On 10 June 2020, the European Commission published its report assessing the application and the scope of Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers (AIFMD).

The AIFMD is a significant pillar of the Capital Markets Union (CMU) facilitating the improved monitoring of risks to the financial system and the cross-border raising of capital for investments in alternative assets. The AIFMD played an important role in creating an internal market for AIFs and reinforcing the regulatory and supervisory framework for AIFMs in the Union. AIFMs are  operating with greater transparency for investors and supervisors.

The report discusses on:

• Impact on AIFs and AIFMs
• Impact on investors
• Impact on monitoring and assessment of systemic risk
• Impact of rules on investment in private companies and in/or for the benefit of developing countries.

On 19 June 2020, the EU published Commission Delegated Regulation (EU) 2020/855 of 7 May 2020 amending Delegated Regulation (EU) 2016/1675 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council, as regards adding the Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar/Burma, Nicaragua, Panama and Zimbabwe to the table in point I of the Annex and deleting Bosnia-Herzegovina, Ethiopia, Guyana, Lao People’s Democratic Republic, Sri Lanka and Tunisia from this table in the Official Journal. 

This Delegated Regulation identifies countries which present strategic deficiencies in their regimes on anti-money laundering and countering terrorist financing that pose significant threats to the financial system of the Union.

On 26 June 2020, the European Securities and Markets Authority (ESMA) updated the list of Relevant Authorities  for Central Securities Depositories (CSDs).

Pursuant to Article 12(1) of CSDR, the listed authorities shall be involved in the authorization and supervision of CSDs:
(a) the authority responsible for the oversight of the securities settlement system operated by the CSD in the Member State whose law applies to that securities settlement system;
(b) the central banks in the Union issuing the most relevant currencies in which settlement takes place;
(c) where relevant, the central bank in the Union in whose books the cash leg of a securities settlement system operated by the CSD is settled. 

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

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

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

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

On 15 June 2020, the European Union published Recommendation of the European Systemic Risk Board of 6 May 2020 on liquidity risks in investment funds (ESRB/2020/4) 2020/C 200/01 in the Official Journal.

This Recommendation is designed to enhance preparedness to respond to potential future adverse shocks that could lead to a deterioration in financial market liquidity, resulting in potential adverse implications for financial stability conditions in the Union. 

It is recommended that the European Securities and Markets Authority (ESMA) coordinates with national competent authorities to undertake a focused piece of supervisory exercise with investment funds that have significant exposures to corporate debt and real estate assets to assess the preparedness of these two segments of the investment funds sector to potential future adverse shocks, including any potential resumption of significant redemptions and/or an increase in valuation uncertainty.

In addition it is recommended that ESMA reports to the ESRB on its analysis and on the conclusions reached regarding the preparedness of the relevant investment funds. 

On 24 June 2020, the Council of the EU adopted an amendment to the DAC allowing member states an option to defer by up to 6 months the time limits for the filing and exchange of the following information:

• automatic exchanges of information on financial accounts of which the beneficiaries are tax residents in another member state;
• reportable cross-border tax planning arrangements.

The severe disruption caused by the COVID-19 pandemic and lockdown measures to the activities of many financial institutions, tax advisers and tax authorities have hampered timely compliance with their reporting obligations. 

Depending on the evolution of the pandemic, the amended directive also provides the possibility, under strict conditions, for the Council to extend the deferral period once, for a maximum of three further months.

Nevertheless, all relevant information will have to be reported to and exchanged by the tax authorities within the deferred deadlines. 

On 2 June 2020, the European Securities and Markets Authority (ESMA) published the Final Report on Technical advice on FRANDT commercial terms for clearing services.

This final report provides the technical advice to the Commission on how to specify the conditions under which the commercial terms are to be considered to be fair, reasonable, non-discriminatory and transparent when providing clearing services to clients in accordance with Article 4(3a) of EMIR. This Final Report takes into account the feedback provided by the respondents to the consultation.

The requirements covered in this technical advice have been carefully designed to address clearing clients and clearing service providers’ concerns and aims to:

• facilitate comparability of the information disclosed;
• address the process of on boarding clearing clients;
• standardise the information disclosed to clients bilaterally; and
• encourage further standardisation of contractual terms.

 As part of a broader effort to facilitate access to clearing, the EMIR review (Refit), has introduced the requirement for clearing members and clients who provide clearing services to do so under FRANDT terms by June 2021. The EC is mandated to develop a delegated act to define the requirements for such FRANDT terms and tasked ESMA in June 2019 with producing technical advice on the FRANDT terms as input for the development of the delegated act.

On 11 June 2020, the European Commission published the Draft delegated regulation supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to the minimum elements to be assessed by ESMA when assessing third-country CCPs' requests for comparable compliance and the modalities and conditions of that assessment. This Regulation:

• sets out the procedure for a Tier 2 CCP to request comparable compliance, including timelines for that CCP to provide complete information to ESMA and for ESMA to complete its assessment.
• sets out the modalities for ESMA to assess whether a Tier 2 CCP’s compliance with the applicable third-country framework satisfies compliance with Article 16 of EMIR (‘Capital requirements’)
• introduces modalities for ESMA to assess whether a Tier 2 CCP’s compliance with the applicable third-country framework satisfies compliance with Title IV of EMIR (organisational requirements, conduct of business rules, prudential requirements) following a detailed assessment of certain elements. 
• sets out modalities for ESMA to assess whether a Tier 2 CCP’s compliance with the applicable third-country framework satisfies compliance with Title V of EMIR (‘Interoperability arrangements’) following a detailed assessment of certain elements.
• sets out specific conditions to conduct the assessment of comparable compliance. It sets out that ESMA should not refuse comparable compliance merely because a Tier 2 CCP applies an exemption under its home rules which is comparable to any of those set out in EMIR. It also stipulates that, where a Tier 2 CCP’s compliance with a specific requirement of EMIR results in breaching the applicable third-country framework, ESMA should grant comparable compliance only where certain conditions are met. 
• specifies that a Tier 2 CCP that benefits from comparable compliance should keep ESMA informed of any changes to the applicable third-country framework.

There are also 2 Annexes which sets out the elements to assess comparable compliance with Title IV of EMIR.
This Regulation shall be binding in its entirety and directly applicable in all Member States.

On 11 June 2020, the European Commission published Draft delegated regulation supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to the criteria that ESMA should take into account to determine whether a central counterparty established in a third-country is systemically important or likely to become systemically important for the financial stability of the Union or of one or more of its Member States. This delegated regulation:

• defines a core set of elements to be assessed by ESMA when taking into the nature, size and complexity of the CCP's business
• defines a core set of elements to be assessed by ESMA when taking into the effect of failure of or a disruption to a CCP
• defines a core set of elements to be assessed by ESMA when taking into the CCP's clearing membership structure
• defines a core set of elements to be assessed by ESMA when taking into alternative clearing services provided by other CCPs
• defines a core set of elements to be assessed by ESMA when taking into the CCP's relationship, inter-dependencies, or other interactions
• defines quantitative indicators allowing ESMA to estimate the exposure of clearing members and clients established in the Union to third-country CCPs.

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. This Regulation shall be binding in its entirety and directly applicable in all Member States.

On 12 June 2020, the European Securities and Markets Authority (ESMA) published updated list of Q&As currently under development (12/06/2020). 
The questions under development concern mainly EMIR reporting and the CSDR settlement discipline.

On 12 June 2020, the EU Systemic Risk Board (ESRB) sent its opinion to the European Securities and Markets Authority (ESMA) on ESMA’s report on post trade risk reduction services (PTRRS) with regards to the clearing obligation (Article 85(3a) EMIR).
ESRB's opinion is that:

• Overall, PTRRS designed to reduce outstanding risk contribute to making the non-centrally cleared OTC markets safer and more resilient to shocks from the failure of market participants. 
• While PTRRS reduce risks, residual and emerging risks must be duly understood, disclosed and addressed. 
• The assessment of risk-reduction benefits is counterparty-specific. 
• From a macroprudential perspective, PTRRS are beneficial if they reduce the overall systemic risk. 
• While the use of PTRRS in non-centrally cleared OTC markets can help to reduce aggregate risk exposures, exempting their use from the clearing obligation may introduce the risk of regulatory arbitrage and circumvention.

On 5 June 2020, the European Securities and Markets Authority (ESMA) published the final guidelines on the MiFID II compliance function. These guidelines replace the ESMA guidelines on the same topic issued in 2012 and include updates that enhance clarity and foster greater convergence in the implementation, and supervision, of the new MiFID II compliance function requirements.

While the objectives of the compliance function as well as the key principles underpinning the regulatory requirements have remained unchanged, the obligations have been further strengthened, broadened and detailed under MiFID II. The guidelines will enhance the value of existing standards by providing additional clarifications on certain specific topics, such as new responsibilities in relation to MiFID II’s product governance requirements, by notably detailing further the reporting obligations of the compliance function. 

The guidelines are addressed to investment firms and credit institutions providing investment services and activities, investment firms and credit institutions selling or advising clients in relation to structured deposits, UCITS management companies and external Alternative Investment Fund Managers (AIFMs) when providing investment services and activities in accordance with the UCITS Directive and the AIFMD.

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

On 4 June 2020, the European Securities and Markets Authority (ESMA) updated reporting instructions to be used for reporting under the Money Market Fund Regulation (MMFR).

ESMA has implemented amendments on the XML schema and reporting instructions in a new version, v1.1. which is published today. As indicated in the announcement published on 31 March this update follows feedback received by market participants after the publication of the first version of the XML schema (v.1.0) and an assessment of the technical committee.

On 22 June 2020, the European Securities and Markets Authority (ESMA) published Guidelines On the reporting to competent authorities under Article 37 of the MMF.

The objectives of these guidelines are to establish consistent, efficient and effective supervisory practices and to ensure the common, uniform and consistent application of Article 37 of the MMF Regulation and the Implementing Regulation on reporting. In particular, they aim to provide guidance on the contents of the fields of the reporting template included in the Annex of the Implementing Regulation on reporting.

These guidelines apply to competent authorities and MMFs and managers of MMFs within the meaning of the MMF Regulation and apply in relation to Article 37 of the MMF Regulation and the reporting template in the Annex of the Implementing Regulation on reporting. 
They apply from 22 August 2020.

On 4 June 2020, the European Banking Authority (EBA) publishesd Template instructions for 2020 EBA data collection exercise for investment firms (Version 1.0).
This document describes the template data items and gives instructions on how to fill them in. It should be read in conjunction with the IFR, IFD, Consultation Paper (CP) on draft RTS prudential requirements for investment firms (EBA/CP/2020/06)4 and the CP on pay out in instruments for variable remuneration under IFD (EBA/CP/2020/09)5. 

The descriptions of the items in these instructions intend to facilitate the completion of the template and shall not be construed as an official interpretation of the applicable regulation. If there are cases where the descriptions in this document contradict the requirements prescribed in the regulation or draft RTS, the latter should prevail. The EBA will treat all individual investment firm data collected in this exercise as strictly confidential and will not attribute them to individual investment firms. 

The participation in this data collection exercise is voluntary.  The EBA expects EEA investment firms as defined in point (22) of Article 4(1) of IFR, authorized and supervised under MiFID, to participate in this exercise. Where applicable and unless noted otherwise, data for investment firms shall be reported on an individual basis. 

Investment firms are required to submit the completed templates to their national competent authority (NCA) by 19 August 2020. Following the data quality assurance, the investment firms would be required to re-submit revised templates, addressing data quality issues, by 16 September 2020. 

1. On 22 June 2020, Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 was published in the Official Journal.

This unified classification system is setting harmonised criteria to determine whether an economic activity is environmentally sustainable.

It lays down six environmental objectives and allows economic activity to be labelled as environmentally sustainable if it contributes to at least one of the objectives without significantly harming any of the others.

The Regulation shall enter into force on 12 July 2020.

Articles 4, 5, 6 and 7 and Article 8(1), (2) and (3) shall apply:

(a) in respect of the environmental objectives referred to in points (a) and (b) of Article 9 from 1 January 2022; and 

(b) in respect of the environmental objectives referred to in points (c) to (f) of Article 9 from 1 January 2023. 

Article 4 shall not apply to certificate-based tax incentive schemes that exist prior to the entry into force of this Regulation and that set out requirements for financial products that aim to finance sustainable projects.

2. On 8 June 2020, the European Commission published Draft delegated directive 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).

This Directive covers the following amendments to Directive 2010/43/EU that

• lays down a definition of ‘sustainability risks’ that is aligned with the definition of ‘sustainability risks’ in point (22) of Article 2 of Regulation (EU) 2019/2088
• integrates in the first subparagraph Article 4(1) of Directive 2010/43/EU on general requirements on procedures and organisation the obligation addressed to management companies to consider sustainability risks.
• requires management companies to retain the necessary resources and expertise for the effective integration of sustainability risks, by amending Article 5 of Directive 2010/43/EU. 
• sets out investment companies integrate sustainability risks, taking into account the principle of proportionality.
• ensures that senior management of the management company is responsible for the integration ofsustainability risks.
• lays down that the identification of conflicts of interest must also include those types that may arise as a result of the integration of sustainability risks.
• includes the consideration of sustainability risks in due diligence requirements under Article 23 of Directive 2010/43/EU. Where management companies, or, where applicable, investment companies, consider principal adverse impacts of investment decisions on sustainability factors, due diligence requirements must also take due account of them.
• clarifies that the risk management policy under Article 38 of Directive 2010/43/EU must also consider exposures of UCITS to sustainability risks.

Member States shall adopt and publish, by a date as the last day of the eleventh month after publication in the Official Journal of the European Union, at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive.

3. On 8 June 2020, the European Commission published Draft delegated directive amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors and preferences into the product governance obligations.

This Directive covers the following amendments to Directive (EU) 2017/593 that:

• aims at clarifying that manufacturers duly consider sustainability preferences when specifying the type(s) of client for whose needs, characteristics and objectives the financial instrument is compatible with. Further, the target market assessment in consideration of the respective product's risk/reward profile and product features should also cover the instrument's objective of sustainable investments or environmental or social characteristics. In the context of this review, manufacturers should also explicitly take clients’ sustainability preferences into account.
• provides requirements for the distributors.

Member States shall adopt and publish, by a date - exactly twelve months minus one day after entry into force of this delegated act, 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.

They shall apply those provisions from a date exactly 12 months after entry into force of this delegated act.

4. On 8 June 2020, the European Commission published Draft delegated regulation amending Delegated Regulation (EU) 2017/2358 and Delegated Regulation (EU) 2017/2359 as regards the integration of sustainability factors 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.

This Regulation covers the following amendments as regard:

• elements to be taken into account when determining the criteria for the design of insurance products and identifying the target market and the group of compatible customers for each insurance product,
• interests of the customer to be taken into consideration when identifying the types of conflicts of interest that arise in the course of carrying out insurance distribution activities related to insurance-based investment products,
• details of the elements to be taken into consideration by insurance intermediaries and insurance undertakings when assessing the suitability of insurance-based investment products for their customers.
• ensuring that insurance undertakings and insurance intermediaries consider the sustainability profile and preferences of the customers belonging to the target market in the product approval process and the product oversight and governance arrangements if a particular insurance product is intended to be distributed to customers looking for products with a sustainability-related profile.
• clarifying that insurance intermediaries and insurance undertakings distributing insurance-based investment products have to take into account possible conflicts of interest that may arise in relation to sustainability factors. Furthermore, when providing advice on insurance-based investment products, insurance intermediaries and insurance undertakings have to carry out a mandatory assessment of sustainability preferences of their customers and potential customers. They should take these sustainability preferences into account in the selection process of the insurance-based investment products that are offered to these customers.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply 12 months after the date of entry into force.

5. On 8 June 2020, the European Commission published the Draft delegated regulation 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.

This Regulation covers the  amendments to Regulation (EU) 2017/565 that:

• aims at clarifying that investment firms providing financial advice and portfolio management should carry out a mandatory assessment of sustainability preferences of their clients. These investment firms should take these sustainability preferences into account in the selection process of the financial products that are offered to these clients. Further, it requires investment firms to prepare a report to the client that explains how the recommendation to this client meets his investment objectives, risk profile, capacity for loss bearing and sustainability preferences (ex-post information disclosure).
• requires investment firms to take into account sustainability risks when complying with the organisational requirements and to integrate sustainability risk into the risk management policies. 

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply 12 months after the date of entry into force.

6. On 8 June 2020, the European Commission published Draft delegated regulation amending Delegated Regulation (EU) No 231/2013 as regards sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers.

This Regulation covers the amendments to Delegated Regulation (EU) 231/2013 that:

• lays down a definition of ‘sustainability risks’ that is aligned with the definition of ‘sustainability risks’ in point (22) of Article 2 of Regulation (EU) 2019/20889
• includes the consideration of sustainability risks in due diligence requirements under Article 18 of Delegated Regulation (EU) 231/2013. Where AIFMs consider principal adverse impacts of investment decisions on sustainability factors, due diligence requirements must also take due account of them.
• requires AIFMs to retain the necessary resources and expertise for the effective integration of sustainability risks, by amending Article 22 of Delegated Regulation (EU) 231/2013.
• lays down that the identification of conflicts of interest must also include those conflicts of interest that may arise as a result of the integration of sustainability risks.
• clarifies that the risk management policy under Article 40 of Delegated Regulation (EU) 231/2013 must also consider exposures of Alternative Investment Funds to sustainability risks.
  Article 1(6) integrates in general requirements laid down in Article 57(1) of Delegated Regulation (EU) 231/2013 the obligation of management AIFMs to consider sustainability risks.
• ensures that senior management of the AIFM is responsible for the integration of sustainability risks.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply 12 months after the date of entry into force.

On 15 June 2020, the Chambre des représentants de Belgique published Draft Law transposing Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU.

The transposition of this Directive takes place by making modifications to the existing relevant legislation, mainly the law of 18 September 2017 on the prevention of money laundering and the financing of terrorism and on the limitation of the use of cash. A number of the provisions of the above-mentioned Directive were already transposed via other legislation. This draft law therefore contains only provisions of Directive (EU) 2018/843 still to be transposed.

The most important changes to the current legislation on prevention of money laundering, include the addition of new reporting entities, the lowering of the limit for non-rechargeable payment instruments, establishing a list of important public functions, harmonization of obligations vigilance and improved collaboration between the competent authorities of the member states.

On 4 June 2020, Belgium published  Royal decree amending the royal decree of 14 June 2017 establishing the list of other jurisdictions subject to declaration and the list of partner jurisdictions, for the purposes of the law of 16 December 2015 regulating the communication of information relating to financial accounts, by Belgian financial institutions and the FPS Finance, within the framework of an automatic exchange of information at international level and for tax purposes.

The royal decree establishes the list of other jurisdictions subject to declaration and the list of partner jurisdictions.

The other jurisdictions subject to declaration for which the information referred to by law is communicated for the first time in 2020 with regard to the year 2019 are the following:

1. Albania
2. Ecuador
3. Kazakhstan
4. Maldives
5. Oman
6. Peru. 

On 11 June 2020, Belgium published Royal Decree on specific measures to extend certain regulatory deadlines linked to the professional knowledge obligations of compliance officers and intermediaries in the financial and insurance sector, in order to combat the consequences of the COVID?19 pandemic.

According to the Royal Degree, a person in contact with the public who does not have the theoretical knowledge required at the time of its designation may be authorized to already exercise his functions, if this person is supervised by a qualified intermediary. This person in contact with the public is thus considered to be "in training". However, under normal circumstances, it is required that this person "in training" has the required theoretical knowledge within one year of its designation. Otherwise, the person concerned can no longer be designated as a person in contact with the public.

