui avait été transmis à l'Autorité des marchés financiers aux fins de sa commercialisation dans d'autres Etats membres, lorsque cette modification rentre en conflit avec les dispositions législatives et réglementaires applicables aux OPCVM.

    L'article 2 de l'ordonnance modifie les dispositions applicables aux FIA. Il transpose dans le code monétaire et financier le processus de la cessation de commercialisation (ou dé-notification), issu de la directive (UE) 2019/1160, et applicable, de même que pour les OPCVM, aux FIA commercialisés en France ou dans d'autres Etats membres de l'UE ou Etats parties de l'EEE (2° et d du 3° de l'article 2). A l'instar des dispositions régissant les OPCVM, il précise les conséquences d'une modification du dossier de notification transmis à l'Autorité des marchés financiers aux fins de la commercialisation dans un autre Etat membre. Cet article transpose enfin dans le code monétaire et financier le nouveau régime européen harmonisé de la pré-commercialisation, qui permet à une société de gestion française ou de l'UE de conduire des activités de prospection, visant à évaluer l'intérêt de clients professionnels, domiciliés dans les Etats membres de l'UE ou dans les Etats parties à l'EEE, pour des parts ou actions de FIA de l'UE qu'elle pourrait à terme vouloir commercialiser sur base transfrontalière, dans les conditions définies par décret et par le règlement général de l'Autorité des marchés financiers.

    3. Le 1 août 2021, le Décret 2021-1011 du 31 juillet 2021 sur la distribution transfrontalière des organismes de placement collectif a été publié au Journal Officiel.

    Le texte procède à la déclinaison réglementaire de la transposition de la directive dite « crossborder », en lien avec les adaptations législatives réalisées par ailleurs par voie d’ordonnance et de décret pris en Conseil d’Etat. En particulier, ce décret précise les conditions dans lesquelles une société de gestion de portefeuille peut entreprendre des activités de pré-commercialisation d’un FIA en France ou dans un autre Etat membre de l’Union européenne.

    4. Le 1 août 2021, le Décret no 2021-1012 du 31 juillet 2021 portant transposition de la directive (UE) 2019/1160 du Parlement européen et du Conseil du 20 juin 2019 modifiant les directives 2009/65/CE et 2011/61/UE en ce qui concerne la distribution transfrontalière des organismes de placement collectif a été publié au Journal Officiel.

    Le texte procède à la déclinaison réglementaire de la transposition de la directive dite « crossborder », en lien avec les adaptations législatives réalisées par ailleurs par voie d’ordonnance et de décret pris en Conseil d’Etat. En particulier, ce décret précise les conditions dans lesquelles une société de gestion de portefeuille peut entreprendre des activités de pré-commercialisation d’un FIA en France ou dans un autre Etat membre de l’Union européenne.

    5. Le 1 août 2021, l'Arrêté du 28 juillet 2021 modifiant l’arrêté du 6 septembre 2017 relatif au cantonnement des fonds de la clientèle des entreprises d’investissement a été publié au Journal Officiel.

    Cet arrêté modifie les dispositions de l’arrêté du 6 septembre 2017 relatif au cantonnement des fonds de la clientèle des entreprises d’investissement dans le cadre de la transposition de la directive (UE) no 2019/2034 du Parlement européen et du Conseil du 27 novembre 2019 concernant la surveillance prudentielle des entreprises d’investissement. Les modifications visent à étendre le champ d’application du présent arrêté aux établissements de crédit et d’investissement (ECI).

    WHAT'S NEXT?

    Le 2 août 2021, l'Autorité des Marchés Financiers (AMF) a modifié son règlement général et actualisé trois documents de doctrine afin de transposer en droit français la directive (UE) 2019/1160 du 20 juin 2019 sur la distribution transfrontalière des organismes de placement collectif (CBDF).

    Le 12 août 2021, l'Autorité des marchés financiers (AMF) a mis à jour ses instructions DOC-2011-19, DOC-2011-20, DOC-2011-21, DOC-2011-22 et DOC-2011-23 concernant les OPCVM et FIA agréés. Elle clarifie et simplifie plusieurs règles relatives à l’agrément des modifications de ces fonds en cours de vie. 

    Les parties intéressées doivent prendre en compte les récents changements législatifs fondamentaux afin de rester en conformité avec les réglementations.

  • Here are two updates of the AMF Regulation taking into account the transposition of the CBD in France / Voici deux mises à jour du règlement de l'AMF tenant compte de la transposition du CBDF en France

    CACEIS

  • Here are two updates of the AMF Regulation taking into account the transposition of the CBD in France.

    1. On 2 August 2021, the Autorité des Marchés Financiers (AMF) amended its General Regulation and updated three policy documents in order to transpose into French law Directive (EU) 2019/1160 of 20 June 2019 on the cross-border distribution of collective investment undertakings (CBD).

    1) Transposition on the national level

    Order No. 2021-1009 and Decrees No. 2021-1011 and No. 2021-1012 of 31 July 2021 transpose the CBDF Directive into the Monetary and Financial Code. Ministerial Order of July 23 2021 creates new provisions and amends certain current provisions in titles I (Undertakings for Collective Investment in Transferable Securities) and II (AIFs) of Book IV of the AMF General Regulation.

    2) Details concerning the facilities made available to investors 

    The amendments made to the AMF General Regulation and policy (AMF instructions DOC-2011-19 and DOC-2014-03 and AMF Position DOC-2014-04) specify several measures introduced by the aforementioned Order and Decrees.

    This concerns primarily the requirements applicable to French UCITS regarding investors in the host States where they undertake marketing activities and those for foreign UCITS and AIF managers regarding investors in France. They stipulate that these market participants shall provide facilities to allow the processing of investors' subscription, repurchase and redemption orders and to ensure that said investors have access to the information to which they are entitled, while noting that the CBDF Directive prohibits Member States from impeding marketing on their territory by demanding a local physical presence or the appointment of a third party. Hence, the appointment of a correspondent by foreign UCITS and AIFs marketed in France to perform these tasks and pay the fixed annual fee due to the AMF is no longer an obligation but a faculty.

    3) Recommendation for foreign UCITS and AIFs

    However, with a concern for investor protection, the AMF recommends that, for their marketing in France, foreign UCITS and foreign AIFs, when the latter are managed by an EU management company or a third-country manager, should appoint a correspondent established in France and belonging to one of the categories mentioned in Article 1 of the Order of 6 September 1989 to perform these tasks and pay said fixed fee.

    4) European harmonisation of the rules regarding cessation of the marketing of UCITS and AIFs

    These amendments specify the conditions for de-notification of the arrangements for marketing a French UCITS in other States and those for de-notification of the arrangements for marketing AIFs in France or in other States when the latter are managed by a French asset management company. Three new annexes to AMF instructions DOC-2011-19 and DOC-2014-03 have been created to provide de-notification form templates.

    5) The new pre-marketing regime

    The CBDF Directive consecrates and regulates in European law the conduct of activities for pre-marketing of AIF units or shares to professional clients.

    The amendments to the AMF General Regulation and AMF position DOC-2014-04 supplement the existing provisions regarding the information that a French asset management company must send to the AMF when it performs pre-marketing of an AIF in France or in another Member State. A standard pre-marketing form has been created.

    Position 2014-04 is also amended to clarify the concept of marketing, and more specifically pre-marketing activities which do not constitute an act of marketing, while maintaining the possibility already existing since 2016 of performing activities of pre-marketing in France of units or shares in:

    • UCITS;
    • AIFs to potential retail clients whose initial subscription would be greater than or equal to €100,000.

    2. On 12 August 2021, the Autorité des Marchés Financiers (AMF) updated its instructions DOC-2011-19, DOC-2011-20, DOC-2011-21, DOC-2011-22 and DOC-2011-23 relating to authorised UCITS and AIFs. It has also clarified and simplified a number of rules relating to the approval of changes made during the life of these funds.

    Version française

    Voici deux mises à jour du règlement de l'AMF tenant compte de la transposition du CBDF en France.

    1. Le 2 août 2021, l'Autorité des Marchés Financiers (AMF) a modifié son règlement général et actualisé trois documents de doctrine afin de transposer en droit français la directive (UE) 2019/1160 du 20 juin 2019 sur la distribution transfrontalière des organismes de placement collectif (CBDF).

    1) Transposition au niveau national

    L’ordonnance n° 2021-1009 du 31 juillet 2021 et les décrets n° 2021-1011 et n° 2021-1012 du 31 juillet 2021 transposent la Directive CBDF dans le code monétaire et financier. L’arrêté du 23 juillet 2021 crée de nouvelles dispositions et modifie certaines dispositions actuelles dans les titres I (Organismes de placement collectif en valeurs mobilières) et II (FIA) du Livre IV du règlement général de l’AMF.

    2) Précisions concernant les facilités mises à disposition des investisseurs 

    Les modifications apportées au règlement général et à la doctrine de l’AMF (instructions AMF DOC-2011-19 et DOC-2014-03 et position AMF DOC-2014-04) précisent plusieurs mesures introduites par l’ordonnance et les décrets susmentionnés.

    Ceci concerne en premier lieu les exigences applicables aux OPCVM français à l’égard des investisseurs dans les Etats d’accueil où ils entreprennent des activités de commercialisation ainsi que celles des OPCVM étrangers et des gestionnaires de FIA à l’égard des investisseurs en France. Elles prévoient la mise à disposition par ces acteurs de facilités visant à permettre le traitement des ordres de souscription, de rachat et de remboursement des investisseurs ainsi qu’à garantir l’accès par ces derniers aux informations auxquelles ils ont droit, tout en prenant acte de l’interdiction faite aux Etats membres par la Directive CBDF d’entraver la commercialisation sur leur territoire en exigeant une présence physique locale ou la désignation d’un tiers. Ainsi, la désignation d’un correspondant par les OPCVM et les FIA étrangers commercialisés en France pour exécuter ces tâches et pour acquitter le droit fixe annuel dû à l’AMF n’est plus une obligation mais une faculté.

    3) Recommandation pour les OPCVM et FIA de droit étranger

    Cependant, dans un souci de protection de l’investisseur, l’AMF recommande que, pour leur commercialisation en France, les OPCVM de droit étranger ainsi que les FIA étrangers, lorsque ces derniers sont gérés par une société de gestion de l’UE ou un gestionnaire de pays tiers, désignent un correspondant établi en France appartenant à l’une des catégories mentionnées à l’article 1er de l’arrêté du 6 septembre 1989 pour exécuter ces tâches et acquitter ledit droit fixe.

    4) L’harmonisation européenne des règles en matière de cessation de commercialisation d’OPCVM et de FIA

    Ces modifications précisent les conditions du retrait de la commercialisation d’un OPCVM français dans d’autres Etats ainsi que celles du retrait de la commercialisation de FIA en France ou dans d’autres Etats lorsque ces derniers sont gérés par une société de gestion de portefeuille française. Trois nouvelles annexes aux instructions AMF DOC-2011-19 et DOC-2014-03 sont créées afin de définir des modèles de formulaires de retrait.

    5) Le nouveau régime de pré-commercialisation

    La Directive CBDF consacre et encadre en droit européen la conduite d’activités de pré-commercialisation de parts ou actions de FIA auprès de clients professionnels.

    Les modifications du règlement général de l’AMF et de la position DOC-2014-04 complètent les dispositions existantes s’agissant des informations qu’une société de gestion de portefeuille française doit adresser à l’AMF lorsqu’elle pré-commercialise, en France ou dans un autre Etat membre, un FIA. Un formulaire type de pré-commercialisation est créé.

    La position 2014-04 est également modifiée pour clarifier la notion de commercialisation et plus spécifiquement les activités de pré-commercialisation qui ne constituent pas un acte de commercialisation, tout en maintenant la possibilité déjà existante depuis 2016 d’exercer des activités de pré-commercialisation en France de parts ou actions :

    • d’OPCVM ;
    • de FIA auprès de clients non professionnels potentiels dont la souscription initiale serait supérieure ou égale à 100 000 euros.

    2. Le 12 août 2021, l'Autorité des marchés financiers (AMF) a mis à jour ses instructions DOC-2011-19, DOC-2011-20, DOC-2011-21, DOC-2011-22 et DOC-2011-23 concernant les OPCVM et FIA agréés. Elle clarifie et simplifie plusieurs règles relatives à l’agrément des modifications de ces fonds en cours de vie.

  • Listing / Trading rules

    AMF publishes a study on the development of the SPAC market and its challenges / L'AMF publie une étude sur le développement des SPAC sur le marché et ses enjeux

    CACEIS

  • On 2 July 2021, the Autorité des marchés financiers (AMF) published a study on the development of the SPAC market and its challenges.

    The study describes the structure, expansion, benefits and risks of the Special Purpose Acquisition Companies (SPAC) market. It details the significant development of SPACs in the United States and their expansion in Europe where they are opening a new route to listing.

    1) Operational structure and growth of SPACs

    SPACs are listed vehicles with no operational purpose that aim to merge with an unlisted company - thus allowing the said company to go public. In the absence of a merger within the prescribed time, the SPAC is liquidated. However, within a flexible regulatory framework, SPACs take specific, variable and complex forms depending on the interests of stakeholders and applicable law. Their structure therefore evolves depending on market forces.

    Widely promoted, SPACs have experienced very strong growth in the United States. Funds raised were less than 2% of those of IPOs until 2014. They were at 18% in 2019 and 45% in 2020. They are developing today in Europe, particularly in the Netherlands and France. France had counted two until then. It approved three in June 2021 alone.

    2) The study also highlights the benefits of SPACs

    After years of listing attrition, SPACs appear as an innovation for primary stock markets. They open a path to listing, an exit for private equity, and offer growth prospects for stock exchange financing.

    The advantages in terms of access to the listing of target companies - the reduction in the time to IPO, the guarantees offered by pre-negotiated IPO prices - do not appear, given the anchoring of their regime in existing company and M&A laws, to harm unduly other listing methods (IPO; direct listing).

    3) Vehicles that present risks

    Their changing and complex legal structures make them suitable for institutional investors capable of exercising critical views on the proposed arrangements, their stakeholders’ incentives and the valuations. The materiality of conflicts of interest is attested in the United States, where the founders maintained high profitability post-merger despite generally negative performance for the remaining holders.

    4) Europe: limited marketing to a large audience to date

    The craze for SPACs also underscores the risks of market mispricing – regarding both SPAC shares and acquisition targets. Growth of SPACs and their operations at international level indicates a need for coordination of the authorities, as applicable regimes retain a strong anchoring at national level.

    In a context of rapid changes in market practices, the ability of SPACs to promote good information and fair treatment of investors and to create, ultimately, long-term value, remains to be assessed, particularly in Europe. They therefore seem to justify international monitoring of their activities.

    Version française

    Le 2 juillet 2021, l'Autorité des marchés financiers (AMF) a publié une étude sur le développement des SPAC sur le marché et ses enjeux.

    L’étude décrit la structure, l’expansion, les avantages et les risques du marché des Special Purpose Acquisition Companies (SPAC). Elle détaille le développement important des SPAC aux Etats Unis et leur expansion en Europe où ils sont une nouvelle voie d’accès à la cotation.

    1) Structure opérationnelle et croissance des SPAC

    Les SPAC (Special Purpose Acquisition Companies) sont des véhicules sans objet opérationnel cotés dans le but de fusionner avec une société non cotée -permettant ainsi à ladite société de s’introduire en bourse. A défaut de fusion dans le temps prévu, le SPAC est dissout. Cependant, dans un cadre réglementaire flexible, les SPAC prennent des formes spécifiques variables et complexes selon les intérêts des parties prenantes et le droit applicable. Leur structure évolue, donc, sous les forces du marché.

    Largement promus, les SPAC ont connu une très forte croissance aux États-Unis. Leurs fonds levés s’élevaient à moins de 2% de ceux des IPO jusqu’en 2014 ; à 18% en 2019 et 45% en 2020. Ils se développent aujourd’hui en Europe, notamment aux Pays-Bas et en France. La France en avait compté deux jusqu’alors, elle en a agréé trois au seul mois de juin 2021.

    2) L’étude souligne également les avantages des SPAC

    Il en ressort qu’après des années d’attrition de la cote, les SPAC constituent une innovation pour les marchés boursiers primaires. Ils ouvrent une voie d’accès à la cotation, une sortie pour le private equity, et offrent des perspectives de croissance au financement par la bourse.

    Les avantages en termes d’accès à la cote des sociétés cibles – la réduction du délai d’introduction, la garantie de prix d’introduction pré-négociés – ne semblent pas, au regard de l’ancrage dans les droits des sociétés et des fusions-acquisitions existants, nuire indûment aux autres modes de cotation (IPO ; cotation directe).

    3) Des véhicules qui présentent des risques.

    Leurs structurations juridiques variables et complexes les destinent à des investisseurs institutionnels capables d’exercer des vues critiques sur les montages proposés, les incitations des parties prenantes et les valorisations. La matérialité des conflits d’intérêts est attestée aux États-Unis, où les fondateurs ont maintenu, au terme de la fusion des SPAC, une profitabilité élevée malgré des performances en général négatives pour les porteurs restants.

    4) Europe : une commercialisation limitée auprès d’un public large à ce jour

    L’engouement pour les SPAC souligne aussi les risques de mauvaise valorisation de marché –qu’il s’agisse des parts de SPAC ou des cibles d’acquisition. Le développement international des SPAC et de leurs opérations indique un besoin de coordination des autorités, là où les régimes applicables conservent un fort ancrage au niveau national.

    Dans un contexte de rapide évolution des pratiques de marché, la capacité des SPAC à favoriser une bonne information et un traitement équitable des porteurs et, in fine, créer de la valeur à long terme, restent, notamment en Europe, largement à évaluer. Ils semblent donc justifier un suivi international de leurs activités.

  • AMF publishes Decision of 20/7/21 amending the rules of LCH SA in the context of the project to integrate two new CSDs / L'AMF publie la Décision du 20/7/2021 modifiant le fonctionnement de LCH SA dans le cadre du projet d’intégrer deux nouveaux CSD

    CACEIS

  • On 11 August 2021, the Autorité des marchés financiers (AMF) published the Decision of 20 July 2021 amending the operating rules of LCH SA in the context of the project to integrate two new CSDs.

    The amendments to the Operating Rules of LCH SA as annexed to this decision are approved. They shall enter into force on the date determined by LCH SA.

    Version française

    Le 11 août 2021, l'Autorité des marchés financiers (AMF) a publié la Décision du 20/7/2021 modifiant le fonctionnement de LCH SA dans le cadre du projet d’intégrer deux nouveaux CSD.

    Sont approuvées les modifications des règles de fonctionnement de LCH SA telles qu’annexées à la présente décision. Elles entreront en vigueur à la date déterminée par LCH SA.

  • Market Abuse Directive & Regulation (MAD / MAR)

    AMAFI publishes Q&As concerning the implementation of the MAR scheme and its interpretation / L'AMAFI publie des questions-réponses concernant la mise en œuvre du dispositif MAR et son interprétation

    CACEIS

  • On 23 August 2021, the Association Française des Marchés Financiers (AMAFI) published Q&As concerning the implementation of the MAR scheme and its interpretation.

    Based on the existing texts and on these exchanges, the objective of this document is to enlighten the Association's members by providing them with elements of appreciation that can guide them in responding to certain questions arising from the MAR system. By its nature, this document is evolving. The answers it contains are therefore always subject to further development and modification in the light of new information that may become available, particularly in the light of information that may be provided by the European Commission, the European Securities and Markets Authority (ESMA) or the AMF. It is also intended to gradually incorporate new issues that may be brought to the Association's attention.

    Version française

    Le 23 août 2021, l'Association Française des Marchés Financiers (AMAFI) a publié des questions-réponses concernant la mise en œuvre du dispositif MAR et son interprétation.

    S’appuyant sur les textes existants et sur ces échanges, l’objectif du présent document est d’éclairer les adhérents de l’Association en leur fournissant des éléments d’appréciation pouvant les guider dans la réponse à apporter à certaines questions résultant du dispositif MAR. Par nature, ce document est évolutif. Les éléments de réponse qu’il comporte sont donc toujours susceptibles d’être approfondis, voire modifiés en fonction de l’évolution de la réflexion, mais aussi de nouveaux éléments d’appréciation qui viendraient à être disponibles, particulièrement au regard de ceux que pourraient fournir la Commission européenne, l’Autorité Européenne des Marchés Financiers (ESMA) ou l’AMF. Il a par ailleurs vocation à incorporer progressivement les nouvelles questions qui pourraient être portées à l’attention de l’Association.

  • Money Market Funds Regulation (MMFR)

    AMF complies with the ESMA guidelines on updating stress test scenarios according to Article 28 MMFR / L'AMF se conforme aux lignes directrices de l'ESMA sur la mise à jour des scénarios de stress test conformément à l'article 28 du MMFR

    CACEIS

  • On 29 July 2021, the Autorité des marchés financiers (AMF) updated its position DOC-2018-05 to reference ESMA’s guidance on updating stress test scenarios in accordance with Article 28 of the Money Market Fund Regulation.

    1) Updating stress test scenarios

    In accordance with Article 28 of Regulation (EU) 2017/1131 on money market funds (“the MMF Regulation”), the manager of a money market fund is required to assess the impact of stress test scenarios on the fund. Under Article 37 of the MMF Regulation, the results of stress tests on a money market fund must be reported to the fund’s competent authority on a quarterly basis if the fund’s assets exceed €100 million. Annual reporting is required for all the remaining funds. The competent authority then forwards this reporting to ESMA.

    2) Clarification on the latest ESMA guidance

    The ESMA guidelines published in 2019 (ESMA34-49-172) define the common reference parameters for different stress test scenarios. In accordance with Article 28(7) of the MMF Regulation, these guidelines are updated at least once a year to take into account the latest market developments. In this regard, on 29 June 2021 ESMA published the official translations of its new guidelines on updating stress test parameters (ESMA34-49-291). To reflect the period of tension in the money market in March 2020, most of the stress test parameters have been scaled upwards. This is the first annual update of this data since the implementation of MMFR reporting (which has been operational since 30 September 2020).

    The AMF decided at the Board meeting held on 20 July 2021 to apply these guidelines on updating stress test scenarios and to notify ESMA of this decision.

    3) Operational application

    The ESMA guidelines containing the updates to the reference parameters for stress test scenarios were published on 29 June 2021. Under the “comply or explain” procedure, these guidelines apply two months after that date, i.e. on 29 August 2021. As MMF reporting is communicated on a quarterly basis for money market funds with more than €100 million in assets, money market fund managers must use the updated stress test parameters from 30 September 2021 onwards.

    The AMF draws market fund managers’ attention to the importance of updating these parameters on reporting due from 30 September 2021. MMF managers who have updated parameters in reporting due before that date should correct them and resubmit their reporting with the previous parameters.

    Version française

    Le 29 juillet 2021, l’Autorité des marchés financiers (AMF) a mis à jour sa position DOC-2018-05 pour y référencer les orientations de l’ESMA sur l’actualisation des scénarios de simulations de crise conformément à l’article 28 du règlement sur les fonds monétaires.

    1) Mise à jour des scénarios de simulations de crise

    Conformément à l’article 28 du règlement (UE) 2017/1131 portant sur les fonds monétaires (« Règlement MMF »), le gérant d’un fonds monétaire est tenu d’évaluer l’impact des scénarios de simulations de crise sur le fonds . Dans le cadre de l’article 37 du Règlement MMF, les résultats de simulations de crise d’un fonds monétaire sont transmis à l’autorité compétente du fonds dans un rapport sur une base trimestrielle si l’encours du fonds dépasse 100 MEUR. Le reporting doit être fait annuellement pour le reste des fonds. L’autorité compétente transmet ensuite ce reporting à l’ESMA.

    2) Précision sur les dernières orientations de l’ESMA

    Les orientations de l’ESMA publiées en 2019 (ESMA34-49-172) définissent les paramètres de référence communs correspondant à différents scénarios de crise. Conformément à l’article 28, paragraphe 7, du règlement sur les fonds monétaires, ces orientations sont actualisées au moins une fois par an pour tenir compte des derniers développements sur les marchés. Dans ce contexte, l’ESMA a publié le 29 juin 2021 les traductions officielles de ses nouvelles orientations relatives à la mise à jour des paramètres de simulations de crise (ESMA34-49-291). Pour refléter les tensions survenues en mars 2020 sur le marché des fonds monétaires, les paramètres de scénarios de crise ont été rééchelonnés majoritairement à la hausse. Il s’agit de la première mise à jour annuelle de ces données depuis l’entrée en vigueur du reporting MMFR (qui est opérationnel depuis le 30 septembre 2020).

    L’AMF a décidé lors du Collège tenu le 20 juillet 2021 d’appliquer ces orientations relatives à la mise à jour des scénarios de simulations de crise et de le notifier à l’ESMA.

    3) Déclinaison opérationnelle

    Les orientations de l’ESMA contenant les mises à jours des paramètres de référence des scénarios de crise ont été publiées le 29 juin 2021. Dans le cadre de la procédure « appliquer ou expliquer », ces orientations s’appliquent dans un délai de deux mois à compter de cette date, soit le 29 août 2021. Le reporting MMF étant communiqué sur une base trimestrielle pour les fonds monétaires d’encours supérieur à 100 MEUR, les gestionnaires des fonds monétaires utiliseront par conséquent les paramètres actualisés de scénarios de crise à partir du 30 septembre 2021.

