Central Securities Depositary Regulation (CSDR)
EP adopts changes to the CSDR framework on the financial instruments settlement regime
On March 2 2023, the European Parliament published that Members of the European Parliament (MEPs) adopted changes to financial instruments settlement regime.
The new rules on the central securities depositories adopted with 56 votes to 3 introduce a number of measures including settlement regime, the recognition regime for central securities depository (CSDs) established in a third-country and closer monitoring to target settlement fails, to encourage timely settlement, when securities transactions are being completed.
In order to address settlement fails, when a party of a transaction does not deliver a security or funds on time MEPs proposed to apply deterrent and proportionate cash penalties. They agreed that mandatory buy-in rules (when non-delivered securities are purchased in the market and made available for settlement) should apply only as a last resort measure. MEPs also want to exclude transactions that failed for reasons not attributable to the participants, transactions that do not involve two trading parties, or when it could lead to detrimental consequences for the market. The Commission should have the power to suspend mandatory buy-ins where necessary.
MEPs agreed to minimizing cross-border obstacles and administrative burden for CSDs so that they can operate across the EU with one single licence.
They also want the recognition regime for CSDs established in a third-country expanded to cover securities settlement services, which should contribute to a more level playing field between CSDs established in a member state and CSDs established in a third-country and mitigate the risks.
Additionally, MEPs voted to substantially simplify the Commission's proposal on the establishment of colleges of supervisors and proposed a stronger role for the European Securities and Markets Authority (ESMA) in those colleges. Colleges should be established whenever a CSD is of substantial importance in more than one host Member State.
CSDs would be able to access banking services so they could offer settlement services for a broader range of currencies and obtain financing from cross-border investors. In order to ensure a level playing field among CSDs, with and without authorisation to provide banking-type ancillary services, CSDs non-authorized as banks should be able to offer a sufficient amount of arrange foreign currency settlement through a bank account. However the principle of ‘same activity, same risk, same rules’ would have to be respected and the European Banking Authority (EBA) should be tasked with drafting risk mitigating requirements.
AFME announces establishment of a T+1 industry taskforce
On March 2 2023, the Association for Financial Markets in Europe (AFME) announced establishment of a T+1 industry taskforce.
The Association for Financial Markets in Europe (AFME), as a leading voice on the debate surrounding a move to a one-day settlement cycle (T+1) in Europe, has announced it is setting up a new industry taskforce. The Association is issuing a call for interest for participation from a broad and diverse group of industry associations representing stakeholders who will be impacted by a shortening of the securities settlement cycle in Europe.
The task force will assess two key questions. Firstly, whether Europe should follow the US and other jurisdictions in moving to shorter settlement cycles, based on a robust cost-benefit analysis. Secondly, if so, how and when the potential move should happen. Further consideration will be required to identify the changes to the current post trade operating environment that would be necessary to facilitate T+1, and to agree on actions required to deliver those changes, including an appropriate timeframe.
Directive on the Distance Marketing of Financial Services
Council of the EU adopts a general approach on the proposal for a Directive on financial services contracts concluded at a distance
On March 2 2023, the Council of the EU adopts a general approach on the proposal for a Directive on financial services contracts concluded at a distance.
The new directive updates the current EU legislation (the 2002 directive on distance marketing of consumer financial services) to create a level playing field in the internal market for distance financial services while raising the level of consumer protection.
With the development of IT technologies, an increasing number of financial services such as credit, insurance, investments or pension plans are promoted online, and the contracts of these services are concluded at a distance. This trend, which became more prevalent during the COVID-19 pandemic, necessitated amendments to the existing legislation. The Commission proposal, presented on May 11 2022, repeals the 2002 directive and introduces the modernised provisions for financial services contracts concluded at a distance into the horizontally applicable consumer rights directive (CRD). In addition, certain articles of the CRD (such as those on telephone communication, additional payments, enforcement and penalties) will apply to financial services sold at a distance.
While the Council’s general approach maintains the objectives of the Commission’s proposal, it introduces several improvements making it more coherent with existing sectoral legislation and clarifying some important points of the directive.
To ensure a high level of consumer protection and avoid any risk of lowering the level of protection for consumers in certain countries, the Council proposes minimum harmonisation as regards pre-contractual obligations which allow member states to have stricter national rules than those established by the directive.
The Council’s mandate clarifies the scope of application and the safety net-feature of the directive, in particular for financial services that are excluded from other sectoral legislation or only partially covered by it.
The Council position also adds further provisions of the consumers rights directive, applying these to financial services contracts concluded at a distance. These include provisions on telephone contracts, inertia selling (the sending of unsolicited goods or services to potential customers to make a sale), or the possibility for member states to introduce language requirements in national law regarding pre-contractual information.
The directive facilitates the exercise of the right of withdrawal in relation to contracts concluded at a distance with the inclusion of a button (or similar function) with the label ‘withdraw from contract here’ (or a corresponding formulation) in the financial service provider’s interface. At a second step, there is a confirmation button ’withdraw now’ to ensure that the consumer does not withdraw from the contract by mistake. The objective of this ’withdrawal button’ is to raise the consumers’ awareness and ensure that withdrawing from a contract is not more burdensome than to entering it.
The Council also proposes extending the provisions of this feature to the general chapter of the consumer rights directive, so that ’withdrawal buttons’ are applied to all contracts concluded at a distance.
The consumer shall have a period of 14 calendar days to withdraw from the contract without penalty, 30 calendar days in the case of personal pension operations. To align this provision with the directive on consumer credits (currently under negotiation), the general approach proposes limiting this right of withdrawal to 12 months, and 14 days in the event that the consumer has not been informed about his or her right of withdrawal.
The general approach adopted today improves the rules of information disclosure and aims to modernise pre-contractual information obligations and make them future-proofed for financial services in the years to come. In case the trader uses online tools, like roboadvice or chatbots, the consumer must have the right to request human intervention to understand the effects that the contract may have on his or her financial situation.
The Council position enables Member States to adapt the explanations that should be provided by financial services providers to the circumstances of the products and needs of the consumers.
Finally, the general approach adopted today extends the transposition period, so the industry will benefit from an additional six months to make all the required changes to their IT-systems.
European Data Act
EP publishes amendments on draft harmonised rules on fair access to and use of data (Data Act)
On March 14 2023, the European Parliament published amendments adopted by the European Parliament on March 14 2023 on the proposal for a regulation of the European Parliament and of the Council on harmonised rules on fair access to and use of data (Data Act) (COM(2022)0068 – C9-0051/2022 – 2022/0047(COD)).
This Regulation lays down harmonised rules on:
(a) the design of connected products to allow access to data generated by a connected product or generated during the provision of related services to the user of that product;
(b) data holders making available data they accessed from a connected product or generated during the provision of a related service to data subjects, users or to data recipients, at the request of the user or data subject;
(c) fair contractual terms for data sharing agreements;
(d) the making available of data to public sector bodies or Union institutions, agencies or bodies, where there is an exceptional need in the public interest;
(e) facilitating switching between data processing services;
(f) introducing safeguards against unlawful international governmental access to non-personal data; and
(g) providing for the development of interoperability standards and common specifications for data to be transferred and used.
This Regulation covers personal and non-personal data, including the following types of data or in the following contexts:
(a) Chapter II applies to accessible data obtained, collected or otherwise generated by connected products or generated during the provision of related services;
(b) Chapter III applies to any private sector data subject to statutory data sharing obligations;
(c) Chapter IV applies to any private sector data accessed and used on the basis of contractual agreements between businesses;
(d) Chapter V applies to any private sector non-personal data;
(e) Chapter VI applies to any data and services processed by data processing services;
(f) Chapter VII applies to any non-personal data held in the Union by providers of data processing services.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
ESMA updates Q&A on the application of the AIFMD (10/3/2023)
On March 10 2023, the European Securities and Markets Authority (ESMA) updated Q&A on the application of the AIFMD (10/3/2023).
The update from 10 March 2023 refers to the following question:
Article 3(2) AIFMD states the following:
“Without prejudice to the application of Article 46, only paragraphs 3 and 4 of this Article shall apply to the following AIFMs:
(a) AIFMs which either directly or indirectly, through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manage portfolios of AIFs whose assets under management, including any assets acquired through use of leverage, in total do not exceed a threshold of EUR 100 million; or
(b) AIFMs which either directly or indirectly, through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manage portfolios of AIFs whose assets under management in total do not exceed a threshold of EUR 500 million when the portfolios of AIFs consist of AIFs that are unleveraged and have no redemption rights exercisable during a period of 5 years following the date of initial investment in each AIF”.
How should the notion of “substantive direct or indirect holding” in Article 3(2) of the AIFMD be interpreted. In particular, is there a quantitative threshold above which the criterion of substantive direct or indirect holding could be considered as met, and, if yes, what this threshold would be?
EU publishes ELTIF II
The European Commission has proposed amending the ELTIF Regulation to make it more appealing to investors. The restrictions and burdensome conditions of the initial ELTIF regulation have served their further development poorly. The revision of the regulation aims at increasing the take-up of ELTIF vehicles across the EU, given that as of the date of publication of the draft at the end of 2021, only 57 ELTIF funds had been launched since the introduction of the regime in May 2015 (this figure rose to 84 at the end of 2022). The revision of the ELTIF regulation also aims to remove barriers of entry for retail investors, while distinguishing requirements applicable to ELTIFs dedicated to retail and professional investors.
On March 20 2023, the European Union published the Regulation (EU) 2023/606 of the European Parliament and of the Council of March 15 2023 amending Regulation (EU) 2015/760 as regards to the requirements pertaining to the investment policies and operating conditions of European long-term investment funds and the scope of eligible investment assets, the portfolio composition and diversification requirements and the borrowing of cash and other fund rules (ELTIF II). The key mulled changes involve differentiating between ELTIFs marketed to professional investors and those to which retail investors can have access; removing barriers to retail investor access to ELTIFs; and establishing an optional liquidity window mechanism for redemptions, for cases where investors need to exit early. The new text redefines the notion of “real asset” to include any asset that has intrinsic value due to its substance and properties. It significantly revises the minimum investment threshold from €10 million to €1 million, and it also no longer requires real assets to be held directly through qualifying portfolio companies. Then, the scope of qualifying assets for ELTIFs is extended to STS securitized assets pursuant to Regulation (EU) 2017/2402 and eligible green bonds in accordance with EU legislation on environmentally sustainable bonds.
Under ELTIF II, AIFMs who manage ELTIFs and other types of funds can co-invest as long as any conflict of interest is identified and managed appropriately. The various limits, borrowing, diversification, concentration, etc., are thus all raised in order to make the management of these particular AIFs easier. The 2024 version ELTIFs will be able to invest in funds of funds, in master-feeder structures and in STS securitization. As a reminder, in order to be able to manage an ELTIF, you must be an AIFM and request “in exchange for management that respects the ELTIF principles” a special license which will serve as confirmation of the ELTIF status.
In terms of distribution to retail clients, ELTIF II makes things simpler by offering to rely on distributors (MIFID or IDD) who will carry out the required tests to qualify investors. ELTIFs will thus be able to benefit from an intra-European passport for their distribution.
The new Regulation applies as of January 10 2024. ELTIF II was officially published on March 20, 2023 in the Official Journal of the European Union and will enter into force on April 9, 2023.
Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)
EP adopts changes to the MiFID/R framework on increased transparency and investor protection
On March 2 2023, the European Parliament published an article on Members of the European Parliament (MEPs) supporting better access to market data and more robust EU market infrastructures.
The Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR) are the principal legislation regulating investment services and activities on the EU trading venues. With their vote on Wednesday, the Economic and Monetary Affairs Committee backed changes concerning among others, data quality standards and investor protection, changes regarding market data consolidation and transparency as well as provisions on “payment for order flow.
Accurate and comparable market data is crucial to an informed decision making process. For this reason, MEPs supported an EU-wide consolidated tape (CT), an electronic system which combines sales volume and price data from different exchanges and consolidates these into a continuous live feed, providing a single reference price for each asset class (shares, exchange traded funds, bonds and derivatives) across markets.
Trading venues (except smaller markets and SME growth markets) would have to provide pre- and post-trade information to a consolidated tape provider (CTP) as close to real time as it is technically possible. This information should be also publicly available for a price based on a cost of producing the data and a reasonable margin. Competent authorities should monitor the data quality provided to the CTP by market data contributors and take the necessary measures, including sanctions, where their quality is insufficient.
Furthermore, MEPs proposed that retail investors, academics and civil society organisations using the data for research purposes as well as public authorities should have access to the consolidated tape free of charge. The tape provider should ensure that the information provided to retail investors is easily accessible and displayed in a user-friendly and understandable format.
MEPs approved changes to the current rules on the transparency rules applicable under MiFIR. The text clarifies and simplifies the limitations on trading without pre-trade transparency (the so-called ‘dark trading’) by establishing a single volume cap that limits the amount of dark trading in an equity instrument in the EU to 7% of total trading in that instrument. They also ask European Securities and Markets Authority (ESMA) to define the size of financial transactions in equities that could benefit from a waiver from the MiFIR transparency obligations.
In addition, to ensure an adequate level of transparency and harmonise it across Europe, the text modifies the deferral times applicable to the publication of the details of transactions in bonds, structured products, emission allowances and derivatives. MEPs backed a EU-wide harmonised regime that categorises those deferrals based on the liquidity and the size of a transactions, significantly improving the current levels of transparency, making possible for all investors to be able to have faster access to transaction data and compare the prices of different financial instruments, while protecting the role of liquidity providers.
Besides, the text introduces greater flexibility by empowering ESMA to set the threshold and limits applicable to market transparency and to oversee market developments, intervening when the price formation process is threatened or the international competitiveness of EU markets is hindered.
To protect investors from sub optimal trading decisions, MEPs supported the EU prohibition of receiving payments for forwarding client orders for execution (‘payment for order flows’). The text also mandates member states to require regulated markets to be able to temporarily halt or constrain trading in emergencies or if there is a significant price movement in a financial instrument and, in exceptional cases, to be able to cancel, vary or correct any transaction.
ESMA publishes Guidelines on MiFID II product governance requirements
On March 27 2023, the European Securities and Markets Authority (ESMA) published Guidelines on MiFID II product governance requirements.
The main amendments introduced to the guidelines concern:
- the specification of any sustainability-related objectives a product is compatible with;
- the practice of identifying a target market per cluster of products instead of per individual product (“clustering approach”);
- the determination of a compatible distribution strategy where a distributor considers that a more complex product can be distributed under non-advised sales;
- the periodic review of products, including the application of the proportionality principle.
The product governance requirements introduced by MiFID II have proven to be one key element of the MiFID II investor protection framework, aiming at ensuring that financial instruments and structured deposits (“products”) are manufactured and/or distributed when this is in the best interest of clients.
By pursuing the objective of ensuring a consistent and harmonised application of the product governance requirements, the guidelines will make sure that the objectives of MiFID II can be efficiently achieved.
ESMA conducted a public consultation on these Guidelines to gather the views of relevant stakeholders. The report published today contains a feedback statement summarising the responses received and highlighting the amendments and clarifications introduced in the final guidelines to consider the feedback received during this consultation.
ESMA issues a public statement on derivatives on fractions of shares
On March 28 2023, the European Securities and Markets Authority (ESMA) issued a Public statement on derivatives on fractions of shares.
This statement, which is addressed to firms and NCAs, clarifies the application of certain investor protection requirements established under MiFID II (and its implementing measures).
Firms are required to provide clients in good time before the provision of investment services with a description of the nature and risks of the relevant financial instruments. This includes:
- General information requirements
- Information on costs and charges including mark-ups and mark-downs
- Requirements on product governance
- Requirements on appropriateness
Where derivatives on fractions of shares are packaged retail and insurance-based investment products, the PRIIPs Regulation applies and firms need to provide retail clients with a PRIIPs KID.
Sustainable Finance / Green Finance
EC amends General Block Exemption rules to further facilitate and speed up green and digital transition
On March 9 2023, the European Commission (EC) amended General Block Exemption (GBE) rules to further facilitate and speed up green and digital transition.