In order to take into account the fact that it is unlikely that examinations will be organized during the confinement period linked to the COVID-19 epidemic, nor probably within a certain time after the expiration of this measure, it seems appropriate, for the protection of the persons concerned and in order to avoid decisions which would be prejudicial to them, to grant an additional period of four months to any person in contact with the public “in training” for whom the period of confinement intervenes during the one year period. This additional four months will also be taken into account as a period of gaining useful practical experience.

The Royal Decree is also addressed to persons subject to professional knowledge obligations and subject to an ongoing training obligation. This training obligation period will also benefit from an extension. 

On 22 June 2020, the Financial Services and Markets Authority (FSMA) published a Q&A for listed companies concerning the half-yearly financial report during the COVID-19 period.

Listed companies will soon be publishing their results for the first half of 2020. This will likely be their first mandatory periodic report to investors that provides a more comprehensive and detailed view of the impact of the COVID-19 pandemic on their financial situation, their activities and their results. The FSMA wishes to set out a number of points that are to be taken into account in this regard, in the form of a Q&A.  This Q&A document is addressed to issuers.

On 29 June 2020, the Chambre des représentants de Belgique established a special commission to review Belgium's management of the COVID-19 epidemic.

In accordance with the provisions of Rule 21, paragraph 2, of the Rules of Procedure, a special commission is hereby established to examine the management of the COVID-19 epidemic.This special commission shall be set up without delay and shall be responsible, inter alia, for :

• examining the decisions and measures taken at the federal level between the announcement, in December 2019, of the appearance of COVID-19 in Wuhan, China, and the first confirmed cases in Belgium, at the beginning of March 2020, including with regard to the measures taken in other European countries;
• review the coordination and implementation of measures to combat the epidemic;
• review the availability of testing for suspected COVID-19 contamination and the organization of contact tracing;
• examine relations and cooperation with neighbouring countries and the various European and international institutions
• examine the chain of communication of federal authorities on the COVID-19 crisis;
• to examine the way in which Belgium has ensured the reporting of health data to the European Centre for Disease Prevention and Control, particularly with regard to other European countries, and has made these data accessible to the population.

On 30 June 2020, the Chambre des représentants de Belgique amended the Proposal to set up a Parliamentary Committee of Inquiry to examine the management of the COVID-19 crisis.

Article 7 is replaced by the following "Art 7. The committee shall take the necessary time to report its work to the House of Representatives."  This decision has been taken as the timetable for the committee to complete its work by 30 September is too tight and will not allow sufficient time for serious and dispassionate investigation and debate.

On 30 June 2020, the Banque nationale de Belgique (BnB) announced it maintains CCyB at 0%.

In application of its macro-prudential competences defined in the Belgian Banking Act of 2014, the NBB decided on 9 June 2020 to maintain the counter-cyclical cushion rate for credit risk exposures to the Belgian non-financial private sector at 0% for the third quarter of 2020.

In a scenario of expected substantial credit losses, such as the one we are currently experiencing, macroprudential measures, such as the removal of the countercyclical cushion, can help to mitigate the potential procyclicality of the banking sector by giving credit institutions sufficient room for manoeuvre to absorb the resulting credit losses in order to continue providing financial intermediation services to the real economy and to preserve financial stability.

On the basis of current projections and risk assessments, the NBB expects not to increase the countercyclical capital cushion for a period of at least one year. A reactivation of the countercyclical buffer in the short term therefore seems highly unlikely.
The NBB will review the situation every quarter.

On 4 June 2020, Belgium published Royal decree implementing Articles 18, 31, 33 and 47 of the Law of 20 December 2019 transposing the Directive on Disclosure for certain cross-border arrangements (DAC 6).

The purpose of the decree is to fix the progressive scale of administrative fines applicable in the event of breaches of the additional reporting obligations imposed by the law of 20 December 2019 on the intermediaries and taxpayers concerned, in the area of cross-border arrangements.

In the event of incomplete provision of the legally required information from the intermediaries and taxpayers concerned, they incur a fine of 1,250 euros to 12,500 euros. For such offenses committed with fraudulent intent or intent to harm, a fine of 2,500 euros to 25,000 euros is imposed.

When the legally required information is not provided or is provided late, these same persons are liable to a fine of 5,000 euros to 50,000 euros. For such offenses committed with fraudulent intent or intent to harm, a fine of 12,500 euros to 100,000 euros is imposed.

On 10 June 2020, the Financial Services and Markets Authority (FSMA) published communication FSMA_2020_05 on new prudential requirements for portfolio management and investment advice companies.

The communication informs the sector of the new legal provisions concerning prudential requirements for investment firms that enter into force on 26 June 2021. The provisions most relevant for portfolio management and investment advice companies are explained.

On 11 June 2020, the Association Française de Gestion (AFG) published a Practical Guide on Specialized Financing Organisms.
In order to support management companies in the integration of this new legal vehicle, AFG publishes a Practical Guide , drawn up with the assistance of the Cabinet Kramer Levin LLP and members of the Securitization and Debt Fund Commission.

In order to enhance the attractiveness and competitiveness of Paris' financial centre, the legislator has created a new category of alternative investment fund (AIF) subject to the AIFM Directive, the specialized financing organisms (SFO) , which complements the other categories of AIFs dedicated to financing, namely the specialized professional funds (SPF) and securitization organisms (ST).

It is a debt fund for export whose universe of possibilities is very large. It can issue bonds and the list of eligible assets is extended: receivables, loans, goods and shares, guarantees, sureties or sub-participations. All forms of financing are possible: bond financing, acquisition and granting of loans, sub-participation in risk and cash, investment in equities, infrastructure financing by benefiting from Daily sales etc.

The SFO is a vehicle under French law that can make investments in France and abroad and be subscribed by French and foreign investors under optimal legal and tax conditions. Its features make it a safe, flexible and efficient vehicle ,far ahead of competing European vehicles.

The SFO makes it possible to carry out, under French law, all the investments of a vehicle wishing to claim the Label ELTIF.

Version française

Le 11 juin 2020, l’Association Française de Gestion (AFG) a publié guide pratique des OFS – Organisme de Financement Spécialisé.Afin d’accompagner les sociétés de gestion dans l’intégration de ce nouveau véhicule juridique, l’AFG publie un Guide pratique, élaboré avec le concours du Cabinet Kramer Levin LLP et des membres de la Commission Titrisation et Fonds de Dette.

En vue de renforcer l’attractivité et la compétitivité de la place financière de Paris, le législateur a créé une nouvelle catégorie de fonds d’investissement alternatif (FIA) soumis à la Directive AIFM, l’organisme de financement spécialisé (OFS), qui vient compléter les autres catégories de FIA dédiés au financement que sont les fonds professionnels spécialisés (FPS) et les organismes de titrisation (OT).

C’est un fonds de dette pour l’export dont l’univers des possibles est très vaste. Il peut émettre des obligations et la liste d’actifs éligibles est élargie : créances, prêts, biens et actions, garanties, sûretés ou sous participations. Toutes les formes de financement sont possibles : financement obligataire, acquisition et octroi de prêt, sous-participation en risque et trésorerie, investissement en actions, financement infrastructure en bénéficiant de cessions Dailly…

L’OFS est un véhicule de droit français pouvant réaliser des investissements en France et à l’étranger et être souscrits par des investisseurs français et étrangers dans des conditions juridiques et fiscales optimales. Ses fonctionnalités en font un véhicule sûr, flexible et efficient, très en avance par rapport aux véhicules concurrents européens.

L’OFS permet de réaliser en droit français tous les investissements d’un véhicule souhaitant se prévaloir du Label ELTIF.

On 11 June 2020, the Autorité des marchés financiers (AMF) published a study on the opportunities and risks of the financial index market.
The study presents an overview of the market in financial indices, which have a profound influence on the functioning of markets. It analyses the functioning of an industry that continues to grow with close to 3 million indices in the world.

In this study, the AMF assesses two main types of risk, risks concerning the functioning of markets and potentially for financial stability, and risks relating to the lack of competition and its impacts on the protection of investors.

Regarding the risks impacting the functioning of markets, the study shows that the development of funds benchmarked to listed funds and index futures contracts is transforming the ecosystem and structure of the markets, beginning by the equities and listed derivatives markets. Price formation and market liquidity processes are being changed profoundly. More particularly, the study highlights the growing effect of rebalancing (changing the composition of the indices), operational risks such as cybercrime, and the risks of shocks being amplified on futures markets.

The study emphasises in particular the following issues regarding lack of transparency.

• As a result of the lack of competition, the offer is often bundled with data supply services which limits the ability to make fee comparisons.
• The boundary between index and asset management are diminishing as the indices in question incorporate more and more asset management rules and discretion margins. This also increases risks regarding conflicts of interest.
• In an environment of accelerated innovation, it is becoming difficult for investors to assess what the indices represent and to understand their methodologies. This is particularly true of strategy, smart beta, ESG and bond indices, which may cumulate several asset management strategies.

The study makes a number of recommendations to facilitate the identification of indices and comparisons between them, as well as making them easier to understand. More specifically, it would be useful to have a public record of  marketed indices. The AMF also stresses the impacts of changes in methodology and index rebalancing on markets. In the context of the health crisis, certain index producers postponed the recomposition of their indices to avoid disrupting the markets further. This support the hypothesis of the influence of these recompositions on the markets whereas a point of vigilance in the future regarding for example index investment in corporate bonds in the event of ratings downgrades.

Version française

Le 11 juin 2020, l’Autorité des marchés financiers (AMF) a publié une étude sur les opportunités et les risques du marché des indices financiers.Cette étude dresse un panorama du marché des indices financiers, dont l’influence est profonde sur le fonctionnement des marchés. Elle analyse le fonctionnement d’une industrie qui continue de croître avec près de 3 millions d’indices dans le monde.

Répondant à une demande croissante, l’industrie des indices est très concentrée. Trois acteurs mondiaux cumulent 71 % de part de marché et présentent une capacité d’innovation importante. A travers cette étude, l’Autorité des marchés financiers (AMF) évalue deux principaux types de risques : des risques pour le fonctionnement des marchés, et le cas échéant la stabilité financière, et des risques liés à un défaut de concurrence et à ses impacts sur la protection des investisseurs.

Concernant les risques pour le fonctionnement des marchés, l’étude démontre que le développement des fonds indiciels et contrats à termes sur indices transforme l’écosystème et la structure des marchés, à commencer par ceux des actions et des dérivés cotés. Les processus de formation des prix et de la liquidité de marché sont profondément changés. L’étude signale notamment l’effet croissant des rééquilibrages (changements de composition) des indices, les risques opérationnels comme la cybercriminalité, et ceux d’amplification des chocs sur les marchés à terme.L’étude souligne en particulier les problématiques de manque de transparence suivantes :

• Traduisant un défaut de concurrence, l’offre est souvent groupée avec des services de fourniture de données, ce qui limite la capacité de comparaison tarifaire.
• La frontière entre indice et gestion d’actifs s’amenuise, les indices concernés intégrant de plus en plus de règles de gestion et de marges de discrétion. Ceci accroît aussi les risques de conflit d’intérêts.
• Dans un contexte d’innovation accélérée, il devient difficile pour les investisseurs d’évaluer ce que représentent les indices et de comprendre leurs méthodologies. C’est le cas en particulier des indices de stratégie, smart beta, ESG et obligataires qui peuvent cumuler plusieurs stratégies de gestion.L’étude formule plusieurs recommandations pour faciliter l’identification et les comparaisons d’indices, et les rendre plus intelligibles. En particulier, un recensement des indices commercialisés serait utile. Par ailleurs, l’AMF souligne les impacts sur les marchés des changements méthodologiques et rééquilibrages des indices.

Dans le contexte de la crise sanitaire, certains producteurs d’indices ont reporté la recomposition d'indices, afin de ne pas perturber davantage les marchés. Cela soutient l’hypothèse de l'influence de ces recompositions sur les marchés, alors qu’un point de vigilance à l'avenir concerne par exemple l’investissement indiciel en obligations en cas de dégradation de notations des entreprises.

On 30 June 2020, the Association Française des Marchés Financiers (Amafi) published a Report on the Capital Markets Union.

In a context marked by the urgent need to finance the economic recovery after the COVID-19 crisis, in particular through increased recourse to the markets, and at a time when Brexit is reshaping the European financial landscape, the AMAFI report proposes a bold strategy to rethink the European Union's markets. 

The objectives are to enable the markets to fully assume their role as financiers of the economy and to maintain the Union's sovereignty in the area of financing.

The challenge is to respond to the four major financing challenges facing the Union:

• Contributing to the recovery of the European economy after the health crisis. 
• Fighting climate change. 
• Encouraging the development of European champions, particularly in the digital and energy transition sectors. 
• Adapt social structures to the ageing of the population.

The report focuses on 6 major areas of reform: 

1) Facilitating the implementation of a genuine European securitisation market. Through revisions of the STS and CRR regulations, the aim is to make the future regime less burdensome in terms of prudential requirements in order to free up part of banks' balance sheets to enable them to allocate more resources to financing the economy. 

2) Improve the flexibility of the prudential regulatory framework. The aim is to allow financial players to allocate more resources to financing the economy when the crisis is not of financial origin, such as the crisis at COVID-19. 

3) Managing Brexit and possible implications in the event of a hard Brexit : 

• Maintain access to international liquidity pools. Developing the role of financial markets in financing the European economy requires finding the right balance between seeking a certain degree of autonomy and opening up to international flows.
• Maintain access to UK clearing houses by extending temporary equivalence beyond 31 January 2021.
• Exempt UK/third country branches of EU-27 investment firms from European trading requirements on equities and derivatives in order to preserve their competitiveness. 

4) Create a European safe asset. As a benchmark for asset valuation, it would also play a stabilising role, in particular by reducing the link between each Member State's sovereign risk and its banking sector. It would serve as a guarantee and facilitate cross-border transactions and better risk allocation. 

5) Strengthen supervisory convergence to ensure that the interpretation of the regulatory framework is the same for the supervisor and the supervised entity. In the short term, ESMA will develop tools and training for the competent national authorities in the EU-27 to facilitate consistent implementation of EU legislation. In the medium/long term, on the basis of the experience gained, direct supervision by ESMA could then become a reality in certain areas and in particular with regard to European clearing houses. 

6) Developing the role of pension funds. Complementary to pay-as-you-go pension systems in the States that have made this choice, they would make it possible to ensure their performance despite the ageing of European populations, while guaranteeing the channelling of capital towards long-term and risky projects requiring patient investors.

Version française

Le 30 juin 2020, l’Association Française des Marchés Financiers (Amafi) a publié ses propositions pour une réforme des marchés financiers européens.

Dans un contexte marqué par l'urgence de financer la relance économique après la crise du Covid-19, via notamment un recours accru aux marchés, et alors que le Brexit redessine le paysage financier européen, le rapport de l'AMAFI propose une stratégie audacieuse pour repenser les marchés de l'Union européenne. Objectifs : permettre aux marchés d'assumer pleinement leur rôle de financeur de l'économie et maintenir la souveraineté de l'Union en matière de financement.

L'enjeu est de répondre aux 4 grands défis de financement auxquels doit faire face l'Union

• Contribuer à la relance de l'économie européenne après la crise sanitaire.
• Lutter contre le changement climatique.
• Encourager le développement de champions européens, en particulier dans les secteurs du digital et de la transition énergétique.
• Adapter les structures sociales au vieillissement de la population.

Le rapport s'articule autour de 6 axes majeurs de réformes

• Faciliter la mise en œuvre d'un véritable marché européen de la titrisation. Il s'agit à travers les révisions des règlements STS et CRR de rendre le futur régime moins contraignant en matière d'exigences prudentielles afin de libérer une partie du bilan des banques pour leur permettre d'allouer davantage de ressources au financement de l'économie.
• Améliorer la flexibilité du cadre réglementaire prudentiel. Il s'agit de permettre aux acteurs financiers d'allouer davantage de ressources au financement de l'économie lorsque la crise n'est pas d'origine financière, comme celle du Covid-19.
• Gérer le Brexit et d'éventuelles implications en cas de Brexit dur :
  o Maintenir l'accès aux pools de liquidité internationaux. Le développement du rôle des marchés financiers dans le financement de l'économie européenne suppose de trouver le bon équilibre entre la recherche d'une certaine autonomie et l'ouverture aux flux internationaux.
  o Maintenir l'accès aux chambres de compensation britanniques en prolongeant l'équivalence temporaire au-delà du 31 janvier 2021.
  o Exempter les succursales pays-tiers/britanniques d'entreprises d'investissement de l'UE-27 des obligations de négociation européennes sur actions et dérivés afin de préserver leur compétitivité.
• Créer un safe asset européen. Étalon dans la valorisation des actifs, il jouerait aussi un rôle de stabilisateur, notamment en réduisant le lien entre le risque souverain de chaque État membre et son secteur bancaire. Il servirait de garantie et faciliterait les transactions transfrontalières et une meilleure répartition des risques.
• Renforcer la convergence de supervision afin de s'assurer que l'interprétation du cadre réglementaire est la même pour le superviseur et pour l'entité supervisée. Il s'agit à court terme pour l'ESMA de développer des outils et des formations pour les autorités nationales compétentes de l'UE-27 afin de faciliter la mise en œuvre homogène de la législation européenne. A moyen/long terme, sur la base de l'expérience acquise, la supervision directe de l'ESMA pourrait alors devenir une réalité dans certains domaines et en particulier s'agissant des chambres de compensation européennes.
• Développer le rôle des fonds de pension. Complémentaires des systèmes de retraite par répartition dans les États qui ont fait ce choix, ils permettraient de s'assurer de leurs performances en dépit du vieillissement des populations européennes, tout en garantissant l'acheminement du capital vers des projets à long terme et risqués nécessitant des investisseurs patients.

On 10 June 2020, the Government presented a third amending budget for 2020 in order to strengthen its support mechanism for the sectors most affected by the crisis and to deploy exceptional measures to assist local authorities and support the most vulnerable.

The Minister for the Economy and Finance and the Minister for Action and Public Accounts presented a third draft amending budget (PLFR-III) for 2020 to the Council of Ministers.

PLFR-III provides the State's appropriations for the implementation of these plans. An unprecedented measure of exemption from employers' contributions and social security contributions, combined with a contribution credit of nearly €3 billion, is being introduced. 

This measure will enable VSEs and SMEs in the hotel, restaurant, culture, events, sports, air transport and VSEs that have been banned from receiving the public, particularly in the non-food retail sector, to reduce their social liabilities very quickly and massively, thereby supporting the recovery of activity. Discounts on employers' contributions on request for small businesses which have lost more than 50% of their business may also be granted. All companies will also be able to benefit from exceptionally long deferment, up to 36 months, to pay the deferred contributions.

Version française

Le 10 juin 2020, le Gouvernement a présenté un troisième budget rectificatif pour 2020 afin de renforcer son dispositif de soutien aux secteurs les plus touchés par la crise et de déployer des mesures exceptionnelles d’aide aux collectivités territoriales et d’accompagnement des plus précaire.

Le ministre de l’Economie et des Finances et le ministre de l’Action et des Comptes publics ont présenté en Conseil des ministres un troisième projet de loi de finances rectificative (PLFR-III) pour 2020.

Le PLFR-3 porte les crédits de l’Etat pour la mise en œuvre de ces plans.   