    L’AMF attire l’attention des gérants sur l’importance de mettre à jour ces paramètres sur les transmissions exigibles à partir du 30 septembre 2021. Les acteurs ayant anticipé la mise à jour de paramètres dans les transmissions exigibles avant cette date doivent les corriger et les renvoyer avec les anciens paramètres.

  • Prospectus Regulation

    AMF publishes a Practical guide for entering a PDF form relating to prospectus or supplement data / L'AMF publie un Guide pratique de saisie d’un formulaire PDF relatif aux données d’un prospectus ou d’un supplément

    CACEIS

  • On 23 July 2021, the Autorité des marchés financiers (AMF) published a Practical guide for entering a PDF form relating to prospectus or supplement data.

    This guide has been drawn up to assist issuers and their advisers in entering the forms required as part of the examination of their draft prospectus or supplement, and downloadable from the website.

    Version française

    Le 23 juillet 2021, l'Autorité des marchés financiers (AMF) a publié un Guide pratique de saisie d'un formulaire PDF relatif aux données d'un prospectus ou d'un supplément.

    Ce guide a été établi afin d’accompagner les émetteurs et leurs conseils dans la saisie des formulaires exigibles dans le cadre de l'instruction de leur projet de prospectus ou supplément, et téléchargeables sur le site de l’AMF.

  • AMF publishes Practical guide for filing the final conditions for issuing debt securities with the AMF / L'AMF publie un Guide pratique de dépôt des conditions définitives d’émission de titres de créance auprès de l'AMF

    CACEIS

  • On 23 July 2021, the Autorité des marchés financiers (AMF) published a Practical guide for filing the final conditions for issuing debt securities with the AMF.

    Pursuant to Article 8 of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market and repealing Directive 2003/71/EC (the Prospectus Regulation) and its Delegated Regulation, an issuer that draws up final terms that are not included in a base prospectus or supplement must file them with the AMF.

    These filing requirements apply to all issuers filing final terms for debt securities relating to a base prospectus or supplement that has been previously approved by the AMF. The AMF then transmits this data electronically to the European Securities and Markets Authority (ESMA), which centralises on its website all prospectuses approved by European regulators and the associated final terms. This guide has been prepared to assist issuers and their advisers in filing their final terms of issue of debt securities with the AMF via its extranet ONDE.

    Version française

    Le 23 juillet 2021, l'Autorité des marchés financiers (AMF) a publié un Guide pratique de dépôt des conditions définitives d'émission de titres de créance auprès de l'AMF.

    Conformément à l’article 8 du règlement (EU) 2017/1129 du Parlement Européen et du Conseil du 14 juin 2017 concernant le prospectus à publier en cas d’offre au public de valeurs mobilières ou en vue de l’admission de valeurs mobilières à la négociation sur un marché réglementé, et abrogeant la directive 2003/71/CE (« le Règlement Prospectus ») et à son Règlement Délégué, l’émetteur qui établit des conditions définitives qui ne sont pas incluses dans un prospectus de base ou dans un supplément doit les déposer auprès de l’AMF.

    Ces modalités de dépôt s’appliquent à l’ensemble des émetteurs qui déposent des conditions définitives de titres de créance relatives à un prospectus de base ou à un supplément qui a été préalablement approuvé par l’AMF. L’AMF transmet ensuite ces données par voie électronique à l’Autorité Européenne des Marchés Financiers (AEMF ou ESMA en anglais), qui centralise sur son site internet l’ensemble des prospectus approuvés par les régulateurs européens et les conditions définitives qui y sont associées. Le présent guide a été établi afin d’accompagner les émetteurs et leurs conseils (ci après, le « déposant ») dans le dépôt de leurs conditions définitives d’émission de titres de créance (« conditions définitives ») auprès de l’AMF via son extranet ONDE.

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

    Here are three decrees transposing the Prudential Requirements for Investment Firms Directive & Regulation (IFD / IFR) in France / Voici trois décrets transposant en France la directive et le règlement sur les exigences prudentielles pour les entreprises

    CACEIS

  • Here are three decrees transposing the Prudential Requirements for Investment Firms  Directive & Regulation (IFD / IFR) in France.

    1. On 17 July 2021, the Decree No. 2021-941 of 15 July 2021 transposing Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms was published in the Official Journal. 

    The decree transposes Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2011/61/EU, 2014/59/EU and 2014/65/EU, the legislative part of which was the subject of Ordinance No. 2021-796 of 23 June 2021 transposing the said directive on the prudential supervision of investment firms.

    Target: investment firms, credit institutions.

    2. On 1 August 2021, the Order of 28 July  2021 amending Regulation 98-05 of 7 December  1998 on credit transactions by investment firms was published in the Official Journal.

    This order amends the provisions of Regulation (EU) No. 98-05 of 7 December 1998 on credit operations by investment firms in the context of the transposition of Directive (EU) No. 2019/2034 of the European Parliament and of the Council of 27 November 2019 concerning the prudential supervision of investment firms.  This amending order extends the scope of the said regulation to credit and investment institutions.

    3. On 1 August 2021, the Order of 28 July 2021 amending Regulation No. 86-21 of 24 November 1986 on non-banking activities was published in the Official Journal.

    This Order amends the provisions of Regulation (EU) No 86-21 of 24 November 1986 on non-banking activities in the context of the transposition of Directive (EU) No 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms. This order excludes credit and investment institutions from the scope of application of Regulation (EU) No 86-21 on non-banking activities.

    Before Article 1 of Regulation No. 86-21 of 24 November 1986 on non-banking activities, a preliminary article is inserted as follows "Preliminary Article. – The provisions of this Regulation shall not apply to the credit and investment institutions mentioned in Article L. 516-1."

    Version française

    Voici trois décrets transposant en France la directive et le règlement sur les exigences prudentielles pour les entreprises d'investissement (IFD / IFR). 

    1. Le 17 juillet 2021, le Décret no 2021-941 du 15 juillet 2021 portant transposition de la directive (UE) 2019/2034 du Parlement européen et du Conseil du 27 novembre 2019 concernant la surveillance prudentielle des entreprises d’investissement a été publié au Journal Officiel.

    Le décret procède à la transposition de la directive (UE) 2019/2034 du Parlement européen et du Conseil du 27 novembre 2019 concernant la surveillance prudentielle des entreprises d’investissement et modifiant les directives 2002/87/CE, 2011/61/UE, 2014/59/UE et 2014/65/UE, le volet législatif ayant fait l’objet de l’ordonnance no 2021-796 du 23 juin 2021 portant transposition de ladite directive concernant la surveillance prudentielle des entreprises d’investissement.

    Publics concernés : entreprises d’investissement, établissements de crédit.

    2. Le 1 août 2021, l'Arrêté du 28 juillet 2021 modifiant le règlement no 98-05 du 7 décembre 1998 relatif aux opérations de crédit des entreprises d’investissement a été publié au Journal Officiel.

    Cet arrêté modifie les dispositions du règlement (UE) no 98-05 du 7 décembre 1998 relatif aux opérations de crédit des entreprises d’investissement dans le cadre de la transposition de la directive (UE) no 2019/2034 du Parlement européen et du Conseil du 27 novembre 2019 concernant la surveillance prudentielle des entreprises d’investissement. Cet arrêté modificatif étend le champ d’application dudit règlement aux établissements de crédit et d’investissement.

    3. Le 1 août 2021, l'Arrêté du 28 juillet 2021 modifiant le règlement no 86-21 du 24 novembre 1986 relatif aux activités non bancaires a été publié au Journal Officiel.

    Cet arrêté modifie les dispositions du règlement (UE) no 86-21 du 24 novembre 1986 relatif aux activités non bancaires dans le cadre de la transposition de la directive (UE) no 2019/2034 du Parlement européen et du Conseil du 27 novembre 2019 concernant la surveillance prudentielle des entreprises d’investissement. Cet arrêté exclut les établissements de crédit et d’investissement du champ d’application du règlement (UE) no 86-21 relatif aux activités non bancaires.

    Avant l’article 1er du règlement no 86-21 du 24 novembre 1986 relatif aux activités non bancaires, il est inséré un article préliminaire ainsi rédigé : « Art. préliminaire. – Les dispositions du présent règlement ne s’appliquent pas aux établissements de crédit et d’investissement mentionnés à l’article L. 516-1. »

  • Prudential supervision / Single Supervisory Mechanism (SSM) / Single Resolution Mechanism (SRM) / Single Resolution Fund (SRF)

    France amends prudential supervision, risk assessment for banks, investment firms other than portfolio management / France modifie la surveillance prudentielle, évaluation des risques bancaires entreprises d’investissement autres que gestion de portefeuil

    CACEIS

  • On 1 August 2021, the Order of 28 July 2021 amending the order of 3 November 2014 on the prudential supervision and risk assessment process for banking services providers and investment firms other than portfolio management companies was published in the Official Journal.

    This order amends the provisions of the order of 3 November 2014 on the process of prudential supervision and risk assessment of banking services providers and investment firms other than portfolio management companies and helps to transpose Directive (EU) No 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms.

    Version française

    Le 1 août 2021, l'Arrêté du 28 juillet 2021 modifiant l’arrêté du 3 novembre 2014 relatif au processus de surveillance prudentielle et d’évaluation des risques des prestataires de services bancaires et des entreprises d’investissement autres que les sociétés de gestion de portefeuille a été publié au Journal Officiel. 

    Cet arrêté modifie les dispositions de l’arrêté du 3 novembre 2014 relatif au processus de surveillance prudentielle et d’évaluation des risques des prestataires de services bancaires et des entreprises d’investissement autres les sociétés de gestion de portefeuille et contribue à transposer la directive (UE) no 2019/2034 du Parlement européen et du Conseil du 27 novembre 2019 concernant la surveillance prudentielle des entreprises d’investissement.

  • France publishes Order of 28/07/2021 amending the order of 3/11/2014 on prudential supervision on a consolidated basis / La France publie l'Arrêté du 28/07/2021 modifiant l’arrêté du 3/11/2014 relatif à la surveillance prudentielle sur base consolidée

    CACEIS

  • On 1 August 2021, the Order of 28 July 2021 amending the order of 3 November 2014 on prudential supervision on a consolidated basis was published in the Official Journal.

    This order amends the provisions of the order of 3 November 2014 on prudential supervision on a consolidated basis in order to transpose Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms. The draft order specifies the rules for defining the supervisory authority on a consolidated basis of a group, in particular regarding the requirement to check compliance with the capitalisation test and by including investment holding companies in the scope of the order.

    Version française

    Le 1 août 2021, l'Arrêté du 28 juillet 2021 modifiant l’arrêté du 3 novembre 2014 relatif à la surveillance prudentielle sur base consolidée a été au Journal Officiel.

    Cet arrêté modifie les dispositions de l’arrêté du 3 novembre 2014 relatif à la surveillance prudentielle sur base consolidée afin de transposer la directive (UE) 2019/2034 du Parlement européen et du Conseil du 27 novembre 2019 concernant la surveillance prudentielle des entreprises d’investissement. Le projet d’arrêté précise les règles permettant de définir l’autorité de surveillance sur base consolidée d’un groupe, notamment concernant l’exigence de contrôle du respect du test de capitalisation et en incluant les compagnies holding d’investissement au champ d’application de l’arrêté.

  • Securities and Futures Act

    AMF and ACPR sign two cooperation agreements with the SEC on the regime applicable to Security Based Swap Dealers in the U.S / L'AMF et l'ACPR signent deux accords de coopération avec la SEC sur le régime applicable aux Security Based Swap Dealers aux US

    CACEIS

  • On 29 July 2021, the Autorité des marchés financiers (AMF) and the French prudential control and resolution authority (ACPR) signed two cooperation agreements with the Securities Exchange Commission (SEC) in order to allow French entities to register as Security Based Swap Dealers (SBSD) with the SEC and to benefit from a substituted compliance regime.

    The Dodd Frank Act requires every entity whose activity on equity OTC derivatives and on single name credit default swap with US counterparties exceeds a certain threshold to register as SBSD with the SEC.

    US regulation however provides for a principle of substituted compliance, based on a decision from the SEC, whereby foreign institutions may be deemed in compliance with certain U.S. rules as long as they comply with the pertinent domestic law. The specific terms of such substituted compliance for France were adopted by the SEC on 23 July 2021.

    In accordance with Articles L.632-7 and L.632-17 of the French Monetary and Financial Code, the purpose of the first cooperation agreement is to define the manner in which the AMF, the ACPR and the SEC will interact in the context of the supervision of the French registered institutions, as well as the relationship between the SEC and these institutions.

    The second cooperation agreement aims to provide a framework for information exchange between the relevant authorities in the context of the implementation of the substituted compliance.

    Version française

    Le 29 juillet 2021, l'Autorité des Marchés Financiers (AMF) et l’Autorité de Contrôle Prudentiel et de Résolution (ACPR) ont signé deux accords de coopération avec la Securities Exchange Commission (SEC) afin de permettre aux établissements français de s’enregistrer en tant que Security Based Swap Dealers (SBSD) auprès de la SEC et de bénéficier d’un régime d’équivalence de certaines règles applicables à ces entités (substituted compliance).

    Le Dodd Frank Act oblige les établissements, dont l’activité sur dérivés de gré à gré sur actions et dérivés de crédit sur actions avec des contreparties américaines dépasse un certain volume, à s’enregistrer en tant que SBSD auprès de la SEC.

    La réglementation américaine prévoit toutefois un mécanisme de substituted compliance, sur décision de la SEC, qui permet aux établissements étrangers d’être considérés comme respectant certaines règles américaines dès lors qu’ils respectent leur législation nationale. Les modalités d’application de la substituted compliance pour la France ont été adoptées par la SEC le 23 juillet 2021.

    Conformément aux articles L. 632-7 et L. 632-17 du Code Monétaire et Financier, le premier accord de coopération a pour objet de définir la façon dont l’AMF, l’ACPR et la SEC vont interagir dans le cadre de la supervision des acteurs enregistrés auprès de la SEC, ainsi que les relations entre la SEC et les acteurs concernés.

    Le second accord de coopération vise à encadrer les échanges entre les autorités concernées dans le cadre de la mise en place de la substituted compliance.

  • Trading rules

    AMF amends the operating rules of LCH AG on Sponsored Clearing & Intraday Variation Margin projects / L’AMF modifie les règles de fonctionnement de LCH SA sur les projets Sponsored Clearing & Intraday Variation Margin

    CACEIS

  • On 13 July 2021, the Autorité des marchés financiers (AMF) published the Decision of 22 June 2021 amending the operating rules of LCH AG in the context of the Sponsored Clearing and Intraday Variation Margin projects.

    The amendments to the Operating Rules of LCH SA as annexed to this decision are approved. They will enter into force on the date determined by LCH SA.

    Version française

    Le 13 juillet 2021, l'Autorité des marchés financiers (AMF) a publié une décision  du 22 juin 2021 de modification des règles de fonctionnement de LCH SA dans le cadre des projets Sponsored Clearing et Intraday Variation Margin.

    Sont approuvées les modifications des règles de fonctionnement de LCH SA telles qu’annexées à la présente décision. Elles entreront en vigueur à la date déterminée par LCH SA.

  • BELGIUM

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

    NBB publishes Circular NBB_2021_16 / Circular on special mechanisms

    CACEIS

  • On 6 July 2021, the Banque nationale de Belgique (BnB) published Circular NBB_2021_16 / Circular on special mechanisms.

    Under the various control laws, financial institutions are prohibited from setting up a special mechanism with the purpose or effect of enabling or encouraging tax evasion by third parties. The prohibition on setting up a special scheme was clarified in the Control Acts by the Act of 2 June 2021 on various financial provisions relating to the fight against fraud. The question of whether this is a "special mechanism" for which the NBB can set a time limit to remedy and for which remedial action can be taken must be decided on a case-by-case basis and on the basis of an ex post review. Nevertheless, it has always been considered desirable that the provisions be clarified in the light of a number of typical transactions. The present circular provides clarification on the prohibition of setting up specific mechanisms.

  • Belgium publishes Royal Decree amending the Royal Decree of 7 April 2019 on the functioning of the central point of contact on financial accounts and contracts (PCC)

    CACEIS

  • On 6 July 2021, Belgium published Royal Decree amending the Royal Decree of 7 April 2019 on the functioning of the central point of contact on financial accounts and contracts (PCC). 

    The Royal Decree is amended to take into account the Data Protection Authority's Opinion 122/2020 and to correct several deficiencies. This includes the following changes:

    • inclusion of a prohibition on the re-use of information obtained by a person within the framework of his right of access to personal data registered in his name in the PCC for administrative purposes or for other purposes incompatible with the primary purpose of this right of access
    • insertion of a new authorization, for a period of one year starting on April 1, 2021, for the information providers to search in the National Register of Natural Persons file, through a specialized institution, the national register number of their resident customers in order to fulfill their obligations under the PCC legislation
    • adaptation of Article 10 of the PCC Law concerning the financing of the PCC in order to specify, on the one hand, that the sharing of the costs of the PCC between users is only a possibility and not a basic principle and, on the other hand, that the King remains empowered to determine the practical modalities of the reimbursement of the costs of the PCC to the National Bank of Belgium, including the payment period which may not exceed 90 calendar days
    • increasing the retention period for the list of PCC information requests from two to five years, in order to reflect EU Directive 2019/1153 laying down rules facilitating the use of financial and other information for the prevention, investigation, detection or prosecution of certain criminal offences and repealing Council Decision 2000/642/JHA
    • the inclusion of an obligation for persons entitled to receive information to report any breaches of the obligations imposed on information providers by the PCC Act to the Treasury, so that the latter can investigate and sanction them if necessary
  • Federal Public Service updates FAQ on the UBO Register

    CACEIS

  • On 31 August 2021, the Federal Public Service – Finance Department updated FAQ on the UBO Register.

    This document consists of two parts. The first part deals with legal issues, including how UBOs should be identified according to the legal form of the information provider. The second part contains technical issues relating to access to the UBO register, registration of beneficial owners and the allocation of mandates and roles. The explanatory document on StAKs has been removed from the site: rules on foreign entities can be found in the general FAQ.

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

    Belgium publishes Law of 11 July 2021 transposing in Belgium several EU directives on the financial supervision

    CACEIS

  • On 23 July 2021, Belgium published Law of 11 July 2021 transposing in Belgium  Directive 2019/878 of the European Parliament and of the Council of 20 May 2019, Directive 2019/879 of the European Parliament and of the Council of 20 May 2019, Directive 2019/2034 of the European Parliament and of the Council of 27 November 2019, Directive 2019/2177 of the European Parliament and of the Council of 19 December 2019, Directive 2021/338 of the European Parliament and of the Council of 16 February 2021 and miscellaneous provisions.

  • COVID-19 Regulatory Measures

    NBB publishes updated Q&As on moratorium and guarantee scheme

    CACEIS

  • On 9 July 2021, the Banque nationale de Belgique (BnB) published updated Q&As on moratorium and guarantee scheme. In February 2021, it was decided to authorise the second Charter for business credit deferral for due dates up until 30 June 2021, and also to grant additional credit deferral to sound enterprises/organisations that already benefited from a maximum credit deferral of 9 months under the first and/or second Charter for business credit deferral.

    By Royal Decree of 14 June 2021, the second guarantee scheme was also extended until 31 December 2021. In addition, the Act of 27 June 2021 containing various financial provisions made a limited number of amendments to the Act of 20 July 2020 relating to the second guarantee scheme (in particular, the deadline for calling on the state guarantee).

    The Q&A has been updated to incorporate these new terms and conditions.

  • Financial supervision

    NBB publishes Circular NBB_2021_17 / Tax Prevention Policy

    CACEIS

  • On 6 July 2021, the Banque nationale de Belgique (BnB) published Circular NBB_2021_17 / Tax Prevention Policy.

    The cornerstone of a well-functioning financial sector is public confidence in financial institutions. This trust is based on the good reputation of these institutions. Controlling reputational risk is therefore an essential element of sound and prudent management of financial institutions. 

    Aspects relating to the integrity of the financial sector's activities play an important role in the prudential supervision of the sound and prudent management of financial institutions. 

    For many years, fiscal behavior has undoubtedly been an important aspect of the integrity referred to above. The sector is therefore expected to pursue a targeted preventive policy in the tax area in accordance with the requirements of the various supervisory laws. The present circular aims to recall the basic principles of the prevention policy in tax matters. It replaces the following circulars with immediate effect:

    • Circular D4/EB/5 to investment firms dated 18 December 1997;
    • Circular D1 97/10 to credit institutions of 30 December 1997;
    • Communication D. 207 to insurance companies of 30 November 30.

    In the context of this circular, the Bank expects financial institutions to critically review their tax prevention policy and, if necessary, to adapt and update it.

  • Belgium publishes Law of 27 June 2021 on various financial provisions

    CACEIS

  • On 9 July 2021, Belgium published the Law of 27 June 2021 on various financial provisions. 

    The law aims to regulate a number of matters that fall within the competence of the National Bank of Belgium, the Financial Services and Markets Authority (FSMA) and the General Administration of the Treasury of the FPS Finance. 

    The provisions concern:

    • autonomous financial provisions
    • amendments to the sectoral control laws in the banking and financial field, mainly to bring them into line with the provisions of the Companies and Associations Code and to ensure the transposition of the European Directive 2019/2177
    • amending financial provisions
    • amending provisions aimed at creating a legal framework for the use of new technologies in the field of securities circulation
    • provisions relating to the granting of concessional loans to the International Development Association under the nineteenth replenishment of resources (IDA19)
  • Belgium publishes the Law of 4 July 2021 transposing a series of directives and implementing European regulations on financial matters in Belgium

    CACEIS

  • On 13 July 2021, Belgium published the Law of 4 July 2021 transposing a series of directives and implementing European regulations on financial matters.

    This law transposes:

    • partially Directive (EU) 2019/1160 of the European Parliament and of the Council of 20 June 2019 amending Directives 2009/65/EC and 2011/61/EU as regards the cross-border distribution of collective investment undertakings; 
    • partially Directive (EU) 2019/2177 (Solvency II), Directive 2014/65/EU on markets in financial instruments and Directive (EU) 2015/849 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing.
  • Information Technology (IT) / Information and Communications Technology (ICT)

    NBB publishes Circular NBB_2021_15 / Guidelines on information and communication technology security and governance

    CACEIS

  • On 6 July 2021, the Banque nationale de Belgique (BnB) published Circular NBB_2021_15 / Guidelines on information and communication technology security and governance.

    This Circular implements the Guidelines of the European Insurance and Occupational Pensions Authority on information and communication technology security and governance (EIOPA-BoS-20/600) and applies from 6 July 2021.

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

    FSMA publishes opinion on the suitability and appropriateness assessment regarding the services to be provided in case of usufruct

    CACEIS

  • On 9 July 2021, the Financial Services and Markets Authority (FSMA) published opinion on the suitability and appropriateness assessment regarding the services to be provided in case of usufruct.

    Regulated companies provide investment services to a range of clients. In some cases, ownership is split between usufruct and bare ownership. Often both the usufructuary and the bare owner are clients.

    For the application of the rules of conduct, this poses a number of challenges. Who benefits from the investment service: the usufructuary or the bare owner? From whom should the company collect information for the suitability or appropriateness assessment? To whom does the information relate? The rules of conduct and the ESMA guidelines do not contain any specific guidance on this subject. There the FSMA published an opinion to answer theses question.

  • Money Market Funds Regulation (MMFR)

    FSMA publishes communication FSMA_2021_15 on ESMA Guidelines on stress test simulations under the Money Market Funds Regulation

    CACEIS

  • On 24 August 2021, the Financial Services and Markets Authority (FSMA) published  communication FSMA_2021_15 on ESMA Guidelines on stress test simulations under the Money Market Funds Regulation and their implementation by the FSMA.

  • GERMANY

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

    BaFin publishes Circular 09/2021 on the prevention of Money Laundering

    CACEIS

  • On 30 July 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published Circular 09/2021 on the prevention of Money Laundering. The circular is addressed to all obligated parties under BaFin in accordance with the AMLA in the Federal Republic of Germany. In the circular, BaFin provides information on all circulars of the Money Laundering Prevention Division that are no longer valid and have been repealed.

  • BaFin publishes Circular 13/2021 on high-risk countries that have strategic deficiencies in their systems for combating money laundering and terrorist financing

    CACEIS

  • On 26 August 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published Circular 13/2021 on high-risk countries that have strategic deficiencies in their systems for combating money laundering and terrorist financing.

  • Cryptoasset / Cryptocurrency / Virtual Currency

    German Federal Ministry of Finance publishes draft ministerial ordinance on requirements for electronic securities registries

    CACEIS

  • On 5 August 2021, the Bundesfinanzministerium published a draft ministerial ordinance on the requirements for electronic securities registries (Verordnung über Anforderungen an elektronische Wertpapierregister, eWpRV), which it drafted together with the German Federal Ministry of Justice and Consumer Protection. 