Together with the new Temporary Crisis and Transition Framework, this targeted amendment aims at making it easier for the Member States to grant necessary support for key sectors in line with the Green Deal Industrial Plan.
The GBER declares specific categories of State aid compatible with the Treaty on the Functioning of the European Union, provided that they fulfil certain conditions. It therefore exempts these categories from the requirement of prior notification to and approval by the Commission, enabling Member States to grant the aid directly and informing the Commission only ex-post.
The amendment grants Member States more flexibility to design and implement support measures in sectors that are key for the transition to climate neutrality and to a net-zero industry. It will help speeding up investment and financing for clean tech production in Europe, in line with the Green Deal Industrial Plan.
The new rules reflect the recent changes to various sets of State aid Guidelines to ensure that the GBER remains fit for the green and digital transition.
They will also set the right foundations to tackle some of the economic effects stemming from Russia's war against Ukraine and contribute to the recovery of Europe's economy, affected also by the coronavirus pandemic and the high energy prices.
In particular, the revised rules are:
- Increase and streamline the possibilities for aid in the area of environmental protection and energy, among others to support the rollout of renewable energy, decarbonisation projects, green mobility and biodiversity, as well as to facilitate investments in renewable hydrogen and to increase energy efficiency;
- Facilitate the implementation of certain projects involving beneficiaries in several Member States, such as Important Projects of Common European Interest (‘IPCEI'), in the research and development field, by increasing the aid intensities as well as the notification thresholds;
- Extend the possibilities for training and reskilling across sectors by exempting from notification training aid below €3 million;
- Block exempt aid measures set up by Member States to regulate prices for energy such as electricity, gas and heat produced from natural gas or electricity;
- Introduce a very significant increase of notification thresholds for environmental aid as well as for Research, Development and Innovation (‘RDI') aid;
- Clarifies and streamlines the possibilities for risk finance aid, for small and medium-sized enterprises (‘SMEs') and start-ups, as well as for financial products supported by the InvestEU Fund;
- Prolongs the GBER until the end of 2026 for legal certainty and regulatory stability;
- Increases the thresholds in the GBER even beyond the areas under specific review to cater for the longer period of validity of the rules; and
- Aligns the provisions of the GBER with the new Regional Aid Guidelines, the Climate, Energy and Environmental State aid Guidelines, the Risk Finance Guidelines, the Research, Development and Innovation Framework and the Broadband Guidelines.
EC welcomes the provisional agreement to reform and strengthen the EU Energy Efficiency Directive
On March 10 2023, the European Commission (EC) welcomed the provisional agreement with the European Parliament and the Council to reform and strengthen the EU Energy Efficiency Directive.
This deal marks a further step in the completion of the ‘Fit for 55' package to deliver the European Green Deal and the REPowerEU Plan. It shows once again the EU's determination to become climate neutral by 2050.
For the first time, the energy efficiency first principle is given legal strength with a clear requirement for EU countries to take energy efficiency into consideration in policy, planning and major investment decisions in the energy sector and beyond.
The agreement establishes an EU energy efficiency target of 11.7% for 2030, exceeding the Commission's original ‘Fit for 55' proposal. It requires EU Member States to collectively ensure an additional reduction of final and primary energy consumption, compared with energy consumption forecasts made in 2020.
Under the provisional deal, the annual energy savings obligation nearly doubles to ensure continual progress. EU countries will be required to achieve new savings each year of 1.49% of final energy consumption on average, from 2024 to 2030, up from the current level of 0.8%. They will gradually have to reach 1.9% by the end of 2030. This is an important instrument to drive energy savings in end-use sectors such as buildings, industry and transport.
The revised rules also give a greater responsibility to the public sector to increase energy efficiency. Public bodies will need to systematically take into account energy efficiency requirements in their public procurement of products, services, buildings and works. A new annual energy consumption reduction target of 1.9% is introduced for the public sector. EU countries' obligation to renovate each year at least 3% of the total floor area of buildings owned by the public administration now also covers the regional and local levels.
Companies will be encouraged to be more energy-efficient under the revised Directive. First, energy management systems will become a default obligation for large energy consumers. All enterprises, including SMEs that exceed 85TJ of annual energy consumption, will have to implement an energy management system. Otherwise, they will be subject to an energy audit (if their annual consumption exceeds 10TJ). For the first time, a reporting scheme for energy performance of large data centres is also introduced.
Under the agreed rules, EU countries will also have to promote local heating and cooling plans in large municipalities having populations above 45,000. Also, with the revised definition of efficient district heating and cooling, minimum requirements will be gradually changed to ensure a fully decarbonised district heating and cooling supply by 2050. Support to new high-efficiency cogeneration units using natural gas and connected to district heating in efficient district heating and cooling systems will only be possible until 2030, whereas any other fossil fuel use will be banned for new heat generation capacities in such systems.
The deal further strengthens provisions on energy efficiency financing to facilitate the mobilisation of investments. Under the new provisions, EU countries will be required to promote innovative financing scheme and green lending products for energy efficiency, by ensuring their wide and non-discriminatory offer by financial institutions. EU countries will have to report on the volume of energy efficiency investments.
The agreement includes the first ever EU definition of energy poverty. Member States will now have to implement energy efficiency improvement measures as a priority among people affected by energy poverty, vulnerable customers, low-income households, and where applicable, people living in social housing. The revised rules put a stronger focus on alleviating energy poverty and empowering consumers, including the creation of one-stop-shops for, technical and financial assistance and out-of-court mechanisms for the settlement of disputes.
Ministère de l'Economie launches new vehicles for the National Artificial Intelligence Strategy - France 2030 / Le Ministère de l'Economie lance de nouveaux véhicules dans le cadre de la Stratégie Nationale sur l'Intelligence Artificielle - France 2030
On March 29 2023, the Ministère de l'Economie launched new vehicles as part of the French National Artificial Intelligence Strategy (France 2030).
The vehicles consist of trusted AI for a total amount of 120 million euros aimed at supporting the development and innovation in certain priority areas such as embedded AI, trusted AI and AI at the service of the ecological transition.
As part of the France 2030 strategy, which contributes to mastering trusted and secure digital technologies, in early April of a call for "Trusted artificial intelligence demonstrators (DIAC)" was launched; this vehicle will support the development of hardware, software and system innovations aimed at ensuring the expansion and demonstration of critical functions integrated in trusted artificial intelligence. Related projects must be oriented towards the demonstration of a clearly identified functional need that will ultimately strengthen the position of players in an existing market or open up to a new market (in particular medical devices, transport and new mobility, industry 4.0, energy and energy networks, critical infrastructures, etc.). The project must demonstrate its ability to bring added value in terms of structuring the industrial sector and the value chain.
At the end of April of a second wave of a call for "Artificial intelligence demonstrators in the territories (DIAT)" will be launched, if the selection of the winners of the first wave is being finalized, aimed at supporting technology demonstrator projects based on data science and artificial intelligence that meet territorial challenges . These demonstrators will aim to make use of efficient AI in energy and/or data to serve the environmental challenges and objectives of communities and the public services or collective interests for which they are responsible, while setting real environment technologies of emerging players at the forefront of France 2030.
Finally, the “Technological maturity and demonstration of embedded artificial intelligence technologies” call will be relaunched, aiming at disseminating through demonstrators in real solutions implementing an AI functionality (inference and/or learning) in an embedded system, as close as possible to the sensor (in particular mobility, Internet of Things, medical devices, energy networks, urban infrastructure or telecommunications infrastructure, agricultural equipment), and supporting the development of particularly advanced hardware architectures for the needs of the deployment of algorithms on embedded targets. This component more specifically targets projects in the field of hardware dedicated to AI, such as semiconductors. Several projects have been selected as part of this programme and a communication on the winners will take place soon.
Le 29 mars 2023, le Ministère de l'Economie a lancé de nouveaux véhicules dans le cadre de la Stratégie Nationale sur l'Intelligence Artificielle (France 2030).
Les véhicules sont constitués d'IA de confiance pour un montant total de 120 millions d'euros visant à soutenir le développement et l'innovation dans certains domaines prioritaires comme l'IA embarquée, l'IA de confiance et l'IA au service de la transition écologique.
Dans le cadre de la stratégie France 2030, qui contribue à la maîtrise des technologies numériques de confiance et sécurisées, début avril un appel à des « Démonstrateurs d'intelligence artificielle de confiance (DIAC) » a été lancé ; ce véhicule soutiendra le développement d'innovations matérielles, logicielles et du système visant à assurer l'expansion et la démonstration de fonctions critiques intégrées dans une intelligence artificielle de confiance. Les projets connexes doivent être orientés vers la démonstration d'un besoin fonctionnel clairement identifié qui permettra à terme de renforcer la position des acteurs d'un marché existant ou de s'ouvrir à un nouveau marché (notamment dispositifs médicaux, transports et nouvelles mobilités, industrie 4.0, énergie et énergie réseaux, infrastructures critiques…). Le projet doit démontrer sa capacité à apporter de la valeur ajoutée en termes de structuration de la filière industrielle et de la chaîne de valeur.
Fin avril sera lancée une deuxième vague d'un appel à des "Démonstrateurs d'intelligence artificielle dans les territoires (DIAT)", si la sélection des lauréats de la première vague est en cours de finalisation, visant à soutenir des projets de démonstrateurs technologiques basés sur la science des données et l'intelligence artificielle qui répondent aux enjeux territoriaux. Ces démonstrateurs auront pour objectif de mettre à profit des IA performantes dans l'énergie et/ou les données pour servir les enjeux et objectifs environnementaux des collectivités et des services publics ou intérêts collectifs dont ils ont la charge, tout en mettant à la pointe des technologies environnementales réelles des acteurs émergents.
Enfin, l'appel à la « Maturité technologique et démonstration des technologies d'intelligence artificielle embarquée » sera relancé, visant à diffuser par le biais de démonstrateurs dans des solutions réelles mettant en œuvre une fonctionnalité d'IA (inférence et/ou apprentissage) dans un système embarqué, au plus près du capteur. (notamment mobilité, Internet des Objets, dispositifs médicaux, réseaux d'énergie, infrastructures urbaines ou de télécommunications, équipements agricoles), et accompagner le développement d'architectures matérielles particulièrement avancées pour les besoins du déploiement d'algorithmes sur des cibles embarquées. Ce volet cible plus particulièrement les projets dans le domaine des matériels dédiés à l'IA, comme les semi-conducteurs. Plusieurs projets ont été sélectionnés dans le cadre de ce programme et une communication sur les lauréats aura lieu prochainement.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
AMF approves amendments to its General Regulation on undertakings for collective investment / L'AMF approuve des modifications de son règlement général relatif aux organismes de placement collectif
On March 15 2023, the Autorité des marchés financiers (AMF) published Order of February 1 2023 approving amendments to its General Regulations on undertakings for collective investment.
The decree of February 1 2023, published in the Official Journal of February 11 2023, amends IV of the AMF General Regulation.
The purpose of these amendments is to clarify that collective investment undertakings or their management companies are obliged to publish the net asset value of such undertakings in the event of suspension of subscriptions and redemptions of their units or shares where they are able to calculate them precisely.
The undertakings for collective investment concerned are undertakings for collective investment in transferable securities, general purpose investment funds, private equity funds, employee savings funds, funds of hedge funds, undertakings for collective investment in real estate, undertakings for professional investment in real estate, professional general purpose funds and specialised financing undertakings.
Le 15 mars 2023, l'Autorité des marchés financiers (AMF) a publié l'ordonnance du 1er février 2023 portant approbation des modifications de son règlement général relatif aux organismes de placement collectif.
Le décret du 1er février 2023, publié au Journal Officiel du 11 février 2023, modifie le Titre IV du règlement général de l'AMF.
Ces modifications ont pour objet de préciser que les organismes de placement collectif ou leurs sociétés de gestion sont tenus de publier la valeur liquidative de ces organismes en cas de suspension des souscriptions et rachats de leurs parts ou actions lorsqu'ils sont en mesure de les calculer précisément.
Les organismes de placement collectif concernés sont les organismes de placement collectif en valeurs mobilières, les fonds d'investissement à vocation générale, les fonds de capital investissement, les fonds d'épargne salariale, les fonds de fonds alternatifs, les organismes de placement collectif immobilier, les organismes d'investissement immobilier professionnel, les fonds professionnels à vocation générale et les organismes de financement spécialisés.
Shareholders' Rights Directive (SRD II)
NBB publishes new form on shareholder control
On March 22 2023, the National Bank of Belgium (NBB) published "Shareholder control - New form effective director of a qualified shareholder".
With this communication, the Bank informs any legal person intending to acquire, increase, reduce or dispose of a qualifying holding in a financial institution governed by Belgian law that a new standard form for assessing the professional integrity of their effective directors is in place.
Money Market Funds Regulation (MMFR)
BaFin applies updated ESMA Guidelines on stress test for MMFs
On March 9 2023, the Federal Financial Supervisory Authority (BaFin) applied the German translation of the ESMA Guidelines published on January 27 2023 on stress test for MMFs.
The purpose of these guidelines is to ensure a common, uniform and consistent application of the provisions of Article 28 of the MMF Regulation. In particular, those guidelines establish common reference parameters for the scenarios underlying the stress tests, as provided for in Article 28(7) of the MMF Regulation.
In accordance with Article 28(7) of the MMF Regulation, ESMA shall update those guidelines at least once a year, taking into account recent market developments. As a result, MMF managers have the necessary information to fill in the relevant fields in the report template referred to in Article 37 of the MMF Regulation in accordance with Commission Implementing Regulation (EU) 2018/708. This information shall include specifications for the types of stress tests mentioned and their calibration.
Custodians / Depositaries
SFC releases Consultation conclusions on the introduction of new regulated activity for depositaries of public funds
On March 24 2023, the Securities and Futures Commission (SFC) released Consultation conclusions on the introduction of new regulated activity for depositaries of public funds.
This constitutes a proposed amendment to the legislative code to introduce Type 13 regulated activity (RA 13), a new regime to regulate depositaries (i.e., top-level trustees and custodians) of SFC-authorised collective investment schemes.
Following general support for proposals in an initial consultation on a framework for a new regulated activity, Type 13 (RA 13), the Securities and Futures Commission (SFC) issued in February 2022 a consultation paper on proposed amendments to the subsidiary legislation and SFC codes and guidelines for the implementation of the new regime to regulate top-level trustees and custodians (ie, depositaries) of SFC-authorised collective investment schemes (CISs).
The consultation period ended in April 2022. Five written submissions were received from an industry association, two market participants, a business organisation and an individual.
Respondents generally supported the proposals and most of the comments sought clarification of technical issues. Key comments related to the scope of the oversight function under the proposed approach to defining RA 13, the interpretation of terms such as “client assets” and “associated entities” under the subsidiary legislation and requests for exemptions from some subsidiary legislation and the level of responsibility under Schedule 11 to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Schedule 11) for different activities. This paper summarizes the key comments received and our responses.
Financial Market Infrastructure (FMI)
SFC publishes Circular on the arrangements for the launch of the HKIDR on 20 March 2023
On March 2 2023, the Securities and Futures Commission (SFC) published a Circular on the arrangements for the launch of the Hong Kong Investor Identification Regime (HKIDR).
Relevant Regulated Intermediaries (RRIs) are reminded that the HKIDR was launched on 20 March 2023. RRIs should comply with all applicable requirements under the SFC’s Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct) and the Rules of the Exchange of The Stock Exchange of Hong Kong Limited (SEHK), including obtaining express consent from each individual client, collecting/updating their respective client identification data (CID), assigning to them each a Broker-to-Client Assigned Number (BCAN), submitting the BCAN-CID Mapping Files to SEHK, and tagging BCANs to on-exchange orders as well as off-exchange trades reportable to SEHK.
RRIs are strongly advised to submit the BCAN-CID Mapping File as soon as possible. If RRIs have not done so upon the launch of the HKIDR, their clients may not be allowed to place buy orders on the day they wish to trade.