Une mesure inédite d’exonération de cotisations et contributions sociales patronales, associée à un crédit de cotisations, pour près de 3 Md€, est mise en place. Cette mesure permettra notamment aux TPE et PME des secteurs de l’hôtellerie, de la restauration, de la culture, de l’événementiel, du sport, du transport aérien et aux TPE ayant été frappées d’une interdiction d’accueil du public, en particulier dans le secteur du commerce de détail non alimentaire, de réduire leurs passifs sociaux très rapidement et massivement, soutenant ainsi la reprise d’activité. Des remises de cotisations patronales sur demande pour les petites entreprises qui auront subi une perte d'activité supérieure à 50% pourront également être accordées. Toutes les entreprises pourront par ailleurs bénéficier d’étalement exceptionnellement long, jusqu’à 36 mois, pour payer les cotisations reportées.

On 11 June 2020, Ordinance No.2020-705 of 10 June 2020 on the solidarity fund for enterprises particularly affected by the economic, financial and social consequences of the spread of the COVID-19 epidemic and the measures taken to limit this spread was published in the Official Journal. 

The purpose of Article 1 of this Ordinance is to extend the duration of the solidarity fund until the end of 2020 in order to continue paying aid to the companies most affected by the health crisis.

Article 2 of this Ordinance extends to public officials working in the decentralized services of the State's civil administrations the power to request the beneficiaries of aid to provide supporting documents. It authorizes the transmission between administrations of information strictly necessary for the processing of applications, the control of aid, the management of the fund and the monitoring of the scheme.

Article 3 contains the provisions relating to the overseas departments and territories.

A ratification bill must be tabled before Parliament within two months of the publication of this Ordinance.

Version française

Le 11 juin 2020, la France a publié l’ordonnance no 2020-705 du 10 juin 2020 relative au fonds de solidarité à destination des entreprises particulièrement touchées par les conséquences économiques, financières et sociales de la propagation de l’épidémie de covid-19 et des mesures prises pour limiter cette propagation.

Le but de l'article 1 de la présente ordonnance est de prolonger la durée du fonds de solidarité jusqu'à la fin de 2020 afin de continuer à payer l'aide aux entreprises les plus touchées par la crise sanitaire.

L'article 2 de cette ordonnance étend aux a agents publics affectés dans les services déconcentrés des administrations civiles de l’Etat le pouvoir de demander aux bénéficiaires de l'aide de fournir des pièces justificatives. Il autorise la transmission entre administrations d'informations strictement nécessaires au traitement des demandes, au contrôle des aides, à la gestion du fonds et au suivi du régime.

L'article 3 contient les dispositions relatives aux départements et territoires d'outre-mer.

Un projet de loi de ratification doit être déposé devant le Parlement dans les deux mois suivant la publication de la présente ordonnance.

1. On 13 June 2020, Decree No. 2020-712 of 12 June 2020 relating to the creation of an ad hoc aid scheme to support the cash flow of companies weakened by the COVID-19 crisis was published in the Official Journal.

The Decree aims at creating a device to support the cash flow of companies weakened by the health crisis of COVID-19, complementing the loan device with state guarantee.

In the context of the health crisis of COVID-19 and its repercussions on economic activity, the decree establishes a system of repayable advances and loans at subsidized rates to small and medium enterprises weakened by the crisis and that have not found financing solutions from their banking partners or private financiers. The limited company Bpifrance Financement SA is responsible for the operational management of this aid.

2. On 11 June 2020, the Ministère de l'Economie announced an increased support for credit insurance.

The Minister of the Economy and Finance, announces the conclusion of a new agreement with credit insurers to strengthen support for credit insurance in the context of the crisis. This agreement provides for the implementation of a public reinsurance programme for outstanding credit insurance and the maintenance of insured lines.

In order to enhance the effectiveness of these measures, the Ministry of the Economy and Finance is implementing the "CAP Relay" programme. This new system provides temporary public reinsurance of all outstanding credit insurance. It will initially cover the domestic market and risks relating to SMEs and ETIs. The scheme was agreed with the main credit insurers operating in France on 9 June, subject to approval of the scheme by the European Commission. It is based on a proportional reinsurance scheme, under which credit insurers will retain a share of the reinsured risks. It will be implemented by the Caisse Centrale de Réassurance, acting with the guarantee of the State. 

The Government is also proposing the extension of this agreement to large companies for domestic operations as well as to all export operations, which will be examined as part of the third amending finance bill.

3. On 24 June 2020, Order of 19 June 2020 setting the scale of borrowing rates for cash support aid for small and medium-sized enterprises weakened by the COVID-19 crisis was published in the Official Journal.

Aid from the system created by the decree of June 12, 2020 can take the form of repayable advances and loans at subsidized rates.

Repayable advances are remunerated at a fixed rate of 100 basis points.

Loans at subsidized rates are remunerated according to a rate scale depending on the final maturity of the loan.

The rate is fixed:

• for loans with a 3-year maturity, 150 basis points;
• for loans with a 4-year maturity, at 175 basis points;
• for loans with a 5-year maturity, 200 basis points;
• for loans with a 6-year maturity, at 225 basis points.

4. On 24 June 2020, Decree No. 2020-765 of 23 June 2020 setting the date of entry into force of I of Article 1 of Law No. 2020-473 of 25 April 2020 on Amending Finance for 2020 was published in the Official Journal.

In order to ensure the full effect of the support measures put in place by the Government, article 1, section I of Act No. 2020-473 of 25 April 2020 on Amending the Finance Act for 2020 allows companies to benefit from the full amount of aid paid by the solidarity fund, without any tax or social security levy being imposed on its amount. 

These new provisions, which are subject to a decision by the European Commission allowing them to be considered as complying with European Union law on State aid, enter into force on a date set by decree, which may not be more than fifteen days after the date on which the Government receives the Commission's decision.

The French authorities have notified the Commission of an amendment to the existing aid scheme "Régime cadre temporaire pour le soutien aux entreprises dans le cadre de la crise du COVID-19 SA. 56985" to include aid in the form of tax and social advantages (in particular exemption from any income tax - corporation tax or income tax - and from all related contributions and social security contributions). 

In its decision of 20 May 2020, the Commission confirmed the compatibility with the internal market of the changes made to the "Temporary Framework Regime". 

Consequently, this Decree provides that these new provisions shall enter into force on 21 May 2020.

Version française

1. Le 13 juin 2020, la France a publié le décret no 2020-712 du 12 juin 2020 relatif à la création d’un dispositif d’aides ad hoc  au soutien de la trésorerie des entreprises fragilisées par la crise de COVID-19.

Dans le contexte de la crise sanitaire de COVID-19 et de ses répercussions sur l’activité économique, le décret institue un dispositif d’avances remboursables et de prêts à taux bonifiés aux petites et moyennes entreprises fragilisées par la crise, et n’ayant pas trouvé de solutions de financement auprès de leur partenaire bancaire ou de financeurs privés. La société anonyme Bpifrance Financement SA est chargée de la gestion opérationnelle de ces aides.

2. Le 11 juin 2020, le ministre de l'Economie et des Finances, annonce la conclusion d’un nouvel accord avec les assureurs-crédit venant renforcer le soutien à l’assurance-crédit dans le contexte de la crise.

Cet accord prévoit la mise en œuvre d’un programme de réassurance publique des encours d’assurance-crédit et de maintien des lignes assurées.

L’assurance-crédit joue un rôle économique essentiel, en couvrant les entreprises contre le risque de défaillance des clients auxquels elles accordent des délais de paiement. Elle est en cela une solution essentielle de sécurisation de la trésorerie des entreprises et du crédit interentreprises, qui constitue une source prépondérante de financement de l’activité économique.  

Dans le contexte de crise sans précédent qui frappe le pays et ses conséquences directes sur les entreprises, le gouvernement est intervenu dès avril dernier en mettant en place quatre produits publics d’assurance-crédit CAP, CAP+, Cap Francexport et Cap Francexport +, destinés à maintenir ou renforcer les couvertures d’assurance-crédit individuelles

Afin de renforcer l’efficacité de ces mesures, le ministère de l’économie et des finances met en œuvre le programme « CAP Relais ». Ce nouveau dispositif assure une réassurance publique temporaire de l’ensemble des encours d’assurance-crédit. Il couvrira dans un premier temps le marché domestique et les risques portant sur les PME et ETI.  

Ce dispositif a fait l’objet d’un accord avec les principaux assureurs-crédit actifs en France le 9 juin, conclu sous réserve de l’autorisation du dispositif par la Commission européenne. Il repose sur un schéma de réassurance proportionnelle, dans lequel les assureurs-crédit conserveront une part des risques réassurés. Il sera mis en œuvre par la Caisse Centrale de Réassurance, agissant avec la garantie de l’État. 

Le Gouvernement propose en outre l’extension de cet accord aux grandes entreprises pour les opérations domestiques ainsi qu’à l’ensemble des opérations à l’export, qui sera examinée dans le cadre du troisième projet de loi de finances rectificative.

Ce soutien exceptionnel de l’Etat vise à permettre aux assureurs-crédit, dans un contexte de perturbations économiques et d’accroissement des risques de défaillance découlant de la crise actuelle, de stabiliser le niveau d’encours assurés, tout en accompagnant la montée en puissance du déploiement des produits CAP, CAP+, Cap Francexport et Cap Francexport+, qui reposent sur une réassurance ligne par ligne des opérations.

3. Le 24 juin 2020, la France a publié l’arrêté du 19 juin 2020 fixant le barème des taux d’emprunt des aides de soutien en trésorerie des petites et moyennes entreprises fragilisées par la crise de COVID-19.

Les aides du dispositif créé par le décret du 12 juin 2020 peuvent prendre la forme d’avances remboursables et de prêts à taux bonifiés.

Les avances remboursables sont rémunérées au taux fixe de 100 points de base.

Les prêts à taux bonifiés sont rémunérés selon un barème de taux dépendant de la maturité finale du prêt. Le taux est fixé : 

• pour les prêts de maturité 3 ans, à 150 points de base ;
• pour les prêts de maturité 4 ans, à 175 points de base ; 
• pour les prêts de maturité 5 ans, à 200 points de base ; 
• pour les prêts de maturité 6 ans, à 225 points de base.

4. Le 24 juin 2020, la France a publié le décret no 2020-765 du 23 juin 2020 fixant la date d’entrée en vigueur  du I de l’article 1er de la loi no 2020-473 du 25 avril 2020 de finances rectificative pour 2020.

Afin d’assurer le plein effet des mesures de soutien mises en place par le Gouvernement, le I de l’article 1er de la loi no 2020-473 du 25 avril 2020 de finances rectificative pour 2020 permet aux entreprises de bénéficier de l’intégralité de l’aide versée par le fonds de solidarité, sans qu’aucun prélèvement fiscal ou social ne soit assis sur son montant. 

Ces nouvelles dispositions, subordonnées à la décision de la Commission européenne permettant de les considérer comme conformes au droit de l’Union européenne en matière d’aides d’Etat, entrent en vigueur à une date fixée par décret qui ne peut être postérieure de plus de quinze jours à la date de réception par le Gouvernement de la décision de la Commission. 

Les autorités françaises ont notifié à la Commission un amendement au régime d’aide existant « Régime cadre temporaire pour le soutien aux entreprises dans le cadre de la crise du COVID-19 SA. 56985 » pour y intégrer les aides sous forme d’avantages fiscaux et sociaux (notamment d’exonération de tout impôt sur les bénéfices – impôt sur les sociétés ou impôt sur le revenu – et de toutes les contributions et cotisations sociales associées). 

La Commission a confirmé, dans sa décision du 20 mai 2020, la compatibilité des modifications ainsi apportées au « Régime cadre temporaire » avec le marché intérieur. Par conséquent, le présent décret prévoit que ces nouvelles dispositions entrent en vigueur le 21 mai 2020.

On 18 June 2020, Ordinance No. 2020-740 of 17 June 2020 on the granting of current-account advances to undertakings in difficulty by undertakings for collective investment in private equity and venture capital companies was published in the Official Journal.

Venture capital mutual funds and community investment funds may grant current account advances, for the duration of the investment made, to companies in which they hold a stake and for an amount representing no more than 20% of the assets of these funds.

Professional private equity funds may grant current account advances, for the duration of the investment made, to companies in which they hold a stake and for an amount representing at most 30% of the total amount of their subscription commitments.

Venture capital enterprises may grant current account advances, for the duration of the investment made, to companies in which they hold a participation and for an amount representing not more than 30 % of the net book value of those venture capital companies.

Version française

Le 18 juin 2020, la France a publié l’ordonnance no 2020-740 du 17 juin 2020 relative à l’octroi d’avances en compte courant aux entreprises en difficulté par les organismes de placement collectif de capital investissement et les sociétés de capital-risque.

Les fonds communs de placement à risques, les fonds communs de placement dans l’innovation et les fonds d’investissement de proximité peuvent consentir des avances en compte courant, pour la durée de l’investissement réalisé, à des sociétés dans lesquelles ils détiennent une participation et pour un montant représentant au plus 20 % de l’actif de ces fonds.

Les fonds professionnels de capital investissement et les sociétés de libre partenariat ayant opté pour les règles d’investissement applicables aux fonds professionnels de capital investissement peuvent consentir des avances en compte courant, pour la durée de l’investissement réalisé, à des sociétés dans lesquelles ils détiennent une participation et pour un montant représentant au plus 30 % du montant total de leurs engagements de souscription.

Les sociétés de capital-risque peuvent consentir des avances en compte courant, pour la durée de l’investissement réalisé, à des sociétés dans lesquelles elles détiennent une participation et pour un montant représentant au plus 30 % de la situation nette comptable de ces sociétés de capital-risque.

On 19 June 2020, the Autorité des marchés financiers (AMF) informed on ML/TF threats and risks in times of COVID-19 crisis.

The AMF draws the attention of asset management companies, CIFs, CIPs and PSANs to the evolution of the risks of money laundering and terrorist financing in the particular context of the global health crisis. The Financial Action Task Force (FATF) and TRACFIN published two instructive analysis documents. Following the risk-based approach, professionals are called upon to adjust their system by strengthening their vigilance in an appropriate manner.

1) FATF report on BCFT risks linked to COVID-19 and political responses

The secretariat of the FATF has prepared a report on the basis of public information or information transmitted by member states and other organizations which describes:

• on the one hand, fraudulent activities which have already been observed to increase during the crisis, and,
• on the other hand, the factors linked to the crisis which are increasing the BC-FT risks (increase in distance operations, financial instability or massive public aid).

This report also presents what measures could or could be taken by the States and the professionals subject to face these risks, to the best of the operational capacities of each

2) Typological analysis of the main risks identified by TRACFIN

To support professionals in their efforts to identify and manage BCFT risks linked to COVID-19, TRACFIN disseminates its typological risk analysis, based on reports received since the start of the crisis. Alongside offenses related to the trade in sanitary materials, TRACFIN mentions fraud involving calls for donations and fraud by misappropriation of the loan system guaranteed by the State. 

TRACFIN calls for increased vigilance by professionals at all stages of the life of a company (creation, opening of capital, treatment of difficulties or liquidation). For real estate transactions, TRACFIN particularly alerts on substitution clauses and financial terms (property valuation and credit condition).

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Le 19 juin 2020, l’Autorité des marchés financiers (AMF) a communiqué sur les risques de blanchiment de capitaux et financement du terrorisme en période de crise sanitaire.

L’AMF attire l’attention des sociétés de gestion de portefeuille, des CIF, des CIP et des PSAN sur l’évolution des risques de blanchiment de capitaux et de financement du terrorisme dans le contexte particulier de crise sanitaire mondiale. Le Groupe d’action financière (GAFI) et TRACFIN publient deux documents d’analyse instructifs. Suivant l’approche par les risques, les professionnels sont appelés à ajuster leur dispositif en renforçant, de manière adaptée, leur vigilance.

• Le secrétariat du Groupe d’action financière (GAFI) a établi un rapport sur la base d’informations publiques ou transmises par les Etats membres et d’autres organisations qui décrit :d’une part les activités frauduleuses qui ont déjà été observées en augmentation pendant la crise, et,
• d’autre part les facteurs liés à la crise qui viennent accroître les risques BC-FT (augmentation des opérations à distance, instabilité financière ou aides publiques massives).

Ce rapport présente également quelles mesures ont pu ou pourraient être prises par les Etats et les professionnels assujettis pour faire face à ces risques, au mieux des capacités opérationnelles de chacun.

Pour accompagner les professionnels dans leurs efforts d’identification et de gestion des risques BCFT liés au Covid 19, TRACFIN diffuse son analyse typologique des risques, élaborée à partir des signalements reçus depuis le début de la crise. Aux côtés des infractions liées au commerce de matériel sanitaire, TRACFIN mentionne la fraude à l’appel aux dons et la fraude par détournement du dispositif de prêt garanti par l’Etat. TRACFIN appelle à la vigilance renforcée des professionnels à tous les stades de la vie d’une entreprise (création, ouverture du capital, traitement des difficultés ou liquidation). Pour les transactions immobilières, TRACFIN alerte plus particulièrement sur les clauses de substitution et les termes financiers (évaluation du bien et condition du crédit).

On 21 June 2020, Decree No. 2020-757 of 20 June 2020 amending Decree No. 2020-371 of 30 March 2020 on the solidarity fund for enterprises particularly affected by the economic, financial and social consequences of the spread of the COVID-19 epidemic and the measures taken to limit this spread was published on the Official Journal.

This Decree amends Decree No. 2020-371 of 30 March 2020 on the solidarity fund for companies particularly affected by the economic, financial and social consequences of the spread of the COVID-19 epidemic and the measures taken to limit this spread. 

It opens the scheme, in respect of losses in the month of May 2020, to enterprises with no more than 20 employees and less than EUR 2 million in turnover which belong to sectors particularly affected by the crisis (hotels, cafés, restaurants, tourism, events, sport, culture) and to enterprises meeting the same threshold conditions belonging to sectors of activity dependent on the above-mentioned sectors and which suffered a loss of turnover of more than 80 % between 15 March 2020 and 15 May 2020. 

For companies with at least one employee belonging to these sectors, the ceiling for aid granted under the second part of the fund is raised to EUR 10 000 and the condition for refusing a loan is abolished. Enterprises set up between 1 and 10 March 2020 shall be made eligible to the fund in respect of losses incurred during the month of May 2020 and the conditions for cumulation of aid with daily allowances and pensions shall be relaxed. 

The deadlines for submitting applications are extended to 31 July 2020 for Component 1 and 15 August 2020 for Component 2. For artist-authors whose activity is not domiciled in their place of residence, the conditions of employment of an employee and refusal of a loan to access component 2 of the fund are abolished. 

Finally, the decree offers the possibility to local authorities and public establishments for inter-municipal cooperation with their own tax system to finance additional aid intended for companies benefiting from the second component located on their territory.

Version française

Le 21 juin 2020, la France a publié le Décret no 2020-757 du 20 juin 2020 modifiant le décret no 2020-371 du 30 mars 2020 relatif au fonds de solidarité à destination des entreprises particulièrement touchées par les conséquences économiques, financières et sociales de la propagation de l’épidémie de COVID-19 et des mesures prises pour limiter cette propagation.

Ce décret modifie le décret no 2020-371 du 30 mars 2020 relatif au fonds de solidarité à destination des entreprises particulièrement touchées par les conséquences économiques, financières et sociales de la propagation de l’épidémie de COVID-19 et des mesures prises pour limiter cette propagation.

Il ouvre le dispositif, au titre des pertes du mois de mai 2020, aux entreprises ayant au plus 20 salariés et moins de 2 millions d’euros de chiffre d’affaires qui appartiennent à des secteurs particulièrement touchés par la crise (hôtels, cafés, restaurants, tourisme, événementiel, sport, culture) ainsi qu’aux entreprises remplissant les mêmes conditions de seuil appartenant à des secteurs d’activité dépendant des secteurs précédemment mentionnés et qui ont subi une perte de chiffre d’affaires de plus de 80 % entre le 15 mars 2020 et le 15 mai 2020. Pour les entreprises ayant au moins un salarié appartenant à ces secteurs, le plafond de l’aide accordée au titre du deuxième volet du fonds est porté à 10 000 euros et la condition de refus de prêt est supprimée. 