    The draft ordinance relates to the Act on Electronic Securities (Gesetz über elektronische Wertpapiere, eWpG), which entered into force on 10 June 2021. The eWpG provides for the issuance of bearer securities (primarily bearer bonds) through an entry in an electronic securities registry instead of issuance in paper form. The eWpRV sets out the requirements for the implementation and maintenance of such electronic securities registries together with related investor protection provisions. In particular, the eWpRV specifies (i) the requirements pursuant to section 15 eWpG with respect to the electronic securities registries relating to a central registry (zentrales Register), which is set up and maintained either by a central securities depository or by a depository bank and (ii) the requirements pursuant to section 23 with respect to a crypto securities registry (Kryptowertpapierregister) which is set up and maintained through decentralised blockchain technology (or similar technology) by the issuing company or a separate service provider (e.g. a bank).

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

    BaFin publishes guidance note on prohibition of blind pool constructions

    CACEIS

  • On 11 August 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published a guidance note on the prohibition of blind pools under the newly adopted section 5b para 2 of the German Capital Investment Act (Vermögensanlagengesetz – VermAnlG). 

    In future, the investment object of investments must be concretely defined at the time the respective prospectus is prepared or, for investments exempted from the obligation to publish a prospectus pursuant to sections 2a, b VermAnlG, at the time the capital investments information sheet (Vermögensinformationsblatt - VIB) is prepared. The guidance note is intended to define criteria for distinguishing a concrete investment object within the meaning of section 5b para 2 VermAnlG from a (semi-) blind pool. 

    The guidance note has applied from 17 August 2021, when section 5b paragraph 2 VermAnlG came into force.

  • BaFin consults on revised FAQs on distribution and acquisition of investment assets under German Capital Investment Code

    CACEIS

  • On 12 August 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) launched a consultation on its draft revised FAQs on the distribution and acquisition of investment assets under the German Capital Investment Code (Kapitalanlagegesetzbuch – KAGB). The FAQs have been revised to reflect changes resulting from the newly enacted German Fund Jurisdiction Act (Fondsstandortgesetz – FoStoG), which implements Directive (EU) 2019/1160 amending Directives 2009/65/EC and 2011/61/EU with regard to the cross-border distribution of collective investment undertakings.

    Comments are due by 13 September 2021.

  • BaFin applies updated ESMA guidelines on MMF Regulation stress test scenarios

    CACEIS

  • On 17 August 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) announced that it will apply the German translation of ESMA guidelines on stress test scenarios under the Money Market Funds (MMF) Regulation (Regulation (EU) 2017/1131 on money market funds) published on 29 June 2021. 

    In particular, as provided for in Article 28 (7) of the MMF Regulation, these guidelines establish common reference parameters of the stress test scenarios to be included in the stress test. In accordance with this provision, ESMA updates the guidelines at least every year taking into account the latest market developments. 

    In 2020, ESMA updated section 5 of the guidelines to ensure that MMF managers have the necessary information to complete the corresponding fields in the reporting template referred to in Article 37 of the MMF Regulation, as specified by Commission Implementing Regulation (EU) 2018/708. This information includes specifications on the type of stress tests mentioned in section 5 and their calibration.

  • Investor protection / Consumer protection

    Bundesfinanzministerium publishes draft Ordinance amending several ordinances under the German Investment Schemes Act (Vermögensanlagengesetz)

    CACEIS

  • On 13 July 2021, the Bundesfinanzministerium published draft Ordinance amending several ordinances under the German Investment Schemes Act (Vermögensanlagengesetz).

    The Act on the Further Strengthening of Investor Protection (AnlSchStG) added a number of investor-protecting provisions to the German Investment Act. These include a ban on investments for which the specific investment objects have not yet been determined at the time the prospectus is prepared (so-called blind pool investments), restrictions on the sale of investments to supervised investment advisors or financial investment intermediaries, and the introduction of a control of the use of funds by independent third parties. These changes require corresponding amendments to the provisions of the Asset Investment Prospectus Ordinance and the Asset Investment Publication and Notification Obligations Ordinance.

    The draft ordinance amending ordinances under the German Investment Fund Act (Vermögensanlagengesetz) therefore includes, in particular, the new provisions on the prohibition of blind pools, the distribution of investments by supervised investment advisors or financial investment intermediaries, and on the control of the use of funds in the respective requirements for the sales prospectus. In addition, further individual investor-protecting provisions and editorial corrections are made.

    The consultation ends on 27 July 2021.

  • Germany publishes law to further strengthen investor protection

    CACEIS

  • On 16 July2021, Germany published law to further strengthen investor protection. The law constitutes the final implementation of the package of measures to further strengthen investor protection which the Federal Ministry of Finance and the Federal Ministry of Justice and Consumer Protection jointly presented in August 2019.

    In particular, the law includes the following rules: 

    • so-called blind pool investments (i.e. investments where the specific investment objects have not yet been determined at the time the prospectus is prepared) are being prohibited to ensure that investors can make an informed assessment at the time the investment is made; 
    • investments may only be distributed by supervised investment advisors and financial investment intermediaries; 
    • the possibilities for auditing the financial statements of issuers of investments are being improved and a control of use of funds by independent third parties introduced in order to prevent misuses; 
    • in case of investor protection concerns by the German Federal Financial Supervisory Authority (BaFin), the review of investment prospectuses will be suspended in order to allow for consideration of possible product intervention measures; and 
    • in order to further increase transparency for investors, investment sales prospectuses, securities information sheets and investment information sheets will be published on BaFin's website.
  • IT Outsourcing

    BaFin publishes revised MaRisk and BAIT as well as new circular on payment services supervisory requirements for IT

    CACEIS

  • On 16 August 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published the sixth revised version of its Minimum Requirements for Risk Management (MaRisk). In particular, the revised version implements the European Banking Authority (EBA) NPE guidelines, outsourcing guidelines and ICT guidelines. Transitional periods for application of the new rules contained in the revised MaRisk are set out in BaFin’s accompanying letter, while specifications of existing rules apply directly upon publication. 

    BaFin has also published a revised version of its Supervisory Requirements for IT in Financial Institutions (BAIT). The revised BAIT set out the framework conditions which BaFin now requires with respect to secure information processing and IT. The revised version applies directly as BaFin has only specified existing requirements. 

    In addition, BaFin has published its new Circular on Payment Services Supervisory Requirements for IT (ZAIT), in which it explains the supervisory requirements that payment and e-money institutions must observe with regard to IT security and data security. The circular is closely aligned with the MaRisk and BAIT and includes requirements from the EBA’s ICT and outsourcing guidelines. The ZAIT apply immediately upon publication since they provide complementary interpretation of existing supervisory requirements, but the transition periods of the EBA guidelines apply accordingly.

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

    BaFin publishes General rulings on the setting of position limits for Gas derivatives

    CACEIS

  • On 14 July 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published General rulings on the setting of position limits for Gas derivatives.

    BaFin is changing several position limits on NCG and TTF gas derivatives as part of a recalculation of open contract positions (open interest). The corresponding general rulings will apply from 15 July 2021.

    In order to ensure uniform competitive conditions (level playing field) in Europe, national supervisory authorities will in future apply uniform open interest calculation methods when setting position limits. The position limits of individual contract types may change as a result. However, the principles for prioritizing significant contracts and agricultural contracts also apply with regard to changed position limits.

  • BaFin updates circular MaComp

    CACEIS

  • On 15 July 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) revised MaComp, the circular on the minimum requirements for the compliance function and the other conduct, organization and transparency obligations for securities services companies. 

    The background to the amendment are adjustments to the guidelines on the requirements for the compliance function of the European Securities and Markets Authority ESMA, which BaFin has transferred to the special part (BT) 1 of MaComp. 

    The revised ESMA guidelines take into account the product governance regime and the resulting changes for the compliance function. BaFin has therefore supplemented the requirements for supervisory actions, advisory tasks and the involvement of the compliance function in processes in BT 1. It has also comprehensively revised the requirements placed on the annual compliance report.

  • HONG KONG

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

    HKMA publishes Circular on Supporting the Use of New Technologies for AML/CFT - Suggested Actions for the Hong Kong Stored Value Facility Sector

    CACEIS

  • On 11 August 2021, the Hong Kong Monetary Authority (HKMA) published Circular on Supporting the Use of New Technologies for AML/CFT - Suggested Actions for the Hong Kong Stored Value Facility Sector. 

    HKMA plans to take further steps to support AML/CFT innovation and help strengthen SVF licensees’ implementation of the risk-based approach to AML/CFT.

    HKMA will be taking a number of initiatives in the coming months as part of the broader “Fintech 2025” strategy to advance SVF licensees’ positive and responsible use of new technologies for AML/CFT

    (a) To share experience and success stories of Authorized Institutions (AIs) and SVF licensee

    (b) To share experience and success stories of Authorized Institutions (AIs) and SVF licensee

    (c) To promote network analytics capability for tackling online fraud and associated mule account networks

    (d) To create a conducive environment for inclusive AML/CFT innovation.

    Senior management of SVF licensees should pay attention to these updates to ensure that the mandate for innovation in AML/CFT is supported with sufficient resources and relevant subject matter expertise. As an immediate next step, SVF licensees should coordinate relevant functions internally to provide data to help us present an updated overview of AML and Financial Crime Regtech adoption, and details will be communicated with individual SVF licensees shortly.

  • COVID-19 Regulatory Measures

    SFC publishes Circular to licensed corporations - Further updates to the Exemption Scheme

    CACEIS

  • On 19 July 2021, the Securities and Futures Commission (SFC) published Circular to licensed corporations - Further updates to the Exemption Scheme.

    This circular should be read in conjunction with the circulars to licensed corporations entitled “Exemption for senior executives of licensed corporations” issued on 28 May 2021 (Exemption Scheme) and “Updates to the Exemption Scheme” issued on 21 June 2021.

    In light of the adjustments to the quarantine requirements for vaccinated persons arriving in Hong Kong, he Chief Secretary for Administration of the HKSAR Government has approved revisions of the conditions under the Exemption Scheme.

    In view of the revisions, the requirement for the submission of attestation forms to the Securities and Futures Commission (SFC) is also adjusted. Sponsoring licensed corporations should submit a signed attestation form:

    for a returning executive, on his or her third and seventh days in Hong Kong; 

    for a visiting executive,

    • on the last day of his or her trip if he or she stays in Hong Kong for less than three days; or
    • on his or her third day in Hong Kong, and on the seventh day in Hong Kong or the last day of his or
    • her trip, whichever is earlier, if he or she stays in Hong Kong for more than three days.
  • Financial Market Infrastructure (FMI)

    SFC publishes Circular on the list of prescribed persons who have reached the clearing threshold under the clearing and record keeping rules for the OTC derivatives regime

    CACEIS

  • On 31 August 2021, the Securities and Futures Commission (SFC) published Circular to Licensed Corporations in relation to list of prescribed persons who have reached the clearing threshold under the clearing and record keeping rules for the OTC derivatives regime.

    The list is compiled based on information currently available to the Hong Kong Monetary Authority (HKMA) and/or the SFC.

  • Sustainable Finance / Green Finance

    SFC informs on next steps to advance Hong Kong’s green and sustainable finance strategy

    CACEIS

  • On 15 July 2021, the Securities and Futures Commission (SFC) informed on the announcements of the Green and Sustainable Finance Cross-Agency Steering Group on the next steps to advance its collaborative strategy to bolster Hong Kong’s position as a leader in green and sustainable finance and help transition the financial ecosystem towards carbon neutrality. 

    As priorities, the Steering Group will focus on climate-related disclosures and sustainability reporting, carbon market opportunities and the launch of the new Centre for Green and Sustainable Finance.

  • IRELAND

    Anti-counterfeiting measures

    Ireland publishes Counterfeiting Act 2021

    CACEIS

  • On 5 July 2021, the Counterfeiting Act 2021 was published in the Irish Statute Book.

    This Act aims to give effect to 

    • Directive 2014/62/EU of the European Parliament and of the Council of 15 May 20141 on the protection of the euro and other currencies against counterfeiting by criminal law, and replacing Council Framework Decision 2000/383/JHA and for that purpose to amend the Criminal Justice (Theft and Fraud Offences) Act 2001; 
    • Council Regulation (EC) No. 1338/2001 of 28 June 20012 laying down measures necessary for the protection of the euro against counterfeiting, as amended by Council Regulation (EC) No. 44/2009 of 18 December 2008; 
    • Regulation (EU) No. 1210/2010 of the European Parliament and of the Council of 15 December 20104 concerning authentication of euro coins and handling of euro coins unfit for circulation; 
    • Decision ECB/2010/14 of the European Central Bank of 16 September 20105 on the authenticity and fitness checking and recirculation of euro banknotes, as amended by Decision ECB/ 2012/19 of 7 September 20126 and by Decision ECB/2019/2195 of 5 December 2019; 

    The Act also makes further provision in relation to the designation of the National Analysis Centre for euro notes and the Coin National Analysis Centre for euro coins; and to provide for related matters.

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

    Ireland publishes S.I. No. 321 of 2021 - European Union (Modifications of Statutory Instrument No. 110 of 2019) (Registration of Beneficial Ownership of Certain Financial Vehicles) (Amendment) Regulations 2021

    CACEIS

  • On 2 July 2021, the S.I. No. 321 of 2021 - European Union (Modifications  of Statutory Instrument No. 110 of 2019) (Registration of Beneficial Ownership  of Certain Financial Vehicles) (Amendment) Regulations 2021 was published in the Irish Statute Book.

    Regulation 5 of the S.I. No. 233 of 2020 is amended by the insertion of the following provisions:

    • An applicable financial vehicle that is in existence before the commencement of the S.I No. 321 of 2021 shall deliver the information regarding the Registration of Beneficial Ownership (RBO) to the Registrar within 6 months from such commencement
    • An applicable financial vehicle that comes into existence on or after the commencement of the S.I No. 321 of 2021 shall, within 6 months from the date of its coming into existence, deliver the information regarding RBO to the Registrar.
    • In the case of an Irish collective asset-management vehicle, such a vehicle shall be deemed to have come into existence by virtue of the making (in respect of it) of a registration order under section 12 of the Irish Collective Asset-management Vehicles Act 2015 - but on the date on which such order comes into operation as distinct from the date on which the order is made.
  • Ireland publishes S.I. No. 335 of 2021 - Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) Regulations 2021

    CACEIS

  • On 13 July 2021, the S.I. No. 335 of 2021 - Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) Regulations 2021 was published in the Irish Statute Book.

    The purpose of the Regulations is to prescribe levies (‘dedicated levies’) to be paid by certain financial vehicles, and the moneys received by the Bank by way of such levies shall be used by it to defray expenses of the Bank associated with its functions under the Investment Limited Partnerships (Amendment) Act 2020 and the European Union (Modifications of Statutory Instrument No. 110 of 2019) (Registration of Beneficial Ownership of Certain Financial Vehicles) Regulations 2020.

  • Ireland publishes Revenue eBrief No. 144/21 - Central Register of Beneficial Ownership of Trusts

    CACEIS

  • On 27 July 2021, the Ireland - Office of the Revenue Commissioners informed on the Central Register of Beneficial Ownership of Trusts (CRBOT).

    The CRBOT portal is available from 26 July 2021 via ROS and MyAccount.

    Relevant trusts established up to and including 23 April 2021 must submit information to the Central Register before 23 October 2021. Trusts created after this date have six months from the date of creation to provide details to the Register.

  • Ireland publishes S.I. No. 387 of 2021 - European Union (Access to Anti-Money Laundering Information by Tax Authorities) Regulations 2021

    CACEIS

  • On 30 July 2021, the S.I. No. 387 of 2021 - European Union (Access to Anti-Money Laundering Information by Tax Authorities) Regulations 2021  was published in the Irish Statute Book.

    An authorised officer of the Revenue Commissioners authorised under Regulation 8 of the Mandatory Automatic Exchange of Information in the Field of Taxation Regulations 2015 (S.I. No. 609 of 2015):

    (a) shall have access to the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies, the Central Register of Beneficial Ownership of Irish Collective Asset-management Vehicles, Credit Unions and Unit Trusts and the Central Register of Beneficial Ownership of Trusts, and 

    (b) may, by notice in writing, require a designated person to deliver to the officer, within a period specified in the notice, such information (including copies of any relevant books, records or other documents) as is relevant to the compliance with any obligation imposed on the designated person by Chapter 3 of Part 4 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 and retained by that designated person under section 55 of that Act.

  • Benchmarks Regulation (BMR)

    Ireland publishes S.I. No. 415 of 2021 - European Union (Indices Used as Benchmarks in Financial Instruments and Financial Contracts or to Measure the Performance of Investment Funds) (Amendment) Regulations 2021

    CACEIS

  • On 10 August 2021, the S.I. No. 415 of 2021 - European Union (Indices Used as Benchmarks in Financial Instruments and Financial Contracts or to Measure the Performance of Investment Funds) (Amendment) Regulations 2021 was published in the Irish Statute Book.

    These regulations amend S.I. No. 644 of 2017 to designate the Central Bank of Ireland as the relevant authority responsible for the carrying out of the functions of a relevant authority referred to in Article 23b of the EU Benchmarks Regulation.

  • Company Law

    Here are two Irish Statutory Instruments published in the Official Journal concerning the Company Act 2014

    CACEIS

  • Here are two Irish Statutory Instruments published in the Official Journal concerning the Company Act 2014 (Fees).

    1. On 30 July 2021, the S.I. No. 395 of 2021 - Companies Act 2014 (Fees) Regulations 2021 was published in the Irish Statute Book.

    Where the Registrar directs that a company change its name, any fee that would be required to be paid in respect of the registration of that change shall not be charged, levied or paid.

    2. On 30 July 2021, the S.I. No. 396 of 2021 - Companies Act 2014 (Forms)  Regulations 2021 was published in the Irish Statute Book.

    The purpose of these Regulations is to prescribe amended forms for the purposes of sections 1302(2) and 1304(1) of the Companies Act 2014.

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

    Ireland publishes S.I. No. 297 of 2021 - European Union (Enforcement of data subjects’ rights on transfer of personal data outside the European Union) Regulations 2021

    CACEIS

  • On 1 July 2021, the S.I. No. 297 of 2021 - European Union (Enforcement of  data subjects’ rights on transfer of personal data outside the European Union)  Regulations 2021 was published in the Irish Statute Book.

    This Order amends the Data Protection Act 2018 by providing for an express right on the part of individuals to enforce third party beneficiary rights conferred on data subjects under binding corporate rules and under standard data protection clauses adopted by the Commission or by a Supervisory Authority and approved by the Commission. 

    The amendment to the Data Protection Act also provides for the enforcement of standard contractual clauses previously brought forward by the Commission under Directive 95/46/EC, as well as the enforcement of contractual clauses authorized by a supervisory authority pursuant to Article 46(3)(a) of the General Data Protection Regulation.

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

    Ireland publishes Revenue eBrief No. 142/21 and No. 138/21 - Filing Guidelines for DAC6 (EU Mandatory Disclosure of Reportable Cross-Border Arrangements)

    CACEIS

  • On 20 July 2021, the Ireland - Office of the Revenue Commissioners published Filing Guidelines for DAC6 (EU Mandatory Disclosure of Reportable Cross-Border Arrangements).

    Tax and Duty Manual Part 33-03-04 - Filing Guidelines for DAC6 (EU Mandatory Disclosure of Reportable Cross-Border Arrangements) - has been amended at Section 7.4 to include 

    • a revised date for the re-opening of the portal of 17 August 2021.
    • the XML Schema Version 1.2 update and the applicable migration dates.
  • Financial supervision

    CBI informs on General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021

    CACEIS

  • On 27 July 2021, the Central Bank of Ireland (CBI) published its statement on General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021.

    Experience has shown that in order for a regulatory framework to work well, it should stimulate strong and effective governance within firms. To achieve this:

    • the allocation of responsibilities within firms needs to be transparent, clear and comprehensive; and
    • individuals need to know what they are responsible and accountable for, be clear what standards of behaviour are expected of them, and recognise that where their actions fall short of expected standards, they will be held accountable.
  • CBI publishes letter on its supervisory powers

    CACEIS

  • On 28 July 2021, the Central Bank of Ireland published a letter, dated 17 June 2021, which answers following questions:

    • Whether the Central Bank has the power to remove approval for an individual in a pre-approval controlled functions (PCF) role irrespective of what the company may decide;
    • If this is not the case, whether it is a power the Central Bank should have.
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    CBI publishes guidance related to Articles 1 and 2 of the Commission Implementing Regulation (EU) 2021/955

    CACEIS

  • On 29 July 2021, the Central Bank of Ireland (CBI) published website guidance related as required under Articles 1 and 2 of the Commission Implementing Regulation (EU) 2021/955:

    • information on the national provisions governing marketing requirements for UCITS
    • information on the national provisions governing marketing requirements for AIFs
    • regulatory fees and charges for UCITS
    • regulatory fees and charges for AIFs.
  • CBI publishes the Fortieth Edition of the Central Bank AIFMD Q&A Document

    CACEIS

  • On 29 July 2021, the CBI issued the 40th edition of the Central Bank AIFMD Q&A, which includes a new Q&A, ID1145.

    The new Q&A, ID 1100, sets out the Central Bank’s position with respect to Retail Investor AIFs and Qualified Investor AIFs gaining exposure (directly or indirectly) to crypto-assets.  The Central Bank’s approach in relation to crypto-assets will be kept under review, continue to be informed by European regulatory discussions on the topic and may change should new information or developments emerge in the future.

  • CBI publishes the Thirty-Second Edition of the Central Bank UCITS Q&A Document

    CACEIS

  • On 29 July 2021, the Central Bank of Ireland (CBI) issued the 32nd edition of the Central Bank UCITS Q&A document, which includes a new Q&A, ID 1100.

    The new Q&A, ID 1100, sets out the Central Bank’s position with respect to UCITS gaining exposure (directly or indirectly) to crypto-assets.  The Central Bank’s approach in relation to crypto-assets will be kept under review, continue to be informed by European regulatory discussions on the topic and may change should new information or developments emerge in the future.

  • Ireland publishes S.I. No. 414 of 2021 - European Union (Alternative Investment Fund Managers) (Amendment) Regulations 2021

    CACEIS

  • On 6 August 2021, the S.I. No. 414 of 2021 - European Union (Alternative Investment Fund Managers) (Amendment) Regulations 2021 was published in the Irish Statute Book.

    The Regulations transposes Directive (EU) 2019/1160 of the European Parliament and of the Council (CBD) into Ireland's European Union (Alternative Investment Fund Managers) Regulations 2013 (S.I. No. 257 of 2013).

  • Ireland publishes S.I. No. 413 of 2021 - European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2021

    CACEIS

  • On 6 August 2021, the S.I. No. 413 of 2021 - European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2021 was published in the Irish Statute Book.

    These Regulations aim to transpose the Directive (EU) 2019/1160 of the European Parliament and of the Council (CBD) into Ireland's European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (S.I. No. 352 of 2011).

  • Market Abuse Directive & Regulation (MAD / MAR)

    CBI publishes three industry letters on the overview of the key findings from the Central Banks's 2020 market abuse supervisory work

    CACEIS

  • On 12 July 2021, the Central Bank of Ireland (CBI) published three industry letters on the overview of the key findings from the Central Banks's 2020 market abuse supervisory work. The letters were sent to:

    1. Persons who transmit or execute orders, 
    2. Issuers and 
    3. Persons who act on behalf or on account of issuers (Advisors)

    The review observed some good practices but identified a need for significant improvements. These include:

    • Regulated firms must enhance trade surveillance and STOR reporting frameworks in order to ensure they are effective. This includes additional resourcing where needed to support the operation of those frameworks and where businesses increase in scale and complexity.
    • Issuers must implement better frameworks to ensure their public disclosures of inside information are made in a timely manner.
    • Issuers and their professional advisors must improve the quality both of insider lists and how the operation of those lists is governed. This includes writing to insiders to inform them of their MAR obligations and the consequences of committing market abuse.
    • Market participants must improve staff awareness of and training in MAR. In particular, training needs to be more comprehensive and specific to the risk the entity faces in the context of its business activities.

    The Central Bank is imposing specific risk mitigation programs on those market participants where concerns were identified. It has also written to relevant market participants requiring them to critically assess their MAR operations against the published findings and to put in place a time-bound remediation plan; whether or not they received a specific risk mitigation program from the Central Bank.

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

    CBI publishes a statement for MiFID Investment Firms authorised to deal on own account or to underwrite financial instruments on a firm commitment basis

    CACEIS

  • On 14 July 2021, the Central Bank of Ireland (CBI) published a statement for MiFID Investment Firms authorised to deal on own account or to underwrite financial instruments on a firm commitment basis.

    All MiFID investment firms authorised to provide the MiFID investment services of dealing on own account or underwriting of financial instruments on a firm commitment basis (MiFID activities (3) or (6)) should give due regard to this draft RTS and engage in the EBA data collection exercise as communicated to them directly by their supervisory team.

    Additionally,the Central Bank expects MiFID investment firms authorised for MiFID activities (3) or (6) to re-confirm their classification under the Investment Firms Directive and the Investment Firms Regulation taking into account the revised draft RTS, to their usual supervisory team by end August 2021.

    Finally within three months of the Delegated Act entering into force, or by end Q1 2022, whichever is later, all MiFID investment firms impacted by the Delegated Act which will be required to submit an application for re-authorisation as credit institutions are required to engage with their usual supervisory team setting out a reasonable plan to bring the respective firm into compliance as soon as possible with the steady-state prudential framework.