During the stabilisation period from March 20 2023 to March 31 2023 (both dates inclusive), RRIs should closely monitor whether there is any failure in tagging BCAN to an order or any rejection of orders due to wrong BCAN format. In the event that an RRI faces unexpected technical difficulties in tagging BCANs, it should contact SEHK on 2840-3626 or the SFC via firstname.lastname@example.org immediately.
SEHK will arrange a PRT for the upgraded Orion Trading Platform – Securities Market (OTP-C) and the Orion Central Gateway – Securities Market (OCG-C) from 9:00am to 12:10pm on March 18 2023 (Saturday) for RRIs who are Exchange Participants (EPs) to verify their system readiness for BCAN tagging before the launch of the HKIDR on the following Monday. EPs can also involve their non-EP RRI clients in order to test the passing of the orders with BCANs during the PRT. Please refer to SEHK’s Circular regarding the arrangements for the launch of the HKIDR for details, which will be issued soon.
SFC publishes Circular to intermediaries, responsible officers and licensed representatives on waiver of annual licensing fees
On March 27 2023, the Securities and Futures Commission (SFC) published a Circular to intermediaries, responsible officers and licensed representatives on waiver of annual licensing fees.
The SFC will waive the annual licensing fees of all intermediaries and licensed individuals incurred during the period from April 1 2023 to March 31 2024.
The SFC will not issue the usual demands for payment for annual licensing fees which would ordinarily become payable during this one-year period. Payments of all other fees, including for licence applications and transfers, will not be affected.
CBI sets out regulatory and supervisory priorities for 2023
On March 15 2023, the Central Bank of Ireland (CBI) sets out its regulatory and supervisory priorities for 2023.
Core areas of focus include:
- Continuing to remain vigilant in assessing and managing the financial and operational resilience of firms;
- Enhancing the Bank’s regulatory and supervisory approaches to mitigate risks from the changing financial system;
- Providing a clear, open and transparent authorisation process through active engagement with industry and other stakeholders;
- Progressing actions on the systemic risks generated by non-banks, in particular advancing a macro-prudential framework for non-banks;
- Continuing to oversee the consolidation of the Irish banking sector and associated programme of account migration;
- Supervising how firms are supporting borrowers to manage the challenges of the current economic environment (including issues related to affordability and arrears);
- Consulting and engaging on the review of the Consumer Protection Code, the cornerstone of the Bank’s consumer protection framework, and the Individual Accountability Framework, the objective of which is to enhance governance across the regulated sector;
- Continuing vigilance of the financial system, supervising firms’ compliance with AML/CFT obligations, detecting and sanctioning market abuse, and enforcing financial sanctions (working closely with An Garda Síochána and other relevant bodies in all these areas);
- Implementing new EU regulations on digital operational resilience (DORA) and markets in crypto assets (MiCA), as well as contributing to the development of other regulations, such as the review of the Payment Services Directive (PSD2).
- Strengthening the resilience of the financial system to climate change risks and its ability to support the transition to a climate-neutral economy, along with implementing the EU’s Sustainable Finance Disclosures Regulation.
These priorities are in keeping with the Central Bank’s vision of a resilient and trustworthy financial system, which sustainably serves the needs of the economy and its customers, in which firms and individuals adhere to a culture of fairness and high standards.
CBI launches Consultation on Individual Accountability Framework Act 2023
On March 13 2023, the Central Bank of Ireland (CBI) launched a Consultation on Individual Accountability Framework Act 2023.
The CBI issued the Consultation Paper 153 "Enhanced governance, performance and accountability in financial services" seting out how the Central Bank proposes to implement the new Individual Accountability Framework, including the publication of draft Regulations and guidance. The draft regulations and guidance seek to provide clarity in terms of the Central Bank’s expectations for the implementation of three aspects of the framework: the Senior Executive Accountability Regime (SEAR), the Conduct Standards and certain aspects of the enhancements to the Fitness & Probity regime.
The IAF includes the following key elements:
- Senior Executive Accountability Regime (SEAR): This will require in-scope firms to set out clearly and fully where responsibility and decision-making lie within the firm’s senior management.
- Conduct Standards: Common Conduct Standards are basic standards such as acting with honesty and integrity, with due skill, care and diligence, and in the best interest of customers, and will apply to individuals in all regulated firms. Senior executives will also have Additional Conduct Standards related to running the part of the business for which they are responsible.
- Enhancements to the current Fitness & Probity (F&P) Regime: This will include clarifying firms’ obligations to proactively certify that individuals carrying out certain specified functions are fit and proper.
- Amendments to the Administrative Sanctions Procedure (ASP): A key change will be the Central Bank’s ability to take enforcement action under the ASP directly against individuals for breaches of their obligations rather than only for their participation in breaches committed by a firm.
To ensure a focus by firms on high quality implementation of the framework, the following implementation period is proposed:
- Conduct Standards including accountability of senior individuals for running their parts of the business effectively to apply from December 31 2023;
- Fitness & Probity Regime - Certification and inclusion of Holding Companies to apply from December 31 2023;
- Regulations prescribing responsibilities of different roles and requirements on firms to clearly set out allocation of those responsibilities and decision making to apply to in-scope firms from July 1 2024.
European Crowdfunding Service Providers (ECSP) Regulation
CONSOB publishes Consultation on Regulation adopting Regulation (EU) 2020/1503 on providers of crowdfunding services to companies
On March 2 2023, the Commissione Nazionale per le Societa e la Borsa (CONSOB) published Consultation on Regulation adopting Regulation (EU) 2020/1503 on providers of crowdfunding services to companies.
The provisions put up for consultation, for a period of 15 days, are aimed at defining some detailed elements of the European regulation on the provision of crowdfunding services in view of the imminent completion of the process of adapting the national legislation to Regulation (EU) 2020/1503.
The regulatory scheme submitted to market consultation is aimed at regulating the following aspects:
- Procedure for granting and revoking the authorization.
- Definition of information obligations for crowdfunding service providers.
- Definition of domestic legislation applicable to marketing communications.
- Definition of further obligations deriving from the civil regime.
The observations on the Consultation must reach Consob by March 17 2023 online, through Sipe (Integrated System for External Services).
Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT Regulation)
Italy issues Decree allowing issuance of digital securities through DLT
On March 17 2023, the Italian Government issued a Decree allowing the issuance of digital securities through DLT in the Gazzetta Ufficiale.
The Decree incorporates urgent provisions on emissions and circulation of some financial instruments in digital form and the simplification of FinTech experimentation, notably focusing on Distributed ledger technology (DLT).
The Law aims at bridging any gap in the competitivity of the Italian financial market by taking the necessary regulatory steps to include the issuance of securities in digital form, including shares and bonds, other debt securities of foreign issuers issued by Italian issuers, deposit receipts relating to bonds, money market vehicles, and Italian funds.
CONSOB updates its fee schedule for the 2023 financial year
On March 13 2023, the Commissione Nazionale per le Società e la Borsa (CONSOB) updated its fee schedule for the 2023 financial year pursuant to Article 40 of Law no. 724/1994 as amended, which defines the fees to be paid by the entities subject to its supervision.
The supervisory fees applicable to foreign Undertakings for Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs) that market their units or shares in Italy for the 2023 financial year can be found in the table in Article 3 of the Resolution no. 22554 dated December 22 2022, and are summarised below:
- UCITS marketed to retail investors as of January 2 2023 (per sub-fund). Listed funds/sub-funds, or funds with one or more listed classes, are exempt from the fee: EUR 2,290
- UCITS which terminated their marketing in Italy before 2023 but which still have investors in Italy as of January 2 2023 (per sub-fund): EUR 1,620
- UCITS marketed to professional investors in Italy (per sub-fund): EUR 1,060
- AIFs marketed to professional investors in Italy (per sub-fund): EUR 1,060
- AIFs marketed to retail investors in Italy (per sub-fund): EUR 2,090
- ETFs and non-ETFs listed on an Italian regulated market as of January 2 2023 (per listed share class): EUR 3,405. There is a cap of EUR 733,085 at the level of the issuer entity.
Exceptionally, the deadline of April 15 for payments has been postponed for 2023. Consequently, the amounts due must be paid at the latest by May 15 2023 by bank transfer. Failure or delay in the payment of such fees may trigger compulsory payment procedures to be initiated by the CONSOB, along with the application of additional interest charges.
The CONSOB does not charge notification fees neither for UCITS nor for AIFs.
For issuers referred to in points (j1) and (j3):
a) the amount of the contribution for the shares is equal to a fixed portion of € 23,580.00 up to € 10,000,000 of total share capital (if there are more than one class of shares), plus € 220.00 for every € 500,000 over € 10,000,000 and up to € 100,000,000 of share capital, plus € 180.00 for every € 500,000 over € 100,000,000 of share capital. Starting from 2014, shares of companies admitted to listing on national regulated markets whose average market capitalisation in the period between the start of trading and the last trading day of the year preceding the reference year was less than 500 shall be exempt million euros. The exemption shall apply for the first three years following the year of admission to listing. Each issuer will be required to confirm by January 31 of each year that it meets the requirements for the right to exemption from payment of contributions by sending a communication to the e-mail address "email@example.com";
b) the amount of the contribution for the bonds is equal to a fixed tranche of € 23,580.00 for each listed issue;
c) the amount of the contribution for the warrants is equal to a fixed fee of € 23,580.00 for each listed issue;
d) the amount of the contribution for covered warrants, certificates, exchange traded commodities (ETC) and exchange traded notes (ETN) is equal to a fixed fee of € 3,250.00 for each listed instrument;
e) the amount of the contribution for the units and shares of mutual funds, exchange traded funds (ETFs), active exchange traded funds (Active ETFs) is equal to a fixed fee of € 3,405.00 for each listed class; for issuers offering units or shares of funds or sub-funds to the public, shall be excluded from the calculation of the contribution two quoted classes.
The maximum contribution amount for each issuer is € 733,085.00.
For foreign issuers referred to in point (j2):
a) the amount of the contribution for shares, bonds and warrants is equal to a fixed amount of € 23,580.00 for each listed category;
b) the amount of the contribution for covered warrants, certificates, exchange traded commodities (ETC) and exchange traded notes (ETN) is equal to a fixed fee of € 3,250.00 for each class of listed instrument;
c) the amount of the contribution for the units and shares of mutual funds, exchange traded funds (ETFs), active exchange traded funds (Active ETFs) is equal to a fixed fee of € 3,405.00 for each listed class; for issuers offering units or shares of funds or sub-funds to the public, shall be excluded from the calculation of the contribution two quoted classes.
The maximum contribution for each issuer is € 733,085.00.
- The payment notice shall be sent to the address of the persons required to contribute within fifteen days prior to the deadline. Payment is made by PagoPA notice.
- Payment instructions and assistance services in cases of non-receipt of the PagoPA notice are published in a specific section on the Consob institutional website (www.consob.it).
- Only foreign subjects, alternatively, can make payment by bank transfer, to the current account indicated in the payment notice, in all cases where it is not possible to make payment through the PagoPA platform.
- The description of the reason for payment to be indicated at the time of payment made by bank transfer must comply with the following format: "causal code"_2023_"user code"_"payment code".
- The notice of payment relating to the payment of the contribution due by foreign subjects is sent within fifteen days prior to the deadline to the address of the subjects required to pay.
- The payment notice referred to in paragraph 5 will contain, among other things, the "user code" with which the subject is identified by CONSOB and the description of the reason for payment. These elements, together with the name of the subject, must be reported on the bank transfer form.
- The subjects referred to in art. 3, lett. n) must send CONSOB a copy of the explanatory tables of the calculation of the contribution:
by 15 February 2023, where the payment date is 15 March 2023;
at least 20 days before the date of payment referred to in letters b) and c) of paragraph 8 below.
A declaration of conformity must be attached to the explanatory tables of the calculation of the contribution.
- The payment of the contribution due must be carried out, within:
a) March 15 2023, if the financial statements closed in 2022 were approved no later than the thirtieth day prior to the date of publication of this resolution in the Official Gazette of the Republic;
b) the thirtieth day from the date of approval of the financial statements closed in 2022, in other cases;
c) 30 September 2023, for all other entities registered in the Register, not required to prepare a financial statement, in charge of the statutory audit of the EIP/ESRI financial statements.
The payment methods indicated in this resolution are mandatory. Failure to pay the contribution within the established deadline will result in the start of the compulsory collection procedure pursuant to art. 40 of Law no. 23 of 1994 December 724 and the application of default interest to the legal extent.
Electronic identification and trust services for electronic transactions in the internal market (eIDAS)
Luxembourg publishes draft law amending the regime of identification of natural persons / Le Luxembourg publie un projet de loi modifiant le regime de l'identification des personnes physiques
On March 2 2023, the Chambre des députés of Luxembourg published a draft law amending the regime on the identification of natural persons.
This bill aims to amend the amended law of June 19 2013 on the identification of natural persons by inserting two new articles. Article 2bis is intended to introduce a legal basis for the establishment by the State of a personal digital wallet mobile application to enable users to create and hold official digital certificates. The personal digital wallet is a state mobile application, downloadable free of charge by mobile devices. Article 15a aims to create an equivalence between the presentation of a digital attestation of the identity card, via the same personal digital wallet application, and the presentation of the physical identity card. The digital attestation of the ID card offers users the possibility to prove their identity electronically. It should be noted that the use of the personal digital wallet is reserved for users who are in possession of a valid identity card.
The creation of the Luxembourg personal digital wallet application is part of the European digital identity, the introduction of which is envisaged by the European Commission in the coming years.
The use of the personal digital wallet, and therefore the downloading of the digital certificate of the identity card, are purely optional and depend entirely on the choice of the user, who decides whether or not to opt for this additional possibility. The aim is to enable users to prove their identity by presenting the digital certificate on a mobile device.
The data that will be included in the digital certificate of the identity card are those visible on the front of the physical identity card. These are the surname, first name(s), nationality, date of birth, gender and uncoded facial image of the identity card holder, as well as the start and end dates of the card's validity, the name and number of the card.
Proof of identity by means of a digital attestation of the identity card is limited to checks taking place on the territory of the Grand Duchy of Luxembourg and will work regardless of whether the mode of presentation is online or offline.
It should be stressed that the digital attestation of the identity card does not constitute an electronic identity card, but is to be considered as a certificate proving that the individual is in possession of a valid identity card within the meaning of Article 12 of the aforementioned amended law of June 19 2013.
Le 2 mars 2023, la Chambre des députés du Luxembourg a publié un projet de loi modifiant le régime sur l'identification des personnes physiques.
Ce projet de loi vise à modifier la loi modifiée du 19 juin 2013 relative à l'identification des personnes physiques en y insérant deux nouveaux articles. L'article 2bis vise à introduire une base juridique pour la mise en place par l'État d'une application mobile de porte-monnaie numérique personnel permettant aux utilisateurs de créer et de détenir des certificats numériques officiels. Le portefeuille numérique personnel est une application mobile étatique, téléchargeable gratuitement par les appareils mobiles. L'article 15 bis vise à créer une équivalence entre la présentation d'une attestation numérique de la carte d'identité, via la même application de portefeuille numérique personnel, et la présentation de la carte d'identité physique. L'attestation numérique de la carte d'identité offre aux utilisateurs la possibilité de prouver leur identité par voie électronique. Il est à noter que l'utilisation du portefeuille numérique personnel est réservée aux utilisateurs qui sont en possession d'une carte d'identité en cours de validité.
La création de l'application luxembourgeoise de portefeuille numérique personnel s'inscrit dans le cadre de l'identité numérique européenne dont la mise en place est envisagée par la Commission européenne dans les années à venir.
L'utilisation du portefeuille numérique personnel, et donc le téléchargement du certificat numérique de la carte d'identité, sont purement facultatifs et dépendent entièrement du choix de l'utilisateur, qui décide d'opter ou non pour cette possibilité supplémentaire. L'objectif est de permettre aux utilisateurs de prouver leur identité en présentant le certificat numérique sur un appareil mobile.