Les entreprises créées entre le 1er et le 10 mars 2020 sont rendues éligibles au fonds au titre des pertes du mois de mai 2020 et les conditions du cumul de l’aide avec des indemnités journalières et des pensions de retraites sont assouplies. 

Les délais pour déposer les demandes sont repoussés au 31 juillet 2020 pour le volet 1 et au 15 août 2020 pour le volet 2. Pour les artistes auteurs dont l’activité n’est pas domiciliée dans leur local d’habitation, les conditions d’emploi d’un salarié et de refus de prêt pour accéder au volet 2 du fonds sont supprimées. 

Le décret offre enfin la possibilité aux collectivités locales et aux établissements publics de coopération intercommunale à fiscalité propre de financer une aide complémentaire destinée aux entreprises bénéficiaires du deuxième volet situées sur leur territoire.

On 23 June 2020, the Banque de France published a Report on the risks assessment of the French financial system .

Drawing lessons from the 2008 financial crisis, public authorities have acted swiftly, deploying a wide array of fiscal, monetary and prudential measures to counter the effects of the economic shock caused by the COVID-19 pandemic and the associated lockdown measures. The shock, which is larger than any of the recessions in the post-Second World War period, is having a simultaneous impact, in France and around the world, on:

• the supply of goods and services, due to supply chain disruptions and a slowdown in business at many companies owing to measures to prevent the spread of the virus, which has led to an unprecedented dash for cash; and
• demand, with a pronounced decline in consumption in the very short term together with the medium-term consequences of the shock to household income.

In emerging economies, the collapse in external demand, especially for commodity exporters, has been coupled with substantial capital outflows. In the euro area, the European Central Bank (ECB) adopted a new public and private securities purchase programme designed to maintain favourable financing conditions throughout the area, which are necessary to meet its inflation target, and ensure the smooth transmission of monetary policy in all euro area countries. 

Liquidity stress on financial markets and rising credit risk have highlighted the tension that exists between certain individually legitimate actions and their collectively sub-optimal consequences: specifically, investment management funds seeking to strengthen their own individual liquidity positions have exacerbated problems at the global level, creating liquidity stress for other stakeholders, including banks and non-financial companies. The need to develop a macroprudential approach for investment funds, which make a substantial contribution to the disintermediated financing provided to the real economy, and the fragility of leveraged finance are two additional priority areas for French authorities.

Further out, the risks associated with failing to take proper account of the major structural shifts currently under way are growing. Massive use of teleworking and remote service provision heralds an acceleration in the digital transformation of the overall economy and especially of the financial sector, which will entail major investments to make business models more profitable. 

Financial institutions, whether banks or insurers, must also do more to encourage all participants to switch to a low-carbon economy. The European stimulus plan currently under discussion will definitely have a crucial role to play in supporting the energy transition.

In the face of all of these risks, the French authorities responsible for financial stability are ready to act both to limit adverse developments and to mitigate risks in advance.

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Le 23 juin 2020, la Banque de France a publié son évaluation des risques du système financier français. 

Instruites de l’expérience de la crise de 2008, les autorités publiques ont rapidement déployé un vaste arsenal de mesures budgétaires, monétaires et prudentielles pour endiguer les effets du choc économique induit par la pandémie de la Covid-19 et les mesures de confinement associées. Ce choc, dont l’ampleur excède toutes les récessions intervenues depuis la Seconde Guerre mondiale, affecte, en France comme ailleurs, à la fois :

• l’offre de biens et services, en lien avec le ralentissement d’activité imposé à nombre d’entreprises par les mesures de prophylaxie qui a été à l’origine d’un choc de trésorerie inédit et de la perturbation des chaînes d’approvisionnement ; et
• la demande, avec un repli marqué de la consommation à très court terme et les conséquences à moyen terme du choc sur le revenu des ménages.

Dans les économies émergentes, la chute de la demande externe, en particulier celle des matières premières qu’elles exportent, se double d’importantes sorties de capitaux.

Une forte correction boursière est intervenue en février-mars du fait de l’ampleur du choc, reflétant la forte incertitude sur les perspectives de croissance et de profits. L’arrêt brutal de l’activité s’est traduit par une demande de liquidité élevée qui a conduit les entreprises à renégocier à la hausse et à utiliser leurs lignes de crédit, et certains intermédiaires financiers à vendre des actifs financiers les plus liquides. Les conditions d’émission de dettes sur les marchés primaires ont été tendues pendant quelques semaines, mais depuis cet épisode, l’action des banques centrales pour injecter des liquidités a permis un fonctionnement des marchés financiers globalement satisfaisant malgré une forte volatilité et une hausse des spreads de crédit.

Les gouvernements ont mis en œuvre des mesures d’urgence qui ont visé prioritairement à protéger la trésorerie des entreprises et les revenus des ménages mais aussi à faciliter l’accès au crédit bancaire, via l’octroi de garanties publiques, afin de préserver le potentiel de production et d’assurer les conditions d’un redémarrage rapide de l’économie à l’issue de la crise sanitaire.

En zone euro, la Banque centrale européenne (BCE) a adopté un nouveau programme d’achats de titres publics et privés visant à maintenir des conditions de financement favorables dans l’ensemble de la zone euro, nécessaires à l’atteinte de son objectif d’inflation et afin d’assurer la bonne transmission de la politique monétaire dans tous les pays de la zone euro. Ce nouveau programme d’achats de titres a permis de réduire les tensions sur les marchés de capitaux et notamment sur celui de la dette des entreprises. En complément, les programmes d’injection de liquidités et l’assouplissement des conditions de refinancement des banques commerciales auprès de l’Eurosystème ont permis le maintien de leur capacité de prêt à l’économie réelle, déterminant dans le contexte de la crise actuelle.

En matière prudentielle, les autorités ont décidé de permettre aux banques d’utiliser les coussins de capital et de liquidité disponibles pour absorber le choc en leur donnant la capacité de prêter davantage à l’économie : les coussins contracycliques ont été relâchés par les autorités nationales tandis que la BCE, agissant comme superviseur unique du secteur bancaire au sein de la zone euro, a autorisé les banques à opérer temporairement en deçà du niveau global de fonds propres réglementaires requis (recommandations au titre du pilier 2, coussin de conservation des fonds propres) et à utiliser les réserves d’actifs liquides pour répondre de façon réactive aux besoins de financement de l’économie réelle. Par ailleurs, le régulateur bancaire européen a adopté des mesures transitoires relatives au traitement comptable et prudentiel des créances restructurées dans le cadre de moratoires, qui ont été mis en place par les banques pour alléger transitoirement les charges financières de leurs débiteurs.

Ce début de crise témoigne de la solidité de l‘intermédiation financière en France, résultat des réformes engagées dans le cadre international depuis 2009 et dans le contexte européen à la suite de la crise de la zone euro. Les banques françaises abordent la récession économique dans une situation financière (niveau des fonds propres, situation de liquidité) nettement plus robuste qu’en 2007-2008, au moment de la crise financière.

Cette solidité leur a permis jusqu’à présent de faire face efficacement au besoin de financement supplémentaire de l’économie et leur confère une forte capacité d’absorption de la montée des risques, en particulier de crédit.

La crise exacerbe cependant des risques déjà identifiés en lien avec la hausse tendancielle de l’endettement privé (ménages et entreprises) en France ou certaines fragilités dans les financements de marché et la gestion d’actifs.

Les entreprises, confrontées à une forte tension sur leur trésorerie, sont pour beaucoup d’entre elles contraintes de solliciter un endettement supplémentaire. Les mesures prises par le gouvernement français et d’autres gouvernements européens – notamment les prêts garantis par l’État - ont permis de répondre rapidement à ces besoins de financement. L’ampleur de ce choc de liquidité reste incertaine et sa résorption conditionnée par le rythme de la reprise de l’activité économique.  L’augmentation de l’endettement des entreprises est susceptible de dégrader la solvabilité de nombre d’entre elles, ce risque étant accentué dans le cas d’une reprise atone et d’une dégradation de leurs notes de crédit.  Une hausse marquée des défaillances d’entreprises pourrait à son tour induire une augmentation des créances douteuses au bilan des banques, freinant la dynamique du crédit, nécessaire à la reprise économique.

À ce stade la solvabilité des ménages français demeure largement intacte compte tenu des mesures de soutien public. En revanche, une augmentation importante du chômage est susceptible d’accroître le poids du remboursement des crédits, ce qui se traduirait par un risque de crédit accru et/ou un moindre dynamisme de la consommation.

Parallèlement, l’ampleur des stabilisateurs automatiques budgétaires et la mise en œuvre massive de mesures de soutien public conduisent à une forte hausse des dettes publiques en France comme dans l’ensemble des pays de l’Union européenne.

Au-delà des mesures d’urgence indispensables, la préservation de la solvabilité des entreprises viables est prioritaire pour favoriser la reprise. Plus globalement, la maîtrise de l’endettement des entreprises, des ménages, comme des finances publiques, constituera un objectif déterminant, aussi bien au plan macroéconomique que pour la stabilité financière.

Enfin, le stress de liquidité sur les marchés financiers et la remontée du risque de crédit ont mis en lumière des tensions entre les comportements individuellement justifiés et leurs conséquences collectivement sous-optimales : par exemple, certains investisseurs ou fonds de gestion – en  renforçant  leur position de liquidité par prudence – ont pu être amenés à augmenter les problèmes au niveau global, créant des tensions de liquidité pour d'autres parties prenantes, notamment les entreprises non financières. L’absence d’une approche macroprudentielle pour les fonds d’investissement, qui contribuent pour une large part au financement désintermédié de l’économie réelle, comme la fragilité de la finance à effet de levier constituent également deux points d’attention pour les autorités françaises.

À plus long terme, les risques associés à une prise en compte insuffisante des grandes transitions structurelles en cours augmentent. Le recours massif au télétravail ou aux prestations de service à distance laisse présager une accélération de la transformation digitale de l’ensemble de l’économie et en particulier du secteur financier, qui nécessitera des investissements importants afin d’améliorer la rentabilité de ses modèles d’affaire. Les établissements financiers, qu’il s’agisse des banques ou des assurances, devront également renforcer leur mobilisation afin d’inciter l’ensemble des acteurs à basculer vers une économie à bas carbone. Le plan de relance européen actuellement en discussion sera certainement appelé à jouer un rôle crucial de soutien à la transition énergétique.

Face à chacun de ces risques, les autorités françaises en charge de la stabilité financière se tiennent prêtes, qu’il s’agisse de réagir face à des développements défavorables ou de chercher à atténuer les risques ex ante.

On 9 June 2020, the Association Française de Gestion (AFG) published a paper on Non-financial indicators that are essential for evaluating a company.

In the context of the growth and multiplicity of ESG data published by companies, management companies wished to beneficiate from a list of extra-financial indicators with a dual purpose: to define the extra-financial information needed to assess a company in order to combat the "too much information kills information" syndrome, and to dialogue with companies to build a framework for publications in line with regulatory requirements.

AFG conducted a survey among its members and identified 10 cross-sectoral indicators per pillar: Environment, Social/Human Capital, Societal and Governance, which are essential to assess companies of all sizes.

In addition, other themes were identified on which investors need transparency and which allow them to engage in dialogue with the company ("Transparency Indicators" list).

Finally, the AFG has identified topics to be dealt with jointly by companies and investors.

Version française

Le 9 juin 2020, l’association Française de Gestion (AFG) a publié la liste des indicateurs extra-financiers indispensables pour évaluer une entreprise.

Face à la croissance et à la multiplicité des données ESG publiées par les entreprises, les sociétés de gestion ont souhaité disposer d’une liste d’indicateurs extra-financiers répondant à un double objectif : définir les informations extra-financières nécessaires pour évaluer une entreprise afin de lutter contre le syndrome “Trop d’informations tue l’information”, dialoguer avec les entreprises pour construire un cadre des publications en phase avec les exigences de la réglementation.

L’AFG a effectué une enquête auprès de ses membres et identifié 10 indicateurs trans-sectoriels par pilier : Environnement, Social / Capital humain, Sociétal et Gouvernance, indispensables afin d’évaluer les entreprises de toute taille.

Au-delà, ont été identifiés d’autres thèmes sur lesquels les investisseurs ont besoin de transparence et qui permettent d’engager le dialogue avec l’entreprise (liste “Indicateurs de transparence”).

Enfin, l’AFG a identifié des sujets à traiter conjointement entre entreprises et investisseurs.

On 19 June 2020, the Association Française de Gestion (AFG) updated the list of Essential extra-financial indicators to assess a company published on 9 June 2020.

Facing with the growth and the multiplicity of ESG data published by companies, management companies wanted to have a list of extra-financial indicators meeting a double objective: defining the extra-financial information necessary to evaluate a company in order to fight against the “Too much information kills information ” syndrome , dialogue with companies to build a publication framework in line with regulatory requirements. 

AFG carried out a survey of its members and identified 10 cross-sectoral indicators by pillar.

In addition, other themes have been identified on which investors need transparency and which make it possible to initiate dialogue with the company ( “Transparency indicators” list ).

Finally, AFG has identified subjects to be dealt with jointly between companies and investors.

Version française

Le 19 juin 2020, l’ Association Française de Gestion (AFG) a mise à jour sa liste des indicateurs extra-financiers indispensables pour évaluer une entreprise. 

Face à la croissance et à la multiplicité des données ESG publiées par les entreprises, les sociétés de gestion ont souhaité disposer d’une liste d’indicateurs extra-financiers répondant à un double objectif : définir les informations extra-financières nécessaires pour évaluer une entreprise afin de lutter contre le syndrome “Trop d’informations tue l’information”, dialoguer avec les entreprises pour construire un cadre des publications en phase avec les exigences de la réglementation.

L’AFG a effectué une enquête auprès de ses membres et identifié 10 indicateurs trans-sectoriels par pilier : Environnement, Social / Capital humain, Sociétal et Gouvernance, indispensables afin d’évaluer les entreprises de toute taille.

Au-delà, ont été identifiés d’autres thèmes sur lesquels les investisseurs ont besoin de transparence et qui permettent d’engager le dialogue avec l’entreprise (liste “Indicateurs de transparence”).

Enfin, l’AFG a identifié des sujets à traiter conjointement entre entreprises et investisseurs.

On 16 June 2020, Decree of 12 June 2020 relating to the creation of assimilable Treasury bonds indexed to the harmonised index of consumer prices, excluding tobacco, of the euro zone 0.10% 1 March 2026 was published in the Official Journal. 

A new line of Treasury bonds indexed to the Harmonised Index of Consumer Prices (excluding tobacco) for the euro zone, maturing on 1 March 2026, is created. These bonds have a nominal value of €1. They are redeemed on 1 March 2026 by application to the nominal amount of the indexation coefficient (IC) as defined in Article 4, calculated on 1 March 2026 and, in any event, for an amount at least equal to 1€.

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La France a publié l’arrêté du 12 juin 2020 relatif à la création d’obligations assimilables du Trésor indexées sur l’indice harmonisé des prix à la consommation, hors tabac, de la zone euro 0,10 % 1er mars 2026.

Il est créé une nouvelle ligne d’obligations assimilables du Trésor indexées sur l’indice harmonisé des prix à la consommation, hors tabac, de la zone euro, d’échéance 1er mars 2026. Ces obligations ont une valeur nominale de 1 €. Elles sont remboursées le 1er mars 2026 par application au nominal du coefficient d’indexation (CI) tel que défini à l’article 4, calculé le 1er mars 2026 et, en tout état de cause, pour un montant au moins égal à 1 €.

On 18 June 2020, the Autorité des marchés financiers (AMF) published a new guide for the preparation of prospectuses and the information to be provided in the event of a public offer or admission of financial securities.

The doctrine relating to the information to be provided in the event of a public offer or admission to a regulated market has been updated and consolidated in a new guide (position-recommendation DOC-2020-06). It contains the provisions of the Prospectus regulations, its delegated regulations, the law, decrees, the AMF general regulations, but also the positions and recommendations of the AMF and ESMA. Objective: to cover the new regulations on the prospectus as a whole.

This guide is made up of three parts:

1. the first part presents the information to be provided in the prospectuses approved by the AMF. A section is specifically dedicated to the presentation of risk factors;
2. the second part presents the information to be provided in the event of a prospectus exemption (presentation of national provisions); and
3. the third part brings together and updates the positions and recommendations of the AMF as well as those of ESMA on issues and admissions of equity securities and giving access to equity.

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Le 18 juin 2020, l’Autorité des marchés financiers (AMF) a publié un nouveau guide d'élaboration des prospectus et de l'information à fournir en cas d'offre au public ou d'admission de titres financiers. 

À l’occasion de l’entrée en application du règlement Prospectus, l’AMF a actualisé sa doctrine relative aux informations à fournir en cas d’offre au public ou d’admission sur un marché réglementé et l’a consolidée au sein d’un nouveau guide. Ce guide, qui contient des positions et des recommandations, porte la référence DOC?2020-06 et son objectif est de présenter la nouvelle réglementation prospectus dans son ensemble.

Ainsi, en complément de la présentation des dispositions relevant du règlement Prospectus, de ses règlements délégués, de la loi (code monétaire et financier), de décrets et du règlement général de l’AMF, le guide regroupe aussi les positions et recommandations de l’AMF et de l’ESMA. Les positions et recommandations de l’AMF sont présentées au sein d’encadrés. La liste des doctrines devenues obsolètes est présentée en annexe du guide.

Ce guide est composé de trois parties :

1. la première partie présente l'information à fournir, dans les prospectus approuvés par l'AMF. Une section est spécifiquement dédiée à la présentation des facteurs de risques ;
2. la deuxième partie présente l'information à fournir en cas de dispense de prospectus (présentation des dispositions nationales) ; et
3. la troisième partie regroupe et met à jour les positions et recommandations de l'AMF ainsi que celles de l'ESMA sur les émissions et admissions de titres de capital et donnant accès au capital.

On 26 June 2020, the Autorité des marchés financiers (AMF) updated its doctrine on the device for verifying the minimum level of knowledge of market participants.

Following the work carried out by the Haut conseil certificateur de Place aimed at further improving the quality of the system for verifying the level of minimum knowledge of market participants, the AMF modified its instruction DOC-2010- 09 to allow the implementation of the common base project.

The updated instruction entered into force on January 1, 2020. It specifies the operating rules of the common examination bases, the evolutions relating to the organization of the examination, and the modifications of the program in terms of regulatory developments and innovations in the financial world. In addition, this system, based on the recognition of a common foundation of professional knowledge, has applied since January 1, 2020 to financial investment advisers entering the profession and those who have not validated the verification of minimum knowledge by CIF associations approved during the transitional period.

In order to integrate recent developments, the AMF Financiers modified its position 2009-29 questions and answers on the system for verifying the minimum level of knowledge of market players. These changes take effect on July 1, 2020.

Version française

Le 26 juin 2020, l’Autorité des marchés financiers (AMF) a mise à jour la doctrine sur le dispositif de vérification du niveau de connaissances minimales des acteurs de marché. 

À la suite des travaux réalisés sous l’égide du Haut conseil certificateur de Place visant à améliorer davantage la qualité du dispositif de vérification du niveau de connaissances minimales des acteurs de marché, l’Autorité des marchés financiers a modifié son instruction DOC-2010-09 afin de permettre la mise en place du projet de base commune.