  • Sustainable Finance / Green Finance

    IF publishes its survey findings on principal adverse impacts reporting under the SFDR

    CACEIS

  • On 27 August 2021, the Irish Funds Industry Association (IF) published a new publication – “Principal Adverse Impacts Reporting – practical insights for the next stage of SFDR implementation”.

    The paper provides a Q&A on implementing PAI reporting and the findings of a survey of ESG data vendors conducted by our ESG Servicing Data WG. The findings reveal patchy coverage on several ESG data points and a wide range of variance in the reported data with low levels of comparability. The paper notes that guidance from regulators would be welcome on how to address data gaps and on the use of “best efforts” until such time as sustainability reporting standards are in place under the CSRD.

  • ITALY

    Financial supervision

    Banca d'Italia amends Circular 288 of 3 April 2015 on Supervisory Provisions for Financial Intermediaries

    CACEIS

  • On 20 July 2021, Banca d'Italia amended Circular 288 of 3 April 2015 ("Supervisory Provisions for Financial Intermediaries") in order to implement the EBA's guidelines on concession and loan monitoring (Guidelines on loan origination and monitoring, EBA / GL / 2020/06 - Guidelines).

    In particular, in paragraph 2.1 of Section VII, Chapter 1 "Administrative and accounting organization and internal controls", Title III, of Circular 288, the reference to the EBA Guidelines on the assessment of creditworthiness is deleted, pursuant to art. 18 of the directive 2014/17 / UE (MCD) (EBA / GL / 2015/11), because repealed and replaced by the Guidelines.

  • Governance

    Banca d'Italia updates circular of 17 December 2013 on CRD V

    CACEIS

  • On 15 July 2021, the 35th update to the circular of Banca d'Italia of 17 December 2013, n.285 (Circular 285) was published on Gazzetta Ufficiale.

    The changes are aimed at incorporating European guidelines, and in specific Directive 2019/878 / EU (CRD V) and the EBA guidelines on the subject, introducing, among others, provisions relating to gender equality, the treshold to define a bank of "smaller size or operational complexity", the inclusion of fintech, ESG factors and policies of funding among the topics of strategic importance;

    the adoption of ethical standards for all staff; the strengthening of control measures;  the adoption of policies for managing the dialogue between administrators and shareholders; the transposition of art. 88, par. 1, paragraphs 4 and 5 of the Directive 2013/36 / EU (CRD), as amended by CRD V.

  • Italy publishes a regulation concerning the handling of procedures managed and listed by Banca d'Italia and the FIU

    CACEIS

  • On 9 August 2021, a new regulation concerning "the identification of the terms and of the organizational units responsible for the administrative procedures listed on the websites of Banca d'Italia and of the Italian Financial Information Unit, pursuant to articles 2 and 4 of the law of 7 August 1990, no. 241, and subsequent amendments " was published in the Gazzetta Ufficiale.

    The Regulation applies to procedures listed in the attachment to the Regulations, published on the websites of Banca d'Italia and FIU (Financial Information Unit), which identify for each procedure the conclusion term, the responsible organizational unit and the regulatory source of reference.

    The Regulation entered into force on the day of publication in the Gazzetta Ufficiale. With this publication, the Exchange Office Regulations of 17 August 2006 is cancelled, as well as Banca d'Italia provisions of 25 June 2008, of 22 June 2010 and of 5 March 2013.

    For any administrative proceedings pending on the date of entry into force of the new regulation,  the provisions adopted by Banca d'Italia on 25 June 2008 and  22 June 2010 and subsequent amendments and additions, will continue to apply.

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

    Italy implements EU rules on cross-border distribution of collective investment undertakings

    CACEIS

  • On 15 July 2021, the Italian Council of Ministers approved, in preliminary examination, a legislative decree introducing rules to adapt national legislation to EU rules on cross-border distribution of collective investment undertakings.

    The draft decree follows the issuance of Directive (EU) 2019/1160 and Regulation (EU) 2019/1156, which regulate the cross-border distribution of collective investment undertakings in order to remove regulatory barriers that limit the offer of undertakings between different EU States, with the aim of reaching a greater level of harmonisation at EU level. Regulation (EU) 2019/1156 applies from 1 August 2019, with the exception of Article 4, paragraphs 1 to 5, on the requirements for marketing communication, Article 5, paragraphs 1 and 2, on the publication of information on websites of the competent authorities, and articles 15 and 16, on the subject of "pre-marketing", which apply from 2 August 2021. The transposition deadline provided for by the Directive is 2 August 2021.

    Removing inefficiencies in the functioning of the single market for investment undertakings should reduce the costs and consequently accelerate the growth of cross-border distribution in the EU. Indeed, most of the collective investment undertakings are sold in the home country of establishment and cross-border distribution is still too limited.

    Among other things, by the draft decree Legislative Decree No. 58 of 1998 (the Consolidated Financial Act) would be amended in order to provide that:

    • Banca d'Italia and CONSOB, according to their respective powers, are appointed as competent national authorities pursuant to Regulation (EU) 2019/1156 for the publication and management on their websites of the information provided by Article 5, paragraph 1 of Regulation (EU) 2019/1156;
    • Banca d'Italia is appointed as competent authority to set out rules for communicating the interruption of the offer of Italian UCITS in other EU member States;
    • the notion of 'pre-marketing' is introduced. It consists of providing information and communications on investment strategies or ideas by an asset management company or an alternative investment fund manager to potential professional investors, resident or having their registered office in the territory of the EU, in order to sound out their interest in an Italian or EU AIF or a sub-fund not yet established or already established but for which the notification procedure has not yet been started pursuant to Article 43, paragraphs 2 and 8, in the Member State where potential investors reside or have their registered office. The draft decree clarifies that pre-marketing does not constitute an offer to the public;
    • administrative sanctions under the Consolidated Financial Act are extended to cover violations of provisions under the draft decree.
  • CONSOB issues a communication on "turbo" products

    CACEIS

  • On 27 July 2021, CONSOB published a press release announcing that currently conditions do not exists to adopt national product intervention measures aimed at limiting the distribution to retail customers of so-called products turbo (turbo certificates or mini-future certificates). The target measures would be similar to those adopted by AFM (the Dutch Financial Markets Authority).

    In its press release, CONSOB highlighted the obligations falling on intermediaries in relation to the distribution of such products, such as:

    • product governance measures should direct these products to the most suitable clientele;
    • the so-called products turbo-like are not subject to the execution only regime, as required by art. 25 (4) of Directive 2014/65 / (MiFID II). Therefore, in relation to this type of products, it is always necessary an assessment of appropriateness or adequacy by the intermediary;
    • the intermediary must ensure that the customer is adequately informed, both before making the investment and in the holding of the acquired position, with special attention concerning the regulation covering positions with potential liabilities.
  • CONSOB publishes the requirements for the marketing of UCITS and AIFs in Italy

    CACEIS

  • On 2 August 2021, CONSOB published the requirements for the marketing of UCITS and AIFs in Italy, as well as information relating to supervisory fees applicable to EU managers and AIFMs managers, in accordance with the provisions of articles 5 and 10 of Regulation (EU) 2019/1156 on the cross-border distribution of collective investment schemes (UCIs).

    Regarding the marketing of UCITS, a reference is made to the Issuers' Regulation on the marketing of Italian and EU UCITS, covering also the obligation to deposit the documentation of the offer and to conclude the procedure to notify the cross-border transfer. The documents to be attached to the notification are also detailed, as well as the procedures for transmission of any updates to the offer documentation.

    The provisions also cover:

    • the obligations to transmit advertising material to CONSOB;
    • reporting obligations;
    • the procedure for the transmission of the «de-notification» for UCITS;
    • the obligation for the EU UCITS marketed to retail investors to provide the facilities referred to in the Issuers' Regulations;
    • the obligation for EU UCITS to carry out the notification process referred to in Issuers' Regulation in case of listing.

    Regarding the marketing of AIFs, CONSOB indicates the documents necessary for commercialization as well as the process to follow for any transmission of prospectuses and KID of the PRIIPs. Additionally, the following aspects are covered:

    • the obligations to transmit advertising material to CONSOB and the rules to which the material shall comply;
    • the obligation to provide EU AIF retail investors with the facilities referred to in the Issuers' Regulation;
    • reporting obligations;
    • the lack, in the Italian legislation, of a national private placement scheme for marketing by non-EU AIFMs or non-EU AIFs;
    • the modalities of communication of the «de-notification» by the AIFMs EU;
    • the obligation to carry out the notification referred to in the Issuers' Regulation for the listing on the secondary market of the AIF.

    Finally, as regards the supervisory fees to be paid in relation to the cross-border operations of EU operators are listed as well as the relative frequency and deadline.

  • IT Outsourcing

    CONSOB implements ESMA's guidelines on cloud services' outsourcing

    CACEIS

  • On 13 July 2021, CONSOB communicated the implementation of ESMA guidelines on outsourcing to cloud service providers (CSPs), integrating them into own supervisory practices.

    It is recalled that these Guidelines provide indications regarding:

    • the risk assessment and due diligence that companies should perform on their CSPs;
    • the principles of governance, organization and control that companies should put in place to monitor the performance of their CSPs and exit strategies;
    • the elements that must be provided for in the agreements for outsourcing;
    • IT security requirements; 
    • the information to be communicated to the competent authorities.

    The Guidelines will be applicable from 31 July 2021 to all agreements of outsourcing to CSPs stipulated or renewed starting from that date. 

    Until 31 December 2022 it will be possible to amend / add material to any pre-existing agreement to achieve compliance.

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

    Banca d'Italia publishes supervisory provisions covering simple investment firms

    CACEIS

  • On 6 July 2021, Banca d'Italia and CONOSB issued the supervisory guidelines applicable to simple investment companies (SiS), aimed at promoting the uniform and correct application of the new discipline introduced with the D.L. n. 34/2019 (Growth Decree, converted with amendments into law no. 58/2019).

    These guidelines:

    • Provide an overview of the main European and national provisions applicable to simple investment firms
    • Define supervisory guidelines with which the simple investment firms will have to comply. These guidelines also provide clarifications on internal governance and control system; prudential discipline; decision making, conflicts of interest and complaints
    • Indicate the procedure applicable in case the temporary limit of shareholders' equity of 25 million is not met.

    The supervisory guidelines are not mandatory; the investment firms can communicate with Banca d'Italia and CONSOB concerning these topics during the authorization phase or during the recurrent reporting whether they aim to implement these guidelines.

  • CONSOB complies with ESMA's guidelines on compliance and control

    CACEIS

  • On 7 July 2021, CONSOB communicated the intention to comply with the ESMA Guidelines on MiFID II requirements, related to the compliance / control function.

    More specifically CONSOB communicated that the obligations detailed in the Resolution no. 17297/2010 with reference to the sending of the "Report of the compliance control function" must be fulfilled. Fulfillment is achieved by sending the reports referred to in art. 22, par. 2, lett. c) of the Regulation (EU) 2017/565, prepared according to the indications of guideline 3 of the Guidelines of the ESMA, applicable as of 7 June 2021.

    CONSOB informed that the process and deadline for submission of the reports remain unchanged.

  • Banca d'Italia implements ESMA's guidelines on control and compliance

    CACEIS

  • On 7 July 2021, Banca d'Italia implemented ESMA's guidelines, following the decision of CONSOB to comply with ESMA's “Guidelines on certain aspects of the requirements of the MiFID II directive relating to the function of control and compliance".

    The Guidelines specify application aspects related to requirements of the control and compliance function, as detailed by the delegated regulation (EU) 2017/565 which integrates the MiFID II directive with organizational requirements applicable to entities providing investment services.

    These Guidelines apply to banks providing investment services and activities, to SIMs and asset management companies. These entities shall comply with the Guidelines, in accordance with the provisions of Article 16 of Regulation (EU) no. 1095/2010 of the European Parliament and of the Council, of 24 November 2010.

  • LUXEMBOURG

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

    CSSF updates Good conduct guide prepared by the Ministry of Finance on the implementation of financial sanctions against certain persons, entities, bodies and groups in the context of the combat against terrorist financing

    CACEIS

  • On 1 July 2021, the Commission de Surveillance du secteur financier (CSSF) updated Good conduct guide prepared by the Ministry of Finance on the implementation of financial sanctions against certain persons, entities, bodies and groups in the context of the combat against terrorist financing, as updated on 24 June 2021

    The recommendations issued in this guide are to be considered non-exhaustive and of a general nature for the purpose of implementing financial sanctions within the framework of combating terrorism financing.

    The recommendations set out in this guide are not legally binding and should not be read as recommending any action which would be incompatible with applicable European or national laws. The guide is not intended to replace the obligation to consult applicable law. Only the latter is legally binding.

  • CSSF publishes Circular 21/775 FATF statements regarding 1) high-risk jurisdictions against which enhanced due diligence measures and where appropriate, countermeasures are required 2) jurisdictions subject to the enhanced supervision process of the FATF

    CACEIS

  • On 5 July 2021, the Commission de Surveillance du secteur financier (CSSF) published a Circular 21/775 FATF statements regarding  

    1) High-risk jurisdictions against which enhanced due diligence measures and, where appropriate, countermeasures are required: Democratic People's Republic of Korea ("DPRK") and Iran.

    2) Jurisdictions subject to the enhanced supervision process of the FATF: Albania, Barbados, Botswana, Burkina Faso, Cambodia, Haiti, Cayman Islands, Mauritius, Jamaica, Malta, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Philippines, Senegal, South Sudan, Syria, Uganda, Yemen and Zimbabwe.

  • ChD amends the Draft Law 7452 to include the transposition of Directive (EU) 2019/1153 laying down rules facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences

    CACEIS

  • On 2 August 2021, the Chambre des députés - Luxembourg published the amendments to the Draft Law 7452 on the management and recovery of assets.

    The amendments aim to transpose the Directive (EU) 2019/1153 of the European Parliament and of the Council of 20 June 2019 laying down rules facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences, and repealing Council Decision 2000/642/JHA.

    These proposed amendments will modify the Law of 25 March 2020 establishing a central electronic data retrieval system related to IBAN accounts and safe-deposit boxes:

    • Include Asset Recovery Office (BRA) in the list of national authorities having access to the electronic system.
    • Distribute the different missions between the BRA and the Asset Management Office (BGA)
    • Provide a clarification as to the role of the different actors involved in the seizure, confiscation procedure, subsequent acts of management, disposition, and post-sentencing investigation.

    The BGA will be exclusively competent for the execution of decisions on the disposition of seized property, including the execution of value-confiscation orders, following a post-sentencing investigation.

    As for the post-sentencing investigation, it is proposed to keep it in the judicial spheres and entrust it to the BRA. 

  • RBE informs on Online forms (HTML) new formalities

    CACEIS

  • On 2 August 2021, the RBE - Register of Beneficial Owners published Public notice - RCS - Online forms (HTML) new formalities.

    The RBE informed about the upcoming changes, starting mid-November 2021, concerning formalities to be carried out at the Trade and Companies Register (RCS).

    The requisition forms in the current PDF format will soon be replaced by forms to be completed directly online in HTML format. This change of technology will solve the practical difficulties encountered by our users, linked to the PDF format of the requisition forms. It will also provide a more user-friendly interface for the RCS registration process.

  • RBE informs on notifications to be sent for rejected requests to be corrected

    CACEIS

  • On 18 August 2021, the RBE - Register of Beneficial Owners informed on notifications to be sent for rejected requests to be corrected.

    Particularly, the notifications will be sent to inform users that certain filing or declaration requests, which have been the subject of a rejection by the LBR, have not yet been corrected. 

  • Benchmarks Regulation (BMR)

    Chambre des députés publishes Draft Law N°7861 amending the law of 17 April 2018 on benchmarks

    CACEIS

  • On 22 July 2021, the Chambre des députés published Draft Law N°7861 amending the law of 17 April 2018 on benchmarks.

    This Draft Law aims to operationalize three European regulations amending the Benchmark Regulation which is implemented in Luxembourg law by the Law of 17 April 2018. 

    The amendments made to Regulation (EU) 2016/1011 by Regulation (EU) 2021/168 introduce a framework for the orderly termination or abandonment of benchmarks. 

    These amendments were introduced in the context of the expected phase-out of LIBOR by the end of 2021. The new rules aim to reduce legal uncertainty and avoid risks to financial stability by ensuring that a legal replacement rate can be put in place before a systemically important benchmark ceases to be used. 

    In particular, Article 5 of Regulation (EU) 2019/2175 provides ESMA with new powers. Thus, ESMA will have direct supervisory powers over certain critical benchmarks and their administrators as of 1 January 2022, while becoming the competent authority for the recognition of administrators of benchmarks located in third countries. 

    In this regard, adjustments are necessary in the Law of 17 April  2018 on benchmarks to reflect the changes resulting from the said regulation. Finally, the Draft Law operationalizes a specific point of Regulation (EU) 2019/2089, by supplementing Article 4 of the Law of 17 April 2018 on benchmarks, to include two new provisions in the list of provisions sanctionable under the said law.

  • COVID-19 Regulatory Measures

    CSSF publishes communication on the end of the COVID-19 reporting's relating to investment fund managers

    CACEIS

  • On 16 July 2021, the Commission de Surveillance du secteur financier (CSSF) published  communication on the end of the COVID-19 reporting's relating to investment fund managers.

    On 10 March 2020, the CSSF implemented a specific monitoring of the largest investment fund managers (“IFM”) by collecting data on significant developments/issues as well as large redemptions for the investment funds they manage. The scope of the ad hoc reporting installed in that context was extended on 2 June 2020 (Launch of the IFM notification on fund issues and large redemptions via eDesk).

    In April 2020, the CSSF launched, in addition, a weekly questionnaire to investment fund managers with the aim to cover financial data (total net assets, subscriptions and redemptions) and information on governance arrangements (Launch of a new weekly questionnaire to investment fund managers – updates on financial data and governance arrangements).

    These reportings allowed the CSSF to continue ongoing supervision of the investment fund sector during the period of market turbulence experienced last year. The collected information also served the CSSF for the discussions at a European and International level with other authorities and with market players to identify issues at an early stage and to assist with the resolution of these.

    In view of the evolution of financial markets in general and investment funds/IFM more specifically since the March/April episode, the CSSF decided, at the current juncture, to end these ad hoc reportings at the end of July 2021. On this basis, the relevant IFM have to provide the last reportings for the reference date 30 July 2021 (IFM notification on fund issues and large redemptions), respectively the reference week from 26 July to 30 July 2021 (Weekly IFM Questionnaire).

    At the same time, the reporting “Early Warning on large redemptions”, which is only applicable to a limited number of UCITS that have in the past been contacted directly by the CSSF, will be reinstated with effect from 2 August 2021. The CSSF will reach out to the concerned IFM separately with more specific instructions.

  • CSSF updates FAQs COVID-19 (17 August 2021)

    CACEIS

  • On 17 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated its COVID-19 FAQs.

    The CSSF updated following questions:

    • 21, 17.b, 16.a, 16.b, 16.c, 16.d, 14, 13, 4.a, 4.b, 4.c, 3 and 1
    • Question 21) Can Less Significant Institutions temporarily exclude certain exposures to central banks from the leverage ratio calculation pursuant to Articles 429a(1)(n), 429a(5) and 429a(6) of Regulation (EU) 575/2013 (CRR) as amended as a result of exceptional macroeconomic circumstances due to the COVID-19 pandemic?
    • Question 17.b) What are the consequences on the phasing-out of EBA-eligible payment moratoria?
    • Question 16.a) Do passive investment breaches (i.e. a breach beyond the control of the UCITS) by a UCITS of the global exposure limit of Article 42(3) of the 2010 Law (and more generally of investment restrictions applicable to UCI) have to be notified to the CSSF?
    • Question 16.b) Can breaches of the VaR limit (either the maximum limit laid down in regulation (20% for absolute VaR or 200% for relative VaR as the case may be) or any other more restrictive internal limit set below the above regulatory thresholds, as laid down in the sales prospectus) by UCITS as a result of the increase of volatility in financial markets (in the absence of any new positions increasing the risk of the portfolio) be considered as passive breaches?
    • Question 16.c) What are the expectations of the CSSF in case of a passive breach (i.e. beyond the control of the UCITS, e.g. increase of volatility in the financial markets) of the regulatory VaR limit or the internal VaR limit laid down in the prospectus?
    • Question 16.d) What information do UCITS have to communicate to the CSSF (opc.prud.sp@cssf.lu) in relation to an active breach of the VaR limit (whether the maximum limit laid down in regulation – 20% for absolute VaR or 200% for relative VaR - or the internal limit, below the above regulatory thresholds, as laid down in the sales prospectus)?
    • Question 14. What is the flexibility offered by IFRS 9 in order to mitigate volatility in the banks’ regulatory capital, financial statements and reporting of the banks regarding the COVID-19 pandemic?
    • Question 13. What is the CSSF policy stance as regards banks’ distribution policies aimed at remunerating shareholders, as well as on variable remuneration in the COVID-19 context?
    • Question 4.a) Can UCIs (UCITS, UCI Part II & SIFs) increase the swing factor to be applied on the NAV up to the maximum level laid down in the prospectus without prior notification to the CSSF?
    • Question 4.b) Situations that UCIs can increase the applied swing factor beyond the maximum swing factor laid down in the fund prospectus.
    • Question 4.c) Where the fund prospectus formally offers the possibility to the Board of Directors of the UCI or, if applicable, the Management Company to go beyond the maximum swing factor laid down in the prospectus, to what extent can a UCI increase the applied swing factor beyond the maximum swing factor disclosed in the fund prospectus?
    • Question 3. The ECB has communicated on a number of measures to alleviate the impacts of COVID-19 on Significant Institutions. Will Less Significant Institutions also be able to benefit from similar measures?
    • Question 1. What are the minimum IT security conditions recommended for remote access implemented to meet the exceptional situation created by Covid-19?

    Questions 20.a, 20.b, 19, 18, 17.a, 15, 12, 11, 10, 9, 8, 7 and 6 are no longer applicable and repealed.

  • CSSF publishes communication on COVID-19: update on operational working arrangements

    CACEIS

  • On 30 August 2021, the Commission de Surveillance du secteur financier (CSSF) published a communication on COVID-19: update on operational working arrangements.

    The CSSF highlights that the coronavirus is still active and it is important that the entities under the supervision of the CSSF, as everyone else, help prevent the spread of the virus, while ensuring their business continuity.

    It is up to the supervised entities to define their operational working arrangements: on-site or remote. As regards on-site employees, their safety needs to be guaranteed, notably by observing protective measures.

    Furthermore, the CSSF reminds that Circular CSSF 21/769 on telework, which was due to enter into force on 30 September 2021, will only apply as from the end of the pandemic, in accordance with Article 66 of the circular.

  • European Market Infrastructure Regulation (EMIR)

    CSSF updates Notification for reporting disputes between counterparties

    CACEIS

  • On 23 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Notification for reporting disputes between counterparties.

    In accordance with  article 15(2) of EU Regulation 149/2013 supplementing the EMIR Regulation, this notification should be submitted by a financial counterparty with outstanding disputes relating to OTC derivative contracts where the CSSF is the competent authority.

    The CSSF requires that financial counterparties use this form to make a monthly notification of any disputes outstanding in the preceding month. Notifications for the preceding month should be submitted within 14 calendar days of the end of each month.

    All disputes outstanding during the month specified in the form relating to the recognition of an OTC derivative contract, its valuation or the exchange of collateral for an amount or a value higher than EUR 15 million and outstanding for at least 15 business days, should be included in this report even if they have been resolved at the time of notification. This includes disputes which are still outstanding from previous months or were outstanding from a previous month but were resolved in the month specified in this form.

  • Financial supervision

    Luxembourg publishes Law of 21 July 2021 amending several Acts on the financial sector concerning the approval attributions and powers of the ministers of the relevant authority

    CACEIS

  • On 26 July 2021, the Law of 21 July 2021 amending 1° the Consumer Code; 2° the amended Act of 5 April 1993 on the financial sector; 3° the amended Act of 23 December 1998 setting up a financial sector supervisory commission; 4° the amended Act of 22 March 2004 on securitization; 5° the amended Act of 10 November 2009 on payment services; 6° the amended Act of 7 December 2015 on the insurance sector; and 7° the amended Act of 30 May 2018 on markets in financial instruments was published in the Official Journal. 

    The term "Minister having in his attributions" is deleted and replaced directly by the name of the competent authority (CSSF, CAA, IML). The texts are amended with the updated legal basis. Several terminological changes are made.

    Persons having, at the date of entry into force of this law, an approval of the Minister having the CSSF in his attributions, or an approval of the Minister having the CAA in his attributions, under the Consumer Code, the amended law of April 5, 1993 on the financial sector, the amended law of March 22, 2004 on securitization the amended law of November 10, 2009 on payment services, the amended law of December 7, 2015 on the insurance sector or the amended law of May 30, 2018 on markets in financial instruments, are deemed to have been authorized by the CSSF or the CAA, in accordance with the provisions of said laws.

  • CSSF publishes its Annual Report 2020

    CACEIS

  • On 6 August 2021, the Commission de Surveillance du secteur financier (CSSF) published its Annual Report 2020.