Les données qui seront incluses dans le certificat numérique de la carte d'identité sont celles visibles au recto de la carte d'identité physique. Il s'agit des nom, prénom(s), nationalité, date de naissance, sexe et image faciale non codée du titulaire de la carte d'identité, ainsi que les dates de début et de fin de validité de la carte, le nom et le numéro de la carte.
La preuve d'identité au moyen d'une attestation numérique de la carte d'identité est limitée aux contrôles ayant lieu sur le territoire du Grand-Duché de Luxembourg et fonctionnera quel que soit le mode de présentation en ligne ou hors ligne.
Il convient de souligner que l'attestation numérique de la carte d'identité ne constitue pas une carte d'identité électronique, mais doit être considérée comme une attestation prouvant que la personne est en possession d'une carte d'identité en cours de validité au sens de l'article 12 de la loi modifiée précitée. loi du 19 juin 2013.
CSSF publishes ways for electronic invoicing / La CSSF publie des modalités de facturation électronique
On March 28 2023, the Commission de Surveillance du secteur financier (CSSF) published the ways available for electronic invoicing.
In accordance with the law of 13 December 2021 amending the law of May 16 2019 on electronic invoicing in the context of public contracts and concession contracts, all economic operators (including small businesses since 18 March 2023) who wish to send an invoice to the CSSF are required to do so electronically.
Thus, sending by post or email is no longer allowed for all invoices issued, falling within the framework of the law and this:
- no matter the amount;
- even if the basic contract has not been tendered.
Only invoices sent via our CSSF PEPPOL access point will be taken into account.
The PEPPOL identifier of the CSSF is: 9938:lu17756005.
To do this, two choices are available to economic operators:
- either the use of their solution, if it is connected to a PEPPOL access point;
- or, where applicable, via the solutions made available on the MyGuichet.lu website. (support is available at the following address: Issuing an electronic invoice — Guichet.lu – Administrative Guide – Luxembourg (public.lu))
For any questions, it is possible to contact: firstname.lastname@example.org.
Le 28 mars 2023, la Commission de Surveillance du secteur financier (CSSF) a publié les modalités de facturation électronique.
Conformément à la loi du 13 décembre 2021 modifiant la loi du 16 mai 2019 relative à la facturation électronique dans le cadre des marchés publics et des contrats de concession, tous les opérateurs économiques (y compris les petites entreprises depuis le 18 mars 2023) qui souhaitent adresser une facture à la CSSF sont tenus de le faire par voie électronique.
Ainsi, l'envoi par voie postale ou mail n'est plus autorisé pour toutes les factures émises, entrant dans le cadre de la loi et ceci :
- peu importe le montant;
- même si le contrat de base n'a pas été soumissionné.
Seules les factures envoyées via le point d'accès CSSF PEPPOL seront prises en compte.
L'identifiant PEPPOL de la CSSF est : 9938:lu17756005.
Pour ce faire, deux choix s'offrent aux opérateurs économiques :
- soit l'utilisation de leur solution, si celle-ci est connectée à un point d'accès PEPPOL ;
- soit, le cas échéant, via les solutions mises à disposition sur le site MyGuichet.lu. (le support est disponible à l'adresse suivante : Émettre une facture électronique — Guichet.lu – Guide administratif – Luxembourg (public.lu))
Pour toute question, il est possible de contacter : email@example.com.
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
CSSF updates form regarding de-notification letter AIF compartment / La CSSF met à jour le formulaire concernant la lettre de dénotification du compartiment FIA
On March 2 2023, the Commission de Surveillance du secteur financier (CSSF) updated form regarding de-notification letter AIF compartment.
The form concerns investment fund managers.
Le 2 mars 2023, la Commission de Surveillance du secteur financier (CSSF) a mis à jour le formulaire relatif à la lettre de dénotification du compartiment FIA.
Le formulaire concerne les gestionnaires de fonds d'investissement.
CSSF updates form regarding de-notification letter UCITS share class / La CSSF met à jour le formulaire concernant la lettre de dénotification de la classe d'actions d'OPCVM
On March 2 2023, the Commission de Surveillance du secteur financier (CSSF) updated form regarding de-notification letter UCITS share class.
For the purpose of de-notifying the marketing arrangements of a share class of a Luxembourg undertaking for collective investment in transferable securities (“UCITS”) in respect of which a notification for marketing has been made to the CSSF in accordance with Article 93 of the UCITS Directive as transposed by Article 54 of the UCI Law.
Le 2 mars 2023, la Commission de Surveillance du secteur financier (CSSF) a mis à jour le formulaire concernant la lettre de dénotification de la classe d'actions d'OPCVM.
Aux fins de dénotification des modalités de commercialisation d'une classe d'actions d'un organisme de placement collectif en valeurs mobilières (« OPCVM ») luxembourgeois pour lequel une notification de commercialisation a été faite à la CSSF conformément à l'article 93 du Directive OPCVM telle que transposée par l'article 54 de la Loi OPC.
CSSF updates form regarding de-notification letter UCITS compartment / La CSSF met à jour le formulaire concernant la lettre de dénotification du compartiment OPCVM
On March 2 2023, the Commission de Surveillance du secteur financier (CSSF) updated the form regarding de-notification letter UCITS compartment.
For the purpose of de-notifying the marketing arrangements of a compartment of a Luxembourg undertaking for collective investment in transferable securities (“UCITS”) in respect of which a notification for marketing has been made to the CSSF in accordance with Article 93 of the UCITS Directive as transposed by Article 54 of the UCI Law.
Le 2 mars 2023, la Commission de Surveillance du secteur financier (CSSF) a mis à jour le formulaire relatif à la lettre de dénotification du compartiment OPCVM.
Aux fins de dénotification des modalités de commercialisation d'un compartiment d'un organisme de placement collectif en valeurs mobilières (« OPCVM ») luxembourgeois pour lequel une notification de commercialisation a été faite à la CSSF conformément à l'article 93 du la Directive OPCVM telle que transposée par l'article 54 de la Loi OPC.
CSSF updates form for IFMs notification regarding branch establishment / La CSSF met à jour le formulaire de notification des GFI concernant l'établissement de succursales
On March 10 2023, the Commission de Surveillance du secteur financier (CSSF) updated form for any notification regarding branch establishment and amendments to the information included in such a notification.
Le 10 mars 2023, la Commission de Surveillance du secteur financier (CSSF) a mis à jour le formulaire pour toute notification concernant l'établissement d'une succursale et les modifications des informations incluses dans une telle notification.
CSSF updates form for any notification on the free provision of services and amendments to the information included / La CSSF met à jour son formulaire pour toute notification pour la libre prestation de services et modifications des informations contenue
On March 13 2023, the Commission de Surveillance du secteur financier (CSSF) updated form for any notification regarding the free provision of services and amendments to the information included in such a notification.
The form concerns investment fund managers, in particular AIFM and Chapter 15 management firms. The entities under scope should provide information regarding their activities, program of operations and EEA funds to be managed.
Le 13 mars 2023, la Commission de Surveillance du secteur financier (CSSF) a mis à jour le formulaire pour toute notification relative à la libre prestation de services et les modifications des informations incluses dans une telle notification.
Le formulaire concerne les gestionnaires de fonds d'investissement, notamment les AIFM et les sociétés de gestion du chapitre 15. Les entités concernées doivent fournir des informations concernant leurs activités, leur programme d'opérations et les fonds de l'EEE à gérer.
AED updates its AML/CTF Guide for RAIFs / L'AED met à jour son guide AML/CTF pour les RAIF
On March 13 2023, the Administration de l'enregistrement, des domaines et de la TVA (AED) of the Government of the Grand Duchy of Luxembourg updated its AML/CTF Guide for RAIFs.
Following the numerous financial sanctions that have been taken against Russia, we note that AED in this guide has issued several points of vigilance and strengthened the attention that the RAIFs should have on the international financial sanctions of which its clients, attorneys, and BO could be subject. The main changes and key topics are:
1/ Obligation to verify and consult the lists of international financial sanctions. The FIAR must put in place rigorous controls in terms of international financial sanctions, they must control the content of the lists of international financial sanctions which is an essential process making it possible to identify the risks of the client, attorney and/or BO. Finally, during an inspection, the FIAR must demonstrate that it has searched and verified the identity of its clients, attorneys, and BO on the sanctions lists.
Thus the burden of proof belongs to the FIAR, which is why the AED recommends keeping traceability of the checks carried out on the lists of international financial sanctions.
2/ What actions should be taken if a client, attorney or BO appears on a sanctions list?
1) Obligation to inform the Ministry of Finance (FIU),
2) Obligation to apply enhanced vigilance – (art. 3-2 of the Law of 2004),
3) Obligation to abstain from carrying out any transaction, in other words no transaction can be accepted. The FIAR must immediately freeze the assets of the client/BO.
3/ New recommendation concerning entering into a business relationship: integrate the SFI law.
The AED highlights when entering into a business relationship that FIAR will now have to integrate and define in its acceptance policy for clients, attorneys and/or BO the basic principles which must be respected when entering into a business relationship and integrating the SFI Law into anti-money laundering and anti-terrorist financing policies and processes.
In addition, related to the identification of the purpose and nature of the transaction, FIAR will have to carry out re-examinations of the data of their clients, attorneys and/or BO when new persons or entities are listed on international financial sanctions lists.
4/ Enhanced vigilance.
The FIAR has an obligation of vigilance when it enters into a business relationship. The AED adds two circumstances for which enhanced due diligence applies:
1) Reinforced vigilance must necessarily apply when the client is listed on the lists of international financial sanctions,
2) but also when the business relationship or the transaction involves a high-risk country or when it is operated according to an unusual pattern. It is no longer a question of having a client residing in a third country, it is sufficient that a high-risk country is involved.
5/ The FIAR risk assessment should include risks identified and communicated by international financial sanctions authorities.
6/ Obligation to cooperate in case of international financial sanctions.
It should be noted here that FIAR for issues related to the international financial sanctions, is required to cooperate with the Ministry of Finance. To be distinguished from the FIU which is competent in case of a suspicious activity based on AML/CTF issues.
To summarize when a FIAR finds that a client, agent and/or beneficial owner(s) has just been entered on a list of international financial sanctions,
1) it is up to him to consider that this information affects the client's risk profile. the FIAR must carry out an update of the assessment of the risks associated with this client and a re-examination, with heightened vigilance, of the transactions it has carried out.
2) The professional is also required to inform the Ministry of Finance without delay
7/ Clarification around RC and RR.
It is important to note that AED has clarified the roles of RR and RC. Indeed, Regulation 12-02 of 14 December 2012 on the fight against money laundering and terrorist financing as amended by CSSF Regulation no. 20-05 of 14 August 2020 introducing an RR and RC, is fully applicable to RAIF. These key functions require several conditions and qualities, and it is essential for effective cooperation with the authorities that RR and RC are directly available from the authorities. It is generally the rule that the RC is available in Luxembourg for the performance of its tasks; however, it is accepted on an exceptional basis, and under specific conditions, that the RC is located outside Luxembourg.
8/ Sanctions in case of non-compliance with professional obligations in AML-CTF.
It appears that the most important sanction provided for in the 2022 guide “withdrawal of establishment authorization” no longer appears today.
Thus, in the event of non-compliance with its AML-CFT obligations, AED will be able to sanction the recalcitrant FIAR up to a public declaration.
As a result, new points of attention have emerged, reinforcing the obligations of RAIFs.
Le 13 mars 2023, l'Administration de l'enregistrement, des domaines et de la TVA (AED) du Gouvernement du Grand-Duché de Luxembourg a mis à jour son Guide AML/CTF pour les RAIF.
Suite aux nombreuses sanctions financières qui ont été prises contre la Russie, on note que l'AED dans ce guide a émis plusieurs points de vigilance et renforcé l'attention que les RAIFs devraient avoir sur les sanctions financières internationales dont ses clients, avocats, et BE pourraient être sujet. Les principaux changements et les sujets clés sont les suivants:
1/ Obligation de vérifier et de consulter les listes de sanctions financières internationales. Le RAIF doit mettre en place des contrôles rigoureux en matière de sanctions financières internationales, elle doit contrôler le contenu des listes de sanctions financières internationales qui est un processus essentiel permettant d'identifier les risques du client, avocat et/ou BE. Enfin, lors d'un contrôle, le RAIF doit démontrer qu'elle a recherché et vérifié l'identité de ses clients, avocats et BE inscrits sur les listes de sanctions.
Ainsi la charge de la preuve appartient au RAIF, c'est pourquoi l'AED recommande de conserver la traçabilité des contrôles effectués sur les listes de sanctions financières internationales.
2/ Quelles actions entreprendre si un client, avocat ou BE apparaît sur une liste de sanctions ?
1) Obligation d'informer le Ministère des Finances (CRF),
2) Obligation d'exercer une vigilance renforcée – (art. 3-2 de la loi de 2004),
3) Obligation de s'abstenir d'effectuer toute transaction, autrement dit aucune transaction ne peut être acceptée. Le RAIF doit immédiatement geler les avoirs du client/BE.
3/ Nouvelle recommandation concernant l'entrée en relation d'affaires : intégrer la loi SFI.
L'AED met en évidence lors de l'entrée en relation d'affaires que le RAIF devra désormais intégrer et définir dans sa politique d'acceptation des clients, avocats et/ou BE les principes de base qui doivent être respectés lors de l'entrée en relation d'affaires et intégrer la Loi SFI dans ses politiques et processus de lutte contre le blanchiment d'argent et le financement du terrorisme.
De plus, en lien avec l'identification de l'objet et de la nature de la transaction, le RAIF devra procéder à des réexamens des données de ses clients, avocats et/ou BE lorsque de nouvelles personnes ou entités seront inscrites sur des listes internationales de sanctions financières.
4/ Vigilance renforcée.
Le RAIF a une obligation de vigilance lorsqu'elle entre en relation d'affaires. L'AED ajoute deux circonstances pour lesquelles la diligence raisonnable renforcée s'applique :
1) Une vigilance renforcée doit nécessairement s'appliquer lorsque le client est inscrit sur les listes de sanctions financières internationales,
2) mais aussi lorsque la relation d'affaires ou la transaction implique un pays à risque ou lorsqu'elle est opérée selon un schéma inhabituel. Il ne s'agit plus d'avoir un client résidant dans un pays tiers, il suffit qu'un pays à risque soit concerné.
5/ L'évaluation des risques RAIF devrait inclure les risques identifiés et communiqués par les autorités internationales de sanctions financières.
6/ Obligation de coopérer en cas de sanctions financières internationales.
Il convient de noter ici que le RAIF, pour les questions liées aux sanctions financières internationales, est tenue de coopérer avec le ministère des Finances. A distinguer de la CRF qui est compétente en cas d'activité suspecte fondée sur des questions de LBC/FT.
Pour résumer lorsqu'un RAIF constate qu'un client, mandataire et/ou bénéficiaire(s) effectif(s) vient d'être inscrit sur une liste de sanctions financières internationales,
1) il lui appartient de considérer que ces informations affectent le profil de risque du client. Le RAIF doit procéder à une mise à jour de l'évaluation des risques liés à ce client et à un réexamen, avec une vigilance accrue, des opérations qu'elle a réalisées.
2) Le professionnel est également tenu d'informer sans délai le Ministère des Finances
7/ Clarification autour de RC et RR.
Il est important de noter que l'AED a clarifié les rôles de RR et RC. En effet, le règlement 12-02 du 14 décembre 2012 relatif à la lutte contre le blanchiment de capitaux et le financement du terrorisme tel que modifié par le règlement CSSF n°. 20-05 du 14 août 2020 introduisant un RR et un RC, est pleinement applicable au RAIF. Ces fonctions clés nécessitent plusieurs conditions et qualités, et il est essentiel pour une coopération efficace avec les autorités que RR et RC soient directement disponibles auprès des autorités. Il est généralement de règle que le CR soit disponible au Luxembourg pour l'exécution de ses missions ; toutefois, il est admis à titre exceptionnel, et sous certaines conditions, que le CR soit situé hors du Luxembourg.