L’instruction mise à jour est entrée en vigueur le 1er janvier 2020. Elle précise les règles de fonctionnement des bases communes d’examen, les évolutions relatives à l’organisation de l’examen, et les modifications du programme à l’aune des évolutions réglementaires et des innovations du monde financier. En outre, ce dispositif, fondé sur la reconnaissance d'un socle commun de connaissances professionnelles, s'applique depuis le 1er janvier 2020 aux conseillers en investissements financiers entrant dans la profession et ceux n’ayant pas validé la vérification des connaissances minimales par les associations de CIF agréées pendant la période transitoire.

Afin d’intégrer les récentes évolutions, l’Autorité des marchés financiers a modifié la position AMF 2009-29 questions-réponses sur le dispositif de vérification du niveau de connaissances minimales des acteurs de marché. Ces modifications entrent en vigueur le 1er juillet 2020.

On 29 June 2020, the Autorité de contrôle prudentiel et de résolution (ACPR) published the Implementation of the guidelines of the ESMA on the assessment of knowledge and skills (ESMA / 2015/1886).

The ACPR stated that it complies with ESMA guidance on the assessment of the knowledge and skills of personnel providing investment advice or information to clients on financial instruments, structured deposits, investment or ancillary services (ESMA/2015/1886).

These guidelines are applicable to credit institutions that market structured deposits within the meaning of Article L. 312-22 of the Monetary and Financial Code. These institutions shall make every effort to comply with these 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 establishing the European Securities and Markets Authority.

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Le 29 juin 2020, l'Autorité de contrôle prudentiel et de résolution (ACPR) a publié la mise en œuvre des orientations de l’Autorité européenne des marchés financiers (AEMF) sur l’évaluation des connaissances et des compétences (ESMA/2015/1886).

Le Collège de l’Autorité de contrôle prudentiel et de résolution (ACPR) s’est déclaré conforme aux orientations de l’Autorité européenne des marchés financiers sur l’évaluation des connaissances et des compétences du personnel fournissant des conseils en investissement ou des informations aux clients sur des instruments financiers, des dépôts structurés, des services d’investissement ou des services auxiliaires (ESMA/2015/1886).

Ces orientations sont applicables aux établissements de crédit qui commercialisent des dépôts structurés au sens de l’article L. 312-22 du Code monétaire et financier. Ces établissements mettent tout en œuvre pour respecter ces orientations, conformément aux dispositions de l’article 16 du règlement (UE) n° 1095/2010 du Parlement européen et du Conseil du 24 novembre 2010 instituant l’Autorité européenne des marchés financiers.  

On 12 June 2020, the Association Française de Gestion (AFG) published the list of SRI funds that have signed the AFG-FIR Transparency Code (May 2020 version), with hyperlinks to the transparency codes.

Version française

Le 12 juin 2020, l'Association Française de Gestion (AFG) a publié liste des fonds ISR signataires du Code de Transparence AFG-FIR.

1. On 29 June 2020, the Federal Ministry of Finance and the highest financial authorities of the federal states have decided on various tax breaks in order to relieve the taxpayers directly and not negligibly affected by the COVID-19 crisis. The aim is to improve the liquidity of companies that have experienced economic difficulties as a result of the COVID-19 crisis.

This gives those affected the opportunity to defer tax payments as a rule without interest and taxpayers a pause in payment to the tax office. In addition, there is the possibility of prepayments for income, corporate and trade tax belittling. 

The tax offices can also reduce and reimburse the special advance payment for the long-term extension of sales tax for entrepreneurs affected by the crisis. In addition to these measures, those affected can refrain from enforcing late tax debts by the end of the year. 

The decision in individual cases is still the responsibility of the tax offices, the municipalities and other contacts. 

Tax support is available to help companies in the corona pandemic improve their liquidity. The Federal Ministry of Finance has coordinated a number of specific tax breaks with the highest state tax authorities.

2. On 29 June 2020, Germany published the Law on the implementation of fiscal aid measures to cope with the COVID-19 crisis in the Official Journal.

The Bundestag and Bundesrat have adopted the draft law on the implementation of tax relief measures to deal with the Corona crisis (the Corona Tax Assistance Act) as amended by the Finance Committee. 

According to the Federal Government, the Corona Tax Assistance Act is primarily intended to contain the economic consequences of the Corona pandemic. The law essentially provides for the following measures:

1) Extension of the transition period for the application of § 2b UStG: The previous transition regulation to § 2b UStG in § 27 Paragraph 22 UStG will be extended until December 31, 2022.

2) Grants from the employer for short-time work benefits: The Corona Tax Assistance Act improves the employer's grants for short-time work tax. In accordance with the treatment under social security law, grants from employers for short-time work benefits and seasonal short-time work benefits are exempt from tax up to 80 percent of the difference between the target salary and the actual salary.

3) Tax-free bonus of up to € 1,500: On April 9, 2020, the Federal Ministry of Finance (BMF) wrote in a BMF letter (BStBl. I p. 503) that employers can pay their employees up to an amount of € 1,500 tax-free or as benefits in kind. Corona special benefits that employees receive between March 1, 2020 and December 31, 2020 are eligible. It is also a prerequisite that the aid and support are paid in addition to the regular wages.

4) Reduced VAT rate for restaurant and catering services: The VAT rate for restaurant and catering services rendered after June 30, 2020 and before July 1, 2021 will be reduced from 19 percent to 7 percent, with the exception of beverage sales.

3. On 29 June 2020, the Association of German Banks (Bankenverband) proposed a catalog of measures to strengthen foreign trade financing.

German foreign trade is facing an unprecedented crisis as a result of the corona pandemic. According to the OECD, the forecasts for the slump in global GDP for the current year range between seven and ten percent. The banking association is proposing a number of measures to strengthen foreign trade finance so that the German export industry can move from a good starting position to tougher global competition despite the difficult situation. 

At the start of the recovery phase, from the perspective of the banking association, there will be increased international competition for projects motivated by industrial policy.

The high level of regulation also has a direct impact on the financing of the economy and foreign trade. Regulatory and documentation requirements should not unnecessarily burden the economics of export finance. Ultimately, in addition to financial market stability, the performance of export finance must also be taken into account in regulatory requirements.

With this paper, the banking association is proposing further measures to increase the effectiveness of Euler Hermes' successful cover instruments for export credits in the acute economic situation. To this end, the banking association asks the federal government and Euler Hermes

• to work with the banks to develop requirements for the risk-bearing capacity assessment that take the current environment into account and avoid risk-related oversubscription;
• expand the coverage instruments to include crisis-induced additional costs of export financing, for example as a result of restructuring or risk hedging;
• in times of scarce liquidity, to waive additional charges for restructuring or temporarily to increase charges for worsening risk with regard to new business.

In addition, the banking association has developed proposals on how the general conditions for German foreign trade can be improved overall. On the one hand, this includes improvements to the KfW refinancing program. On the other hand, competition policy considerations also play a role in getting the German export industry into a good starting position when international economic activity picks up. Germany, in particular, should defend the principles of a global economic system based on rules and an international level playing field. But this also includes bringing the relevant criteria and regulatory requirements for export financing into balance with the strategic interests of the German foreign trade.

On 30 June 2020, the Deutsche Bundesbank announced the base rate remains unchanged at -0.88%. 

The basic interest rate of the Civil Code serves primarily as the basis for the calculation of default interest, § 288 paragraph 1 sentence 2 BGB. It changes on January 1 and July 1 of each year by the percentage points by which its benchmark has risen or fallen since the last change in the base rate.

From the beginning of July 1, 2020, this resulted in a base interest rate of -0.88% of the Civil Code (previously -0.88%).

The new base rate will be announced in the July 2, 2020 issue of the Federal Gazette.

On 19 Jun 2020, the Securities and Futures Commission (SFC) published the 25th edition of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

The latest update is on the definition of “financial counterparty” which means: 

(a) an authorized institution (AI); 

(b) a licensed corporation; 

(c) a provident fund scheme; 

(d) an occupational retirement scheme; 

(e) an insurer; 

(f) a licensed money service operator; 

(g) a money lender; 

(h) a special purpose vehicle or a secularization vehicle, except where and to the extent that the special purpose vehicle enters into non-centrally cleared OTC derivative transactions for the sole purpose of hedging; 

(i) a collective investment scheme; 

(j) an entity that carries on a business outside Hong Kong and is engaged predominantly in any one or more of the following activities:  Banking; Securities or derivatives business; Asset management; Insurance business; Operation of a remittance or money changing service; Lending; Activities that are ancillary to the conduct of these activities. 

On 26 June 2020, the Securities and Futures Commission (SFC) published draft of the revised form of the return required to be submitted by licensed corporations (LCs) under section 56 of the Securities and Futures (Financial Resources) Rules.

The financial soundness of LCs is a major focus of the SFC, which supervises LCs’ prudential risks primarily through a review of their financial returns. In light of the rapidly changing operating environment and greater business complexity, the financial return form has been revised to collect additional data from LCs to enable the SFC to identify risks in a timely manner, take prompt supervisory action and protect investors.

To allow time for LCs to prepare, the revised form shall only be used for accounting periods starting on or after 1 July 2021. While the revised form may be subject to non-substantive amendments, LCs are strongly advised to familiarize themselves with the revised form, start gathering the newly required data and enhance their systems where necessary.

On 10 June 2020, the Securities and Futures Commission (SFC) released a consultation conclusions paper on proposals to refine the scope of regulated activities so that the corporate treasury activities of non-financial groups and certain portfolio compression services would not be captured under the over-the-counter (OTC) derivatives licensing regime. 

The paper also sets out the competence and continuous professional training requirements which will apply to those licensed or applying to be licensed under the regime.

This consultation conclusions paper covers the proposed refinements to the scope of the regulated activities (RAs) under the OTC derivatives licensing regime (please refer to Part II of the Consultation Paper), as well as the proposed competence and continuous professional training (CPT) requirements under the OTC derivatives licensing regime.

On 16 June 2020, the Central Bank of Ireland issued a questionnaire to all issuers of equities on the regulated market of Euronext Dublin regarding compliance with their obligations under the Market Abuse Regulation (Regulation 596/2014/EU) (“MAR”) and related and supporting legislation.  

The Central Bank will use the responses to that questionnaire to inform its future supervisory work. This will include selecting a number of participants on the regulated market of Euronext Dublin and those who act on their behalf for further assessment of the extent to which they comply with the MAR requirements to recognize, manage and, in the case of issuers, publicly disclose inside information as soon as possible and in compliance with their statutory obligations.

COVID-19 has thrown the importance of these areas into very sharp focus given the uncertainty and economic disruption it has created. The Central Bank also reminds authorized firms, issuers and those who act on their behalf, of their obligations to consumers, investors and to the market pursuant to MAR, and in particular stresses the following:

• The importance of issuers of financial instruments complying with their obligation under Article 17 MAR to disclose inside information to the market as soon as possible, including in circumstances where there is a material change to financial expectations.
• The importance of issuers and those who advise them continuing to identify inside information of all types, irrespective of whether it is Coved 19-related and creating and maintaining consequential inside information lists pursuant to Article 18 MAR.
• All entities and market participants should take care to ensure continued compliance with their regulatory obligations.

On 16 June 2020, the Central Bank of Ireland (CBI) published a statement setting out its expectations as regards due diligence arrangements and periodic on-site visits to outsourcing service providers and delegates in the context of COVID-19.

Fund Service Providers are reminded of the importance of maintaining strong ongoing oversight of any outsourcing / delegation arrangements. As part of their ongoing oversight, Fund Service Providers should:

• take into account the location of the relevant service provider(s) and ensure controls are in place to identify and address the material challenges facing such location(s) during the current COVID-19 crisis. 
• ensure that they are satisfied with the due diligence arrangements in place pertaining to their delegates. 
• conduct a risk assessment to identify aspects of the outsourcing relationship where appropriate due diligence may be difficult or unfeasible to achieve remotely. 
• ensure proactive engagement with Central Bank supervisors on these matters. 

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

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

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

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

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

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

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

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

On 9 June 2020, Banca d'Italia issued a press release on guarantees released by banks on financial operations within the Euro-system during the COVID-19 pandemic, in the context of ACC.

The measures list below complement those announced on 20 May 2020, have been approved by BCE and are aimed at favoring access to credit for families, businesses and SMEs.

In detail, banks will be able to provide as collateral for financing transactions:

1.  portfolios of homogeneous loans made of consumer credit granted to households;
2.   mortgage loans granted to households within portfolios, regardless of the probability of default attributed to the debtor (the maximum limit, currently equal to 10 percent, is eliminated, while the maximum Loan-to-Value limit, currently equal to 80 percent, it is raised to 100 percent) Only performing loans can be granted as collateral.

Moreover, Banca d'Italia crated new metrics to evaluate credit quality of loans.

On 12 June 2020, CONSOB issued resolution no. 21369 on the suspension of some provisions of the discipline on related party transactions.

In particular, until 31 June 2020, in order to withdraw from capital strengthening operations in cases of urgency, it is not needed to have this faculty/option formalised in the company's statute.

On 24 June 2020,  the Italian government converts into law the Law Decree no. 33 of 26 May 2020, containing provisions to deal with the COVID-19 pandemic.
Movement within Italy and abroad

• As of 18 May 2020, it is possible in Italy to circulate within regions. However, until 2 June 2020, it is (was) forbidden to move among regions (i.e. outside one’s own region) and to leave the country

Quarantine measures

• People who are subjected to quarantine measures cannot leave their house
• Quarantine should be applied to subjects who have been in contact with people who resulted positive to the virus* in addition to people who are positive

Aggregations

• It is forbidden to create aggregations of people
• The cities’ majors can decide to close public spaces to avoid aggregations of people
• When it is needed to hold meetings, the distance of 1.5 meters should be respected
• Any activity (religious functions, production and social activities, academic activities) should be executed respecting the dispositions of previous regulations on the topic (i.e. Decree Law no. 19 of 2020), as well as regional dispositions on the matter and any new regulation that might arise as a consequence of worsened regional situation

Sanctions

• Not respecting these dispositions can be punished with administrative and monetary sanctions – moreover, if businesses do not act in compliance with these guidelines, they can be sanctioned with closure.

On 30 June 2020, Banca d'Italia communicated that EBA/GL/2020/07, related to reporting obligations on COVID-19 related measures, had been implemented.
More specifically, EBA guidelines require to report on:

1. loans subject to moratoria that are in the scope of the EBA Guidelines on legislative and non-legislative moratoria on loan payments granted during COVID-19 crisis (EBA / GL / 2020/02); 
2. loans subject to forbearance measures applied following the COVID-19 crisis; 
3. new loans guaranteed by the State or other public bodies.

Reporting should be realised on a quarterly basis, as of 30 June 2020 (with the deadline for sending the data established on 11 August 2020).

On 4 June 2020, Banca d'Italia issued an updated on measures adopted to mitigate the impact of COVID-19 on the banking and financial system. Measures included:

• less significant banks could operate with capital below the threshold established by SREP, Capital Conservation buffer (CCB) and Liquidity coverage ratio (LCR)
• Banca d'Italia is currently evaluating the possibility to have flexibility regarding MREL (Minimum Requirement for own funds and Eligible Liabilities) requirements for significant banks and cross border groups, allowing a period of time to let intermediaries reach the threshold.

On 7 June 2020, the Decree Law of 8 April 2020, no. 23 is converted into law. The Decree contained COVID-19 related measures, and in particular concerning guarantees provided by the government for loans granted to companies - the final aim was/is to allow the injection of liquidity on the market. 3 types of guarantees are foreseen: the first is a State guarantee which covers 90% of the loan for companies with less than 5 thousand employees in Italy and a turnover value of up to 1.5 billion. The second is an 80% guarantee for companies with a turnover between 1.5 and 5 billion or with more than 5 thousand employees in Italy. The third provides 70% coverage for companies with a turnover of over 5 billion. Further guarantees are available for  companies with up to 499 employees: the guarantee of the Central Fund for SMEs is granted free of charge, in the amount of 90%, with a maximum guaranteed amount raised to € 5 million and granted on 6-year loans. Further guarantee funds are foreseen by the decree. Lastly, the law decree also suspended the deadline of expiry of notes, bills of exchange and other debt securities (bank and postal checks) issued before the date of entry into force of this decree until 30 April 2020.

On 26 June 2020, Banca d'Italia fixed the countercyclical capital buffer, CCyB to 0%.
This decision was based on the following elements:

• in the first quarter of 2020, the ratio between total credit and GDP (credit-to-GDP gap) showed a largely negative deviation from the long term trend - this parameter is key according to EU regulations to determine the CCyB;
• Other indicators confirm the weakness of the financial cycle in Italy. The growth rate of credit to households recorded a sharp drop; the growth rate of credit to companies is positive due to the higher liquidity needs of companies following the stop of production activities. The incidence of non-performing loans granted to businesses, although decreasing, still remains high. The macro-financial conditions also show weaknesses: there is a reduction in the unemployment rate, attributable to the sharp drop in people looking for jobs during the health emergency. Lastly, housing prices remain below their long-term level.

On 4 June 2020, the Italian Ministry of Economy and Finance launched a consultation on  Art. 14 of the DM 30/2015 containing the Regulation implementing article 39 of Legislative Decree of 24 February 1998, n. 58 (TUF) concerning the determination of criteria with which the Italian collective investment schemes for savings must comply. The consultation concerns the proposition to extend the participation to Alternative Investment funds to the entities listed below in order to inject further liquidity on the market:

• non-professional investors with a minimum investment >=  500M EUR, not divisible, in the case of direct investment 
• non-professional investors with a minimum investment >= 100m EUR, not divisible and a concentration limit of 10% in their financial portfolio (financial portfolio means the total value of the portfolio in financial instruments) 
• authorized parties that subscribe or purchase units or shares of the AIF in the context of the provision of portfolio management service, on behalf of non-professional investors; 
• members of the Board of Directors and employees of the manager, without entry restrictions.

Opinions can be send until the 3rd of July 2020.

On 19 June 2020, the Commission de Surveillance du secteur financier (CSSF) published a communication on measures to implement in the light of the return to working on-site.

Following the additional measures to ease containment announced by the Luxembourg government, while taking into account the fact that the Coronavirus is still present in the Grand Duchy, and with the aim of avoiding a second wave of infections and ensuring operational continuity of the supervised entities, the CSSF requests that they implement, or continue the following measures for the return to work and work in the office of employees and external service providers:

• Identification within the staff of vulnerable people, or part of a household with vulnerable person (s), and definition of the protection measures for these employees.
• Definition of organizational rules for internal and external meetings, and for welcoming visitors.
• Establishment of procedures relating to catering spaces, coffee spaces and meeting spaces.
• Rules put in place to prevent people who are ill or think they are COVID-19 from going to the office.
• Specific cleaning or disinfection of office spaces and equipment.
• Display of barrier gestures, as published by the Luxembourg government.

On 24 June 2020, the Conseil du gouvernement du Luxembourg published Circular No. 3871 on the end of the COVID-19 state crisis.

The state of crisis declared by the amended Grand-Ducal Regulation of 18 March 2020 introducing a series of measures in the fight against the "COVID-19" disease, extended by the law of 24 March 2020 extending the state of crisis, expires on 24 June 2020 at midnight. 

Consequently, the emergency measures that have become necessary to respond to the pandemic and to stem the spread of the SARSCoV-2 virus, taken in accordance with Article 32(4) of the Constitution, will cease to have effect also on the same day at midnight.

In four successive stages from 20 April 2020, the Government has begun a gradual resumption of suspended activities and has eased restrictions on the movement and assembly of persons while maintaining protective health measures.

The purpose of this circular is to inform the municipalities about the emergency measures that cease with the end of the state of crisis and the measures that will come into effect from 25 June 2020.