    1) Financial crisis averted, so far

    The COVID-19 pandemic is without any doubt the event that left its mark on the year 2020. The health crisis, with extreme consequences for the health of many fellow citizens and the health systems of many countries, became an economic crisis, the effects of which could however be limited – for now – through the intervention of the political powers and the central banks. Until now, the financial systems demonstrated resilience owing notably to the reforms implemented after the financial crisis of 2007-2008.

    2) CSSF business continuity

    “The CSSF’s prudential supervisory mission cannot be interrupted, not even for a single day”, states Claude Marx, Director General. “Even if we were not prepared for this pandemic – no one was, actually – our continuity plan, the digitisation and modernisation of the work organisation pursued by us for several years allowed seamless continuity of services, even during the lockdown, when, in spring 2020, more than 99 % of our agents worked offsite and partially outside Luxembourg borders.”

    3) Liquidity and loans taking centre stage

    A particular concern was the supervision of liquidity of investment funds, notably of some money market funds. A crisis could be avoided through the funds’ use of certain instruments but also and foremost through the purchase of private and public sector debt by the ECB via its Pandemic Emergency Purchase Programme (PEPP).

    Another focus of the CSSF was the monitoring of the development of mortgage loans, corporate loans and loans to individuals, in times of crisis. In both cases, close supervision was carried out via a specific reporting and dialogue with the industry. The follow-up was performed by the CSSF as well as the Comité du Risque Systémique.

    Throughout the year, the CSSF was in close contact with the European and international institutions, notably the ECB, the EBA, ESMA, the FSB and the Basel Committee, with the objective of flexibility, in line with the law and European standards, as well as the safekeeping of the financial stability, in mind.

    4) A resilient and responsible financial sector

    The supervised entities deployed their business continuity plans successfully and no major operational incident had to be reported. Thanks to new loans granted (with or without partial State guarantee) and to moratoria, the banks acted responsibly and helped cushion the economic shock caused by the pandemic. In June 2020, moratoria reached almost EUR 3.7 billion but decreased to EUR 446 million at the end of 2020.

    5) Brexit, SFDR and digitisation, the other topics that marked the year

    The CSSF teams made substantial efforts to support the entities concerned in their preparations for Brexit in view of the end of the transitional period on 31 December 2020. Thus, they provided a framework for the access of providers established in the United Kingdom to the Luxembourg market, determined the equivalence of the British regime in the context of the MiFID II/MiFIR third-country regime and reviewed a certain number of authorisation files received in the context of Brexit.

    The greening of finance is more topical than ever. The CSSF closely monitored the developments at European level, and notably the preparation of the entry into force, on 10 March 2021, of the EU regulation on sustainability-related disclosures in the financial services sector (SFDR), while Level-2 texts and the taxonomy had not yet been published. “We adopted a tolerant and firm approach: tolerance with respect to certain open questions, pending notably a clarification by the European Commission, firmness with respect to those which do not prepare themselves and fail to comply with the standards”, specifies Claude Marx. “The CSSF will not use gold plating. There will not be additional national requirements, but the ambitious goals of the EU will have to be implemented in the Luxembourg financial sector which, given its importance, will significantly contribute to the transition towards and the financing of a more sustainable economy.”

    The digitisation of the financial sector, under way prior to the health crisis, was accelerated as a result of the latter, especially due to the fact that a significant number of employees had to work remotely during a longer period. “The CSSF will remain vigilant as to cybercrime risks and the risks posed by business models of entities not sufficiently preparing for the digital era”, stresses Claude Marx. As regards digitisation and sustainable finance, training and sufficient knowledge at all levels, starting with the boards of directors and the executive committees, will be key attention points.

  • CSSF communicates on its authorization powers for the approvals of certain entities placed under its supervision

    CACEIS

  • On 13 August 2021, the Commission de Surveillance du secteur financier (CSSF) communicated on its authorization powers for the approvals of certain entities placed under its supervision.

    From 30 July 2021, the CSSF exercises the power to grant, refuse and withdraw for the approvals of certain entities placed under its supervision, instead of the Minister of Finance. The approval procedures for the following entities are concerned: 

    • mortgage credit intermediaries; 
    • all PSF as defined in article 1 of the amended law of 5 April 1993 on the financial sector (investment firms, specialized PFS, support PFS); 
    • branches of foreign PSF other than investment firms; 
    • branches of credit institutions from third countries; 
    • third-country companies providing investment services or carrying out investment activities; 
    • fiduciary-representatives in accordance with the amended law of 22 March 2004 relating to securitization; 
    • payment institutions and electronic money institutions; 
    • regulated markets.

    The CSSF will continue to pre-examine and investigate the requests that will be submitted to the CSSF. For the supervised entities, this change has the advantage that the approval processes no longer entail a double involvement of the CSSF and the Ministry of Finance. 

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

    Luxembourg transposes the Directive on cross-border distribution of undertakings for collective investment

    CACEIS

  • On 26 July 2021, the Law of 21 July 2021 transposing Directive (EU) 2019/1160 of the European Parliament and of the Council of 20 June 2019 amending Directives 2009/65/EC and 2011/61/EU as regards cross-border distribution of undertakings for collective investment was published in the Official Journal. The Law comes into force on 2 August 2021.

    1) Amendment of the amended law of 17 December 2010 concerning collective investment undertakings

    The amendments of the Law describe the arrangements UCITS must perform, in each Member State where it markets its units, or where it intends to market its units (including electronic tasks) as well as how and when to fulfill the notification letter. 

    The new amendments mention how the Funds may withdraw the notification letter should it wish to and what information must be provided to the investors.

    Moreover, the Law clarifies the Funds is not required to have a physical presence in the host Member State or to appoint a third party. 

    2) Amendment of the amended law of 12 July 2013 relating to alternative investment fund managers

    The definition of “pre-marketing” is introduced. The amendments to the above-mentioned Law deal with the accounting standards applicable to a Luxembourg AIF as well as the  international financial reporting standards to prepare their consolidated financial statements. 

    A new chapter is introduced in the law of 12 July 2013 on Conditions applicable to pre-marketing in the European Union by a manager established in the European Union and more specifially on:

    • Managers established in Luxembourg pre-marketing in Luxembourg or in another Member State 
    • AIFMs established in another Member State pre-marketing in Luxembourg
    • AIFMs established in Luxembourg withdrawing the notification relating to the marketing in Luxembourg of the units or shares of European Union AIFs that they manage
    • AIFMs established in Luxembourg withdrawing the notification relating to the marketing in another Member State of the units or shares of European Union AIFs that they manage
    • AIFMs established in another Member State withdrawing the notification relating to the marketing in Luxembourg of the units or shares of European Union AIFs that they manage
    • Arrangements to be taken by AIF managers towards retail investors.
  • Here are eleven updates from the CSSF following the transposition of the Cross-border fund distribution Directive & Regulation in Luxembourg

    CACEIS

  • Here are eleven updates from the CSSF following the transposition of the Cross-border fund distribution Directive & Regulation in Luxembourg.

    1. On 27 July 2021, the Commission de Surveillance du secteur financier (CSSF) published the forms for de-notification letter of UCITS compartment and UCITS share class.

    2. On 28 July 2021, the Commission de Surveillance du secteur financier (CSSF) updated Circular CSSF 11/509 in accordance with Directive (EU) 2019/1160.

    This circular amends Circular CSSF 11/509 by integrating technical modifications related to Directive (EU) 2019/1160 of 20 June 2019 amending the UCITS Directive. The circular CSSF 11/509 is amended in accordance with the attached Annex. To facilitate reading and understanding, the Annex presents under a ‘track changes’ format the changes made herewith to Circular 11/509. 

    The circular applies to all undertakings for collective investment in transferable securities governed by Luxembourg law, to UCITS of another Member State of the European Union wishing to market their units in Luxembourg and to those involved in the operation and control of these undertakings.

    The UCITS Directive was amended by Directive (EU) 2019/1160 of the European Parliament and of the Council of 20 June 2019. Amongst others, it extends the notification procedure insofar as it considers the de-notification of sub-funds and types of units of UCITS, which is also carried out directly between the supervisory authorities of the Member States on the basis of a file that the UCITS must submit to the supervisory authority of the home Member State.

    3. On 29 July 2021, the Commission de Surveillance du secteur financier (CSSF) published: 

    • Notification letter for pre-marketing to potential professional investors in Luxembourg.
    • Notification letter for pre-marketing by non-EU AIFMs to potential professional investors in Luxembourg.
    • De-notification letter AIF compartment.

    4. On 30 July 2021, the Commission de Surveillance du secteur financier (CSSF) published questions/answers in relation to the CBD/CBR, highlighting the changes for notifications to the CSSF as from 2 August 2021.

    1. UCITS Notifications 

    • Main changes for UCITS notifications introduced by the CBD/CBR
    • New information to be included in the initial notification letter 
    • How to do a de-notification for Luxembourg UCITS
    • Package size supported for notifications (initial and update)
    • Language should be used for the KIIDs for initial notification requests
    • The notification is rejected with the error message “Document date does not match the date of the last document registered at CSSF”
    • Where to find the list of the appropriate nomenclature for each document
    • Attestation required for notification requests
    • Any additional requirements to be respected when submitting a notification for the various host Member States of the European Union
    • Who to contact and further information about an ongoing notification request

    2. AIFM Notifications 

    • Main changes for AIFM notifications introduced by the CBD/CBR
    • Procedure to notify the CSSF for pre-marketing
    • How to do a de-notification for AIFs
    • Package size is supported for notifications (initial and update).

    5. On 4 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Notification letter for pre-marketing by EU AIFMs to potential professional investors in Luxembourg.

    6. On 5 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated De-notification letter UCITS share class.

    7. On 5 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated De-notification letter UCITS compartment.

    8. On 10 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated the List of questions/answers in relation to the CBDF Regulation highlighting the changes for notifications to the CSSF.

    The following Frequently Asked Questions (FAQs) in relation to the CBDF Regulation aim at highlighting the changes for notifications to the CSSF as from 2 August 2021.

    The novelty highlighted on 10 August 2021 concern Q1 and 11: Marketing a new share class has to be notified as an initial notification.

    Due to complications pertaining to high volume and increased administrative tasks involved with initial notifications, this procedure has been put on hold until further notice. As of now, all initial notifications are done on a sub-fund level. Marketing new share classes is done by informing the host authority directly. This effectively overrides the changes that were introduced with the CSSF Circular 21/778 until further notice.

    9. On 10 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated Notification letter for pre-marketing by AIFMs established in Luxembourg to potential professional investors in Luxembourg.

    10. On17 August 2021, the Commission de Surveillance du secteur financier (CSSF) updates FAQ concerning the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment – version 12.

    The update concerns the treatment of breaches of the UCITS global exposure limit, particularly relating to following questions:

    • Do passive investment breaches (i.e. a breach beyond the control of the UCITS) by a UCITS of the global exposure limit of article 42(3) of the Law of 2010 (and more generally of investment restrictions applicable to UCI) have to be notified to the CSSF?
    • Can breaches of the VaR limit (either the maximum limit laid down in regulation (20% for absolute VaR or 200% for relative VaR as the case may be) or any other more restrictive internal limit set below the above regulatory thresholds, as laid down in the sales prospectus) by UCITS as a result of the increase of volatility in financial markets (in the absence of any new positions increasing the risk of the portfolio) be considered as passive breaches?
    • What are the expectations of the CSSF in case of a passive breach (i.e. beyond the control of the UCITS, e.g. increase of volatility in the financial markets) of the regulatory VaR limit or the internal VaR limit laid down in the prospectus?
    • What information do UCITS have to communicate to the CSSF (opc.prud.sp@cssf.lu) in relation to an active breach of the VaR limit (whether the maximum limit laid down in regulation – 20% for absolute VaR or 200% for relative VaR - or the internal limit, below the above regulatory thresholds, as laid down in the sales prospectus)?

    11. On 18 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Notification letter for pre-marketing by non-EU AIFMs to potential professional investors in Luxembourg.

  • CSSF publishes a communication on Luxembourg IFMs compliance with the Benchmarks Regulation

    CACEIS

  • On 29 July 2021, the Commission de Surveillance du secteur financier (CSSF) published a communication on Luxembourg IFMs compliance with the Benchmarks Regulation.

    Overall, the CSSF observed a low level of BMR compliance among the inspected entities. This was most prominent in the required prospectus disclosures of UCITS funds in relation to the ESMA Register, which were found to be often missing, incorrect or incomplete.

    Focus areas of the thematic review: 

    1. Eligible benchmarks: The CSSF considers annual controls as insufficient to ensure effective monitoring of the ESMA Register.
    2. Contingency measures: For reasons of good corporate governance, this decision should be explained and approved by the management body/governing body of the IFM.
    3. Disclosure: this information was missing in almost one third of the prospectuses reviewed.
  • CSSF publishes a communication on AML/CFT controls applied to unregulated AIFs by the IFM

    CACEIS

  • On 29 July 2021, the Commission de Surveillance du secteur financier (CSSF) published a communication on AML/CFT controls applied to unregulated AIFs by the IFM.

    The main finding was that the indirect supervision of the unregulated AIFs through the supervision of its IFM works properly in practice. The shortcomings identified during the thematic review were similar to those found during inspections of IFMs of regulated investment funds.

    Key findings related to certain IFMs of the sample of entities:

    • Weaknesses in the risk assessment at the IFM and the unregulated AIFs level: The CSSF reminds IFMs to take appropriate steps to identify and assess the ML/TF risks faced by them and the products they manage.
    • Weaknesses in the oversight of the delegated portfolio managers: The CSSF reminds IFMs that they must effectively monitor and control the delegated AML/CFT tasks performed on investments by their portfolio managers.
    • Weaknesses with regard to the risk-based approach on investments: The CSSF reminds IFMs to carry out an analysis of the ML/TF risk posed by the investments (either for each asset individually or by buckets of type of assets) and take due diligence measures adapted to the assessed risk for higher risk investments. 
    • Weaknesses of name screening on Targeted Financial Sanctions on investments: The CSSF reminds IFMs to ensure that name screening against official sanctions lists is performed at least upon publication of such lists for all relationships linked to investments and, in any event, upon acquisition and sale of the investment.
  • CSSF publishes communication on changes intended to optimize the authorization process of new UCI and/or new sub-funds added to existing fund structures

    CACEIS

  • On 30 July 2021. the Commission de Surveillance du secteur financier (CSSF) informed on some procedural changes intended to optimize the authorization process of new UCI and/or new sub-funds added to existing fund structure:

    1. A new questionnaire “Fund Pre-Inception Readiness Review” 

    - To be submitted with the application file. 

    - To provide a confirmation by the management company/AIFM that:

    • All preparatory work and assessments required by regulation have been completed and that 
    • The management company/AIFM is ready to onboard the new fund or sub-fund(s) after authorization.

    2. No longer request nor assess all agreements concluded between a fund and its service providers during the examination of an application file

    - At the end of the examination, the applicant will submit to the CSSF 

    • A copy of final signed agreements deemed core;
    • A standardized confirming compliance of these agreements with applicable legal and regulatory requirements. 

    - The CSSF’s general guidance that is expected to be considered as good practice when drafting fund service contracts.

    3. New guiding notes on CSSF’s expectations for the documents required to support an application

    - General considerations to be followed when submitting documents;

    - Overview table of all the documents required when submitting a UCI approval file.

  • CSSF updates Application questionnaire for the set up of a fully licensed AIFM

    CACEIS

  • On 4 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated Application questionnaire for the set up of a fully licensed AIFM.

    This workbook constitutes a request for approval as a fully authorised AIFM in accordance with Chapter 2 of the AIFM law. The category of AIFM to which the applicant belongs will determine which "application worksheet" is applicable to the situation.

  • CSSF updates Registration form for an AIFM

    CACEIS

  • On 4 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated Registration form for an AIFM.

    This AIFM registration form aims at providing the CSSF with information about compliance with article 3 of the AIFM Law as well as any applicable laws, rules and regulations relating to the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010.

  • CSSF updates Questionnaire for the approval of a new sub-fund

    CACEIS

  • On 16 August 2021, the Commission de Surveillance du secteur financier (CSSF) updates Questionnaire for the approval of a new sub-fund.

  • ALFI responds to the consultation on MMF resilience conducted by the FSB

    CACEIS

  • On 16 August 2021, the Association of the Luxembourg Fund Industry (ALFI) responded to the consultation on Money Market Fund (MMF) resilience conducted by the Financial Stability Board (FSB).

    ALFI points out the market impact of quarter end balance sheet pressures on liquidity. As banks reduce their balance sheets approaching reporting period ends, this directly impacts both the amount of liquidity a MMF can hold in the fund, and also how liquid the market is. Redemption pressure timed ahead of a quarter end was in our view a material factor in the lack of liquidity in markets. 

    Among the outflows, the ones from both euro and USD-denominated funds were significant, especially USD-denominated LVNAV funds, while preliminary USD-dominated CNAV funds received net inflows. This could also be observed for Luxembourg MMFs.

  • CSSF updates FAQ on Swing Pricing Mechanism (17 August 2021)

    CACEIS

  • On 17 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated FAQ on Swing Pricing Mechanism.

    The questions concerns:

    Question 6: Whether UCIs (UCITS, UCI Part II & SIFs) can increase the swing factor to be applied on the NAV up to the maximum level laid down in the prospectus without prior notification to the CSSF

    Question 7: Whether UCIs can increase the applied swing factor beyond the maximum swing factor laid down in the fund prospectus in the following situations: 

    • where the fund prospectus formally offers the possibility to the Board of Directors of the UCI or, if applicable, the Management Company to go beyond the maximum level under certain predefined conditions
    • where the fund prospectus does not offer the possibility to the Board of Directors of the UCI or, if applicable, the Management Company to go beyond the maximum level laid down in the prospectus

    Question 8: Where the fund prospectus formally offers the possibility to the Board of Directors of the UCI or, if applicable, the Management Company to go beyond the maximum swing factor laid down in the prospectus, to what extent a UCI can increase the applied swing factor beyond the maximum swing factor disclosed in the fund prospectus.

  • CSSF publishes Circular 21/780 on ESMA Guidelines on stress test scenarios under Article 28 of the Money Market Fund Regulation – Update 2020 (ESMA/34-49-289)

    CACEIS

  • On 26 August 2021, the Commission de Surveillance du secteur financier (CSSF) published a Circular 21/780 on ESMA Guidelines on stress test scenarios under Article 28 of the Money Market Fund Regulation – Update 2020 (ESMA/34-49-289). 

    The purpose of this Circular is to inform that the CSSF, as competent authority, integrates the latest version of the ESMA Guidelines on stress test scenarios under the MMF Regulation (Ref. ESMA/34-49-289 EN), as published on 16 December 2020 (the “2020 Guidelines”), in its administrative practices. All money market funds (MMFs) under the supervision of the CSSF and Luxembourg managers of MMFs shall duly comply with the 2020 Guidelines.

    Circular CSSF 20/735 implementing the 2019 version of the Guidelines is repealed and replaced by this Circular. This Circular, with the updated Guidelines, enters into force on 30 August 2021. The CSSF expects all entities falling under the scope of this Circular to apply the 2020 Guidelines for the preparation of the required MMF reporting as from the reporting date 30 September 2021 onwards.

    The circular applies to all money market funds under the supervision of the CSSF and Luxembourg managers of money market funds as well as to those that take part in the functioning and control of these undertakings.

  • CSSF publishes update in relation to the requirement to submit liquidation period extension requests for funds in non-judicial liquidation

    CACEIS

  • On 31 August 2021, the Commission de Surveillance du secteur financier (CSSF) published update in relation to the requirement to submit liquidation period extension requests for funds in non-judicial liquidation.

    Liquidation period extension requests for funds in non-judicial liquidation will no longer be required, effective immediately. The CSSF will monitor the status of the liquidation via the semi-annual reports on the progress of the liquidation submitted by the liquidator who will be using the form available on the CSSF website.

    The deadlines for submission of the half-yearly progress reports are as follows:

    • report covering the period from 1 January to 30 June – please submit the report no later than 30 September of the same calendar year;
    • report covering the period from 1 July to 31 December – please submit the report no later than 31 March of the following year.
  • CSSF communicates on the entry into application of ESMA Guidelines on Article 25 of Directive 2011/61/EU (AIFMD)

    CACEIS

  • On 31 August 2021, the Commission de Surveillance du secteur financier (CSSF) communicated on the entry into application of ESMA Guidelines on Article 25 of Directive 2011/61/EU (AIFMD).

    The Guidelines on Article 25 of Directive 2011/61/EU (AIFMD) concerning leverage-related systemic risk in the alternative investment funds sector were published on the European Securities and Markets Authority (ESMA) website on 17 December 2020 and were designed to be applicable two months after the publication of their translations on ESMA’s website in all official EU languages.

    The CSSF hereby informs market participants that the official translations were published on the ESMA website on 23 June 2021. As a consequence, the Guidelines are applicable as from 23 August 2021.

    The main objective of the Guidelines, which apply only to National Competent Authorities (NCAs) and not to market participants, is to ensure the common, uniform and consistent application of Article 25 of the AIFMD.

    In particular, the Guidelines relate to the assessment of leverage-related systemic risk and aim to ensure that NCAs adopt a consistent approach when assessing whether the conditions for imposing leverage-related measures are met.

  • Here are five updated forms and questionnaires from the CSSF relating to Investment Funds

    CACEIS

  • Here are five updated forms and questionnaires from the CSSF relating to Investment Funds.

    1. On 1 July 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Annex to CSSF Circular 19/708 on Electronic transmission of documents to the CSSF.

    2. On 14 July 2021, the Commission de Surveillance du secteur financier (CSSF) updated its Registration form for an alternative investment fund manager (AIFM).

    This AIFM registration form aims at providing the CSSF with information about compliance with article 3 of the AIFM Law as well as any applicable laws, rules and regulations relating to the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010. 

    3. On 4 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated Application questionnaire for the set up of a fully licensed AIFM.

    This workbook constitutes a request for approval as a fully authorised AIFM in accordance with Chapter 2 of the AIFM law. The category of AIFM to which the applicant belongs will determine which "application worksheet" is applicable to the situation.

    4. On 4 August 2021, the Commission de Surveillance du secteur financier (CSSF) updated Registration form for an AIFM.

    This AIFM registration form aims at providing the CSSF with information about compliance with article 3 of the AIFM Law as well as any applicable laws, rules and regulations relating to the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010. 

    5. On 16 August 2021, the Commission de Surveillance du secteur financier (CSSF) updates Questionnaire for the approval of a new sub-fund.

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

    CSSF publishes Circular CSSF 21/779 - Adoption of ESMA Guidelines on certain aspects of the MiFID II compliance function requirements (ESMA35-36-1952)

    CACEIS

  • On 30 July 2021, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 21/779 - Adoption of ESMA Guidelines on certain aspects of the MiFID II compliance function requirements (ESMA35-36-1952).

    The Circular applies to  all investment firms, credit institutions, UCITS management companies and AIFMs when providing the MiFID-related services.

    The purpose of this Circular is to inform that the CSSF applies the ESMA Guidelines. Consequently, the CSSF has integrated the Guidelines into its administrative practices and regulatory approach with a view to promote supervisory convergence in this field at EU level.

  • Money Market Funds Regulation (MMFR)

    ALFI responds to the ESMA consultation on the EU Money Market Fund Regulation

    CACEIS

  • On 1 July 2021, the Association of the Luxembourg Fund Industry (ALFI) responded to ESMA consultation on the EU Money Market Fund Regulation.

  • Outsourcing arrangements

    CSSF publishes Circular 21/777 - Implementation of the Guidelines of the ESMA on outsourcing to cloud service providers by amending the scope of Circular CSSF 17/654, as amended

    CACEIS

  • On 12 July 2021, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 21/777 on the implementation of the Guidelines of the European Securities and Markets Authority (ESMA) on outsourcing to cloud service providers by amending the scope of Circular CSSF 17/654, as amended.

    The CSSF has already incorporated equivalent guidelines into its administrative practice and regulatory approach, through the circular CSSF 17/654 (as amended) relating to IT outsourcing relying on a cloud computing infrastructure (Cloud Circular). However, the scope of the Cloud Circular did not include all entities covered by the ESMA guidelines. 

    Therefore, in this Circular, the CSSF extends the scope of the Cloud Circular to all entities targeted by the ESMA guidelines. The CSSF applies the cloud guidelines and integrates them into its practice administrative and regulatory approach for all entities concerned, particularly:

    1. Current entities in-scope:

    • all credit institutions and PFS within the meaning of the Law of 5 April 1993 on the financial sector (“LFS”)
    • all payment institutions and electronic money institutions within the meaning of the Law of 10 November 2009 on payment services (“LPS”)
    • investment fund managers subject to Circular CSSF 18/698.

    2. New in-scope entities (following ESMA guidelines)

    • AIFMs as defined in Article 4(1)(b) of the AIFMD and depositaries as referred to in Article 21(3) of AIFMD (depositaries of AIFs);
    • UCITS, UCITS management companies as defined in Article 2(1)(b) of the UCITS Directive and depositaries as defined in Article 2(1)(a) of UCITS Directive; 
    • CCPs as defined in Article 2(1) of EMIR and Tier 2 third-country CCPs within the meaning of Article 25(2a) of EMIR which comply with the relevant EMIR requirements pursuant to Article 25(2b)(a) of EMIR; 
    • data reporting services providers as defined in Article 4(1)(63) of MiFID II and market operators of trading venues within the meaning of Article 4(1)(24) of MiFID II;
    • CSDs as defined Article 2(1)(1) of CSDR; 
    • administrators of critical benchmarks as defined in Article 3(1)(25) of the Benchmarks Regulation.