8/ Sanctions en cas de non-respect des obligations professionnelles en LBC-FT.
Il apparaît que la sanction la plus importante prévue dans le guide 2022 « retrait d'autorisation d'établissement » n'apparaît plus aujourd'hui.
Ainsi, en cas de non-respect de ses obligations LBC-FT, l'AED pourra sanctionner le RAIF récalcitrante jusqu'à une déclaration publique.
CSSF publishes Circular 23/831 on stress test scenarios under the MMF Regulation / La CSSF publie la circulaire 23/831 sur les scénarios de stress test dans le cadre du règlement MMF
On March 24 2023, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 23/831 to integrate the latest version (2022) of the ESMA Guidelines on stress test scenarios under the MMF Regulation.
Circular CSSF 22/818 implementing the 2021 version of the Guidelines is repealed and replaced by this circular with effect as of March 27 2023. The CSSF expects all entities falling under the scope of this circular to apply the 2022 Guidelines for the preparation of the required MMF reporting as from the reporting date March 31 2023 onwards.
Le 24 mars 2023, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire CSSF 23/831 afin d'intégrer la dernière version (2022) des lignes directrices de l'ESMA sur les scénarios de stress test dans le cadre du règlement FMM.
La circulaire CSSF 22/818 mettant en œuvre la version 2021 des Orientations est abrogée et remplacée par la présente circulaire avec effet à compter du 27 mars 2023. La CSSF attend de toutes les entités relevant du champ d'application de la présente circulaire qu'elles appliquent les Orientations 2022 pour la préparation des Déclaration MMF à partir de la date de déclaration du 31 mars 2023.
Luxembourg publishes draft Law 8183 amending laws on SICAR, SIF, UCIs, AIFMs and RAIFs / Le Luxembourg publie le projet de loi 8183 modifiant les lois sur les SICAR, FIS, OPC, AIFM et RAIF
The objective of the draft law is to improve and modernise the Luxembourg toolbox for investment funds and thus increase the attractiveness and competitiveness of the financial centre. Thus, the draft law amends the five sectoral laws mentioned which currently regulate investment funds or their managers in Luxembourg.
On March 24 2023, the Chambre des députés - Luxembourg (ChD) published the draft Law 8183 amending:
- Amended Law of June 15 2004 relating to Investment companies in risk capital (SICARs);
- Amended Law of February 13 2007 on Specialised investment funds (SIFs);
- Amended Law of December 17 2010 concerning Undertakings for collective investment (UCIs);
- Amended Law of July 12 2013 on Alternative Investment Fund Managers (AIFMs);
- Amended Law of July 23 2016 on Reserved Alternative Investment Funds (RAIFs).
Firstly, the draft law modifies the definitions of " informed investor " contained respectively in the SICAR law, the SIF law and the RAIF law in order to reinforce the coherence between the different laws and to align the Luxembourg regime to the European standard by lowering the current investment threshold from 125,000 to 100,000 euros.
Furthermore, the draft law extends the period during which the minimum capital must be constituted for funds governed by the SICAR law, the SIF law, part II of the UCI law and the RAIF law, in order to adapt these laws to the market needs.
The bill also makes certain amendments to the UCI law. In particular, the draft law aims to introduce the possibility for SICAVs (Société d'Investissement à Capital Variable) subject to Part II of the UCI law to adopt, in addition to the form of a public limited company, the form of a limited partnership with share capital, a limited partnership, a special limited partnership, a limited liability company or a cooperative organised as a public limited company, which contributes to a modernisation of the UCI law without jeopardising investor protection.
In addition, the bill introduces the possibility for AIFMs to use tied agents, thereby aligning the legal framework for AIFMs with that of management companies authorised under Part IV, Chapter 15 of the UCI. Targeted changes are also made in the AIFM law to clarify the relationship between the AIFM law and other legislation in relation to the marketing of alternative investment funds in Luxembourg. The bill also clarifies certain definitions contained in the AIFM law.
Secondly, the bill extends to management companies and managers the non-judicial liquidation regime which currently applies to undertakings for collective investment regulated by the UCI law and reforms the supervisory commissioner regime in case of withdrawal from the official list by the CSSF of an entity supervised by the CSSF.
Finally, the Bill modernises the subscription tax regime on three specific points in order to support the emergence of new European products such as European Long Term Investment Funds (ELTIFs) and Pan-European Individual Retirement Savings Products (PEPPs) following the European Commission's efforts to create a true Capital Markets Union (CMU). Indeed, in its latest CMU Action Plan, the European Commission has encouraged Member States to introduce national tax incentives. In order to be consistent with the European CMU texts, the regime applicable to money market funds will be aligned with the European standards defining this type of fund. These modifications will not lead to any significant direct fiscal waste and could even have a positive impact on the State's revenues due to their incentive effect on the establishment of this type of activity in Luxembourg.
It should be noted that the draft law, which does not transpose a European text, also includes the relevant provisions of draft law n° 6936 while adapting them to the latest legislative developments.
L'objectif du projet de loi est d'améliorer et de moderniser la boîte à outils luxembourgeoise des fonds d'investissement et d'accroître ainsi l'attractivité et la compétitivité de la place financière. Ainsi, le projet de loi modifie cinq lois sectorielles qui réglementent actuellement les fonds d'investissement ou leurs gestionnaires au Luxembourg.
Le 24 mars 2023, la Chambre des députés - Luxembourg (ChD) a publié le projet de loi 8183 modifiant :
- Loi modifiée du 15 juin 2004 relative aux sociétés d'investissement en capital à risque (SICAR) ;
- Loi modifiée du 13 février 2007 relative aux fonds d'investissement spécialisés (FIS) ;
- Loi modifiée du 17 décembre 2010 concernant les organismes de placement collectif (OPC) ;
- Loi modifiée du 12 juillet 2013 relative aux gestionnaires de fonds d'investissement alternatifs (AIFM) ;
- Loi modifiée du 23 juillet 2016 relative aux Fonds d'Investissement Alternatifs Réservés (RAIF).
En premier lieu, le projet de loi modifie les définitions d'« investisseur averti » contenues respectivement dans la loi SICAR, la loi SIF et la loi RAIF afin de renforcer la cohérence entre les différentes lois et d'aligner le régime luxembourgeois sur le standard européen en abaissant le seuil d'investissement actuel de 125 000 à 100 000 euros.
En outre, le projet de loi prolonge la période pendant laquelle le capital minimum doit être constitué pour les fonds régis par la loi SICAR, la loi FIS, la partie II de la loi OPC et la loi RAIF, afin d'adapter ces lois aux besoins du marché.
Le projet de loi apporte également certaines modifications à la loi OPC. En particulier, le projet de loi vise à introduire la possibilité pour les SICAV (Société d'Investissement à Capital Variable) soumises à la partie II de la loi OPC d'adopter, en plus de la forme de société anonyme, la forme de société en commandite avec capital social, une société en commandite simple, une société en commandite spéciale, une société à responsabilité limitée ou une coopérative organisée sous forme de société anonyme, qui contribue à une modernisation du droit des OPC sans porter atteinte à la protection des investisseurs.
En outre, le projet de loi introduit la possibilité pour les gestionnaires de recourir à des agents liés, alignant ainsi le cadre juridique des gestionnaires sur celui des sociétés de gestion agréées en vertu de la partie IV, chapitre 15, de l'OPC. Des modifications ciblées sont également apportées à la loi AIFM afin de clarifier la relation entre la loi AIFM et les autres législations relatives à la commercialisation des fonds d'investissement alternatifs au Luxembourg. Le projet de loi précise également certaines définitions contenues dans la loi AIFM.
Deuxièmement, le projet de loi étend aux sociétés de gestion et aux gérants le régime de la liquidation judiciaire qui s'applique actuellement aux organismes de placement collectif régis par la loi OPC et réforme le régime du commissaire de surveillance en cas de retrait de la liste officielle par la CSSF d'une entité surveillée par la CSSF.
Enfin, le projet de loi modernise le régime de la taxe d'abonnement sur trois points spécifiques afin de soutenir l'émergence de nouveaux produits européens tels que les fonds européens d'investissement à long terme (ELTIF) et les produits paneuropéens d'épargne individuelle (PEPP) suite aux efforts de la Commission européenne pour créer une véritable union des marchés des capitaux (UMC). En effet, dans son dernier plan d'action pour l'UMC, la Commission européenne a encouragé les États membres à introduire des incitations fiscales nationales. Afin d'être cohérent avec les textes européens de l'UMC, le régime applicable aux fonds monétaires sera aligné sur les normes européennes définissant ce type de fonds. Ces modifications n'entraîneront pas de gaspillage fiscal direct significatif et pourraient même avoir un impact positif sur les recettes de l'État en raison de leur effet incitatif à l'implantation de ce type d'activité au Luxembourg.
A noter que le projet de loi, qui ne transpose pas un texte européen, reprend également les dispositions pertinentes du projet de loi n° 6936 tout en les adaptant aux dernières évolutions législatives.
Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT Regulation)
Luxembourg publishes Law of 15 March 2023 on DLT pilot regime / Le Luxembourg publie la loi du 15 mars 2023 relative au régime pilote DLT
With the law of March 1 2019 on the circulation of securities ("Blockchain I law"), Luxembourg became one of the first EU Member States to adopt a law recognizing blockchain in the same way as traditional transactions while allowing the use of DLTs for account registration, the transfer of securities and their materialisation. The law of January 22 2021 (“Blockchain II law”) strengthened this legal framework around dematerialized securities, in particular by recognizing the possibility of using secure electronic registration mechanisms to issue these securities and by broadening access to all credit institutions and investment firms.
In this context, Luxembourg is adapting more and more to advanced market practices and demand for financial instruments based on DLT technologies with an adequate legal framework.
On March 17 2023, the Legilux (Journal Officiel du Grand-Duché de Luxembourg) published Law of March 15 2023 on the Distributed Ledger Technology (DLT) pilot regime, implementing Regulation (EU) 2022/858. The Regulation introduces a pilot scheme which allows national competent authorities to temporarily exempt DLT market infrastructures from some of the specific requirements imposed by existing legislation on traditional market infrastructures. In this context, the Law makes amendments to the following Acts:
- Law of April 5 1993 on the financial sector: amendments to include financial instruments issued by way of DLT.
- Law of August 5 2005 on financial collateral arrangements: amendments to enable the use of DLT for financial guarantees.
- Amended law of May 30 2018 on markets in financial instruments: amendments to include financial instruments issued by way of DLT.
This Law 8055, known as the “Blockchain III Law”, completes the Luxembourg legal regime for financial guarantees and aims to supplement, in national law, the Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on technology of distributed registers (the DLT Pilot Regime), by redefining the notion of financial instruments under the law of April 5, 1993 on the financial sector and the law of May 30, 2018 on markets in financial instruments, to include those resulting from the European Regulation; actions that significantly strengthen the blockchain legal framework in Luxembourg.
The Law will come to force on March 23 2023.
Avec la loi du 1er mars 2019 sur la circulation des titres (« loi Blockchain I »), le Luxembourg était devenu l’un des premiers États membres de l'UE à adopter une loi reconnaissant la blockchain au même titre que les transactions traditionnelles en permettant l'utilisation des DLT pour l'inscription en compte, le transfert de titres et leur matérialisation. La loi du 22 janvier 2021 (« loi Blockchain II ») a renforcé ce cadre juridique luxembourgeois autour des titres dématérialisés. Notamment en reconnaissant la possibilité d'utiliser des mécanismes d'enregistrement électronique sécurisés pour émettre ces titres et en élargissant l'accès à tous les établissements de crédit ainsi qu’aux entreprises d'investissement.
Dans ce contexte, le Luxembourg s'adapte davantage aux pratiques de marché avancées et aux demandes d'instruments financiers basés sur les technologies DLT avec un cadre juridique adéquat.
Le 17 mars 2023, Legilux (Journal Officiel du Grand-Duché de Luxembourg) a publié la loi du 15 mars 2023 relative au régime pilote de la technologie des registres distribués (DLT), mettant en œuvre le règlement (UE) 2022/858. Le règlement introduit un programme pilote qui permet aux autorités nationales compétentes d'exempter temporairement les infrastructures de marché DLT de certaines des exigences spécifiques imposées par la législation existante sur les infrastructures de marché traditionnelles. Dans ce contexte, la loi apporte des modifications aux lois suivantes :
- Loi du 5 avril 1993 relative au secteur financier : modifications pour y inclure les instruments financiers émis par voie de DLT.
- Loi du 5 août 2005 relative aux contrats de garantie financière : modifications permettant l'utilisation de la DLT pour les garanties financières.
- Loi modifiée du 30 mai 2018 relative aux marchés d'instruments financiers : modifications pour inclure les instruments financiers émis par voie de DLT.
La loi 8055, dite « loi Blockchain III », complète le régime juridique luxembourgeois des garanties financières et vise à compléter, en droit national, le règlement (UE) 2022/858 sur un régime pilote pour les infrastructures de marché reposant sur la technologie des registres distribués (le Régime Pilote DLT), en redéfinissant la notion d’instruments financiers sous la loi du 5 avril 1993 relative au secteur financier et la loi du 30 mai 2018 relative aux marchés d’instruments financiers, pour y inclure ceux issus du règlement européen ; actions qui renforcent significativement le cadre blockchain à Luxembourg.
La loi entrera en vigueur le 23 mars 2023.
Sustainable Finance / Green Finance
CSSF publishes practical and technical guidance on SFDR UCI data collection / La CSSF publie des orientations pratiques et techniques sur la collecte de données OPC SFDR
On July 27 2022, the CSSF announced the intetntion to launch a data collection exercise related to Sustainable Finance Disclosure Regulation (SFDR) and Taxonomy Regulation (TR).
On March 24 2023, the Commission de Surveillance du secteur financier (CSSF) published practical and technical guidance on SFDR UCI data collection. The deadline for submission of the initial report is June 15 2023. The objective of the present guidance is to provide industry participants with information regarding the launch of the data collection exercise relating to precontractual product disclosure information, as Investment Fund Managers (AIFM) and Institutions for Occupational Retirement Provisions (IORPs) qualifying as financial market participants (FMPs) are required to include sustainability-related information in the precontractual disclosures of financial products in accordance with SFDR, TR and the SFDR RTS. The CSSF is hereby requiring the following FMPs:
- (a) UCITS management companies, based in Luxembourg or in another Member State of the European Union, in relation to all Luxembourg-domiciled UCITS they manage;
- (b) authorised AIFMs, based in Luxembourg, in relation to all Luxembourg-domiciled regulated and unregulated AIFs (including ELTIFs) they manage;
- (c) authorised AIFMs, based in another Member State of the European Union, in relation to all Luxembourg-domiciled regulated AIFs, as well as Luxembourg-domiciled unregulated AIFs (only when they qualify as ELTIFs) they manage;
- (d) registered AIFMs, subject to Article 3(3) of the Law of July 12 2013 (the 2013 Law), based in Luxembourg or in another Member State of the European Union, in relation to all Luxembourg-domiciled regulated AIFs they manage;
- (e) IORPs, subject to the Law of July 13 2005 to participate to this data collection exercise, by providing a set of information relating to precontractual product disclosures for each of the financial products mentioned previously. The SFDR data can be submitted to the CSSF via the following channels:
a. A solution based on the submission of a structured file through S3 (“simple storage service”) protocol, which is already available. This solution allows for an automation by financial market participants and if needed, a testing of the reporting file submission before going into production.
b. An online solution via eDesk for manual input by IFMs/IORPs for each fund/sub-fund they manage. This solution will be made available as of May 2 2023.
FMPs subject to Articles 2(2) or 3(1) of the 2013 Law can participate to this data collection exercise on a voluntary basis in relation to any Luxembourg-domiciled regulated AIF they manage. A user guide providing clarifications on the content and the format of the information to be reported as well as technical details on the data collection process is available. The current reporting of SFDR data is mandatory for all sub-funds of a UCITS/AIF/IORP subject to the scope as defined above. The data is to be completed and provided to the CSSF for each fund/sub-fund, regardless of the regime applicable to those under SFDR (i.e. SFDR Article 6, Article 8 or Article 9).