On 25 June 2020, the Law of 20 June 2020 extending the measures concerning the holding of meetings in companies and other legal persons was published in the Official Journal.

A company may, even if the articles of association do not so provide and irrespective of the number of participants in its general meeting, hold any general meeting without a physical meeting, and may require its shareholders or members and other participants in the meeting to attend the meeting and exercise their rights in one or more of the following forms of participation: 

(1) by remote vote in writing or in electronic form allowing their identification and provided that the full text of the resolutions or decisions to be taken has been published or communicated to them, or 

(2) by videoconference or other means of telecommunication allowing their identification

(3) through an agent designated by the company.

Shareholders or partners participating by such means are deemed present for the calculation of a quorum and majority at such meeting.

The other bodies of any company may hold their meetings without a physical meeting: 

(1) by written circular resolutions; or 

(2) by videoconference or other means of telecommunication enabling the identification of the members of the body participating in the meeting.

Any company that has convened its general meeting in accordance with the terms and conditions applicable before the entry into force of the Grand-Ducal Regulation of 20 March 2020 and that takes the decision to reconvene the general meeting in accordance with the terms and conditions defined by this law, must publish its decision and, where applicable, notify it to its shareholders or associates or other participants in the form in which it had convened that meeting or by publication on its website no later than the third working day before the meeting.

The Law shall enter into force on 25 June 2020 (the day of its publication in the Official Journal) for the exception of Article 4 (concerning the public institution named "Fonds du Logement" (Housing Fund) which applies retroactively from 30 May 2020.

The law applies to the holding of general meetings and meetings of the other bodies of the companies and legal persons referred to in Articles 1 and 7 during the period provided for in Article 3 of the law of 22 May 2020 extending the deadlines for the filing and publication of annual accounts, consolidated accounts and related reports during a state of crisis.

On 30 June 2020, the Association des Banques et Banquiers, Luxembourg (ABBL) informed of several points which should help to ensure a smooth return, whilst safeguarding the safety of employees:

• the ASTF are available to perform workplace audits, with the aim of validating the own ‘deconfinement’ plans, ensuring that the measures that you are planning or have already implemented are sufficient, and offering advice on desk spacing, signage and hygiene steps to put in place.
• the Luxembourg government invites residents and cross-border workers to participate voluntarily in the free of charge large-scale COVID-19 testing. The financial sector has been identified as one of the target populations for this testing and a COVID-19 test.
• recent communications from the CSSF, the ASTF and the ABBL on getting back into the office safely.

On 6 June 2020, the Chambre des députés - Luxembourg published draft law 7625 on the postponement of reporting deadlines for DAC 6, CRS and FATCA due to COVID-19. 

According to the draft law, CRS and FATCA returns in respect of the 2019 reporting period have been deferred until 30 September 2020.

The first filings of DAC6 returns, which were originally scheduled to be made by 31 August 2020, is deferred by up to six months.

On 5 June 2020, the Commission de Surveillance du secteur financier (CSSF), together with  Banque centrale du Luxembourg, informed industry participants that on 6 May 2020 the European Systemic Risk Board (ESRB) has discussed a first set of actions in 5 priority areas identified to address the impact of COVID-19 on the financial system from a macroprudential perspective. 

These actions constitute a comprehensive set of policy measures that apply to different sectors of the financial system as well as across countries, and address the areas of market illiquidity, downgrades of corporate bonds, guarantee schemes and other fiscal measures, dividend payment restraints and margin call induced liquidity risks.

The BcL and the CSSF draw particular attention to the policy actions which are related to and have implications for investment funds and their activities:

• Recommendations of 6 May 3030 on liquidity risks in investment funds 
• Use of liquidity management tools by investment funds with exposures to less liquid assets 
• Issues note on liquidity in the corporate bond and commercial paper markets, the procyclical impact of downgrades and implications for asset managers and insurers 

On 5 June 2020, the Chambre des députés - Luxembourg published adopted amendments to Draft law 7566 on the extension of the measures introduced by the Grand-ducal regulation of 20 March 2020 concerning the holding of meetings in companies and in other legal persons.

The main amendments are as followings:

• A non-profit association may, notwithstanding any contrary provision in the statutes, whatever the number of participants at its general meeting, convene any general meeting to deliberate on the matters referred to in article 4, point 3, of the amended law of 21 April 1928.
• A trade union governed by the amended law of 16 May 1975 on the statute for the co-ownership of built buildings may, in the event that the co-ownership regulations provide for a later date close, convene the general meeting of the co-owners on a date that is at the latest 30 September 2020. 
• By way of derogation from article 19 of the amended law of 10 June 1999 on the organization of the profession of certified accountants, the general meeting of the year 2020 of the Ordre des
• Experts-Comptables (OEC) can be convened on a date which is no later than 30 September 2020. 
• By way of derogation from the amended law of 23 July 2016 on the audit profession, the general meeting of the year 2020 of the Institut des Réviseurs d’Entreprises (IRE) maybe convened on a date which is no later than September 30, 2020.
• It is also applicable to meetings of members, shareholders or associates as well as meetings of the management bodies of: non-profit associations and foundations, agricultural associations, mutual societies, economic interest groups, European economic interest groups, the Housing Fund, co-ownership trade unions, the Institut des Réviseurs d’Entreprises (IRE), the Order of Chartered Accountants, Ordre des Experts-Comptables (OEC).
• This law comes into force on the 1st day following the end of the state of crisis, except article 1-quater which shall enter into force, with retroactive effect, from 30 May 2020.

1. On 21 June 2020, the Law of 20 June 2020 to set up an aid scheme for projects related to the fight against the COVID-19 pandemic was published in the Official Journal.
The Law describes the following:

• Aid for research and development projects linked to the fight against COVID-19
• Eligible costs of research and development projects related to COVID-19 control
• Investment aid for the production of products relevant for the fight against COVID-19
• Terms and conditions of the application
• Methods of granting the aid
• Accumulation rules.

2. On 21 June 2020, Law of 20 June 2020 on the granting of the State guarantee within the framework of the instruments set up at the European Union level to mitigate the socio-economic consequences of COVID-19 was published in the Official Journal.
The Government is authorized to grant the State guarantee to the European Commission, under Council Regulation (EU) 2020/672 of 19 May 2020 establishing a European instrument providing temporary support for the mitigation of unemployment risks in emergency situations (SURE) caused by the spread of COVID-19, for a maximum amount of EUR 105 million.
The Government is authorized to grant the State guarantee to the European Investment Bank, under the European Guarantee Fund COVID-19 set up by the bank, for a maximum amount of 45 million euros.

On 9 June 2020, the Association of the Luxembourg Fund Industry (ALFI) published its key objectives for the next five years in order to achieve its 2025 Ambition.  

The ALFI's ambition is to empower investors in their financial journey to allow them to meet their life goals. The ALFI aims to achieve this by driving innovation and change in the asset management industry in alignment with the evolving needs of investors and the society.

The five key objectives that ALFI has set itself are as follows: 

• To lead the development of innovative cross-border savings and pensions products
• To create a framework that helps sustainable products flourish
• To extend the global reach of UCITS as a multi-purpose solution
• To broaden access to alternative investments
• To drive innovation and the digital transformation of the Luxembourg funds industry.

On 2 June 2020, the Central Bank of Luxembourg updated the Non-regulated alternative investment fund registration form.

The form must be filled and done for all sub-funds.

On 2 June 2020, the Commission de Surveillance du secteur financier (CSSF) updated the Investment vehicle EMIR Questionnaire.

In case of changes in either the EMIR classification or use of derivative contracts or organisational model, this Investment vehicle Questionnaire - EMIR shall be updated and resubmitted to the CSSF within undue delay.

1. On 26 June 2020, the Commission de Surveillance du secteur financier (CSSF) published Guidelines on the UCITS risk reporting (URR), which gives further guidance on the UCITS risk reporting and contains definitions, explanations and examples for the items as referred to in the Excel reporting file. 
The present reporting obligation does apply to all Luxembourg domiciled UCITS1 authorized by the CSSF as at 30 June 2020. UCITS liquidated during the reference period are out of scope. 
While management companies and investment companies know the UCITS they manage and that are covered by the reporting scope, the CSSF asks them nevertheless to critically verify, prior to the submission of the report, that they cover all UCITS authorized as at 30 June 2020 by consulting the CSSF list of UCITS identifiers, which  will only be available as from 15 July 2020. 
The frequency of the UCITS risk reporting is semi-annual, this reporting exercise covering the half-year starting 1 January 2020 and ending 30 June 2020. For completeness purposes, the next report is scheduled for the reference date 31 December 2020 covering the semester from 1 July 2020 to 31 December 2020.  
UCITS shall submit the UCITS risk reporting as at 30 June 2020 to the CSSF by 14 August 2020 at the latest.

2. On 26 June 2020, the Commission de Surveillance du secteur financier (CSSF) published the List of ManCo identifiers for UCITS risk reporting (URR)3. On 26 June 2020, the Commission de Surveillance du secteur financier (CSSF) published Template for the UCITS risk reporting (URR).4. On 26 June 2020, the Commission de Surveillance du secteur financier (CSSF) published Example for UCITS risk reporting (URR).

On 9 June 2020, the Commission de Surveillance du secteur financier (CSSF) updated the Form for Declaration of membership of the “Système d’Indemnisation des Investisseurs Luxembourg (SIIL)”.

With this form, the company will join/participate in the Système d’indemnisation des investisseurs Luxembourg (“SIIL”), enacted by Article 156 of the law of 18 December 2015 on the failure of credit institutions and certain investment firms.

On 17 June 2020, the Commission de Surveillance du secteur financier (CSSF) imposed an administrative fine amounting to EUR 41,050 on the credit institution Öhman Bank S.A.

The fine has been imposed for certain violations, detected following an on-site inspection, of Article 16, paragraph 2 of the Market Abuse Regulation and the regulatory technical standards laid down by the Commission Delegated Regulation (EU) 2016/957 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the appropriate arrangements, systems and procedures as well as notification templates to be used for preventing, detecting and reporting abusive practices or suspicious orders or transactions. 

In the context of the procedure before the CSSF, the bank has committed itself to remedy the violations.

According to Article 15 of the Law, a court action against the decision of the CSSF of 17 June 2020 may be lodged by the bank before the Tribunal administratif (Administrative court) within three months. 

The administrative sanction is published in accordance with Article 34 of the Market Abuse Regulation.  

On 29 June 2020, the Association of the Luxembourg Fund Industry (ALFI) published its response to EU Commission consultation on MiFID II/MiFIR framework, dated 18 May 2020.

The consultation aims to assess the overall functioning of the regime that was in force since 3 January 2018 with the objective to improve investor protection and ensure transparent, efficient and competitive trading in financial instruments. The questions raised in this consultation range from the creation of a new, semi-professional client category to the opting-out from ex-ante cost information obligations, an outright ban of inducements and digitization aspects.

On 5 May 2020, the Commission de Surveillance du secteur financier (CSSF) published the Whistleblowing Q&As - Reporting of breaches of financial sector regulations to the CSSF. The Q&A answers following questions:

1. Who is the whistleblowing procedure aimed at? 
2. May the customers of financial service providers use the whistleblowing procedure? 
3. How to blow the whistle? 
4. Will the CSSF consider a whistleblower’s report if they have not first tried to raise their concerns internally? 
5. Will the whistleblower's identity become known, in particular to their employer? 
6. Will the whistleblowing reports be forwarded to the ECB in the context of the Single Supervisory Mechanism (SSM)? 
7. What information does the CSSF need from a whistleblower? 
8. Will the CSSF give legal advice in the context of a whistleblowing procedure? 
9. Will the CSSF inform the whistleblower of any actions taken on the whistleblowing report?

On 16 June 2020, the Commission de Surveillance du secteur financier (CSSF) published Reporting instructions under Article 37 of the Money Market Funds Regulation. The MMFR Handbook published by the CSSF describes the reporting principles to be used by the MMF Managers in order to report activity to the CSSF as the National Competent Authority (NCA) for Luxembourg. 

The information detailed in the Handbook relates to: 

• Reporting obligations including the description of the details to report 
• Technical overview of the reporting system 
• Data and file format of the reports 
• Exchange and encryption protocols

On 3 June 2020, the Commission de Surveillance du secteur financier (CSSF) published Q&As  on the definition and classification of payment accounts under the Law of 10 November 2009 on payment services, important for all payment service providers established in Luxembourg.

The following Questions and Answers (“Q&A”) only cover the notion of payment accounts and consequences of such a definition/classification under the Law of 10 November 2009 on payment services. The Q&A are therefore addressed to all payment service providers and electronic money institutions that offer payment accounts and are established in Luxembourg.

The present Q&A are to be read in conjunction with the questions and answers the European Commission and/or the European Banking Authority (EBA) have published with respect to the application of the PSD2.

The Q&As clarify the type of accounts that are qualified as payment accounts in accordance with the Law, the elements of definition of a “payment transaction” as well as the definition of a “payment account” and a list of entities allowed to provide such accounts. 

On 17 June 2020, the Autoriteit Financiële Markten (AFM) published recommendations for the review of AIFMD.

1) Introduction of a third-country passport

One of the most important recommendations concerns the introduction of a properly functioning third-country passport. For an efficiently functioning and transparent European asset management market, it is essential that non-EU management companies can offer their services in Europe. The issue of the third-country passport has become more important due to Brexit.
The AFM proposes a phased approach, in which the various National Private Placement Regimes (NPPR) of Member States would continue until the third-country passport has proved to be a viable option in practice.

2) Central collection of AIFMD data and improved data quality

The AFM also recommends that the AIFMD data should be collected by an independent third party, with national supervisory authorities having access to this central data source. This will contribute to the (timely) availability of data and will increase data quality.

3) European process

The AIFMD report from the European Commission was published on 10 June, addressed to the European Parliament and the European Council. This includes the AIFMD issues on which the Commission wishes to consult. The consultation itself is expected to begin in September.

4) AFM supervision

The AIFM Directive (which came into effect in the Netherlands on 22 July 2013) is a European directive that introduces harmonised rules for management companies of AIFs. Among other things, the directive aims to subject the activities of management companies of AIFs to harmonised European regulation, so that a passport system can be introduced in Europe.
In addition to the rules for obtaining a license, the directive sets continuous requirements such as prevention of conflict of interest and appropriate risk and liquidity management. The directive also obliges management companies of AIFs to communicate transparently with (potential) investors and supervisory authorities. Ultimately the directive is intended to improve the management of systemic risks.

On 15 June 2020, the Autoriteit Financiële Markten (AFM) published the Periodic AML/CFT questionnaire for investment firms.

The AFM asked investment firms to complete a mandatory questionnaire about their activities this year. The questions concern the risks of money laundering, terrorist financing and compliance with sanctions regulations. This request was sent at the end of May.

Risk-based supervision

The AFM's supervision is risk-based. This means that the AFM uses the information supplied to draw up risk profiles of the various investment firms. These risk profiles provide the AFM with a general picture of the money laundering and terrorist financing risks in the market and the extent to which the Wwft and the Sanctions Act are complied with. In addition, the AFM can use these risk profiles when making choices in its supervisory strategy.

The questionnaire must be completed every year. The letter that the companies have received states when the AFM must have received the answers.

COVID-19 crisis

The AFM is aware of the current situation regarding the coronavirus and the impact on many organizations. AFM appreciates the contribution and cooperation of the investment firms to the questionnaire. If firms are unable to comply with this request within the requested period, they can contact the Ondernemersloket. The Ondernemersloket is currently only available by email at entrepreneursloket@afm.nl

On 22 June 2020, De Nederlandsche Bank (DNB) Working method for viewing and copying digital data was published in the Official Journal.

The supervisors appointed the DNB to supervise the compliance of the rules laid down in and pursuant to the Financial Supervision Act (Wet op het financieel toezicht (Wft)).

To this end, pursuant to the General Administrative Law Act (Algemene wet bestuursrecht (Awb)) these supervisors have the power to demand inspection of business information and documents and to make copies thereof (Article 5:17 of the Awb). 

They are also authorised to demand information (Article 5:16 of the Awb). The company under investigation is obliged to provide all cooperation that can reasonably be demanded in the exercise of these powers (Article 5:20 Awb). Persons who may invoke a right to refuse to give evidence, such as lawyers, may refuse to cooperate (Section 5:20(2) of the Awb). 

Furthermore, the principle of proportionality requires that a supervisor only makes use of his powers to the extent reasonably necessary for the performance of his duties (Article 5:13 of the Awb). This Working Method outlines how DNB's supervisors will act when exercising the powers referred to above in so far as DNB requires digital data in doing so. 

The Working Method applies mutatis mutandis to the claiming of digital data pursuant to Section 5:16 of the General Administrative Law Act (Awb), in situations other than during an on-site investigation. The Working Method describes the procedure to be followed from the moment that the digital data have been selected by the supervisory authorities which, by virtue of their nature and/or content, may reasonably fall within the scope of the purpose and subject of the investigation in question.

On 8 June 2020, the Autoriteit Financiële Markten (AFM) published its answer to the consultation of the European Commission for the revision of the Non-Financial Reporting Directive.

The AFM wants an international standard for non-financial information in reporting. Such a standard is necessary to increase the comparability, consistency, relevance and reliability of this information. 

The Non-Financial Reporting Directive (NFRD) requires that large public interest entities (PIE), such as securities issuers, banks and insurers, include a statement on non-financial information either in their management report, such as in the Netherlands, or in a separate publication. In it, they report on environmental, social and human resources issues, respect for human rights and the fight against corruption and bribery.

Clear and unambiguous regulations are required 

In its response to the consultation, the AFM argues for the need for a uniform reporting standard for the inclusion of non-financial information. Due to the lack of clear and unambiguous regulations, this information is not always comparable, consistent, relevant and reliable. The AFM advocates an international (above a European) standard and a coherence of the revised directive with other applicable European legislation. 

All relevant information about organization together

The NFRD requires large securities issuers and financial companies to be transparent about sustainability factors in their business activities. The AFM is in favor of integrated reporting, in which all relevant financial and non-financial information about an organization is presented together. In its response to the consultation, the AFM therefore advocates including non-financial information in the management report of a company and imposing these obligations on large non-PIE and medium-sized PIEs.

On 24 June 2020, De Nederlandsche Bank (DNB) announced NGFS published climate scenarios for forward looking climate risks assessment, a user guide, and an inquiry into the impact of climate change on monetary policy.
Central banks and prudential supervisors around the world are stepping up efforts to integrate climate-related risks into their work, in particular financial stability monitoring. In addition, central banks increasingly focus on the potential impact of climate change on price stability and its implications for monetary policy.
Highlighting the growing importance of climate change for central banks and supervisors, the NGFS publishes several deliverables aimed at fostering the integration of climate-related risks into their work:

• A first set of climate scenarios alongside a first-of-its-kind Guide to climate scenario analysis for central banks and supervisors. The NGFS scenarios have been developed to provide a common starting point for analysing climate risks, while the guide provides practical advice on using scenario analysis to assess these risks to the economy and financial system.
• A Report examining the possible effects of climate change on monetary policy. Based on a comprehensive review of existing literature and expert analyses, it provides early answers to the following questions: (i) How does climate change affect key macroeconomic variables? and (ii) What are the effects on the monetary transmission channels and central banks’ assessment of their policy space?
• A Report which lays out and discusses the NGFS research priorities related to the analysis of the macroeconomic and financial stability impacts of climate change.

On 5 June 2020, the De Nederlandsche Bank (DNB) published a Report on Biodiversity: Opportunities & Risks for the Financial Sector.