    This circular applies from 31 July 2021. For new in-scope entities, the CSSF circular 17/654 (as amended) applies to all cloud service outsourcing contracts which are concluded, renewed or modified at this date or after this date.

  • Sustainable Finance / Green Finance

    CSSF informs on EC's announcements related to Regulation (EU) 2019/2088 – SFDR

    CACEIS

  • On 30 July 2021, the Commission de Surveillance du secteur financier (CSSF) informed financial market participants and financial advisers some recent publications made by the European supervisory authorities (the ESAs) in respect of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR):

    • ESAs Q&A related to the interpretation of the SFDR: It has been noted that the answers to the first two questions were swapped by mistake.
    • Deferral of SFDR RTS: EC intends to bundle all 13 RTS under SFDR into a single delegated act and to defer the application of 1 January 2022 by six months to 1 July 2022.
  • SWITZERLAND

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

    FINMA publishes AMLA audit points for asset management companies - Template 2021 / La FINMA publie les exigences d’audit LBA pour les gestionnaires d'actifs - Formulaire de saisie 2021

    CACEIS

  • On 26 August 2021, the FINMA published the AMLA audit points for asset management companies template 2021.

    Version française

    Le 26 août 2021, la FINMA a publié les exigences d’audit LBA pour Asset Management - Formulaire de saisie 2021.

  • Blockchain / Distributed Ledger Technology (DLT)

    FINMA publishes Guidelines on licensing as a DLT trading facility according to Art. 73a ff. FinMIA / La FINMA publie un guide pratique pour les autorisations en tant que système de négociation fondé sur la TRD selon les art. 73a ss de la LIMF

    CACEIS

  • On 2 August 2021, the FINMA published Guidelines on licensing as a DLT trading facility according to Art. 73a ff.  Financial Market Infrastructure Act.

    This document is intended to act as a guide for the convenience of applicants and to facilitate the presentation of applications submitted by them. It does not give rise to any legal claim. These guidelines highlight the information and documents an applicant must usually submit when making an application. The guidelines do not exclude the possibility that the applicant may submit additional information or that the Swiss Financial Market Supervisory Authority FINMA may request further details and documents. Particularly in connection with the use of distributed electronic registers it is likely that further information will be required in the application. The application must be in one of Switzerland’s official languages. If an application is submitted by a legal representative, this person’s original authorisation must be submitted.

    Version française

    Le 2 août 2021, la FINMA a publié un guide pratique pour les autorisations en tant que système de négociation fondé sur la TRD selon les art. 73a ss de la LIMF.

    Ce guide pratique doit, en tant qu’instrument de travail, faciliter le traitement des demandes pour les requérants. Le présent guide pratique ne saurait fonder aucune prétention d’ordre juridique. Il précise les indications et les pièces justificatives généralement nécessaires. Ce guide pratique n’exclut pas la possibilité pour le requérant de fournir des renseignements complémentaires ou pour l’Autorité fédérale de surveillance des marchés financiers (FINMA) d’exiger des indications et des documents supplémentaires. Justement en relation avec l’utilisation de registres distribués électroniques, il est vraisemblable que dans certains cas, des données supplémentaires soient nécessaires pour la requête. La demande doit être rédigée dans une langue officielle suisse. Si une demande est déposée par un représentant juridique, il convient de faire parvenir sa procuration en version originale.

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

    FDPIC recognises EU standard contractual clauses for the transfer of personal data to third countries / Le PFPDT reconnaît les clauses contractuelles types de l'UE pour le transfert de données personnelles vers des pays tiers

    CACEIS

  • On 27 August 2021, the Federal Data Protection and Information Commissioner (FDPIC) recognised the standard contractual clauses for the transfer of personal data to third countries in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council (pursuant to Implementing Decision 2021/914/EU) as the basis for personal data transfers to a country without an adequate level of data protection, provided that the necessary adaptations and amendments are made for use under Swiss data protection law.

    The following explanations show which adaptations and amendments must be made. The standard contractual clauses pursuant to the European Commission Decision of 5 February 2010 on standard contractual clauses for the transfer of personal data to processors established in third countries under Directive 95/46/EC of the European Parliament and of the Council (2010/87/EU), the Swiss Transborder Data Flow Agreement (for outsourcing of data processing) of November 2013 and Council of Europe model contract to ensure equivalent protection in the context of cross-border data flows can still be notified until 27 September 2021 and continue to be used during a transitional period until 31 December 2022. 

    Version française

    Le 27 août 2021, le Federal Data Protection and Information Commissioner (FDPIC) a reconnu les clauses contractuelles types pour le transfert de données personnelles vers des pays tiers conformément au règlement (UE) 2016/679 du Parlement européen et du Conseil (conformément à la décision d'exécution 2021/914/UE) comme base pour les transferts de données personnelles vers un pays ne disposant pas d'un niveau de protection des données adéquat, à condition que les adaptations et modifications nécessaires soient apportées pour une utilisation selon le droit suisse de la protection des données.

    Les explications suivantes montrent quelles adaptations et modifications doivent être apportées.  Les clauses contractuelles types conformément à la décision de la Commission européenne du 5 février 2010 relative aux clauses contractuelles types pour le transfert de données à caractère personnel à des sous-traitants établis dans des pays tiers en vertu de la directive 95/46/CE du Parlement européen et du Conseil (2010/87/UE), l'accord suisse sur les flux transfrontaliers de données (pour l'externalisation du traitement des données) de novembre 2013 et le contrat type du Conseil de l'Europe visant à assurer une protection équivalente dans le cadre des flux transfrontaliers de données peuvent encore être notifiés jusqu'au 27 septembre 2021 et continuer à être utilisés pendant une période transitoire jusqu'au 31 décembre 2022. 

  • Derivative Financial Instruments (Derivatives)

    FINMA clarifies derivative trading obligations concerning LIBOR replacement / La FINMA précise les obligations en matière de négoce de dérivés en relation avec l'abandon du LIBOR

    CACEIS

  • On 5 July 2021, the FINMA published a guidance on the replacement of the LIBOR reference rate by the end of 2021. In this guidance, FINMA provides further details about derivative contracts. In this context FINMA is calling on the market participants to continue their preparations for the LIBOR replacement as a matter of the highest priority.

    In its Guidance 02/2021 FINMA makes clear that amendments to existing derivative contracts are not considered as newly concluded derivative contracts and therefore do not trigger either clearing or margin obligations if the adjustments are made solely to address LIBOR replacement or are justified by the corresponding reference rate reform (Arts. 85, 131 para. 3 FMIO [SR 958.11]).

    The following will be considered as adjustments in the above sense:

    • The replacement, extension or other modification to an existing derivative contract that replaces the operative benchmark rate; replacements can also be made as part of portfolio compression;
    • The introduction of a fallback clause in relation to the operative benchmark rate for a derivative contract;
    • Technical adaptations required to implement the adjustments outlined under a) and b).

    The adjustments may, in particular, modify the maturity or effect a change in the actual notional amount of the existing derivative contract, but they must be necessary for the replacement of the reference rate and abide by the market practices applicable in each case for the new reference rates.

    This guidance relates solely to the regulatory derivative obligations under the Financial Market Infrastructure Act (FMIA). By providing these clarifications FINMA is also responding to international developments and contributing to the timely replacement of LIBOR.

    Version française

    Le 5 juillet 2021, la  FINMA a publié une nouvelle communication sur la surveillance consacrée à l’abandon du taux d’intérêt de référence LIBOR à la fin de 2021. La FINMA y précise ses explications au sujet des contrats sur dérivés. Elle appelle dans ce contexte les acteurs du marché à continuer d’accorder la plus haute priorité aux préparatifs en vue de l’abandon du LIBOR.

    La FINMA explique dans sa communication sur la surveillance 02/2021 que des adaptations apportées à des contrats sur dérivés existants ne sont pas considérées comme de nouveaux contrats sur dérivés et n’entraînent par conséquent ni obligations de compensation, ni obligations de gage, lorsque ces adaptations ne sont effectuées que pour faire face à l’abandon du LIBOR ou se justifient par la réforme correspondante du taux d'intérêt de référence (art. 85, 131 al. 3 OIMF [RS 958.11]).

    Sont considérés comme adaptations au sens précité :

    • -e remplacement, la prolongation ou une autre modification d’un contrat sur dérivés existant consistant à remplacer le taux d’intérêt de référence déterminant. Ce remplacement peut aussi avoir lieu dans le cadre d’une compression ;
    • l’introduction d’une clause de réversion en lien avec le taux de référence déterminant pour un contrat sur dérivés ;
    • les modifications techniques nécessaires pour réaliser les adaptations citées sous a) et b).

    Les adaptations peuvent entraîner des modifications de la durée ou de la valeur nominale effective des contrats sur dérivés existants, mais elles doivent être nécessaires pour remplacer le taux de référence et correspondre aux usages en vigueur sur le marché pour les nouveaux taux d’intérêt de référence.

    La présente communication sur la surveillance se réfère exclusivement aux obligations prudentielles de la loi sur l’infrastructure des marchés financiers (LIMF) en lien avec les dérivés. Par ces précisions, la FINMA tient aussi compte des développements internationaux et contribue à un remplacement en temps voulu du LIBOR.

  • Financial supervision

    FINMA publishes a guidance on FINMA mandataries: a key tool of supervision and enforcement / La FINMA publie une fiche d’information sur les mandataires de la FINMA: un instrument précieux de l’arsenal de surveillance et de l’application du droit

    CACEIS

  • On 12 July 2021, the FINMA published a guidance on FINMA mandataries: a key tool of supervision and enforcement.

    FINMA can appoint third parties, known as mandataries, to assist it in performing its duties. It makes targeted use of this efficient, resource-saving tool in both supervision and enforcement proceedings.

    Mandataries are an essential element in FINMA’s repertoire of tools, giving the authority swift and flexible access to external specialists when needed and enabling complex audits or investigations to be completed within a reasonable time. Mandataries assist FINMA in fulfilling its legal remit: to protect creditors, investors and policyholders and ensure that Switzerland’s financial system functions effectively.

    The paper describes : 

    • Use of mandataries at authorised institutions and to tackle illegal activities
    • Mandated auditors at authorised financial intermediaries
    • Investigating agents at authorised financial intermediaries
    • Investigating agents at unlicensed financial intermediaries
    • Restructuring agents and crisis managers at authorised financial intermediaries
    • Liquidators and bankruptcy liquidators
    • Mandataries selected carefully and used in a targeted manner
    • Mandatary’s performance steered and monitored by FINMA.

    Version française

    Le 12 juillet 2021, la FINMA a publié une fiche d’information sur les mandataires de la FINMA: un instrument précieux de l’arsenal de surveillance et de l’application du droit.

    Dans l’accomplissement de ses tâches, la FINMA a la possibilité de recourir à des tiers, qualifiés de mandataires. Ceux-ci peuvent être engagés tant pour des missions relevant de la surveillance que pour des procédures visant à faire appliquer le droit. La FINMA fait un usage ciblé de cet instrument efficient qui lui permet de ménager ses ressources.

    Le recours à des mandataires est un élément clé de la panoplie d’instruments dont dispose la FINMA pour accomplir sa mission. Il s’agit d’une solution flexible qui permet à la FINMA, en cas de besoin, d’engager rapidement des spécialistes externes, afin de mener à bien, dans un délai raisonnable, des contrôles ou des enquêtes qui exigent d’importants moyens. Les mandataires soutiennent la FINMA dans l’accomplissement de son mandat qui consiste à protéger les créanciers, les investisseurs et les assurés ainsi qu’à garantir le bon fonctionnement du système financier.

    La fiche d’information décrit : 

    • Mandataires auprès d’établissements autorisés et en cas d’activité exercée sans l’autorisation requise
    • Chargés d’audit auprès d’intermédiaires financiers autorisés
    • Chargés d’enquête auprès d’intermédiaires financiers autorisés
    • Chargés d’enquête en cas d’activité exercée sans l’autorisation requise
    • Délégués à l’assainissement et gestionnaires de crise auprès d’intermédiaires financiers autorisés
    • Mandataires intervenant dans le cadre de procédures de liquidation ordinaire et de faillite
    • La FINMA choisit ses mandataires avec soin et de façon ciblée
    • La FINMA pilote et surveille l’exécution des mandats.
  • Investment Funds / Collective Investment Schemes (CIS) / Asset Management

    FINMA extends deadline for revising fund documents until 30 June 2022 / La FINMA repousse le délai d’adaptation des documents de fonds au 30 juin 2022

    CACEIS

  • On 15 July 2021, the Asset Management Association Switzerland (AMAS) informed FINMA extended the deadline for revising fund documents (Art. 144 para. 3 CISO) until 30 June 2022.

    According to Art. 144 para. 3 CISO, fund management companies, SICAVs, and limited partner-ships for collective investment must submit revised fund contracts, investment regulations, and partnership agreements to FINMA within two years of the FinSA and FinIA entering into force. This would make the deadline 31 December 2021.

    Since the revision of the self-regulation materials (including model documents) is taking longer than originally anticipated, it is no longer realistic to expect that the documents will be finalized in all languages before the summer vacation period. To ensure that members nevertheless have enough time to implement the revised self-regulation materials, the Asset Management Association Switzerland asked FINMA to extend the deadline for submitting fund documents revised in line with the FinSA and FinIA. 

    On 12 July 2021, FINMA extended the deadline under Art. 144 para. 3 CISO until 30 June 2022. The revised fund documents must now be submitted to FINMA by 30 June 2022 at the latest.

    Version française

    Le 15 juillet 2021, l'Asset Management Association Switzerland (AMAS) a informé que la FINMA a prolongé le délai de révision des documents de fonds (art. 144 al. 3 OPCC) jusqu'au 30 juin 2022.

    Conformément à l’art. 144 al. 3 OPCC, les directions de fonds, les SICAV et les SCmPC sont tenues de soumettre à la FINMA les contrats de fonds, règlements de placement et contrats de sociétés adaptés dans les deux ans suivant l’entrée en vigueur de la LSFin et de la LEFin. Le délai de dépôt des documents de fonds adaptés devrait donc s’achever le 31 décembre 2021.

    Etant donné que la révision de l’autorégulation (documents modèles compris) a pris plus de temps que prévu initialement, il ne semple plus réaliste de pouvoir finaliser les documents dans toutes les langues avant les vacances d’été. Pour pouvoir disposer pour l'industrie malgré tout de suffisamment de temps pour la mise en œuvre de l’autorégulation révisée, l’Asset Management Association Switzerland a demandé à la FINMA de repousser le délai au sens de l’art. 144 al. 3 OPCC de dépôt des documents de fonds adaptés à la LSFin et à la LEFin

    Le 12 juillet 2021, la FINMA a prolongé le délai de l’art. 144 al. 3 OPCC jusqu’au 30 juin 2022. Les documents de fonds adaptés devront désormais être soumis à la FINMA d’ici le 30 juin 2022 au plus tard.

  • Sustainable Finance / Green Finance

    Federal Council sets parameters for binding climate reporting for large Swiss companies / Le Conseil fédéral fixe les lignes directrices pour le rapport climatique des grandes entreprises suisses

    CACEIS

  • On 18 August 2021, the Federal Council decided on parameters for the future mandatory climate reporting by large Swiss companies. The Federal Department of Finance is to prepare a consultation draft by summer 2022.

    The Federal Council has now instructed the FDF, together with other federal units, to prepare a consultation draft with the following parameters by summer 2022:

    • Public companies, banks and insurance companies with 500 or more employees, more than CHF 20 million in total assets or more than CHF 40 million in turnover are obliged to report publicly on climate issues.
    • The public reporting not only includes the financial risk that a company incurs as a result of climate-related activities, but also discloses the impact of the company's business activities on the climate and the environment. This so-called double materiality is also in line with the European Union's approach.
    • Minimum requirements should ensure that disclosures are meaningful, comparable and, where possible, forward-looking and scenario-based.
    • The binding implementation of the TCFD recommendations is expected to take place from 2024 for the 2023 financial year by means of a separate executive order on the counter-proposal to the responsible business initiative. This procedure should increase legal certainty.

    Version française

    Le 18 août 2021, le Conseil fédéral a adopté les lignes directrices du rapport climatique que les grandes entreprises suisses devront établir à l'avenir. Le Département fédéral des finances (DFF) rédigera d'ici l'été 2022 un projet destiné à la consultation.

    Le Conseil fédéral a maintenant demandé au DFF de préparer d'ici l'été 2022, en collaboration avec d'autres services de la Confédération, un projet destiné à la consultation qui tient compte des lignes directrices suivantes:

    • Les sociétés ouvertes au public, les banques et les assurances à partir de 500 employés, dont le total du bilan dépasse 20 millions de francs ou le chiffre d'affaires est supérieur à 40 millions de francs, sont tenues de publier un rapport sur les questions climatiques.
    • D'une part, ce rapport présente le risque financier qu'une entreprise encourt en raison de ses activités liées au climat. D'autre part, il montre les effets de l'activité commerciale de l'entreprise sur le climat ou l'environnement. Cette «double matérialité» correspond à l'approche adoptée par l'Union européenne.
    • La définition d'exigences minimales vise à garantir que les informations fournies sont pertinentes, comparables et, si possible, prospectives et fondées sur des scénarios.
    • Il est prévu que la mise en œuvre contraignante des recommandations de la TCFD intervienne à partir de 2024 pour l'exercice 2023 par le biais d'une ordonnance d'exécution séparée relative au contre-projet à l'initiative pour des multinationales responsables. Cette solution vise à accroître la sécurité juridique.
  • Swiss Financial Institutions Act (FinIA)

    FINMA updates Authorisation form for establishments under the FinIA / La FINMA met à jour le formulaire d'autorisation pour les établissements selon la LEFin

    CACEIS

  • On 5 July 2021, the FINMA updated the Authorisation form for establishments under the FinIA.

    Version française

    Le 5 juillet 2021, la FINMA a mis à jour le formulaire d'autorisation pour les établissements relevant de la LEFin.

  • NETHERLANDS

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

    The Netherlands publish Regulation of 24 June 2021 amending the AML/CFT BES Regulation prescribing risk factors, simplifying the indicators for unusual transactions and establishing new forms for the notification of cross-border cash transports

    CACEIS

  • On 5 July 2021, the Regulation of the Minister of Finance of 24 June 2021 2021-0000083999 amending the BES Regulation on the Prevention of Money Laundering and Terrorist Financing in connection with addressing the identified ML/FT risks  prescribing risk factors, simplifying the indicators for unusual transactions and establishing new forms for the notification and notification of cross-border cash transports was published in the Government Gazette of the Kingdom of the Netherlands.

    The Regulations lists the Indicators for unusual transactions, the non-exhaustive list of risk factors of potentially higher risk and the model registration or notification form for cross-border CIT transports.

  • NVB announces banks and other financial institutions have received a license from the Dutch Data Protection Authority to share data of persons who pose a threat to the financial system under certain conditions

    CACEIS

  • On 20 August 2021, the Dutch Banking Association (Nederlandse Vereniging van Banken, NVB) announced banks and other financial institutions have received a license from the Dutch Data Protection Authority to share data of persons who pose a threat to the financial system under certain conditions.

    These conditions are set out in the updated Protocol Incident Warning System Financial Institutions (PIFI). As a result, banks and other financial institutions can continue to warn each other about crime in the financial sector via the Incident Warning System Financial Institutions.

    The warning system enables banks to check whether (potential) customers or (former) employees pose a threat. For example, if that person has previously committed fraud at a bank. This way, that person can be prevented from trying again at another bank. The warning system is therefore an important instrument for banks to fulfill their social role in combating fraud and crime.

    Banks understand that inclusion in the alert system has a major impact on people. That is why they carefully consider and test the proportionality on the basis of the strict rules for the use of this system that are laid down in the Protocol Incident Warning System Financial Institutions (PIFI). The PIFI also offers guarantees for those involved. The most important change compared to previous protocols is that the texts of this new Protocol have been brought into line with the General Data Protection Regulation (GDPR). Under the new Protocol, banks and insurers that are not members of a trade association can also join.

    Banks are very committed to preventing fraud and countering abuse of the financial system. An early warning system is essential to ensure that attempts at abuse are identified and that they do not lead to further damage to other banks. This is also in the public interest because fraud and abuse can lead directly to the disadvantage of customers and undermine confidence in the financial system. 

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

    The Netherlands publish Decision of 30 June 2021 restricting the marketing, distribution or sale of turbochargers to retail clients in the Netherlands

    CACEIS

  • On 7 July 2021, the Decision of 30 June 2021 restricting the marketing, distribution or sale of turbochargers to retail clients in the Netherlands was published in the Government Gazette of the Kingdom of the Netherlands.

    A 'turbo' is defined as a a negotiable bond with a stop-loss feature and whose value is derived from an underlying asset and the financing of the underlying asset or other negotiable debt instrument with a stop-loss feature and whose value is derived from an underlying asset and the financing of the underlying value.

    1) Restrictions on turbos with regard to retail clients

    Turbos can only be marketed, distributed or sold to retail clients in the Netherlands if at least all of the following conditions are met:

    1. the turbo provider does not issue an offer price for a turbo if the leverage of the turbo is greater than the maximum leverage ('leverage limitation');
    2. the turbo provider does not provide the retail client, directly or indirectly, with any payment or pecuniary or other non-monetary advantage in connection with the marketing, distribution or sale of a turbo other than the price of the non-monetary -Professional client sold turbo or the payment of the residual value upon settlement of the turbo; and
    3. the turbo provider does not, directly or indirectly, make any communication to or publish any information accessible to retail clients in connection with the marketing, distribution or sale of a turbo unless such communication or information contains an appropriate risk warning included as specified in and in accordance with the conditions of Annex II.

    2)  Prohibition on participation in evasion activities and obligation to report in the event of a leverage limitation violation

    • It is prohibited to deliberately participate in activities that have the object or result of circumvention of the requirements of Article 2, and also to act as a replacement for the turbo provider for that purpose.
    • If a supplier of a specific turbo establishes that another supplier of the same specific turbo does not comply with the first paragraph of Article 2, the first-mentioned turbo supplier shall notify the other supplier of that same specific turbo and the competent authority as soon as possible.
  • AFM calls on managers of investment institutions and UCITS to submit half-yearly figures in a timely manner

    CACEIS

  • On 20 July 2021, the Autoriteit Financiële Markten (AFM) called on managers of investment institutions and UCITS to submit half-yearly figures in a timely manner.

    Dutch managers of UCITS and Dutch managers of investment institutions that offer units to non-professional investors in the Netherlands must provide the AFM with their half-year figures within 9 weeks after the end of the first half of the financial year. They must also provide the AFM with half-year figures of the UCITS and investment institutions they manage that offer units to non-professional investors in the Netherlands. This also applies to the European investment institutions managed by them or the investment institutions managed by them in which they offer units in a Member State.

    For many administrators, the fiscal year is equal to the calendar year. This means that the AFM must receive the half-year figures before 1 September 2021. The AFM would like to receive your documents as a file in an automatically readable PDF format, and not as an image in PDF format created by a copier. Send this by e-mail to: tgfo_jaarrekeningen@afm.nl

  • Outsourcing

    AFM sends a letter to the financial sector on outsourcing risk management

    CACEIS

  • On 26 July 2021, the Autoriteit Financiële Markten (AFM) sent a letter to the financial sector on outsourcing risk management.

    1) Outsourcing policy often in place, implementation lagging behind

    If companies outsource activities to third parties, they remain responsible for this themselves. This requires proper agreements and control measures so that the services to clients and investors are not endangered. 

    2) Work is increasingly outsourced

    Investment firms and institutions are outsourcing more and more activities. This may concern client administration, but also compliance, risk management or portfolio management. Outsourcing activities requires good control. Especially when it comes to outsourcing primary processes. After all, companies remain responsible themselves and must be able to account to the supervisor for outsourced activities.

    3) Increase in outsourcing outside the Netherlands

    The AFM supervises the asset management sector in the Netherlands. As a result of outsourcing, an increasing proportion of the activities of supervised institutions takes place outside the Netherlands. This international character can make the management and supervision of outsourcing risks more difficult. The AFM therefore remains closely involved in international supervisory convergence initiatives in this area.

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

    Here are two Decree s and Council of State advice on the transposition of the Prudential Requirements for Investment Firms Directive & Regulation (IFD / IFR) in the Netherlands

    CACEIS

  • Here are two Decree s and Council of State advice on the transposition of the Prudential Requirements for Investment Firms  Directive & Regulation (IFD / IFR) in the Netherlands.

    1. On 9 July 2021, the Decree of 2 July 2021 amending the Decree on the implementation of the EU Financial Markets Regulations in connection with the implementation of the Regulation on prudential requirements for investment firms (Implementing Decree on the Regulation on the Prudential Requirements of Investment Firms) was published in the Official Gazette of the Kingdom of the Netherlands. 