- IFMs, respectively IORPS must submit an initial report to the CSSF by June 15 2023 at the latest for all UCIs, respectively IORPs in scope and under their management. The reporting must be done at sub-fund level and be consistent, where applicable, with the information contained in the precontractual document/template.
- A subsequent report must be submitted by the IFM, respectively the IORP, each time the relevant information contained in the SFDR precontractual document/template and reflected in the previous report is modified.
After the initial declaration, IFMs and IORPs remain responsible to ensure that the information provided is being kept up-to-date; in case of changes to the precontractual documents/templates, IFMs and IORPs must update the data reported under the SFDR data collection by transmitting subsequent declarations.
The SFDR data concerning UCIs must be submitted by the IFM (or the UCITS/AIF for internally managed UCIs). The SFDR data concerning IORPs must be submitted directly by the IORP. Any question should be addressed to firstname.lastname@example.org. The current data collection exercise will be extended in the near future to collect information contained in the PAI statements and in the periodic disclosure templates. Further details on timing and practical proceeding of this extended data collection will be communicated at a later stage.
Le 27 juillet 2022, la CSSF a annoncé son intention de lancer une exercice de collecte de données en lien avec le Sustainable Finance Disclosure Regulation (SFDR) et le Taxonomy Regulation (TR).
Le 24 mars 2023, la Commission de Surveillance du secteur financier (CSSF) a publié des orientations pratiques et techniques sur la collecte de données OPC SFDR. La date limite de la soumission du rapport initial est le 15 juin 2023. L'objectif des présentes orientations est de fournir aux acteurs du secteur des informations concernant le lancement de l'exercice de collecte de données relatives aux informations précontractuelles sur les produits, en tant que gestionnaires de fonds d'investissement alternatifs (AIFM) et des institutions pour les régimes de retraite professionnelle qualifiés d'acteurs des marchés financiers (FMP) qui sont tenus d'inclure des informations liées à la durabilité dans les informations précontractuelles des produits financiers conformément au SFDR, au TR et aux RTS SFDR. La CSSF exige par la présente les FMP suivants :
- (a) les sociétés de gestion d'OPCVM, domiciliées au Luxembourg ou dans un autre Etat membre de l'Union européenne, pour tous les OPCVM domiciliés au Luxembourg qu'elles gèrent ;
- (b) les gestionnaires d'AIF agréés, basés au Luxembourg, par rapport à tous les AIF réglementés et non réglementés domiciliés au Luxembourg (y compris les ELTIF) qu'ils gèrent ;
- (c) les gestionnaires d'AIF agréés, basés dans un autre État membre de l'Union européenne, en ce qui concerne tous les AIF réglementés domiciliés au Luxembourg, ainsi que les AIF non réglementés domiciliés au Luxembourg (uniquement lorsqu'ils sont qualifiés d'ELTIF) qu'ils gèrent ;
- (d) les gestionnaires d'AIF enregistrés, soumis à l'article 3(3) de la loi du 12 juillet 2013 (la loi de 2013), établis au Luxembourg ou dans un autre État membre de l'Union européenne, par rapport à tous les AIF réglementés domiciliés au Luxembourg qu'ils gérent;
- (e) Les IRP, soumises à la loi du 13 juillet 2005 pour participer à cet exercice de collecte de données, en fournissant un ensemble d'informations relatives aux déclarations précontractuelles de produits pour chacun des produits financiers mentionnés précédemment. Les données SFDR peuvent être transmises à la CSSF via les canaux suivants :
Une solution basée sur le dépôt d'un fichier structuré via le protocole S3 (« simple storage service »), déjà disponible. Cette solution permet une automatisation par les acteurs des marchés financiers et si besoin, un test de la soumission du fichier de reporting avant la mise en production.
Une solution en ligne via eDesk pour la saisie manuelle par les GFI/IRP pour chaque fonds/compartiment qu'ils gèrent. Cette solution sera disponible à partir du 2 mai 2023.
Les FMP soumis aux articles 2(2) ou 3(1) de la Loi 2013 peuvent participer à cet exercice de collecte de données sur une base volontaire concernant tout AIF réglementé domicilié au Luxembourg qu'ils gèrent. Un guide d'utilisation fournissant des précisions sur le contenu et le format des informations à déclarer ainsi que des détails techniques sur le processus de collecte des données est disponible. La déclaration courante des données SFDR est obligatoire pour tous les compartiments d'un OPCVM/AIF/IRP soumis au périmètre tel que défini ci-dessus. Les données sont à compléter et à fournir à la CSSF pour chaque fonds/compartiment, quel que soit le régime applicable à eux sous le SFDR (i.e. SFDR Article 6, Article 8 ou Article 9).
- Les GFI, respectivement IRP, doivent soumettre un rapport initial à la CSSF au plus tard le 15 juin 2023 pour tous les OPC, respectivement IRP, sous leur gestion. Le reporting doit être fait au niveau du compartiment et être cohérent, le cas échéant, avec les informations contenues dans le document/modèle précontractuel.
- Un rapport ultérieur doit être remis par le GFI, respectivement l'IRP, chaque fois que les informations pertinentes contenues dans le document/modèle précontractuel SFDR et reflétées dans le rapport précédent sont modifiées.
Après la déclaration initiale, les GFI et IRP restent responsables de la mise à jour des informations fournies ; en cas de modification des documents/modèles précontractuels, les GFI et IRP doivent mettre à jour les données déclarées dans le cadre de la collecte de données SFDR en transmettant des déclarations ultérieures.
Les données SFDR concernant les OPC doivent être transmises par le GFI (ou l'OPCVM/FIA pour les OPC à gestion interne). Les données SFDR concernant les IRP doivent être transmises directement par l'IRP. Toute question doit être adressée à email@example.com. L'exercice de collecte de données en cours sera étendu dans un avenir proche pour collecter les informations contenues dans les déclarations PAI et dans les modèles de divulgation périodique. De plus amples détails sur le calendrier et la procédure pratique de cette collecte de données étendue seront communiqués ultérieurement.
Financial Market Infrastructure (FMI)
Federal Council recognizes foreign platforms for trading equity securities of Suisse companies / Le Conseil Fédéral reconnaît les plates-formes étrangères pour le négoce de titres participation d’entreprises suisses
On March 28 2023, the Federal Council published Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (Recognition of foreign platforms for trading equity securities of companies headquartered in Switzerland). Trading venues based abroad must first obtain recognition from FINMA if the following conditions are met:
a. equity securities of companies with their registered office in Switzerland are traded on these platforms or they allow such securities to be traded in some other way;
b. the equity securities referred to in let. a are listed on a stock exchange in Switzerland or traded on a trading venue in Switzerland.
A foreign exchange does not need recognition for trading equity securities if they meet the following conditions:
a. they are listed or admitted to trading with the express agreement of their issuing company given before November 30 2018;
b. they were listed or admitted to trading before November 30 2018;
c. their issuing company assumes the obligations related to listing or admission to trading.
Recognition lapses as soon as the trading venue has its registered office in a jurisdiction mentioned in the list referred to in Art. 41(c) paragraph 2.
FINMA grants recognition upon request if the foreign trading venue meets the following conditions:
a. it is subject to appropriate regulation and supervision;
b. it does not have its seat in a jurisdiction which subjects its market participants to rules restricting trading on Swiss trading venues in equity securities of companies established in Switzerland and thereby substantially impedes trading in such securities on Swiss trading venues.
It may also recognise a foreign trading venue that has not filed an application if that venue meets the requirements laid down in para. 1.
FINMA publishes a list of recognised foreign trading venues.
The Federal Council shall publish a list of the courts referred to in Art. 41b para. 1 let. b.
Foreign trading venues which, upon the entry into force of the amendment of March 17 2023, have FINMA recognition based on the Ordinance of November 30 2018 on the recognition of foreign venues for trading equity securities of companies with their registered office in Switzerland3 do not need to obtain new recognition in accordance with Art. 41a.
This Act shall be subject to a referendum.
The Federal Council sets the date of entry into force.
This Act has effect for five years. The Federal Council may extend it for a maximum of five years at each deadline as long as the list referred to in Art. 41c, paragraph 2, contains at least one court.
Le 28 mars 2023, le Conseil fédéral a publié la loi fédérale sur les infrastructures des marchés financiers et la conduite sur le marché en matière de négociation de valeurs mobilières et de dérivés (reconnaissance des plates-formes étrangères pour le négoce de titres de participation d'entreprises ayant leur siège en Suisse). Les plates-formes de négociation basées à l'étranger doivent au préalable obtenir l'agrément de la FINMA si les conditions suivantes sont remplies :
a. des titres de participation de sociétés ayant leur siège social en Suisse sont négociés sur ces plateformes ou permettent le commerce de ces titres d'une autre manière;
b. les titres de participation visés aux let. a sont cotés en bourse en Suisse ou négociés sur une plate-forme de négociation en Suisse.
Une bourse étrangère n'a pas besoin d'être reconnue pour la négociation de titres de participation si elle remplit les conditions suivantes :
- ils sont cotés ou admis aux négociations avec l'accord exprès de leur société émettrice donné avant le 30 novembre 2018 ;
- ils ont été cotés ou admis aux négociations avant le 30 novembre 2018 ;
- leur société émettrice assume les obligations liées à la cotation ou à l'admission à la négociation.
La reconnaissance s'éteint dès que la plate-forme de négociation a son siège social dans une juridiction mentionnée dans la liste visée à l'art. 41(c) paragraphe 2.
La FINMA accorde la reconnaissance sur demande si la plate-forme de négociation étrangère remplit les conditions suivantes :
- il fait l'objet d'une réglementation et d'un contrôle appropriés ;
- il n'a pas son siège dans une juridiction qui soumet ses participants au marché à des règles restreignant le négoce sur les places boursières suisses de titres de participation des sociétés établies en Suisse et entrave ainsi de manière substantielle le négoce de ces titres sur les places boursières suisses.
Elle peut également reconnaître une plate-forme de négociation étrangère qui n'a pas déposé de demande si cette plate-forme remplit les conditions prévues à l'al. 1.
La FINMA publie une liste des plates-formes de négociation étrangères reconnues.
Le Conseil fédéral publie une liste des tribunaux visés à l'art. 41b al. 1 let. b.
Les plates-formes de négociation étrangères qui, à l'entrée en vigueur de la modification du 17 mars 2023, sont reconnues par la FINMA sur la base de l'ordonnance du 30 novembre 2018 concernant la reconnaissance des plates-formes étrangères pour le négoce de titres de participation de sociétés ayant leur siège en Suisse3 n'ont pas besoin obtenir une nouvelle reconnaissance conformément à l'art. 41a.
La présente loi est soumise à un référendum.
Le Conseil fédéral fixera la date d'entrée en vigueur.
La présente loi est effective pendant cinq ans. Le Conseil fédéral peut la proroger pour une durée maximale de cinq ans à chaque échéance tant que la liste visée à l'art. 41c, alinéa 2, contienne au moins un tribunal.
The Netherlands publishes Decision of 21 March 2023 amending Regulation to replace the service document with the comparison card
On March 31 2023, the Netherlands published Decision of March 21 2023 amending Regulation to replace the service document with the comparison card.
The Financial Supervision Of Companies Conduct Regulations Wft now provides a standard model in terms of the design and content of the comparison map, which contains fixed and variable texts.
It must meet the following general requirements:
- Arial font or another Arial-like font
- Font size standard: 10 pt
- Font size different: 8, 12 and 14 pt
- Alignment default: left
- Alignment different: centered
- Line spacing: 14
- Color use text standard black: #000000
- Use of colour different: grey #A6A6A6, blue #0070C0, green #00B050 and white #FFFFFF
- Size: A4
- Size: up to 4 pages
- At the top left of every page with content, the following text: Comparison map Mortgage or Comparison Card Hedging risks or Comparison card Building up capital or Comparison card Pension demand employer
- At the top right of every page with content the possibility to show a company logo with maximum size of 2.5 cm × 2.5 cm.
- Top alignment page: 2.5 cm
- Alignment page bottom: 1.5cm
- Alignment page left: 1.5 cm
- Alignment page right: 1.5 cm
The comparison map consists of six parts in a fixed order:
- Introduction and general information of financial service provider
- What can this financial service provider do for you?
- How can you get advice on this financial Service provider?
- Gives this financial service provider independent advice?
- Why should this financial service provider choose?
- What do you pay to this financial service provider?
- What can this financial service provider do for you in the future mean?
Regulation on Sustainability-Related Disclosures in the Financial Services Sector (SDR)
AFM publishes Report and Q&A on sustainability information annual reporting in 2024
On March 30 2023, the Autoriteit Financiële Markten (AFM) published a Report and a related Q&A on sustainability information annual reporting in 2024.
As of January 1 2024, stricter transparency rules for sustainability information (ESG) will apply in the annual report of the largest listed companies; the Corporate Sustainability Reporting Directive (CSRD). This makes it clear, for example, what climate change means for the value development of a company and what their impact is on the environment. In anticipation of this, the AFM has carried out an exploration of their climate reporting and the assurance thereof. It appears that major steps are still needed to achieve 2024.
Half of the 27 listed companies surveyed do not explain the negative effects on the environment and society to a limited extent. The majority is also not sufficiently transparent about the (financial) impact of climate change and the energy transition on the company. Half of them are not clear about how they intend to achieve their climate goals.
For many companies, the CSRD means that they have to draw up or update a sustainability strategy and based on this, set up the processes and systems to be able to measure and achieve the sustainability objectives. It is important that companies invest in this in time, in 9 months they will already have to report on this.
It is important that the auditor makes the challenges and dilemmas surrounding the application of the CSRD transparent in the assurance statement. So that there is more clarity about the nature and depth of the work carried out.
Investing in sufficient expertise and capacity around sustainability reporting and assurance applies to both companies and audit firms. The external auditor provides assurance on the sustainability information. The number of assurance assignments will grow strongly because the rules will apply to a large number of organizations.
CSRD will apply to all large enterprises from 2025. This will be followed by medium-sized and small listed companies in 2026. This means that not only they must have this information in order, but also the parties within their chain such as the suppliers.
Sustainable Finance / Green Finance
DNB publishes supervisory approach for climate and environmental risk management
On March 30 2023, the De Nederlandsche Bank (DNB) published its supervisory approach for climate and environmental risk management.
The new Guide to managing climate and environmental risks provides the financial sector with focal points and good practices. The Guide incorporates feedback from the sector and NGOs collected during the consultation round. DNB uses the Guide in the supervision of climate and environmental risk management and will soon launch a survey among pension funds and insurers.
Financial institutions are required by law to manage material risks, including ESG risks such as climate and environmental risks. Nevertheless, previous indicates that institutions have embedded these risks in their core processes only to a limited extent. In this Guide, DNB provides insurers, pension funds, premium pension institutions, investment firms and institutions, and electronic money and payment institutions with focal points and good practices for managing climate and environmental risks. DNB is thus responding to a need felt throughout the sector for a clear indication of what good management of climate and environmental risks could entail. The Guide outlines focal points for a financial institution’s entire control process: from the business model and strategy, to governance, risk management and disclosure.
DNB use the focal points in this Guide in our supervision of the management of financial and non-financial risks arising from climate change and environmental degradation. These include more frequent extreme weather events which could cause destruction of capital or which could increase the unforeseen claims burden for non-life insurers. New climate and environmental policies could also potentially reduce the market value of certain investments and even result in stranded assets. The climate and environmental impact of financial institutions themselves (known as double materiality) can also give rise to risks. For example, financial institutions that invest in companies with high negative environmental impacts may face increased reputational and legal risks.