The paper addresses two important questions: how financial institutions can be affected by risks arising from the loss of biodiversity, and how they can have a positive impact on the preservation and restoration of biodiversity. 

For example, failing ecosystems can lead to credit risks for banks. This occurs when natural resources are rendered inaccessible and the production processes that rely on them are disrupted as a result. Preserving and restoring biodiversity requires a major shift towards investments that support these activities, and in this respect financial institutions can play a key role. 

On 12 June 2020, Ordinance 2 on measures destined to fight against the COVID-19 was published in the Official Journal.

All states outside the Schengen area (air traffic) are on the list of countries and regions at risk.

On 19 June 2020, the Der Bundesrat / Le Conseil fédéral launched consultation on COVID-19 Law.

The Federal Council intends to submit to Parliament the draft of an urgent federal law of limited duration, the law COVID-19, which will base the measures it has adopted within the framework of the right of necessity and which will still be necessary to manage the COVID-19 epidemic. 

The project aims to give a legal basis, adopted by Parliament, to the measures adopted so far. The preliminary draft put in consultation contains delegation standards which will have effect until the end of 2022. These empower the Federal Council to renew or adapt the measures that will still be necessary.

The law provides that the Federal Council will only use its powers for as long as it is necessary to manage the COVID-19 epidemic. If it turns out that a measure is no longer useful, the Federal Council will repeal the corresponding ordinance provisions before the law lapses.

The preliminary draft includes thirteen articles. Nine of them relate to areas in which the Federal Council has specific powers: measures to combat the epidemic, measures in the area of foreigners and asylum, measures in the field of justice and procedural law , measures in the field of company law, measures in the event of insolvency, measures in support of culture, measure in the field of the media, measures in the event of loss of earnings and in the field of unemployment insurance.

In order for Parliament to deliberate on the law and declare it urgent during the autumn session, the Federal Council will have to adopt the message on August 12, 2020. The consultation period is therefore shortened to three weeks.

The consultation will end on July 10, 2020.

On 29 June 2020, the Swiss National Bank (SNB) informed on the adjustment of special rate and selective provision of liquidity to the money market via open market operations.

Following the introduction of the SNB COVID-19 refinancing facility (CRF), the SNB has reviewed the interest rates for its standing facilities. The Governing Board has decided to make an adjustment in the calculation of the special rate for the liquidity-shortage financing facility as of 1 July 2020. As before, the special rate will be calculated as the SNB policy rate plus a surcharge of 50 basis points. However, the lower limit for the special rate is to be reduced to at least 0%, down from the current level of at least 0.5%.

On 30 June 2020, Switzerland announced it launched a consultation on 19 June, on the Federal Act on the legal basis for the Federal Council Ordinances to overcome the COVID-19 epidemic (COVID-19 Act).

Since 13 March 2020, the Federal Council has issued several ordinances aimed at overcoming the COVID-19 crisis. The duration of these ordinances is limited by the Constitution. In accordance with Article 7d, paragraph 2, of the Act of 21 March 1997 on the Organisation of Government and Administration (LOGA; SR 172.010), these ordinances will lapse if the Federal Council does not submit to Parliament a draft establishing their legal basis within six months of their entry into force. 

The purpose of the COVID-19 Act is to create the basis that will enable the Federal Council to continue the measures, already set out in the ordinances based directly on the Constitution, which are still necessary to overcome the COVID-19 epidemic.

The consultation runs until 10 July 2020.

On 29 June 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) published a Confirmation of conformity for audit-free reporting period form for the period 1 January 2020 to 31 December 2020.

On 30 June 2020, the Swiss Funds & Asset Management Association (SFAMA) announced Switzerland and United Kingdom seek closer cooperation on financial services.

The Swiss and UK finance ministers, Federal Councillor Ueli Maurer and Chancellor of the Exchequer Rishi Sunak, signed a joint statement on deepening cooperation between the two countries in the area of financial services during a virtual meeting. They also exchanged views on the impact of the COVID-19 pandemic on the economic situation and financial markets, as well as on national bridging aid schemes for the economy.

The joint statement underscores the shared ambition for an agreement between the two countries that would enable cross-border market access for a wide range of financial services relating to insurance, banking, asset management and capital market infrastructure. 

With such an agreement, Switzerland and the United Kingdom intend to reaffirm their commitment to the importance of open financial markets and international financial stability, as well as to consolidate their position as the world's leading international financial centres in Europe. Furthermore, Switzerland and the United Kingdom intend to deepen their already established cooperation in international financial bodies such as the Bretton Woods institutions in the future.

The agreement pursued by Switzerland and the United Kingdom is to be based on the principle of mutual recognition of the respective financial market regulations and the supervisory framework. Thereby, both sides are committed to investor and consumer protection, financial market integrity and stability, while maintaining the highest regulatory standards. 

Moreover, the future agreement could serve as a possible template for international cooperation in the area of financial services. Switzerland sees this work as a continuation of the "mind the gap" strategy, with which it intends to secure and expand the existing relationship with the UK beyond its withdrawal from the EU.

On 16 June 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) updated the SST templates.

These documents summarizes the deadlines for the regular update of the SST templates as well as the planned blank calculations and new features. It also describes any extraordinary updates.

On 3 June 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) updated SST templates.

These documents summarizes the deadlines for the regular update of the SST templates as well as the planned blank calculations and new features. It also describes any extraordinary updates.

On 24 June 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) updated the SST templates.

On 30 June 2020, Switzerland amended the Federal Law on Insurance Contracts, replacing an expression.

Throughout the act, "insurer" is replaced by "insurance undertaking", with the necessary grammatical adjustments.

On 24 June 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) published the Authorization Form for establishments according to LEFin for establishments providing wealth management  activities and as trustees. 

On 3 May 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) updated forms on fund and asset management.

The updated forms are the following:

• Fund management authorization form
• Authorization form representing foreign collective investment schemes
• Authorization form for collective asset manager
• Impeccable activity guarantee form.

On 29 June 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) published Guidelines for licence holders in supervisory category 5 under the Financial Institutions Act and the Collective Investment Schemes Act concerning reduced audit frequency.

These guidelines should be regarded as instructions for licence holders under Article 2 para. 1 lets. c and d of the Financial Institutions Act (FinIA; SR 954.1) as well as under the Collective Investment Schemes Act (CISA; SR 951.31) wishing to apply for a reduced audit frequency as specified in margin no. 113.2 of FINMA Circular 2013/3 “Auditing”. They do not confer any legal entitlement.

On 19 June 2020,  the Federal Council adopted dispatch on partial revision of Banking Act.

The legislative amendment aims to strengthen depositor and customer protection and promote system stability.

The Banking Act regulates only the main features of the restructuring procedure for banks; details can be found in the FINMA Banking Insolvency Ordinance. In order to strengthen legal certainty, the Federal Council wants above all to enshrine at the legislative level those instruments such as capital measures (e.g. a bail-in) which impinge on the rights of the bank's owners and creditors. An adjustment to the Mortgage Bond Act should also strengthen the functioning of the Swiss mortgage bond system in the event of a member bank's insolvency or bankruptcy.

Moreover, in order to better protect depositors, banks are no longer to secure half of their obligatory deposit insurance contributions in the form of additional liquidity, but by depositing securities or Swiss francs in cash with a custodian. The period for paying out deposit insurance funds is also to be shortened. They should reach the bankruptcy liquidator within seven days instead of the existing 20 days. Once the bankruptcy liquidator has received bank clients' payment instructions, clients will receive their secured deposits within seven days.

Finally, the Federal Council is proposing to amend the Intermediated Securities Act. Custodians of intermediated securities should be obliged to segregate their own holdings from those of clients. If the custody chain leads abroad, the last Swiss custodian has to take measures to protect the intermediated securities placed with the foreign custodian. Clients should also be better informed about these procedures.

Parliament is expected to address the bill for the first time in the second half of 2020. It is not expected to come into force until the start of 2022 at the earliest.

On 16 June 2020, the Swiss Funds & Asset Management Association (SFAMA)  published Key Messages and Recommendations on Sustainable Finance.

The SFAMA is firmly committed to sustainable finance. With this in mind, it has joined forces with Swiss Sustainable Finance (SSF) to draw up detailed recommendations for the Swiss asset management industry on how to implement sustainable practices effectively. The recommendations and associated core messages are intended to actively help asset managers incorporate sustainability criteria into their investment processes.

Factoring ESG criteria into the investment strategy plays a part in generating higher risk-adjusted returns over the long term. Asset managers therefore need to assess the social, economic, and environmental impact of their investments and embed their values within a policy of sustainability. The key to implementing sustainability criteria successfully is transparency. Standardized, measurable reporting is vital in this respect, but transparency also requires companies and research providers to make reliable, high-quality data available.

The recommendations from SSF and SFAMA are primarily intended to inform asset managers and are targeted in particular at organizations that are still in the early stages of ESG integration. The recommendations are mainly technical in nature and designed to serve as a useful guide for asset managers. They are focused on implementing a sustainable investment process and cover the topics of governance, investment policy and strategy, risk management, transparency, and reporting. They explain the role of the board of directors and executive board, for example, along with a range of sustainability approaches and transparent reporting methods.

On 26 June 2020, the Eidgenössische Finanzmarktaufsicht (FINMA) addressed climate risks in the financial sector as part of its supervisory remit. It is also reviewing regulatory approaches for improved transparency regarding climate-related financial risks by major financial institutions.

As part of its remit FINMA addresses risks caused by climate change for prudentially supervised institutions and their customers.

On the one hand, climate change entails physical risks for market participants, particularly for insurance companies, for example in the form of rising natural catastrophes and their associated costs. 

On the other hand, financial institutions can be indirectly affected by so-called transition risks as a result of action taken on climate policy. For example, illiquid assets in affected industrial sectors can be exposed to increased valuation risks in the balance sheets of financial institutions.

• FINMA checks that the financial institutions are managing these risks appropriately. By law financial institutions are obliged to identify, assess and adequately deal with significant climate-related financial risks and, where necessary, to develop their instruments and processes to this end. Together with the SNB and academics, FINMA is currently analysing the transition risks for the two major banks as part of a pilot project.
• From a consumer protection perspective, FINMA is also addressing the risks of greenwashing in the provision of financial services and the distribution of financial products. Consumers may not be deceived by exaggerated or misleading claims about “green” properties, for example in the case of investment products.
• At the regulatory level FINMA is reviewing approaches for improved disclosure of financial climate risks by major financial institutions, in order to improve transparency and market discipline.

The framework conditions for the Swiss financial centre in the area of sustainability and sustainable growth have been identified and will be further developed by the end of 2020. They are:

• - Information for market participants: Environmental and climate information for financial products and companies, including financial institutions, should be made available to all market participants in a systematic and comparable way.
• Quality of information: The chosen reporting standard is to be measured against the traceable and effective achievement of sustainability goals in accordance with the 2030 Agenda reference framework.
• Quality of service: Informed advice, a high level of training and further education in the sector as well as products that are efficiently and effectively geared to achieving sustainability goals are key factors on the supply side.
• Innovation: In general, including in the three areas mentioned above, the use of digital business and analysis models plays a central role.
• Risk pricing: Financial risks from environmental and climate developments must be identified. This also includes the long-term perspective and developments during the transition and adaptation phase.
• Exportability: International developments, especially in the EU, must be closely monitored in order to identify at an early stage which steps are necessary to maintain competitiveness. Switzerland remains committed to the exportability of high-quality financial services, which makes the sustainability of Swiss financial services transparent in the international context.

On 23 June 2020, the UK Government launched a consultation on the transposition of the Bank Recovery and Resolution Directive II. Responses are requested by 11 August 2020. 

The UK Government consulting on the following provisions of the Directive:  

• the introduction of the concepts of ‘resolution entities’ and ‘resolution groups’ which derive from the same terms used in the FSB’s TLAC standard  
• the power for the resolution authority to prohibit certain distributions, where the entity fails to meet its combined buffer requirement, when considered in addition to its MREL requirements  
• the power for the resolution authority to suspend any contractual payment or delivery obligations after a firm is deemed failing or likely to fail, but before entry into resolution 
• restrictions on the selling of subordinated eligible liabilities to retail clients  
• amendments to the requirements on the contractual recognition of bail-in, to address circumstances in which it would be legally or otherwise impractical to include a contractual term  
•  • a requirement for entities to include, in financial contracts governed by third country law, a term by which the parties recognize that the financial contract may be subject to the exercise of powers by the resolution authority to suspend or restrict obligations.

The scope of the Directive covers credit institutions, 730k investment firms, certain financial institutions, and financial holding companies, mixed financial holding companies and mixed-activity holding companies. 

On 2 June 2020, the Financial Conduct Authority (FCA) published Policy statement PS20/5: Extending the Senior Managers Regime to benchmark administrators, which sets out FCA's response to the feedback, final rules and guidance regarding Consultation Paper CP19/31 Extending the Senior Managers Regime to Benchmark Administrators.

For benchmark administrators that do not undertake any other regulated activities, the guidance introduces:

• the Senior Managers Regime (SMR), and 
• the Conduct Rules, which are high-level standards of behaviour expected of those working in FCA regulated firms.

The SMR is designed to: 

• ensure Senior Managers clearly understand and can demonstrate where responsibility lies 
• encourage employees to take responsibility for their actions and to improve conduct at all levels, and 
• support and promote healthy cultures within firms, driving change across FCA regulated firms.

The SMR will come into force for benchmark administrators that do not undertake any other regulated activities on 7 December 2020.

On 11 June 2020, the UK Government published a letter dated 27 May 2020 regarding the review on financial services after Brexit, which included several issues as followings:

• Equivalence and its importance: The Government’s priority with respect to the Political Declaration commitments on equivalence is to seek equivalence across all the 40 equivalence regimes which currently exist in EU legislation.  In spite of the COVID-19 crisis, work continues in this area. The EU and the UK are currently conducting their own assessments in line with their internal processes.
• Improving the equivalence process:  The UK will seek to ensure the transparency and stability of an equivalence-based relationship while not compromising its autonomous nature.    
• Outstanding risks of disruption: Risks relating to cleared and uncleared derivatives can be mitigated through positive equivalence decisions from the EU, and positive data adequacy decisions for the UK would enable the free flow of personal data between the EU and UK after the end of the Transition Period. 
• A new approach to financial regulation and to give regulators a competitiveness objective: The Treasury will need to consider, with Parliament, in designing the UK’s approach to financial regulation that the UK has left the EU. The next phase of the Future Regulatory Framework review will set out how the government proposes to address these questions, and will seek views from Parliament, industry and other interested parties. 
• Making rules fit for purpose: The UK Government is willing to look at regulatory cooperation arrangements that reflect the level of access between our markets, that are “grounded in the economic partnership” as stated in the Political Declaration, and that seek to establish processes for dialogue.
• Opportunities for regulatory divergence: The Government is committed to the highest standards of regulation and appropriate levels of supervisory oversight.  That’s why the UK Government has already announced, as part of the Financial Services Bill, a commitment to implementing the remaining Basel 3 reforms, in a full, timely and consistent manner, showing the UK will continue to provide global leadership on high standards of regulation.  
• The need for global regulatory cooperation and leadership: It is the Government’s intention to deploy independent financial services trade and regulatory powers to enhance the links to key global financial centers, combating market fragmentation, improving collaboration between states and promoting cross border activity. 

1. On 23 June 2020, the Financial Conduct Authority (FCA) informed on a Written Ministerial Statement which was presented to Parliament further confirming the UK approach to on-shoring the European Market Infrastructure Regulation (EMIR) and EMIR REFIT. 

The statement confirmed that the UK will create legislation to bring into UK law the remaining EMIR REFIT requirements that will apply in the EU after the end of the Transition Period. These are:

• requirements for firms who offer clearing services to do so on fair, reasonable and non-discriminatory and transparent commercial terms (FRANDT requirements)
• requirements for Trade Repositories (TRs) to have policies and procedures in place to reconcile and validate the data reported to them and for the orderly transfer of data to other trade repositories (TR requirements)

The FCA will work alongside HM Treasury and the Bank of England to implement these requirements into UK law.

2. On 23 June 2020, the Financial Conduct Authority (FCA) informed on a Written Ministerial Statement which was presented to Parliament further confirming the UK approach to on-shoring the SFTR.

The statement confirmed that the UK will not implement the SFTR reporting obligation for non-financial counterparties (NFCs).

As a result, the FCA will not require NFCs established in the UK to put in place arrangements to meet the reporting obligation under the on-shored UK SFTR regime.

3. On 23 June 2020, the Financial Conduct Authority (FCA) informed on a Written Ministerial Statement which was presented to Parliament further confirming the UK approach for CSDR Settlement Discipline Regime.

The Treasury has stated that the UK will not be implementing the CSDR Settlement Discipline Regime.

The UK will assess its approach to settlement discipline to ensure that any regime is appropriate for the UK market. Euroclear UK and Ireland (EUI) will continue to operate its existing settlement discipline regime.    

On 29 June 2020, the Statutory Instrument 2020 No. 628 - The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020 was published on the UK legislation.

These Regulations are made in exercise of the powers mentioned the European Union (Withdrawal) Act 2018 to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the United Kingdom from the European Union. The main amendments are as followings:

• “an EEA state” substitute “a state” or “a third country”
• “ESMA shall develop draft regulatory” substitute “The FCA and the Bank of England may make”
• “the Commission shall adopt” substitute “The Treasury may make regulations"
• “EU” substitute “UK”
• “UCITS” substitute “UK UCITS”.

On 2 June 2020, the Prudential Regulation Authority (PRA) publishes its statement which provides information on the use of electronic signatures in relation to the submission of forms and other regulatory documents.

In the context of COVID-19 and increased remote working, the PRA confirmed that firms may use electronic signatures for such purposes, although we may in specific instances request a ‘wet signature’ where it is appropriate to do so.

The PRA is unable to comment on the use of electronic signatures more generally, and firms should obtain their own legal advice on the validity of such signatures in specific circumstances.

On 4 June 2020, the Prudential Regulation Authority (PRA) published a letter to update the March guidance to address exits from initial payment deferrals.

Principles underlying the guidance in this letter:

• When there has been a payment deferral, counting of days past due should be based on the agreed schedule for the purposes of the ECL backstops and for the CRR definition of default. However, loans that are not past due can still have suffered a significant increase in credit risk (‘SICR’), credit impairment or default.  
• Eligibility for, and use of, COVID-19 related initial and further payment deferrals taken up in accordance with the FCA’s guidance on the subject does not on its own automatically result in a loan (a) being regarded as having suffered a SICR or being credit-impaired for ECL, or (b) triggering a default under CRR. Firms will therefore need to consider other indicators to determine the appropriate treatment. 
• Firms will need to make holistic assessments that look beyond past-due information and use of payment deferrals in order to treat such loans appropriately for accounting and regulatory purposes.
• The PRA does not envisage that these holistic assessments for accounting and CRR purposes will be made at the time when a payment deferral is taken up, as the FCA guidance does not require such information to be available at that time. These assessments are expected to be made subsequently and be based on the information available at the next and subsequent reporting dates.  

On 5 June 2020, the Financial Conduct Authority (FCA) published an update on Coronavirus and safeguarding customers’ funds: proposed guidance for payment firms.

In response to requests from trade bodies and other industry participants, the FCA extended the closing date to 12 June 2020.  This is to allow for fuller discussion and better considered responses on this important issue.

On 8 June 2020, the Bank of England (BoE) published Joint statement with Prudential Regulation Authority (PRA) on the ESRB recommendations for the restriction of distributions during the COVID-19 pandemic.

In the context of the UK’s withdrawal from the EU, this Recommendation applies to UK authorities during the transition period. 