    This Decree provides that the Regulation is added to the list of regulations in the field of financial markets in the Decree on the Implementation of EU Regulations on Financial Markets, to which, on the basis of the Wft, the Dutch Central Bank (DNB) or the Netherlands Authority for the Financial Markets (AFM) is supervised. In the division of powers between these supervisors with regard to this Regulation, the existing division of tasks between the two supervisors has been left unchanged, so that all provisions of a prudential nature have been assigned to DNB and provisions with a behavioral component or a general character have been assigned to the AFM. Furthermore, provision is made for enforcement in the event of violation of the various articles of the regulation.

    2. On 23 July 2021, the Council of State advice on the draft order in council amending the Decree on the implementation of EU financial markets regulations in connection with the implementation of the Regulation on prudential requirements for investment firms was published in the Official Gazette of the Kingdom of the Netherlands.

    This Decree provides that the Regulation is added to the list of regulations in the field of financial markets in the Decree on the Implementation of EU Regulations on Financial Markets, to which, on the basis of the Wft, the Dutch Central Bank (DNB) or the Netherlands Authority for the Financial Markets (AFM) is supervised. In the division of powers between these supervisors with regard to this Regulation, the existing division of tasks between the two supervisors has been left unchanged, so that all provisions of a prudential nature have been assigned to DNB and provisions with a behavioral component or a general character have been assigned to the AFM. 

    Furthermore, provision is made for enforcement in the event of violation of the various articles of the regulation (see further the article-by-article explanation).

  • SPAIN

    Brexit

    CNMV publishes a public statement on the provision of investment services in Spain by third-country firms without the establishment of a branch

    CACEIS

  • On 23 July 2021, the Comision Nacional del Mercado del valores (CNMV) published a public statement on the provision of investment services in Spain by third-state firms without the establishment of a branch.

    After analysing current legislation and pursuant to the provisions thereof, the CNMV has established, within its remit, the following cases where the establishment of a branch shall not be required:

    1. If there is reciprocity in the home State, such that a Spanish credit institution or investment firm can provide investment services in such State, under terms and conditions similar to those laid down in Spanish legislation, without a permanent establishment, providing that the conditions set out in subparagraphs 2 or 3 below are also met.

    2. Third-country firms may carry on investment activities and provide investment services, with or without ancillary services, without the establishment of a branch, to clients domiciled in Spain, providing that such clients:

    i) have the status of eligible counterparty as defined in Article 207 TRLMV; or

    ii) have the status of professionals per se as defined in Article 205(2) TRLMV, and the following thresholds are not exceeded.

    3. Other cases where, exceptionally and in view of the specific circumstances and subject to an appropriate justification by the promoters, the CNMV considers it appropriate to grant the authorisation to provide investment services to clients without the establishment of a branch. The CNMV shall publish the criteria in those cases where the provisions contained in this subparagraph apply.

  • Dividend distribution

    Banco de España decides not to extend beyond September 2021 its recommendation on dividend distributions and variable remuneration, in keeping with the ECB recommendation

    CACEIS

  • On 23 July 2021, the Banco de España decided not to extend beyond September 2021 its recommendation on dividend distributions and variable remuneration, in keeping with the ECB recommendation.

  • UNITED KINGDOM

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

    UK Government publishes Circular 004/2021: money laundering and suspicious activity reports

    CACEIS

  • On 7 July 2021, the UK Government published Circular 004/2021: money laundering and suspicious activity reports.

    This Circular sets out the position that Her Majesty’s Government takes regarding the use of Suspicious Activity Reports (SARs) in private civil litigation matters. It should be read in conjunction with Home Office Circular 022/2015. 

    The purpose of this Circular is to provide guidance to help protect reporters of SARs (including but not limited to financial institutions and professional services firms), the subjects of SARs and the integrity of the SARs regime wherever possible. Reporters should consider how they can apply points set out in the circular to contribute towards maintaining the wider effectiveness of the SARs regime. 

    For the avoidance of doubt, this circular does not affect any legal obligations of disclosure including under the Civil Procedure Rules 1998 or under an order of the court.

  • UK publishes CfE on the Review of the UK’s AML/CTF regulatory and supervisory regime

    CACEIS

  • On 22 July 2021, the UK Government launched Call for Evidence: Review of the UK’s AML/CTF regulatory and supervisory regime, which lasts until 14 October 2021.

    This call for evidence supports the review which will aim to assess the UK’s anti-money laundering and counter terrorist financing regulatory (the Money Laundering Regulations and Office for Professional Body Anti-Money Laundering Supervision (OPBAS) regulations) and supervisory regimes.

    The intention is to do this by looking at three themes in this document: the overall effectiveness of the regimes and their extent (i.e. the sectors in scope as relevant entities); whether key elements of the current regulations are operating as intended; and the structure of the supervisory regime including the work of OPBAS to improve effectiveness and consistency of PBS supervision.

    The government is keen to ensure that the UK’s anti-money laundering and counter terrorist financing regime effectively deters money laundering and terrorist financing activity, whilst being proportionate and managing burdens on businesses.

    A consultation on amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 will be run in parallel to this call for evidence.

  • Benchmarks Regulation (BMR)

    UK publishes S.I. 2021 No. 812 - The Benchmarks (Provision of Information and Documents) Regulations 2021

    CACEIS

  • On 9 July 2021, the S.I. 2021 No. 812 - The Benchmarks (Provision of Information and Documents) Regulations 2021 was published in the UK legislation.

    These Regulations:

    • impose an obligation on the administrator of a critical benchmark to provide an address to which the Financial Conduct Authority may send a notice or permission electronically;
    • make provision for when a notice or permission sent in such a manner is deemed to have been received.
  • FCA publishes CP 21/22: LIBOR transition and the derivatives trading obligation (CP21/22)

    CACEIS

  • On 14 July 2021, the Financial Conduct Authority (FCA) published Consultation Paper 21/22: LIBOR transition and the derivatives trading obligation (CP21/22).

    The proposals in CP21/22 will be of interest to financial counterparties, like investment firms and banks, and non-financial counterparties that are or could become subject to the derivatives trading obligation (DTO). It will also be of interest to regulated trading venues, including third country trading venues that are considered equivalent for the purposes of the DTO and to central counterparties.

    In CP21/22 the FCA is proposing to modify the list of derivatives subject to the DTO in line with Articles 28 and 32 of the onshored Markets in Financial Instruments Directive (UK MiFID) as further specified under the UK regulatory technical standard (RTS) 4 (onshored Delegated Regulation 2016/2020).

    The FCA explains that it needs to review the DTO in light of the interest rate benchmark reform and the consequential changes that the Bank of England has proposed to the derivatives clearing obligation in line with Article 5 of the onshored European Markets Infrastructure Regulation (UK EMIR) in its consultation. Over-the-counter derivatives based on benchmark rates that are being discontinued or may continue on an unrepresentative basis and become subject to use restrictions under the onshored Benchmarks Regulation (UK BMR) need to be excluded from the DTO to ensure its scope remains relevant. The DTO should extend to derivatives based on relevant risk-free rates that will replace them, provided they are sufficiently liquid or are likely to become sufficiently liquid as transition plans approach or reach completion.

    The deadline for comments on CP21/22 is 25 August 2021.

    On the basis of the responses to CP21/22 the FCA intends to finalise the draft RTS and will publish a Policy Statement late Q3/early Q4 2021.

  • UK publishes S.I. 2021 No. 920 - The Benchmarks (Provision of Information and Documents) (Amendment) Regulations 2021

    CACEIS

  • On 8 August 2021, the S.I. 2021 No. 920 - The Benchmarks (Provision of Information and Documents) (Amendment) Regulations 2021 was published in the UK legislation.

    These Regulations amend the Benchmarks (Provision of Information and Documents) Regulations 2021 (S.I 2021/812)(“the 2021 Regulations”), which make provision in respect of a notice or permission given by the Financial Conduct Authority to a benchmark administrator under Articles 22A, 22B, 23A and 23D of Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds. These Regulations are being issued free of charge as they rectify errors in the 2021 Regulations.

    These Regulations amend the 2021 Regulations so that:

    • the transitional provision in the 2021 Regulations is omitted;
    • an administrator of a critical benchmark listed in Commission Implementing Regulation (EU) 2016/1368 of 11 August 2016 establishing a list of critical benchmarks used in financial markets pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council must provide an address in accordance with regulation 5(1) of the 2021 Regulations before 14th August 2021.
  • Directive on the protection of persons who report breaches of Union law (Whistleblowers Directive)

    Bank of England publishes the Prescribed Persons (Reports on Disclosures of Information) Regulations 2017 Annual Report

    CACEIS

  • On 21 July 2021, the Bank of England (BoE) published the Prescribed Persons (Reports on Disclosures of Information) Regulations 2017 Annual Report.

    The Bank of England and PRA are both Prescribed Persons as defined by Parliament under The Public Interest Disclosure (Prescribed Persons) Order 2014.

    Since April 2017, all ‘Prescribed Persons’ are required to report in writing annually on workers (whistleblowing) disclosures they have received. This report covers the period 1 April 2020 to 31 March 2021.

  • European Market Infrastructure Regulation (EMIR)

    FCA updates on UK EMIR

    CACEIS

  • On 9 July 2021, the Financial Conduct Authority (FCA) updated on the UK EMIR, particularly Reporting under UK EMIR and transition from LIBOR.

    This update provides further clarity on how FCA expects this modification to be reported under UK EMIR such as:

    • Reporting of fallbacks in accordance with the ISDA protocol
    • Reporting of bespoke fallbacks
    • Reporting where a reference rate is otherwise amended.
  • Financial supervision

    FCA publishes PS21/7 - FCA regulated fees and levies 2021/22

    CACEIS

  • On 1 July 2021, the Financial Conduct Authority (FCA) published Policy statement PS21/7 - FCA regulated fees and levies 2021/22.

    Firms can use FCA’s online fees calculator to calculate their individual fees based on the final rates in this PS. This includes FCA periodic fees and the Financial Ombudsman Service, Money and Pensions Advice Service, Devolved Authorities and illegal money lending levy final rates in Appendix 1 (where applicable) of this PS. The fees calculator will also cover PRA (where applicable) fees and FSCS levies.

    The FCA will invoice fee-payers from July 2021 onwards for their 2021/22 periodic fees and levies.

  • PRA publishes letter on conditions for assessing a proposed change in control of a regulated firm

    CACEIS

  • On 2 July 2021, the Prudential Regulation Authority (PRA) published a letter on conditions for assessing a proposed change in control of a regulated firm.

    Before the Acquisitions Directive, the regulator could object to an acquisition unless it was satisfied that the relevant conditions were met. Now, the regulator may only object to a complete application if there are reasonable grounds for doing so based on the six criteria. This shifted the burden of proof.

  • FCA publishes Information for firms who use certain exemptions to the Financial Promotions Order

    CACEIS

  • On 21 July 2021, the Financial Conduct Authority (FCA) published Information for firms who use certain exemptions to the Financial Promotions Order.

    Following onshoring changes made to The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the FPO), the definition of Relevant Market inadvertently no longer includes relevant UK markets.

    Until such date as this SI comes into force, the FCA does not propose to take enforcement action against persons for breach of the financial promotion restriction if such breach only comes about because the relevant exemption no longer applies on account of this omission.

  • FCA publishes revised direction regarding the manner in which applications for recognised overseas investment exchange (ROIE) status should be made

    CACEIS

  • On 4 August 2021, the Financial Conduct Authority (FCA) published revised direction regarding the manner in which applications for recognised overseas investment exchange (ROIE) status should be made. 

    This replaces the temporary direction put in place in September 2018 to facilitate the transition when the UK left the EU. 

    The change does not affect current complete applications submitted by EEA market operators.

  • FCA publishes letter on Loan-based Peer-to-Peer (P2P) crowdfunding platforms

    CACEIS

  • On 26 August 2021, the Financial Conduct Authority (FCA) published a letter on Loan-based Peer-to-Peer (P2P) crowdfunding platforms, dated 25 May 2021.

    This letter:

    • set out FCA’s view of the key risks P2P platforms pose to their customers or the markets in which they operate 
    • outline FCA’s expectations of P2P firms, including how firms should be mitigating these key risks, and 
    • describe FCA’s supervisory strategy to ensure that firms are meeting the FCA expectations, and harms are being remedied.
  • Governance

    FCA publishes CP21/24 - Diversity and inclusion on company boards and executive committees

    CACEIS

  • On 28 July 2021, the Financial Conduct Authority (FCA) published Consultation paper CP21/24 on diversity and inclusion on company boards and executive committees.

    This consultation should be read by:  

    • UK and overseas companies that have securities admitted to listing or trading on a regulated market in the UK
    • existing and prospective investors in listed companies including those admitted to a regulated market, including institutional and individual investors 
    • law firms, investment banks and other advisors and intermediaries who may assist issuers
    • exchanges or venue operators  
    • intermediaries who may facilitate, including providing execution and/or marketing of, investments into issuers, whether at initial public offering (IPO) or in secondary markets 
    • those wishing to become members of a company board.

    The FCA is consulting on changes to its Listing Rules to require listed companies to publish annually: 

    • A ‘comply or explain statement’ on whether they have achieved certain proposed targets (see notes to editors) for gender and ethnic minority representation on their boards, and 
    • As part of the same annual disclosure obligation, data on the make-up of their board and most senior level of executive management in terms of gender and ethnicity.

    The FCA is consulting for 12 weeks on these proposals, with a closing date of 22 October 2021. Subject to consultation feedback and FCA Board approval, it will seek to make relevant rules by late 2021. 

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

    FCA publishes findings on authorized fund managers’ assessments of their funds’ value

    CACEIS

  • On 6 July 2021, the Financial Conduct Authority (FCA) published its findings on authorized fund managers’ assessments of their funds’ value.

    This applies to:

    • authorized fund managers
    • governing bodies of authorized fund managers (“Boards”)
    • Independent AFM directors.

    The review found that, while some had been conducting AoV assessments well, too many AFMs often made assumptions that they could not justify to the FCA, undermining the credibility of their assessments.

    The FCA expects all AFMs to consider these findings and use them to assess their AoV processes. Where necessary, they should make changes to address shortcomings. The FCA intends to review firms again within the next 12 to 18 months and the FCA will assess how well firms have reacted to FCA’s feedback. The FCA will consider other regulatory tools should the FCA finds firms are not meeting the standards that the FCA expects to be necessary to comply with FCA’s rules.

  • BoE and FCA publish report on the review of open-ended investment funds

    CACEIS

  • On 13 July 2021, the Bank of England (BoE) and the Financial Conduct Authority (FCA) published a report on the review into vulnerabilities associated with liquidity mismatch in open-ended funds.

    Conclusions:

    • Market-based finance is essential to the UK real economy.
    • Authorities need to be able to effectively monitor market-based finance.
    • It is important that market-based finance is resilient to, and does not amplify, shocks.
    • There is an important program of work, coordinated by the FSB, to understand and, where necessary, remediate the vulnerabilities exposed in the ‘dash for cash’.

    The FPC will continue to use the data and analysis available to scan the horizon for new and growing risks as the financial system continues to evolve. This includes monitoring developments in parts of the financial system that are already systemically important, as well as those which may not yet be systemically important but have the potential to become so, including as the result of innovations and the use of new technologies. The Bank alongside other UK authorities, will continue work to improve understanding of and data on the sector as a whole.

  • BoE publishes analysis on whether price data from exchange-traded funds could help open-ended fund managers calculate price adjustments

    CACEIS

  • On 13 August 2021, the Bank of England (BoE) published an analysis on whether price data from exchange-traded funds could help open-ended fund managers calculate price adjustments.

    Price data from exchange-traded funds (ETFs), such as net asset value (NAV) discounts and bid-ask spreads, could help some open-ended funds (OEFs) more accurately identify the cost of trading underlying assets.

    Swing pricing may not currently fully reflect the cost of sales to meet redemptions. But price data from ETFs, such as NAV discounts and bid-ask spreads, could provide information on the ‘actual’ cost of trading the underlying assets in some OEFs.

  • Investor protection / Consumer protection

    FCA publishes Q&As on the finalized Guidance on the fair treatment of vulnerable customers

    CACEIS

  • On 19 July 2021, the Financial Conduct Authority (FCA) published a document that answers the most frequently asked questions (FAQs) from its earlier webinar on Finalised Guidance 21/1: Guidance for firms on the fair treatment of vulnerable customers (FG21/2). The FAQs are grouped by theme, and the FCA’s answers link to key chapters and paragraphs in FG21/2, Feedback Statement 21/4 and other relevant documents, including the recent consultation on the new consumer duty.

  • Listing / Trading rules

    FCA publishes PS21/10 - Investor protection measures for special purpose acquisition companies: Changes to the Listing Rules

    CACEIS

  • On 27 July 2021, the Financial Conduct Authority (FCA) published PS21/10: Investor protection measures for special purpose acquisition companies: Changes to the Listing Rules.

    This policy statement will be of interest to:

    • prospective investors in SPACs, including institutional and individual investors
    • prospective issuers of SPACs considering a UK listing and prospective acquisition targets
    • law firms, investment banks and other advisors and intermediaries who may assist in creating and advising on SPAC offers
    • exchanges or venue operators who admit SPACs to their markets
    • intermediaries who may facilitate investments into a SPAC, including providing execution and/or marketing services, whether at initial public offering or in secondary markets 
    • trade associations representing the various market participants noted above
    • wider financial market participants, such as research analysts.

    The additional investor safeguards that the FCA will require SPACs to provide in order to benefit from the alternative approach include: 

    • a ‘redemption’ option allowing investors to exit a SPAC prior to any acquisition being completed
    • ensuring money raised from public shareholders is ring-fenced
    • requiring shareholder approval for any proposed acquisition
    • a time limit on a SPAC’s operating period if no acquisition is completed

    SPAC issuers unable to meet the conditions, or those choosing not to, will continue to be subject to a presumption of suspension.

  • FCA publishes Primary Market Technical Note Cash shells and special purpose acquisition companies (SPACs)

    CACEIS

  • On 10 August 2021, the Financial Conduct Authority (FCA) published Primary Market Technical Note  Cash shells and special purpose acquisition companies (SPACs).

    The terms ‘cash shell’ and ‘SPAC’ are not defined in the Listing Rules. In this note, the FCA explains how these terms are broadly understood, how these types of issuers meet the eligibility requirements for listing shares and when the listing may be suspended if a reverse takeover is announced or leaked (as cash shells and SPACs will be shell companies under LR 5.6.5AR).

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

    UK Government launches a consultation on UK Wholesale Markets Review

    CACEIS

  • On 1 July 2021, the UK Government launched a consultation on UK Wholesale Markets Review.

    It outlines the government’s proposals to clarify the regulatory perimeter to ensure the market can operate in confidence, and to remove requirements that limit firms’ ability to access the most liquid pools of capital where they can get the best outcomes for investors. 

    The consultation considers how the transparency regime for fixed income and derivatives markets can be recalibrated to ensure it is proportionate to the characteristics of these markets. 

    It finally proposes reforms to the UK commodities regime as well as amendments to the market data regime, to ensure that market activity is not unnecessarily restricted and to enable participants to identify the best available prices, respectively.

  • FCA publishes statement on supervision of commodity position limits

    CACEIS

  • On 9 July 2021, the Financial Conduct Authority (FCA) informed that the FCA remains its position for the supervision of commodity position limits.

    The FCA will not take supervisory or enforcement action in relation to commodity derivative positions that exceed position limits on cash-settled commodity derivative contracts, unless the underlying is an agricultural commodity. The FCA will keep this position under review, and reconsider if there are indications of market abuse.

    This statement does not apply to physically deliverable or agricultural commodity derivative contracts – where final settlement can be in the form of physical settlement of the underlying commodity – or where the underlying is an agricultural commodity. FCA's existing supervisory and enforcement approach relating to position limits remains for these contracts.

    FCA’s position does not affect the responsibilities on members or participants of a trading venue under the position management rules of that venue. Further, it does not affect FCA’s expectation that firms trading or arranging trades in commodity derivatives comply with their other market conduct obligations including requirements set out under the Market Abuse Regulation. Firms must also continue to have adequate systems and controls to do so.

  • FCA updates on UK MiFIR data reporting and LIBOR transition

    CACEIS

  • On 9 July 2021, the Financial Conduct Authority (FCA) updated on UK MiFIR data reporting and LIBOR transition, particularly by answering 2 questions:

    • Should a transaction report be submitted when the reference rate for a previously reported contract changes from LIBOR to an alternative rate (whether as a result of the application of a fallback or otherwise)?
    • Are trading venues required to amend financial instrument reference data when the reference rate for an instrument changes from LIBOR to an alternative rate (whether as a result of the application of a fallback or otherwise)?
  • Prudential Requirements for Investment Firms Directive & Regulation (IFD / IFR)

    FCA publishes Policy Statement PS21/9 on Implementation of Investment Firms Prudential Regime

    CACEIS

  • On 26 July 2021, the Financial Conduct Authority (FCA) published Policy Statement PS21/9 on Implementation of Investment Firms  Prudential Regime. 

    This policy statement (PS) is about the UK Investment Firm Prudential Regime (IFPR), a single prudential regime for all FCA investment firms that simplifies our current approach. The IFPR will shift the focus of prudential requirements and expectations away from the risks that firms face, to address the harm that firms can pose to consumers and markets. This is the FCA second PS on the IFPR and it aims to streamline the prudential requirements for solo-regulated investment firms in the UK (FCA investment firms).

  • FCA publishes MIFIDPRU applications and notifications

    CACEIS

  • On 28 July 2021, the Financial Conduct Authority (FCA) published MIFIDPRU applications and notifications.

    FCA’s gateway for MIFIDPRU applications is open. Application forms for the MIFIDPRU permissions are now available and must be submitted via Connect. These are the types of MIFIDPRU permissions that firms will need to apply for in advance of MIFIDPRU coming into force. 

    • Permission under MIFIDPRU 2.3.2R to be exempt from individual liquidity requirements in MIFIDPRU 6 for firms in a consolidated group 
    • Permission under MIFIDPRU 2.4.17R to apply the group capital test to an investment firm group instead of prudential consolidation
    • Permission under MIFIDPRU 2.5.19R to be exempt from consolidated liquidity requirements
    • Permission under MIFIDPRU 2.5.34R(2) to use offsetting positions when calculating K-NPR on a consolidated basis
    • Permission under MIFIDPRU 2.5.40R to include a portfolio of a designated investment firm in a consolidated K-CMG requirement
    • Permission under MIFIDPRU 2.5.41R to include a portfolio of a third country entity in a consolidated K-CMG requirement
    • Permission under MIFIDPRU 4.13.9R to apply K-CMG to a portfolio, instead of K-NPR
    • Permission under MIFIDPRU 4.14.6R to exclude transactions with some counterparties from K-TCD requirement
    • Permission under MIFIDPRU 3.3.3(1)R to classify an issuance of capital instruments as common equity tier 1 (CET1) capital

    The FCA will make the remaining application forms and all notification forms available in the autumn. 

  • FCA publishes CP21/26: A new UK prudential regime for MiFID investment firms

    CACEIS

  • On 6 August 2021, the Financial Conduct Authority (FCA) published Consultation paper CP21/26: A new UK prudential regime for MiFID investment firms.

    This is the third consultation on new prudential regime for UK investment firms, which concerns following areas of  the investment firms:

    • Disclosure & ESG
    • Own funds – excess drawings by partners and members
    • Other – consequential amendments to CRR technical standards
    • MiFID investment firms that are Depositories
    • Approach to the UK resolution regime.

    The FCA seeks feedback on this consultation by Friday 17 September 2021.

  • Sustainable Finance / Green Finance

    UK Government publishes its Green Financing Framework

    CACEIS

  • On 2 July 2021, the UK Government published its Green Financing Framework.

    The Framework lists the six types of green expenditures that will be financed across the UK by the Green Gilt and retail Green Savings Bonds:

    • Clean Transportation
    • Renewable Energy
    • Energy Efficiency
    • Pollution Prevention and Control
    • Living and Natural Resources
    • Climate Change Adaptation

    The Framework also commits the government to annual allocation reporting and biennial reporting on environmental impacts and social co-benefits, ensuring transparency for retail and institutional investors and other interested parties.

  • FRC outlines necessary action for effective ESG reporting

    CACEIS

  • On 7 July 2021, the Financial Reporting Council (FRC) outlined the necessary action for effective ESG reporting.

    The FRC has published the FRC Statement of Intent on Environmental, Social and Governance challenges. This paper sets out areas in which there are issues with ESG information if companies are to report in a way that meets the demands of stakeholders, how to address some of these demands and the FRC’s planned activities in this area.

    There is an ever-increasing amount of regulatory change, and as these changes are implemented, there remain a range of underlying issues with the production, audit and assurance, distribution, consumption, supervision and regulation of ESG information. 

    In the FRC’s view, there is a need:

    • Production – to ensure that better internal information leads to better decisions and better insight for stakeholders
    • Audit and Assurance – so that the reported information is robust and reliable
    • Distribution – so that information is made accessible to interested parties
    • Consumption – to ensure this information leads to better decision making by stakeholders
    • Supervision – so that information and activity is appropriately monitored and requirements are enforced
    • Regulation – as coordinated and coherent regulation leads to efficiency.
  • UK publishes S.I. 2021 No. 839 - The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021

    CACEIS

  • On 14 July 2021, the S.I. 2021 No. 839 - The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 was published in the UK legislation.