Financial institutions' action plans with regard to voluntarily signed sustainability commitments or covenants, such as the Climate Commitment, also play a role in our supervision of climate and environmental risk management. Once made, failing to comply with such commitments can create reputational and legal risks for financial institutions. Action plans can also affect an institution's business model and governance, as embedding responsibilities is essential in their implementation. As part of the supervision of sound and ethical operational management, DNB therefore monitors how institutions assess their progress on the commitments they make under the voluntary Climate Commitment. An institution’s compliance with its own policies, for example on sustainable investments, is also an integral part of the on-site inspections of ESG risks.
DNB will update the Guide to climate and environmental risk management in about a year's time, adding new good practices for managing ESG risks and current developments in laws and regulations.
DNB is also working towards further embedding ESG factors in our risk assessments of financial institutions. In 2024, for instance, DNB expect to include ESG risks in our annual sector-wide risk analysis surveys as part of our supervisory practice. Additionally, DNB is developing ESG dashboards to gain insight into institutions’ exposure to various ESG aspects. DNB will use the information gleaned from these dashboards for various purposes, including as a basis for supervisory meetings and as input for risk assessments.
Financial Market Infrastructure (FMI)
Spain publishes Law 6/2023 of March 17 on Securities Markets and Investment Services
On March 18 2023, the Boletín Oficial del Estado published Law 6/2023, of March 17, on Securities Markets and Investment Services. The Law will enter into force 20 days after its publication in the BOE, on April 7, 2023.
The objective of the LMV is to modernize the regulation of capital markets and their operation through the transposition into national regulations of the recent European Directives on financial markets. The new approved regulation systematizes and reorganizes the regulations of the securities market, adapts it to the novelties of several European directives, in particular in the field of crypto-assets and distributed ledger technologies, and simplifies and makes more flexible some procedures to increase the competitiveness of the securities market. It also takes the opportunity to introduce new developments in the field of takeover bids, investment services firms and collective investment institutions and regulates for the first time the figure of special purpose acquisition companies (SPACs).
It is envisaged as the new “framework law” for the securities markets and it is envisaged that it will be implemented by three royal decrees.
1. Simplification of securities market procedures: The new Law reduces the requirements for the issuing and admission to trading of securities and removes or relaxes certain administrative formalities with a view to increasing the competitiveness of the securities market.
2. Tender offers: the rules applicable to regulated markets in relation to tender offers are extended to include companies listed on a multilateral trading facility (MTF), such as BME Growth, and which are domiciled in Spain. Consequently, it is provided that multilateral trading facilities will also be subject to the rules on the voluntary delisting of financial instruments. In both cases, the provisions will only be applicable where the entry into force of the relevant implementing regulations occurs.
3. Crypto-assets and distributed ledger technology (DLT): One of the main new elements of the legislation is the advancement it makes towards incorporating the EU legislation that will be contained in a future directive, and which accompanies the proposals for EU regulations on markets in crypto-assets, on the market infrastructures based on distributed ledger technology, and on digital operational resilience.
4. SPAC: For the first time in Spain specific rules are introduced for SPACs - (in the new Chapter VIII of Title XIV of the Capital Companies Law). The rules cover Redemption mechanism; Freezing of funds and redemption value; Period for making the acquisition; and others
5. Investment Services Firms: Investor protection is enhanced, the Directive 2019/2034 on the prudential regime for investment firms is transposed, introducing new conduct of business and solvency rules for investment firms. The CNMV will be in charge of adapting the new requirements according to the size, nature and complexity of the activities carried out by the ISF, and a regime for national investment services firms is created.
6. Collective Investment Undertakings: The Law 35/2003, of November 4, on Collective Investment Undertakings is amended in order to improve the competitiveness of the sector and to make further progress in the transposition of directives and adaptation to European regulations. The definition of the minimum content of the Key Investor Information Document (KIID) that was contained to date is removed and The regime on public intervention in the dissolution of an investment company, management company or depositary is amended, clarifying, inter alia, that (i) cash and financial instruments of CIS may not be distributed or realized for the benefit of creditors of the depositary or any third party to whom the depositary has delegated its functions, in the event of the insolvency of either of them; and (ii) the declaration of insolvency shall not prevent the settlement of subscription, redemption or transfer orders placed by clients prior to the date of the declaration of insolvency.
Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT Regulation)
CNMV adopts the ESMA guidelines for applying for a permit to operate a market infrastructure based on the decentralized record technology (DLT/TRD)
On March 10 2023, the Comicion Nacional del Mercado del valores (CNMV) adopted the guidelines for applying for a permit to operate a market infrastructure based on the decentralized record technology (DLT/TRD).
The National Securities Market Commission (CNMV) has notified the European Securities and Markets Authority (ESMA) of its intention to comply with the Guidelines on standard forms, formats and templates to request permission to operate a market infrastructure based on information technology. Decentralized Registry (TRD or DLT). Therefore, it will take them into account in its supervision tasks. The guidelines aim to establish coherent, effective and efficient practices within the European System of Financial Supervision (SESF) and to guarantee a common, uniform and coherent application of articles 8.4, 9.4 and 10.4 of Regulation (EU) 2022/858 of the European Parliament and of the Council, of May 30 2022, on a pilot regime of market infrastructures based on the TRD.
This Regulation will be applicable, in general, as of March 23 2023, like the Guidelines. In particular, these guidelines intend to establish standard forms, formats and templates for the application of specific permits to operate market infrastructures based on the TRD.
UK Government publishes Guidance on extending the pension fund clearing exemption and exemptions for intragroup transactions
On March 28 2023, the UK Government publishes Guidance on extending the pension fund clearing exemption and exemptions for intragroup transactions.
The UK Government intends to lay a statutory instrument extending:
- the exemption for pension funds from the clearing obligation by a period of two years to June 18 2025, through amendments to Article 89(1) of onshored Regulation (EU) 648/2012 (UK EMIR); and
- the temporary intragroup exemption regime by a further three years to December 31 2026, by amending the relevant days set out in Articles 81(1)(b), 81(2)(b), 83(1)(b) and 83(2)(b) of The Over the Counter Derivatives, Central Counterparties and Trade Repositories (EU Exit) Regulations 2019.
A review of the pension fund exemption will be conducted ahead of its expiry in 2025, allowing time for consideration and implementation of a longer-term approach.
The guidance also notes that the government will consider reforming this area of legislation in due course as part of the ongoing process of building a smarter financial services framework for the UK.
HM Treasury intends to lay this statutory instrument shortly to ensure it comes into force before the current expiry date of the pension fund clearing exemption on June 18 2023.
Cryptoasset / Cryptocurrency / Virtual Currency
UK Parliament publishes draft SI on the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023
On March 27 2023, the UK Parliament published draft Statutory Instrument (SI) on The Financial Services and Markets Act 2000 (FSMA) (Financial Promotion) (Amendment) Order 2023, to include financial promotions in respect of certain cryptoassets. Together with the SI, the UK Government published a draft explanatory memorandum and a keeling schedule to assist with the interpretation of the SI.
The SI and relevant FCA rules will provide for the regulation of in-scope cryptoasset financial promotions. This is aimed at improving consumers’ understanding of the risks associated with cryptoasset investments and ensuring that cryptoasset promotions are held to the same standards as for broader financial services.
The draft SI:
- Creates a new controlled investment (defined as a “qualifying cryptoasset”) and amends relevant controlled activities to incorporate reference to qualifying cryptoassets, through changes to the FPO.
- Applies and modifies certain existing exemptions in the FPO to qualifying cryptoassets and creates a temporary, limited exemption to the financial promotion restriction (imposed by section 21(1) of FSMA, for cryptoasset businesses that are not authorised persons but are registered with the FCA under the Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692)).
- Allows for an implementation period of four months from the day after the SI is made before it comes into force. This period is intended to allow industry time to understand how the regime will be practically implemented, with the aim of ensuring compliance across the industry. The government had originally planned to provide for a six-month implementation period, but this was reduced to four in light of recent market turmoil and growing consumer risks and harms relating to cryptoassets.
- UK Government notes in the explanatory memorandum that it will not be issuing further guidance relating to the SI. The FCA intends to amend its perimeter guidance for authorised and registered firms.
Financial System Stability
Boe explains what happened to Silicon Valley Bank UK
On March 24 2023, the Bank of England (BoE) explained what happened to Silicon Valley Bank UK.
In March 2023, Silicon Valley Bank (SVB) became the largest US bank to fail since the 2008 global financial crisis. SVB bank owned a smaller bank based in the UK called Silicon Valley Bank UK. It showed signs that it would not be able to survive too. At that point, the BoE stepped in using the authority given to it by Parliament. BoE's aim was to avoid any wider disruption.
Silicon Valley Bank UK was not bailed out with UK taxpayers’ money. Its business was transferred to another bank (HSBC). No UK taxpayers’ money was involved. During the 2008 global financial crisis, the government needed to inject money into some banks. At that time, letting a bank fail wouldn’t have only been a problem for its customers. It could have threatened the UK’s whole financial system. The situation has now changed. Since 2009, the Bank of England has been working with banks (and other firms that provide financial services) to put in place a safety system. This system is called ‘resolution’. It allows banks to fail safely, without causing harm to the wider economy. Or costing taxpayers a lot of money.
Thanks to the resolution process, the BoE has a few options when it intervenes to manage the failure of a UK bank. One of those options is to close it down (putting it into insolvency). Other options include transferring it to a private company or taking it into public ownership. With Silicon Valley Bank UK, the best option was to transfer its business to another stronger bank (HSBC). This means that all its services continued as normal. Its customers shouldn’t notice any changes.
The UK banking system remains resilient, with a strong financial position and robust regulation.
UK publishes 2023 Green Finance Strategy
On March 30 2023, the UK Government published its 2023 Green Finance Strategy: Mobilising Green Investment.
This Strategy aims to reinforce and expand the UK’s position as a world leader on green finance and investment, delivering five key objectives:
a. UK financial services growth and competitiveness
The UK can and will do more to support our financial services sector to prosper from a transitioning global economy. From venture capital supporting innovative climate tech solutions , to banks lending to major renewables projects and asset managers allocating capital to support the companies of the future – behind every step of our transition will be our world-leading financial services sector.
b. Investment in the green economy
Private investment will be crucial to delivering net zero, building climate resilience and supporting nature’s recovery. We estimate that to deliver on the UK’s net zero ambitions, through the late 2020s and 2030s, an additional £50-60 billion capital investment will be required each year. A 2021 report estimated that over the next ten years, our domestic nature-related goals could require between £44-97 billion of investment. This investment will support the sectors and technologies of the future, enable traditional sectors to adapt and thrive as part of the transition, and presents a significant opportunity to level up the UK, including those parts with an industrial heritage.
c. Financial stability
Climate change and environmental degradation pose profound risks to the economy. The Bank of England projected £110 billion in additional losses for UK banks out to 2050 in their disorderly transition scenario, and 50-70% higher losses for UK insurers in their highest climate risk scenario. Similarly, over half the world’s GDP is generated in sectors that depend on the goods and services nature provides. An effective green finance framework will ensure the finance sector has the information it needs to manage risks from climate change and nature loss.
d. Incorporation of nature and adaptation
There has been significant progress on nature finance both domestically and internationally since 2019, culminating in the commitments on finance made in the landmark Kunming-Montreal Global Biodiversity Framework agreed at the UN Convention on Biological Diversity COP 15 in December 2022. There is also increasing recognition of the Government’s critical role in supporting private investment in climate resilience, as highlighted by the Climate Change Committee’s recent report. To reflect these developments, as well as calls from industry for an integrated approach, this Strategy will explicitly incorporate both nature and climate adaptation into the government’s green finance policy framework.
e. Alignment of global financial flows with climate and nature objectives
With the UK Government world leading expertise and outward looking financial sector, the UK is strategically placed to collaborate with international partners to support the alignment of global financial frameworks and stimulate investment towards emerging and developing markets where capital needs are highest. The UK can capture a huge economic opportunity by supporting the global transition, whilst building closer relationships with high growth emerging markets and developing economies as they seek to meet their own financing needs.
Investment firms /MiFID firms
UK publishes Draft Financial Services and Markets Act 2000 (Commodity Derivatives and Emission Allowances) Order 2023
On March 30 2023, the UK Government published the Draft Financial Services and Markets Act 2000 (Commodity Derivatives and Emission Allowances) Order 2023.
This instrument amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) which specifies types of activities and investments for the purposes of the Financial Services and Markets Act 2000 and the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (MiFI Regulations) which transposed certain European legislation into UK law. The purpose of this instrument is to streamline the process for determining when a firm trading commodity derivatives or emission allowances needs to be authorised as an investment firm, which HM Treasury consulted on as part of the Wholesale Markets Review (WMR). The FCA will put in place a simpler and therefore lower cost regime for determining when a firm that trades commodities or emission allowances as an ancillary activity does not need to be authorised as an investment firm. Currently firms are required to perform costly calculations to determine whether their trading activity is ancillary to their main commercial business, and therefore whether they are exempt from the commodity position limits regime. This instrument removes the obligation for firms relying on the ancillary activities exemption to notify the FCA of their exemption annually. This instrument also removes article 72J of the RAO which enables firms to carry on their business without obtaining authorisation if there is no data available to enable them to perform the test establishing when an activity is ancillary. It also removes references to Commission Delegated Regulation (EU) 2017/592 (RTS 20) which outlines the regulatory technical standards for determining when a firm’s activity is considered to be ancillary to its main commercial business.
EU Directive 2014/65/EU and Regulation (EU) No 600/2014 (collectively referred to as MiFID II) repealed and recast EU Directive 2004/39/EC. MiFID II established the legal framework governing the requirements applicable to investment firms, trading venues, data reporting service providers and third-country firms providing investment services or activities in the EU. EU Directive 2014/65/EU established an exemption from authorisation for firms trading commodity derivatives or emission allowances primarily for investment purposes or in support of the firm’s commercial business (this is known as the ancillary activities exemption).
The ancillary activities exemption was transposed into UK legislation by Part 1, Schedule 3 of the RAO and took effect in 2018. The exemption relies on a set of calculations, known as the Ancillary Activities Test (AAT). Currently the AAT is based on specific quantitative criteria (most of which is set out in RTS 20) which requires firms to perform complex calculations and process substantial volumes of historical trading data. The RAO also requires firms to notify the FCA of the outcome of the assessment on an annual basis by reference to regulation 47 of the MiFI Regulations. Regulation 47 of the MiFI Regulations establishes requirements that persons who qualify for the ancillary activities exemption are subject to. That regulation requires firms to notify the FCA of the outcome of the AAT on an annual basis and gives the FCA the power to direct persons to notify it of their status.
This instrument therefore amends schedule 3 of the RAO to remove the requirement to notify the FCA when a firm is making use of the exemption when the activity of trading commodity derivatives or emission allowances is ancillary to its main business. The FCA will establish a simpler and therefore more cost-effective regime for determining when a firm that trades commodities or emission allowances as an ancillary activity does not need to be authorised as an investment firm. This instrument also amends Regulations 30 and 47 of the MiFI Regulations to reflect the removal of the notification requirement from the RAO. This is important because the AAT in the RAO and the MiFI Regulations are designed to mirror each other, and if a firm is participating in algorithmic trading and satisfies the tests in the RAO, it automatically comes within scope of the requirements in the MiFI Regulations. Amending the MiFI Regulations at the same time as amending the RAO is therefore important to prevent confusion for firms.
FCA publishes Portfolio letter setting out its priorities for payments firms
On March 16 2023, the Financial Conduct Authority (FCA) published its priorities for payments firms.
The FCA remains concerned that many payments firms do not have sufficiently robust controls and that as a result some firms present an unacceptable risk of harm to their customers and to financial system integrity. The entity considers that the risk of customer harm is heightened by the tightening economic conditions and the cost-of-living crisis.