In this respect, the Bank and the PRA have previously announced a number of measures to ensure the resilience of the financial system and financial market infrastructures, support banks’ lending through this period and maintain the safety and soundness of firms, which are consistent with the objectives of the ESRB’s recommendation.

The Bank and PRA do not consider it necessary to extend this guidance further at this time.

1. On 24 June 2020, the Prudential Regulation Authority (PRA) published its Statement on implementation of the EBA Guidelines to address gaps in reporting data and public information in the context of COVID-19.

The PRA does not consider it necessary at this time to extend the supervisory reporting elements of the Guidelines on COVID-19 reporting and disclosure to UK credit institutions. Firms are therefore not expected to prepare or transmit to the PRA the reporting templates contained within the Guidelines on COVID-19 reporting and disclosure.

2. On 26 June 2020, the Prudential Regulation Authority (PRA) updated its Statement on COVID-19 regulatory reporting and disclosure amendments.

Having considered the fact that firms have had time to adjust to new ways of working, and the prudential benefits to supervisors of timely submission of regulatory data, the PRA has concluded that it would not be appropriate to continue to apply the reporting measures set out in the previous statement to future submissions.

Going forward, the PRA will therefore, in general, expect on time submission for future regulatory reporting. Firms experiencing difficulty with timely submission should contact their usual supervisor to discuss. 

The PRA would be flexible in its expectations of firms’ publication timeline for Pillar 3 disclosures (compared to the publication date of the financial statements), in light of the impact of COVID-19. While the PRA will continue to take a flexible approach to this, it expects that going forward the publication timeline for Pillar 3 disclosures should not be affected by COVID-19 in most cases.

3. On 26 June 2020, the Prudential Regulation Authority (PRA) published an update to include clarifications on the application of credit risk approaches for firms, in particular:

• Clarification for firms using the standardized approach for exposures to the obligor
• Clarification for firms using the IRB approach for exposures to the obligor and the standardized approach for exposures to the guarantor (under permanent partial use or rollout)
• Clarification for firms using the IRB approach for exposures to the obligor and the IRB approach for exposures to the guarantor.

On 18 June 2020, the Bank of England (BoE) published its own climate-related financial disclosure for the first time in June 2020 which sets out the BoE’s approach to managing the risks from climate change across its entire operations.

This report covers

• BoE's approach to climate-related risk disclosure 
• The governance structures and processes the BoE uses to manage climate-related financial risk 
• BoE's approach to setting climate strategy and managing its implementation 
• BoE's approach to climate-related financial risk management, including its targets and the metrics that the BoE tracks.

On 22 June 2020, the Financial Conduct Authority (FCA) reminded businesses which carry out cryptoasset activity in the UK, that they have to be registered with the FCA to comply with new regulations. 

To ensure that applications are processed on time, the FCA requires firms to submit completed applications for registration by 30 June 2020. Any businesses that started carrying on business in the UK immediately before 10 January 2020 and are not registered by the FCA by the 10 January 2021 deadline will have to cease carrying on business.

The 30 June date allows the FCA to review submitted applications and raise any follow-up questions with firms, with enough time for that process to be completed before 10 January 2021.

On 30 June 2020, the Prudential Regulation Authority (PRA) published Consultation Paper 5/20 - Solvency II technical information: The PRA’s proposed approach to the publication at the end of the transition period.

The proposals included in this CP, which would apply at the end of the TP, are as follows:

• the PRA’s published TI would be derived by adopting the same technical methodologies embodied within the European Insurance and Occupational Pensions Authority’s (EIOPA’s) TI as at the end of the TP, with some limited exceptions. The exceptions are set out in a draft Statement of Policy (SoP), and are generally items that the PRA must change as a result of the UK’s changed legal status of having withdrawn from the EU, and the resulting alterations in information flows between the PRA and EIOPA. These changes would also contribute to the TI being relevant and credible for UK firms;
• the criteria that the PRA would use to determine the PRA relevant currencies to publish, which would be based on the relative materiality of technical provisions denominated in each currency, and the currencies for which firms have volatility adjustment (VA) or matching adjustment (MA) authorization;
• the PRA’s approach to determining VA reference portfolios (which would inform the calculation of the VA), in light of the loss of sharing of regulatory returns data between the PRA and EIOPA; and
• the publication of TI on the PRA website, and, where there is a deviation in the future from EIOPA’s technical methodology, a PRA publication that describes this deviation.

This CP is relevant to all UK Solvency II firms, including in respect of the Solvency II groups provisions, to the Society of Lloyd’s and its managing agents. Non-Directive firms are out of the scope of this CP.

On 18 June 2020, the Prudential Regulation Authority (PRA) published Annual Report 2019/20 which includes information on the PRA's activities for the year ended 29 February 2020.

The PRA’s activities in 2019/20 were directed by the PRA’s Business Plan (as set out in the PRA Business Plan 2019/20):

• Have in place robust prudential standards comprising the post?crisis regulatory regime, and hold regulated firms, and those who run them, accountable for meeting these standards 
• Continue to adapt to changes in the external market and to hold regulated firms, and those who run them, accountable for meeting the PRA's standards 
• Ensure that firms are adequately capitalized, and have sufficient liquidity, for the risks they are running or planning to take 
• Develop the PRA's supervision of operational resilience in order to mitigate the risk of disruption to the provision of critical economic functions 
• Ensure that banks and insurers have credible plans and capabilities in place to enable them to recover from financial stress events, and that the PRA supports the Bank as resolution authority to have a credible resolution strategy to manage a firm’s failure in an orderly manner 
• Facilitate effective competition by actively considering the proportionality of the PRA's approach as it contributes to the safety and soundness of the UK financial system 
• Deliver a smooth transition to a sustainable and resilient UK financial regulatory framework following the UK’s exit from the EU
• Operate effectively by ensuring that resources are allocated to work that best advances PRA's strategy and reduces the greatest risks to the delivery of the statutory objectives.

On 16 June 2020, the Financial Conduct Authority (FCA) published updated position limits for certain commodity derivative contracts traded on ICE Futures Europe. The limits have been established under the Markets in Financial Instruments Regulations 2017 (MiFIR).

For decreases to limits, including where limits were previously To Be Announced 'TBA', we give two months’ notice before the revised limits come into force to enable market participants to adjust their trading strategies in a responsible way. These decreased limits (SMD contract) will apply from 17 August 2020.

The limits are being revised in accordance with RTS 21, which states that position limits should be reviewed when there is a significant change in OI, deliverable supply, or any other significant change in the market.

Increases to limits (AEB, AEO, SMT and STB contracts) will apply immediately. These limits are published in advance of the publication of ESMA Opinions on the limits, and may change in light of an ESMA opinion, or in the event that we decide it is necessary. This is in accordance with the statements of ESMA and of the FCA published on 28 September 2017.

On 23 June 2020, the Financial Conduct Authority (FCA) published discussion paper DP20/2 on a prudential regime for UK investment firms. Comments and/or responses to the questions on the potential implementation proposals will last until 25 September 2020.

In this Discussion Paper, the FCA sets out initial views as well as technical details on the Investment Firm Directive (IFD) and the Investment Firm Regulation (IFR). The Government will be introducing a framework for the new prudential regime for UK firms. The FCA is seeking views on how best to implement this.

This discussion paper marks the first step in introducing a set of prudential rules for investment firms to better reflect their business models and the risk of harm they pose to consumers and markets. The FCA will use it to inform on the consultation to introduce a UK prudential regime for investment firms. It provides stakeholders with the details of the EU Investment Firm Directive and Regulation (IFD/IFR), and requests industry feedback on the design of a UK regime.

Annex 3 of this discussion paper provides a table to help all types of MiFID investment firms access its detailed content and determine the parts most relevant to their business models.

This will be interest all solo-regulated investment firms that are currently authorized under MiFID. It will also be of interest to Collective Portfolio Management Investment Firms and those investment firms authorized by the Prudential Regulation Authority.

On 23 June 2020, the UK Government updated the Policy statement which  provides an update on the proposed approach to legislating this package of prudential standards within the Financial Services (FS) Bill. 

Changes to existing legislation to enable the implementation of the new regimes:

1. CRRII and Basel 3.1 : To enable the Regulators to make rules on these prudential standards, the FS Bill will: 

a. delete articles of the retained CRR where appropriate to do so;
b. provide HM Treasury with a power to delete further elements of CRR using secondary legislation where additional flexibility may be required. For example, with regards to Basel 3.1. 

2. Investment Firms Prudential Regime: HM Treasury also intends to make a number of other amendments to the statute book, including: 

a. amending retained CRR to disapply it for FCA-regulated investment firms;
b. amending retained MIFIR to update the equivalence provisions for third country investment firms under Title VIII.

The UK will endeavor to introduce the IFPR and updated prudential standards for credit institutions (those contained in CRR2 for the EU) by Summer 2021, broadly consistent with the applicability date of the European Union’s IFR/IFD and CRRII. 

On 24 June 2020, the Financial Conduct Authority (FCA) published Draft Notification for conversion of registration for Trade Repositories providing services under the Securities Financing Transactions Regulations (SFTR) - SFTR Trade Repository form.

This form is a DRAFT and is subject to change. Legislation referred to in this form may be amended before transition period completion date. References to legislation should be read as that legislation is expected to apply after the end of the transition period. For example, references to Commission Delegated Regulation 2019/359 are to that Regulation as it is anticipated it will be amended. 

On 24 June 2020, the Financial Conduct Authority (FCA) published Draft advance application for registration for Trade Repositories providing services under the Securities Financing Transactions Regulation(SFTR) - SFTR Trade Repository form.

This form is a draft and is subject to change. Legislation referred to in this form may be amended before transition period completion date. References to legislation should be read as thatlegislation that is expected to apply after the end of the transition period. For example, references to Commission Delegated Regulation 2019/359 are to that Regulation as it is anticipated it will be amended.

On 25 June 2020, the Financial Action Task Force (FATF) published a Money Laundering and the Illegal Wildlife Trade Report.

The illegal wildlife trade (IWT) is a major transnational organised crime, which generates billions of criminal proceeds each year. The Financial Action Task Force (FATF), as the global standard setter on antimoney laundering (AML), countering the financing of terrorism (CFT) and countering proliferation financing (CPF), is concerned about the lack of focus on the financial aspects of this crime, and has conducted this study to support jurisdictions to combat related money laundering. 

This is the FATF’s first global report on IWT. It builds on previous studies by two of the FATF-Style Regional Bodies (FSRBs), work by other international bodies and recent initiatives by the private sector. 

This study highlights that jurisdictions should view the proceeds generated by IWT as a global threat, rather than as a problem only for those jurisdictions where wildlife is illegally harvested, transited, or sold. In particular, criminals are frequently misusing the legitimate wildlife trade, as well as other import-export type businesses, as a front to move and hide illegal proceeds from wildlife crimes. They also rely regularly on corruption, complex fraud and tax evasion. Another key theme of this study is the growing role of online marketplaces and mobile and social media-based payments to facilitate movement of proceeds from wildlife crimes. These trends highlight the increasing importance of a coordinated response from public authorities, the private sector and civil society to identify and disrupt financial flows from IWT.

On 30 June 2020, the Financial Action Task Force (FATF) provided information regarding Jurisdictions under Increased Monitoring.

he FATF and FATF-style regional bodies (FSRBs) continue to work with the jurisdictions noted below and to report on the progress made in addressing the identified strategic deficiencies. The FATF calls on these jurisdictions to complete their agreed action plans expeditiously and within the proposed timeframes. The FATF welcomes their commitment and will closely monitor their progress. 

The FATF does not call for the application of enhanced due diligence to be applied to these jurisdictions, but encourages its members to take into account the information of jurisdictions under increased monitoring in their risk analysis, in particular, in this communication, the information on Iceland and Mongolia.

The statement on Jurisdictions under Increased Monitoring, adopted in February 2020 remains in effect for the remaining jurisdictions identified at that time.

On 25 June 2020, the International Organization of Securities Commissions (IOSCO) launched the consultation on proposed guidance to help its members regulate and supervise the use of Artificial Intelligence (AI) and Machine Learning (ML) by market intermediaries and asset managers.

The consultation report proposes six measures to assist IOSCO members in creating appropriate regulatory frameworks to supervise market intermediaries and asset managers that use AI and ML. The proposed measures seek to ensure that market intermediaries and asset managers have the following features:

• Appropriate governance, controls and oversight frameworks over the development, testing, use and performance monitoring of AI and ML;
• Ensuring staff have adequate knowledge, skills and experience to implement, oversee, and challenge the outcomes of the AI and ML;
• Robust, consistent and clearly defined development and testing processes to enable firms to identify potential issues prior to full deployment of AI and ML; and
• Appropriate transparency and disclosures to investors, regulators and other relevant stakeholders.

The proposed guidance reflects the standards of conduct expected of market intermediaries and asset managers using AI and ML. 

To prepare the report, IOSCO surveyed and discussed AI and ML with market intermediaries and asset managers. The report analyzes how firms use this technology, identifies the risks involved and describes how firms address them. It also includes a chapter on guidance for AI and ML published by supranational organizations, such as the International Monetary Fund and the Financial Stability Board.

IOSCO welcomes comments on this consultation report on or before 26 October 2020.

On 29 June 2020, the International Swaps and Derivatives Association (ISDA), together with the Asia Securities Industry and Financial Markets Association (ASIFMA), the Futures Industry Association (FIA) and the Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association (GFMA), published a set of recommendations to reform the European Union Benchmarks Regulation (BMR).

The proposals are aimed at maintaining the intended protections of the BMR but reducing the potential for uncertainty and disruption and preventing EU investors from being put at a competitive disadvantage versus non-EU entities.

The full set of recommendations include:

• Allow benchmarks to be used in the EU unless specifically prohibited (ie, a reversal of the current general prohibition of benchmarks unless specifically authorized).
• Provide designatory powers to an appropriate central authority (such as the European Commission (EC) or the European Securities and Markets Authority (ESMA)) to mandate compliance for those EU and third-country benchmarks that are most systemically important to investors in the EU.
• Allow third-country administrators to obtain authorization from an appropriate central authority (such as the EC or ESMA), or to qualify via equivalence, or via reformed endorsement or recognition processes, each within a fixed period of time.
• Exempt EU non-significant benchmarks and their equivalent third-country benchmarks from mandatory designation.
• Consider exempting EU significant benchmarks and their equivalent third-country benchmarks from mandatory designation in order to better align the BMR with the scope of benchmark regulations globally.
• Exempt public policy benchmarks (eg, FX rates used in non-deliverable forwards) and certain interest rate swaps) and regulated data benchmarks.
• Provide a voluntary labelling regime to allow administrators to comply with the BMR and market their benchmarks as BMR-compliant.
• Provide regulators with the power to prohibit the acquisition of new exposure to benchmarks that fail to comply with the BMR, but permit the use of such benchmarks for managing or reducing legacy positions (including undertaking new transactions for such purposes).
• Provide end users with greatly enhanced visibility on whether third-country benchmarks have qualified (or been disqualified) for use under the regime via a more usable ESMA register.

On 30 June 2020, the International Capital Market Association (ICMA) expanded its Bond Market Transparency Directory to include pre-trade reporting obligations, in addition to post-trade obligations across multiple jurisdictions from Europe, the Americas and Asia-Pacific.

The purpose of the mapping is to provide a consolidated view to compare both regulatory rules and best practice guidance on bond trade reporting transparency regimes, as well as details on reporting fields and exceptions. 

On 9 June 2020, the International Swaps and Derivatives Association (ISDA) published a letter in which, on 2 June, the European Banking Federation and FIA wrote to the European Commission (EC) and the European Securities and Markets Authority asking the EC both to expedite equivalence decisions relating to EMIR Article 13 and to extend a derogation from the clearing obligation for cross-border intragroup transactions by a further three years (for transactions where one entity is in a jurisdiction that has not yet been found equivalent). The derogation is set to expire on December 21, 2020.

In view of the forthcoming expiry in December 2020 of the intragroup exemption from the clearing obligation under EMIR, the associations ask that
1) the necessary equivalence decisions be adopted as a matter of urgency in relation to all jurisdictions that have implemented clearing rules in line with the G20 commitments and
2) that the Clearing RTS should be amended to extend the current temporary derogation from clearing requirements for intragroup transactions with non-EU affiliates for a further 3 years for all other jurisdictions. 

On 28 June 2020, the Financial Stability Board (FSB) published Consultation Report for the Evaluation of the effects of too-big-to-fail (TBTF) reforms.

The evaluation found that:

(i) TBTF reforms have made banks more resilient and resolvable. 

• Systemically important banks are better capitalised and have built up significant loss-absorbing capacity. The capital ratios of global systemically important banks have doubled since 2011.
• Many FSB jurisdictions have introduced comprehensive bank resolution regimes and are carrying out resolution planning. This gives authorities a wide range of options for dealing with banks in stress.
• Evidence from market prices and credit ratings suggest that these reforms are seen as credible by market participants.

(ii) The benefits of the reforms significantly outweigh the costs.

• Material negative side effects of the reforms have not been observed. Other market participants have stepped into areas where large banks have reduced their activities, while market fragmentation has not increased.
• On a conservative estimate of the probability and costs of financial crisis, the reforms have produced net benefits to society.

(iii) There are still gaps that need to be addressed.

• Resolution of banks is a complex process, and some obstacles to resolvability remain. The FSB continues its work to make sure these are addressed and to encourage full implementation of the resolution reforms.
• Supervisors, firms and markets have much better information than before the implementation of the reforms, but reporting and disclosures could still be improved.

On 23 June 2020, the Bank of International Settlement (BIS) published a Technical amendment to the securitisation standard of non-performing loans.

This technical amendment, which the Committee started developing before the onset of the COVID-19 pandemic, addresses a gap in the regulatory framework and sets out a prudent treatment for securitisations of non-performing loans. The Committee invites comments on the proposed amendment by 23 August 2020.

The technical amendment establishes a 100% risk weight for certain senior tranches of non-performing loan securitisations. The risk weight applicable to the other positions are determined by the existing hierarchy of approaches, in conjunction with a 100% risk weight floor and a ban on the use of certain inputs for capital requirements. The present amendment does not change the applicable capital requirements to securitisations of performing assets.

On 9 June 2020, the International Capital Market Association (ICMA) released Sustainability-Linked Bond Principles (SLBP). 
These are voluntary guidelines for sustainability-linked bonds (SLBs) defined as forward-looking performance-based bond instruments where the issuer is committing to future improvements in sustainability outcomes within a predefined timeline. The financial and/or structural characteristics of SLBs can vary depending on whether the issuer achieves those predefined Sustainability Performance Targets. Within these parameters, the use of funds for SLBs are intended for general purposes rather than for underlying sustainable projects as in the case of existing green, social and sustainability bonds. 

The following publications have also been updated: 

• Social Bond Principles (SBP)
• Harmonized Framework for Impact Reporting ( including guidance for biodiversity)
• Working Towards a Harmonized Framework for Impact Reporting for Social Bonds 
• High-level Mapping of Green, Social and Sustainability Bonds to the Sustainable Development Goals
• Guidance Handbook
• External Review Guidelines.

On 24 June 2020, the Network for Greening the Financial System published  report on Climate Change and Monetary Policy. This report compiled by the NGFS group of experts on monetary policy and climate change investigates the possible effects of climate change on the conduct of monetary policy. Based on a comprehensive review of existing literature, studies and expert analyses, it provides some early answers to the following questions:

(I) How does climate change affect key macroeconomic variables?

(II) What are the effects on the monetary transmission channels and central banks’ assessment of their policy space?

(III) Do central banks’ prevalent analytical toolkits adequately reflect climate change?

(IV) How might climate-related risks affect different monetary policy regimes?