    These Regulations impose requirements on trustees of certain occupational pension schemes, including trustees of authorised master trust schemes and trustees of schemes authorised to provide collective money purchase benefits, with a view to ensuring that there is effective governance of those schemes with respect to the effects of climate change. The Regulations also impose associated reporting and publication requirements on the trustees.

  • UK publishes S.I. 2021 No. 857 - The Occupational Pension Schemes (Climate Change Governance and Reporting) (Miscellaneous Provisions and Amendments) Regulations 2021

    CACEIS

  • On 19 July 2021, the S.I. 2021 No. 857 - The Occupational Pension Schemes (Climate Change Governance and Reporting) (Miscellaneous Provisions and Amendments) Regulations 2021 was published in the UK legislation.

    These Regulations prescribe matters about which trustees of certain occupational pension schemes are required to have knowledge and understanding and new climate change governance and reporting requirements.

    • the identification, assessment and management of risks arising to occupational pension schemes from the effects of climate change and of opportunities relating to climate change, as matters about which certain trustees must have knowledge and understanding for the purposes of the Pensions Act 2004, section 247(4)(c) (requirement for trustee knowledge and understanding: individual trustees). Individual trustees must have knowledge and understanding of the prescribed matters insofar as they are relevant to meeting requirements specified in Part 1 of the Schedule. Corporate trustees must ensure that individuals exercising trustee functions have such knowledge and understanding.
    • the registrable information prescribed for the purposes of sections 59 to 65 of the Pensions Act 2004. Such registrable information must, in particular, be specified in a scheme return notice issued by The Pensions Regulator in accordance with sections 63 and 65 of the Pensions Act 2004 and must be included in the scheme return which the trustees are required to provide in accordance with section 64 of that Act.
    • in the case of an occupational pension scheme in respect of which the trustees are required to publish a report on a website, the website address where the most recent report has been published, is registrable information. Where no report has been published, whether the period for publishing the report as provided for in regulation 6(1) of the Climate Change Governance and Reporting Regulations 2021 has ended, is registrable information.
    • trustees are required to make information publicly available free of charge on a website in accordance with the Disclosure Regulations 2013. In the case of an occupational pension scheme in respect of which the trustees are required to publish the information, the website address where the information has been published, is registrable information.
    • information about the report which trustees of certain schemes are required to publish to be included in the scheme’s annual report, summary funding statements (where relevant) and annual benefit statements issued to members.
  • FCA publishes Letter to chairs of authorised fund managers setting the expectations on the design, delivery and disclosure of ESG and sustainable investment funds

    CACEIS

  • On 19 July 2021, the Financial Conduct Authority (FCA) published a Letter to chairs of authorised fund managers setting the expectations on the design, delivery and disclosure of ESG and sustainable investment funds.

    The FCA included in this letter a set of guiding principles that explains the FCA’s expectations in this area:

    • Principle 1. The design of responsible or sustainable investment funds and disclosure of key design elements in fund documentation
    • Principle 2. The delivery of ESG investment funds and ongoing monitoring of holdings
    • Principle 3. Pre-contractual and ongoing periodic disclosures on responsible or sustainable investment funds should be easily available to consumers and contain information that helps them make investment decisions.
  • BRAZIL

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

    BACEN publishes Resolution BCB No. 119 - amending Circular No. 3.978, of 23 January 2020 on the prevention of ML/FT within the financial system

    CACEIS

  • On 27 July 2021, the Banco Central do Brasil (BACEN) published Resolution BCB No. 119 - amending Circular No. 3.978, of 23 January 2020 on the prevention of ML/FT within the financial system.

    The need for these adjustments arises from improvement, adaptation to specific cases and alignment with the securities standard.

    Obtaining information about the customer's place of residence, in the case of a natural person, or the location of the head office or branch, in the case of a legal entity, is now required in the customer's qualification procedures. Thus, as provided for in the regulations for the qualification stage, the need for verification and validation of the customer's location information, provided by the customer, must be evaluated by the institutions according to the customer's risk profile and the nature of the business relationship, in view of the risk-based approach.

    In the case of identification of the final beneficiary, and with a view to harmonizing the regulation under the competence of BACEN with the regulation of the CVM on investment funds and non-resident investors, the funds and clubs of investment, investment funds constituted in the form of closed condominiums and certain non-resident investors.

    Finally, in the case of operations using cash resources carried out through a cash transport company, the transport company will be considered the holder of the resources and will be identified by registering the CNPJ registration number and the firm or corporate name.

  • Financial Market Infrastructure (FMI)

    BACEN publishes Normative Instruction No. 144 concerning the deadlines, hours and operational procedures for the Special Settlement and Custody System (SELIC)

    CACEIS

  • On 20 August 2021, the Banco Central do Brasil (BACEN) published Normative Instruction No. 144 concerning the deadlines, hours and operational procedures for the Special Settlement and Custody System (SELIC).

    The times and deadlines:

    • opening time of the SELIC is 6:30 am
    • closing time of the SELIC is 6:30 pm or 1:00 pm, on December 24, if a business day, and on the last business day of the year.

    The purchase and sale orders are automatically transmitted by SELIC, at 9:30 am, on the day of settlement of the corresponding term. If a command has been transmitted, all others required for the registration and settlement of the transaction or associated or combined transactions must be transmitted within 60 minutes;

  • CVM publishes Circular Letter CVM/SMI 04/2021 - Best practices for the performance, by intermediaries, of compulsory settlement procedures for open positions held by clients, especially in future settlement markets

    CACEIS

  • On 30 August 2021, the Comissão de Valores Mobiliários (CVM) publishes Circular Letter CVM/SMI 04/2021 - Best practices for the performance, by intermediaries, of compulsory settlement procedures for open positions held by clients, especially in future settlement markets.

    Circular Letter highlights

    • Intermediaries must look out for their clients' best interests.
    • Opening of positions by the client must be preceded by confirmation of sufficient resources to guarantee the position that will be opened.
    • The intermediary's risk management control systems must adequately monitor that client's exposures throughout the trading session.
    • Establishing a percentage of collateral consumption at which the intermediary must inform the client that the compulsory liquidation procedure may be triggered at any time, in case the client does not immediately recompose his guarantees or reduce the risk of his positions. This percentage must be calibrated in order to give the investor an adequate reaction time.
    • When identifying, at a certain time during the trading session, a reduction in funds provided as guarantees on behalf of the client, or even a change in the prices of the assets, the intermediary must: prevent an increase in positions above the guarantees allocated on behalf of the client or close or reduce positions held by the client, on a compulsory basis.
    • Communicating to the client information about the risk limit of the guarantees provided by him, situations in which compulsory liquidation may occur, additional costs involved.
  • Financial reporting

    ANBIMA publishes a letter on request for the improvements in the information submission process by Circular 3.945 of BACEN

    CACEIS

  • On 13 July 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) published its letter to the Banco Central do Brasil (BACEN) on its request for the improvements in the information submission process by Circular 3.945 of BACEN, including:

    • Change in deadline for sending information
    • Improvements in the BACEN's Validator
    • Postponement of charging in the billing.
  • Financial services intermediaries

    CVM issues SDM Public Hearing Notice 05/21 - Changes to the rules applicable to independent investment agents and to the disclosure of remuneration in the intermediation of transactions carried out with securities

    CACEIS

  • On 12 August 2021, the Comissão de Valores Mobiliários (CVM) issued SDM Public Hearing Notice 05/21 concerning two draft resolutions that introduce substantial updates to the regulatory framework for independent investment and intermediation agents in securities transactions.

    1. Replacing CVM Resolution 16 as a general rule that governs the activity of independent investment agent. Its main innovations are:

    • Elimination of the obligation to act on an exclusive basis with intermediaries.
    • Elimination of the requirement to adopt the form of simple companies.
    • Need to adopt internal policies, rules and controls for autonomous agents who wish to take advantage of the new possibilities allowed by the regulations.

    2. amendments to CVM Resolution 35 , introducing a chapter on the disclosure of information on remuneration and conflicts of interest in the intermediation of transactions carried out with securities. Under the proposed terms, investors will have:

    • Qualitative information on remuneration and conflicts of interest of agents involved in the intermediation of operations.
    • Periodic statements with quantitative information on the remuneration paid by the investor in these operations.

    Suggestions and comments must be sent by 17 September 2021.

  • Financial supervision

    CVM highlights the level of signatures required in electronic interactions

    CACEIS

  • On 14 July 2021, the Comissão de Valores Mobiliários (CVM) published its remarks on the level of signatures required in electronic interactions.

    Some of the documents or electronic actions that were signed or carried out through the so-called 'simple login' in some CVM system started to have a different level of requirement. In the case, for example, of signing a term of commitment with the CVM, the signature must be advanced or qualified.

  • CVM publishes joint Circular Letter CVM/SEP/SIN/SMI/SNC/SSE 1/21 - contents that will be made available on the Open Data Portal

    CACEIS

  • On 9 August 2021, the Comissão de Valores Mobiliários (CVM) published joint Circular Letter CVM/SEP/SIN/SMI/SNC/SSE 1/21 - contents that will be made available on the Open Data Portal.

    The CVM informed that the data available  in the current “Download Files” tool will be made available exclusively on the CVM's Open Data Portal.

    The contents that will be made available on the Open Data Portal concern:

    • Securities Consultants
    • Portfolio Management Service Providers
    • Real Estate Investment Fund Managers
    • Investment Funds
    • Non-Resident Investor Representative
    • Public Companies
    • Encouraged Companies
    • Foreign companies
    • Autonomous Agents
    • Investment Banks
    • Multiple Banks
    • Brokers
    • Custodians
    • Distributors
    • Organized Market Management Entities
    • Bookkeepers
    • Independent Auditors
    • CEPAC issuers

    The “Download Files” tool will be discontinued on 1/2/2022, when the contents contained therein will be exclusively on the CVM's Open Data Portal.

  • Here are ten CVM resolutions on financial supervision

    CACEIS

  • Here are ten CVM resolutions on financial supervision.

    1. On 31 August 2021, the Comissão de Valores Mobiliários (CVM) published CVM Resolution 52 related to its Governance and Management System.

    This Circular establishes the general rules applicable to the internal conduct of activities, processes, macroprocesses, projects and programs executed within the scope of the SGG/CVM.

    2. On 31 August 2021, the Comissão de Valores Mobiliários (CVM) published CVM Resolution 51 related to the registration of securities market participants with the CVM. This Resolution revokes the CVM Instruction No. 510 , of 5 December 2011.

    The participants indicated in Annex A of this Resolution must, through the CVM's electronic system:

    • update its registration form whenever any information contained is changed, in up-to 7 business days from the fact that caused the change; and
    • by March 31 of each year, confirm that the information contained in the form remain valid, with the exception of the participants mentioned in items V and VI of Annex I, who must confirm the information by the last business day of the month of April.

    3. On 31 August 2021, the Comissão de Valores Mobiliários (CVM) published Resolution 50 & its explanatory note regarding AML/CFT and Proliferation Financing in the securities market, particularly on:

    a) the insertion of the Risk-Based Approach as the main governance tool of the AML/CFT and proliferation financing of mass destruction weapons, which results in the need, on the part of regulated entities:

    (i) structuring a AML/CFT Policy;

    (ii) periodic preparation of an internal risk assessment; and

    (iii) reformulation of its rules, procedures and internal controls;

    b) the improvement of the functions of the director responsible for the standard, as well as the presentation of duties linked to senior management;

    c) the definition of the steps linked to the conduct of the "Know Your Customer" Policy, including the detailing of routines related to the full knowledge of the final beneficiary; and

    d) greater detail of the warning signs to be monitored and the points that must be included the analysis of the operation or atypical situation that was detected, as well as the presentation of the elements which must be part of a report to Conselho de Controle de Atividades Financeiras – COAF.

    4. On 31 August 2021, the Comissão de Valores Mobiliários (CVM) published CVM Resolution 49 regarding the authorization to reproduce and use the CVM acronym, logo and slogan.

    The person or entity that intends to reproduce and use the acronym, logo and slogan of CVM, except for mention or reproduction in speech, scientific or literary work or any other publication without commercial connotation and without prejudice to its distinctive character, must obtain prior authorization from CVM.

    5. On 31 August 2021, the Comissão de Valores Mobiliários (CVM) published Resolution 48 on the inspection of administrative proceedings and on the procedures for accessing information within the scope of the CVM.

    These provisions apply to complaints and queries made by investors and any other market participants. The request for review of administrative proceedings must be made in writing.

    6. On 31 August 2021, the Comissão de Valores Mobiliários (CVM) published Resolution 47 on the injunctions applied by the CVM.

    This Resolution regulates the imposition of fines by CVM on persons who fail to provide periodic or occasional information required in normative acts, or that fail to comply with specific orders issued by the CVM.

    For the purposes of this Resolution, the fines imposed by CVM are of two natures:

    • ordinary fine, understood as the fine applied due to the delay in the provision of periodic or occasional information provided for in specific regulations; 
    • extraordinary fine, understood as the fine imposed due to non-compliance with specific order issued by CVM in legal cases and forms.

    7. On 31 August 2021, the Comissão de Valores Mobiliários (CVM) published Resolution 46 on the processing of non-sanctioning administrative proceedings within the scope of CVM's Board.

    After the decisions rendered by the Superintendências of the CVM, an appeal may be filed with the Colegiado within 15 (fifteen) working days, counted from the date of its awareness by the interested party.

    These provisions also apply to opinions, expressions of understanding and opinions of the Superintendências, except when given in order to support the necessary decision of the Colegiado on the same object.

    The appeal must be presented in a written and substantiated petition, accompanied by the documents on which it is based, being addressed to the Superintendências that has rendered the decision contested.

    8. On 31 August 2021, the Comissão de Valores Mobiliários (CVM) published Resolution 45 regarding the procedures related to sanctioning action within the scope of CVM.

    This Resolution provides for the investigation of administrative infractions, the rite of proceedings administrative sanctions, the application of penalties, the term of commitment and the agreement administrative supervisory process within the scope of the CVM.

    9. On 17 August 2021, the Comissão de Valores Mobiliários (CVM) published CVM Resolution 43 concerning the institution of the Ombudsman under the scope of the securities market.

    The text contains updated references and point improvements. This measure is part of the work of reviewing and consolidating normative acts below the decree, determined by Decree 10.139/19.

    As it did not entail changes in the merits of the obligations in force, the resolution was not submitted to a public hearing.

    10. On 23 August 2021, the Comissão de Valores Mobiliários (CVM) published CVM Resolution 44 concerning the disclosure of information on a material act or fact, the trading of securities pending an undisclosed material act or fact and the disclosure of information on the trading of securities.

    The new rule aligns the regulation with CVM's jurisprudence with the analysis of cases involving accusations for misuse of privileged information, and brings greater clarity in the application of presumptions related to such cases, indicating the content of each presumption, to whom it applies and in what circumstances.

    On a complementary basis, the standard also introduces an autonomous period of prohibition on the trading of securities , by controlling shareholders, directors, members of the board of directors and the fiscal council, before the disclosure of quarterly accounting information and annual financial statements, independently knowledge, by such persons, of the content of said information.

    Finally, the resolution promotes flexibility in the criteria that must be met by individual investment or divestment plans, making it possible to remove the presumptions and prohibitions provided for in the standard.

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

    CVM publishes Circular Letter 01/2021/CVM/SSE - Update on the Annual Real Estate Investment Funds Report

    CACEIS

  • CVM publishes Circular Letter 01/2021/CVM/SSE - Update on the Annual Real Estate Investment Funds Report

    On 12 August 2021, the Comissão de Valores Mobiliários (CVM) published Circular Letter 01/2021/CVM/SSE - Update on the Annual Real Estate Investment Funds Report (FII annual report).

    This Circular Letter aims to communicate to the market that, as of this date, a new version of the FII Annual Report is available on the FundosNet System, which enables the fulldisclosure of transactions involving a conflict of interest.

    With the adjustment implemented, the fund manager must inform all the transactions involving potential conflicts, even if the meeting has not been held, bringing more transparency to the market.

  • ANBIMA updates on methodology for sending investment fund information

    CACEIS

  • On 17 August 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) updated its methodology for sending investment fund information, dated 21 May 2021.

    It is a supporting document to assist fund managers when submitting information, such as net worth, number of shareholders, investor redemptions and value of shares in their funds.

    The methodology details each of the information, the deadlines and forms of submission, the metrics used by ANBIMA to validate the data, as well as the values ??of the fines.

  • ANBIMA reminds on the registrations to the new certification model for managers

    CACEIS

  • On 19 August 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) reminded that institutions must review their resource managers' registration by 31 August 2021.

    Institutions that follow  ANBIMA's Certification Code and have certified third-party resource managers have until 31 August to review the activity of these professionals. The action is necessary to adapt the registrations to the new certification model for managers, brought about by the new version of the Certification Code, in force since 1 July.

  • CVM informs on the expansion of the agreement with ANBIMA to seek more agility and cost reduction for the market

    CACEIS

  • On 30 August 2021, the Comissão de Valores Mobiliários (CVM) informed that the CVM and the Brazilian Financial and Capital Markets Association (ANBIMA) start exchanging information on the classification of investment funds.

    As of 19 September, the ANBIMA will share with the regulator the inspections carried out on the classification of the funds, that is, the verification that the funds' assets are in accordance with what is defined in the regulations.

    The new front of the agreement will enable the full monitoring and sharing with CVM of the work carried out by ANBIMA, including the penalties applied, such as fines, and the terms of commitment entered into, so that the autarchy can take advantage of the material and the decisions taken .

    The exchange of information will also allow agility in the analysis of the portfolios and will minimize the redundancy of actions. 

    Every three months, the CVM and the ANBIMA will meet to analyze the results and lessons learned for the quarter and align any improvements in the agreement.

  • Listing / Trading rules

    CVM publishes Circular CVM/SMI 03/2021 on the offer to retail customers of transactions that include securities subject to registration in an organized over-the-counter market

    CACEIS

  • On 16 July 2021, the Comissão de Valores Mobiliários (CVM) published Circular CVM/SMI 03/2021 on the offer to retail customers of transactions that include securities subject to registration in an organized over-the-counter market.

    This Circular Letter aims to emphasize the duties of intermediaries, in compliance with the regulation in force, when offering securities registered in the over-the-counter market to retail customers organized (especially derivative contracts, offered alone or together with other assets hereinafter referred to as "operations"), more specifically regarding 

    (i) the information minimum that must be provided to customers and 

    (ii) the adoption of measures with the objective of mitigating potential conflicts of interest.

  • Securities Trading

    ANBIMA informs on the Law No 14.195 of 26 August 2021, concerning the new regulation of commercial notes

    CACEIS

  • On 27 August 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) informed that the Law No 14.195 of 26 August 2021, concerning the new regulation of commercial notes, was published in the Diário Oficial.

    The text of the law simplifies the issuance of commercial notes by joint-stock, limited and corporate companies, based on specific rules for this type of credit instrument (previously, they were linked to the rules for promissory notes).

    Among the points of the new regulation, emphasis is given to the issue of commercial notes, which should take place exclusively in book-entry form, through the service of institutions authorized by the CVM. Thus, it will no longer be necessary to formalize the physical title, which will reduce time, cost and risks to operations.

  • COLOMBIA

    Blockchain / Distributed Ledger Technology (DLT)

    Banco de la República participates in the launch of the first pilot of a blockchain bond in Colombia

    CACEIS

  • On 22 July 2021, Banco de la República announced its participation in the launch of the first pilot of a blockchain bond in Colombia.

    The IDB Group and Banco Davivienda have launched the first pilot of a bond issued, placed, negotiated and settled in blockchain technology through the use of smart contracts for the Colombian stock market.

    This pilot operation will be the first step towards the implementation of this technology in the placement, negotiation and fulfillment of operations with instruments in the capital market, where Davivienda will issue the bond and IDB Invest will subscribe the entire issue. The extreme money of the operations will flow in the high-value payment system of the Banco de la República.

    The Banco de la República will act as an observer node in the blockchain network. Their participation in the technological experiment is carried out in order to understand the process of issuing and trading securities in a decentralized way in blockchain technology in the primary and secondary market, as well as understanding the operational challenges of the project and the regulatory needs.

  • UNITED STATES

    Benchmarks

    CFTC Market Risk Advisory Committee adopts SOFR First Recommendation at Public Meeting

    CACEIS

  • On 13 July 2021, the Commodity Futures Trading Commission’s Market Risk Advisory Committee (MRAC) adopted a market best practice known as SOFR First for consideration by the full Commission. SOFR First is a phased initiative for switching trading conventions from LIBOR to the Secured Overnight Financing Rate (SOFR) for U.S. Dollar (USD) linear interest rate swaps, cross currency swaps, non-linear derivatives and exchange traded derivatives. Acting Chairman Rostin Behnam is the sponsor of the MRAC. 

    SOFR First, developed by the MRAC’s Interest Rate Benchmark Reform Subcommittee (Subcommittee), is designed to help market participants decrease reliance on USD LIBOR in light of statements from the Financial Stability Board and the International Organization of Securities Commissions on LIBOR transition which reinforce U.S. banking regulator guidance that banks cease entering new contracts that reference USD LIBOR post December 31, 2021.

    SOFR First has four phases with phase one, involving USD linear swaps, recommended to occur on July 26, 2021. Specifically, on July 26, 2021 and thereafter, interdealer brokers would replace trading of LIBOR linear swaps with trading of SOFR linear swaps. The SOFR First market best practice recommends keeping interdealer brokers’ screens for LIBOR linear swaps available for informational purposes, but not trading activity, until October 22, 2021. After this date, these screens should be turned off altogether. The remaining SOFR First phases involve cross currency swaps, non-linear derivatives and exchange traded derivatives.

  • Securities and Futures Act

    SEC and the ECB Sign Memorandum of Understanding Regarding Cooperation with Respect to Security-Based Swap Entities

    CACEIS

  • On 16 August 2021, the Securities and Exchange Commission (SEC) and the European Central Bank (ECB) announced the signing of a Memorandum of Understanding (MOU) to consult, cooperate, and exchange information in connection with the supervision, enforcement, and oversight of certain security-based swap dealers and major security-based swap participants that are registered with the SEC and supervised by the ECB. This is the first MOU between the SEC and ECB.

    The MOU was executed on Aug. 16, 2021, and is intended to facilitate the SEC's oversight of all SEC-registered security-based swap entities in EU Member States participating in the Single Supervisory Mechanism (SSM). The SSM refers to the system of banking supervision in the European Union. It is composed of the ECB and the relevant national competent authorities of participating EU Member States. 

    The MOU will also support the SEC's oversight of the operation of substituted compliance orders that the Commission has issued for security-based swap entities in France and Germany, as well as any future substituted compliance orders for such firms in other EU Member States that participate in the SSM. Substituted compliance allows a security-based swap entity to comply with particular U.S. requirements under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 through compliance with comparable EU and EU Member State laws. The MOU also enhances the ability of the SEC and the ECB to consult, coordinate, and share information with each other with respect to these entities, including in connection with cross-border inspections. 

  • INTERNATIONAL

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

    FATF updates its Recommendations on international standards on combating money laundering and the financing of terrorism & proliferation

    CACEIS

  • On 9 August 2021, the Financial Action Task Force (FATF) updated its Recommendations on international standards on combating money laundering and the financing of terrorism & proliferation.

    Following the outcomes of the FATF Plenary, 20-25 June 2021; the Task Force reviewed its recommendations. The revision made in June 2021 concerns the Revision of Interpretive Note 15 (INR.15) to clarify the applicability of proliferation financing risk assessment and mitigation requirements to virtual asset activities and service providers.

    The FATF Recommendations set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction. Countries have diverse legal, administrative and operational frameworks and different financial systems, and so cannot all take identical measures to counter these threats.

    The FATF Recommendations, therefore, set an international standard, which countries should implement through measures adapted to their particular circumstances. The FATF Standards comprise the Recommendations themselves and their Interpretive Notes, together with the applicable definitions in the Glossary.

  • Over-the-counter derivatives (OTC)

    ISDA publishes OTC Derivatives Compliance Calendar

    CACEIS

  • On 1 July 2021, the International Swaps and Derivatives Association (ISDA) updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.

  • 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 Legal Manager - Projects & Regulatory Monitoring
    Nathalie Thomas, Group Compliance Officer - General secretary, Projects & Regulatory Monitoring

    Permanent Editorial Committee
    Gaëlle Kerboeuf, Group Legal Manager - Projects & Regulatory Monitoring
    Nathalie Thomas, Group Compliance Officer - General secretary, Projects & Regulatory Monitoring
    Corinne Brand, Group Communications Manager

    Local
    Jennifer Yeboah, Team Manager Legal (Belgium)
    François Honnay, Head of Legal and Compliance (Belgium)
    Tania Deltchev, Head of Legal (France)
    Stefan Ullrich, Head of Legal (Germany)
    Georgios Frangou, Compliance Officer (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)
    Samuel Zemp, Compliance Officer (Switzerland)
    Sarah Anderson, Head of Legal (UK)
    Olga Kitenge, Legal, Risk & Compliance (UK)
    Michele Tuen, 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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