In summary, FCA expects firms:
- To ensure your customers’ money is safe with you, including in the eventthat your firm fails;
- To have robust controls to prevent your firm being used for financial crime, including money laundering and fraud;
- To ensure you meet your customers’ needs, including through implementation of the Consumer Duty and robust operational resilience; and
- To have robust governance and to take action to support the ESG agenda and promote diversity and inclusion
In more detail:
This letter aims that with its priorities, payments firms reach three outcomes:
Outcome 1: Ensure that your customers’ money is safe. How:
Priority 1: Safeguarding - Companies should ensure that their firm is safeguarding customers’ funds in line with the PSRs/EMRs and guidance set out in FCA Approach Document. In particular your firm must:
- appropriately document its process to identify which funds are relevant funds for the purposes of safeguarding
- undertake internal and external reconciliations at least once a day to ensure that safeguarded funds are adequate and not excessive
- ensure that the accounts in which relevant funds are held (or the insurance policy or comparable guarantee) meet FCA requirements and are supported by the appropriate documentary evidence
- maintain appropriate records to enable the firm or a third party such as an insolvency practitioner to identify the customer to which the funds it holds relate
Priority 2: Prudential Risk management - FCA expects firms to regularly review its prudential risk management arrangements. In particular firms should ensure:
- meets its regulatory capital requirement at all times;
- considers the particular financial risks it faces, based on the business model it operates, and consider how those risks may be heightened by macroeconomic conditions;
- sets or reviews its risk appetite, including key risk indicators;
- forecasts its likely financial performance in a range of plausible scenarios, including stressed scenarios, and uses this analysis to validate the firm’s assessment of adequate capital and liquidity resources;
- considers holding additional capital above the minimum requirement under the PSRs or EMRs where that would be prudent based on the firm’s assessment of the risks it faces;
- plans well ahead to ensure it has adequate financial resources on an ongoing basis.
Priority 3: Wind-down planning: FCA expect firms have an appropriate wind-down plan in place and ensure that it is reviewed regularly and kept up to date.
Outcome 2: Firms do not compromise financial system integrity
Priority 1: Money Laundering & Sanctions: - FCA expects that firm’s anti-money laundering systems and controls are effective and commensurate with the risks in the business, including as it grows over time. Firms should also conduct regular reviews to assess its compliance with anti-money laundering obligations and sanctions requirements, and to work swiftly to remediate weaknesses identified. Furthermore FCA expects firms to comply with its responsibilities under the Proceeds of Crime Act 2002 and Terrorism Act 2000 through accurate and timely submissions of Suspicious Activity Reports(SARs) and to regularly review of themes from your SARs reporting.
Priority 2: Fraud - Firms should:
- reviews its internal risk appetite statements and policies and procedures to ensure that these adequately address the risk of fraud to its customers,
- regularly reviews its fraud prevention systems and controls to ensure that these are effective,
- maintains appropriate customer due diligence controls at onboarding stage and on an ongoing basis to identify and prevent accounts being used to receive proceeds of fraud or financial crime.
Outcome 3: Ensuring that your customers' needs are met through high quality products and services
- FCA expects firms to ensure that customer needs are met through adequate implementation of the FCA’s Consumer Duty.
Furthermore the FCA also introduces cross-Cutting Priorities relating to governance, operational resilience and regulatory resilience. the entity also expects firms to familiarize with ESG concepts.
FCA announces that will start collecting Treasury’s economic crime levy (Anti-Money Laundering) from July
On March 9 2023, the FCA announced that will start collecting Treasury’s economic crime levy (Anti-Money Laundering) from July.
The Government has introduced an economic crime levy (ECL) to fund the fight against economic crime. The levy will be collected for the Government by HM Revenue and Customs (HMRC), the FCA and the Gambling Commission.
The ECL will apply to AML regulated businesses including:
- credit institutions
- financial institutions
- auditors, insolvency practitioners, external accountants, and tax advisers
- independent legal professionals
- trust or company service providers
- estate and lettings agents
- high value dealers, casinos, auction platforms and art market participants
- crypto asset exchange providers and custodian wallet providers
To ensure firms are charged the right amount, all impacted firms (those who were subject to the money laundering regulations between April 6 2022 and April 5 2023) must submit their data via new Reg Data Report (FIN074) from April 1. A failure to submit in time may result in a £250 administrative fee. Impacted firms will see the new levy appear on invoices from July 2023.
Those firms registered as an Annex 1 financial institutions only will receive a letter to report their data.
Sustainable Finance / Green Finance
BoE publishes report on climate-related risks and the regulatory capital frameworks
On March 13 2023, Bank of England (BoE) published report on climate-related risks and the regulatory capital frameworks.
This report sets out the Bank's latest thinking on climate-related risks and regulatory capital frameworks. The report includes updates on: capability and regime gaps; capitalisation timelines; and areas for future research and analysis.
This report updates on the Bank’s work on climate risk and the capital frameworks, building on the analysis set out in its Climate Change Adaptation Report (CCAR). It sets out areas where the Bank’s work has progressed since the CCAR, including on time horizons, ways of tackling uncertainty, and the impacts of climate risks on the existing microprudential and macroprudential frameworks. Substantial further work is needed and there remain many open questions, notably on potential regime gaps to capture systemic risks from climate change and unintended consequences. The Bank will continue to address these questions as part of its supervision and policymaking.
- Existing capability and regime gaps create uncertainty over whether banks and insurers are sufficiently capitalised for future climate-related losses. This uncertainty represents a risk appetite challenge for micro and macroprudential regulators. Regulators, including the Bank, need to form judgements on whether quantified and unquantified risks are within risk appetite – and act accordingly.
- Effective risk-management controls within PRA-regulated firms (firms) can reduce the quantum of capital required in the future for resilience, but the absence of controls might suggest a greater quantum of capital will be required. As a short-term priority, the Bank is focused on ensuring firms make progress to address ‘capability gaps’ to improve their identification, measurement, and management of climate risks.
- The Bank has explored conceptual issues to better understand the nature and materiality of ‘regime gaps’ in the capital framework. The unique characteristics of climate risks mean that their capture by capital frameworks requires a more forward-looking approach than used for many other risks. Scenario analysis and stress testing will play a key role in this. Regulators, including the Bank, need to focus on the development of these frameworks and how they can inform capital requirements. Firms will be expected to make further progress in this regard.
- Current evidence suggests that the existing time horizons over which risks are capitalised by banks and insurers are appropriate for climate risks.
- Research on the conceptual challenges of incorporating climate risks into the capital frameworks appears to be limited based on submissions to the Bank’s call for research papers.
The question of whether the capital frameworks adequately capture climate risks is complex. The Bank will undertake further analysis to explore whether changes to the regulatory capital frameworks may be required.
UK Parliament publishes letter to the FCA following SDR and investment labels consultation
On March 9 2023, the UK Parliament published a letter of Treasury Sub-Committee on Financial Services Regulations addressed to the Financial Conduct Authority (FCA) following Sustainability Disclosure Requirements (SDR) and investment labels consultation.
The letter raises the following issues:
Cost benefit analysis – The Sub-Committee is concerned that the FCA has failed to take into account the substantial costs to the consumer of the measures included within the consultation. It warns that without putting a figure on these costs, it is difficult for the Sub-Committee to take a view on whether the design of the proposals has been sufficiently considered.
Enforcement against misleading customers – The Sub-Committee is concerned that despite stating in its consultation that consumers are being misled, and that it takes its fundamental principles seriously, the FCA appears unwilling to take enforcement action because no specific rules were in place when the misleading took place. It notes that misleading customers is a breach of an FCA principle and should therefore be a cause for enforcement.
International divergence or convergence – The Sub-Committee asks the FCA to set out its assessment of the risks to consumers and to the funds industry if the FCA disclosure requirements prove to be too onerous for US or EU based funds to meet.
The Sub-Committee has asked the FCA for a response by March 23 2023.
FCA publishes Dear CEO letter outlining ESG Benchmarks Review findings
On March 20 2023, the Financial Conduct Authority (FCA) published a Dear CEO letter outlining ESG Benchmarks Review findings.
This follows a previous Dear CEO letter, sent in September 2022, which highlighted the risk of poor disclosures for ESG benchmarks. The FCA flagged the importance of high quality ESG benchmarks to support trust in the market for ESG products and the transition to a net zero economy.
The FCA’s preliminary review, which assessed the quality of ESG-related disclosures made by a sample of UK benchmark administrators, found that the overall quality of those disclosures was poor. The issues identified included:
- Insufficient detail and description provided of the ESG factors considered in benchmark methodologies.
- Failing to ensure that the underlying methodologies for ESG data and ratings products used in benchmarks are accessible, clearly presented and explained to users.
- Not fully implementing the ESG disclosure requirements introduced by the UK Low Carbon Benchmarks Regulation.
- Benchmark administrators failing to implement their ESG benchmarks’ methodologies correctly, including using outdated data and ratings or failing to apply ESG exclusion criteria.
- The FCA expects all benchmark administrators to have strategies in place to address the issues identified in the letter and to be able to explain those strategies on request. It plans to carry out more work in this area, including holistically considering the risks of harm related to ESG benchmarks across the value chain. Where firms fail to consider the feedback set out in the letter, the FCA will use the full range of its supervisory tools.
The concerns highlighted in the letter are likely to be of interest not only to benchmark administrators but also to those in the sector that rely on ESG benchmark disclosures, such as asset managers.
Finally, the FCA has confirmed that it supports the regulation of ESG ratings and is currently working closely on this with the government, which is expected to consult shortly on whether and how to extend the FCA’s regulatory perimeter to include ESG ratings providers.
UK launches Consultation on Future regulatory regime for Environmental, Social, and Governance (ESG) ratings providers
On March 30 2023, the UK Government launched a Consultation on Future regulatory regime for Environmental, Social, and Governance (ESG) ratings providers.
As the consideration of ESG factors increases, firms and consumers increasingly rely on related services, such as ESG ratings and data. ESG ratings can be described as assessments of the ESG characteristics of entities, such as companies and sovereigns; or of products, like financial instruments. ESG data is data on the same, but with no final assessment or value judgment. These services are used in different ways, including incorporating sustainability-related factors into investment decision-making. This means such ESG-related services have a growing impact on investment decisions and therefore capital allocation.
HM Treasury seeks to improve financial services regulation to protect consumers and to promote the UK’s position as a world-leading financial services centre. More broadly, HM Treasury wants to achieve strong and sustainable growth of the economy as a whole, with financial services as one of the UK’s key growth sectors. These broad objectives – the government’s wider aims of greening finance and HM Treasury’s aims for the financial services
sector and the economy – guide government thinking about ESG ratings and data. As a result, in December last year, the Chancellor announced as part of the Edinburgh Reforms that the government wants to improve transparency and promote good conduct in the ESG ratings market. To explore the best way to promote those outcomes, HM Treasury is now consulting on a potential regulatory framework for ESG ratings providers.
Considering industry concerns, international initiatives, and the FCA’s view, HM Treasury recognises that growing reliance on unregulated ESG ratings, particularly in investment decisions, can raise risks. This can impact both the performance of investments and the credibility of the sustainable investment market. Therefore, HM Treasury considers there is clear benefit to be gained from improving the transparency of methodologies, governance, and processes of ESG ratings providers. These outcomes could be brought about through regulation.
In summary, the core policy proposal set out in this consultation is that the following activity is brought into regulation: the direct provision of an assessment of environmental, social, or governance factors to a user in the UK, where the assessment is used in relation to a specified investment in the RAO, unless an exclusion applies.
Questions for Respondents
1. Do you agree that regulation should be introduced for ESG ratings providers?
2. (For ESG ratings providers) If your firm were subject to regulation in line with IOSCO’s recommendations, and aimed at delivering the four key regulatory outcomes in Figure 1.A, how would this impact your business? Please provide information on the size of your business when answering this question.
3. Are there any practical challenges arising from overlap between potential regulation for ESG ratings providers and existing regulation?
4. Are there any other practical challenges to introducing such regulation?
Investment Funds / Collective Investment Schemes (CIS) / Asset Management
ANBIMA updates Investment Product Distribution Code
On March 9 2023, the Brazilian Financial and Capital Markets Association (ANBIMA) updated the Investment Product Distribution Code. The changes were approved at a public hearing at the end of 2022, coming into force in two stages: on May 8 and September 5 of 2023.
ANBIMA also announced that the rules of suitability (investor suitability profile analysis process), privacy and protection of personal data, information security and cybersecurity and business continuity plan have been modified, and that standards have also been created to self-regulate institutions that mediate the provision of services abroad.
Suitability: The new suitability rules come into force on September 5 2023
- The code update included suitability rules for investment products that have cryptoassets in their wallets. Institutions will now have to make a specific risk classification, considering the particularities of the products and the risks they can generate.
- The asset risk score has also been updated so that each investment product is identified in its own classification. For example, the CDBs (Bank Deposit Certificates) score is currently divided by papers maturing in less than three years and over three years old. With the update, it will be expanded by opening distinct scores for titles up to two years old; from two to four years; from four to eight; and over eight years. In addition, the score of each of them, which was every 0.5 points, becomes every 0.25.
- In order to standardize relationships and benefit the investor, institutions that follow our Distribution Code will be required to adopt our risk score, but can increase the rule if they wish.
- The risk limit tolerated by the conservative profile has also been updated, which you can apply to products with a score of 1.5 – currently, this rule goes up to 1. There were no changes in relation to moderate and bold profiles, which follow with maximum risk scores of 3 and 5, respectively.
- The criteria for the client to be classified as conservative have also been changed and begin to consider who has low risk tolerance, needs liquidity and has low market knowledge.
Intermediation of services abroad:
- Now institutions must follow specific rules for the provision of intermediation of investment products abroad. This activity already occurs in the market and Comissão de Valores Mobiliários (CVM) (has issued guidelines on the subject in recent years. Self-regulation predicts that the effort to raise clients should be made from the Brazilian institution, which will analyze the investor's profile. In addition, the houses will have to maintain a team that speaks Portuguese to serve customers residing in Brazil.
- The code also began to provide for institutions to have action plans and incident response plans. The goal is to maintain internal procedures and controls of privacy, protection of personal data, information security and cybernetics, as well as contingency.
- The rules make the guidelines for how institutions should proceed in contingency situations and waive the obligation to perform validation or testing on the continuity of their business at annual or lower frequency, in case of activation of the plan.
- The privacy and protection standards for personal data, information security and cybersecurity, business continuity plan and the provision of intermediation services enter into force on May 8 2023.
- The distribution standards of investment funds set out in Annex II to the Distribution Code have not been amended at that time, but will soon be assessed for compliance with Resolution 175.
Anti-money laundering / Combating the financing of terrorism (AML / CFT)
FATF updates its Guidance on beneficial ownership of legal persons (10/3/2023)
On March 10 2023, the Financial Action Task Force (FATF) updated guidance on beneficial ownership of legal persons.
The revisions to the Standard will help prevent the organised criminal gangs, the corrupt and sanctions evaders from using anonymous shell companies and other businesses to hide their dirty money and illicit activities.
The guidance will help countries identify, design and implement appropriate measures in line with the revised Recommendation 24 to ensure that beneficial ownership information is held by a public authority or body functioning as a beneficial ownership registry, or an alternative mechanism that enables efficient access to the information.
The guidance will also help countries assess and mitigate the money laundering and terrorist financing risks associated with foreign companies to which their countries are exposed.
The guidance explains types and sources of relevant information, and mechanism and sources to obtain such information. This includes the multi-pronged approach, which consists of combining information from, among others, companies themselves, public authorities in a registry, or alternative mechanism if it ensures rapid and efficient access to beneficial ownership information. FATF’s mutual evaluations demonstrated that countries using a multi-pronged approach were more effective in preventing the misuse of legal persons for criminal purposes and ensuring transparency of beneficial ownership than countries using a single approach.
This guidance is the result of several months of intense consultations with external stakeholders and the private sector. It aims to assist policy makers and practitioners in national authorities and private sector stakeholders in implementing the necessary measures so that shell companies can no longer be a safe haven for illicit proceeds with links to crime or terrorism.
ICMA releases Bond Data Taxonomy
On March 14 2023, the International Capital Markets Association (ICMA) released Bond Data Taxonomy.
ICMA is pleased to announce the launch of the ICMA Bond Taxonomy Pack which standardises key economic terms of a vanilla bond (eg nominal amounts, denominations, currencies, prices, net proceeds, interest, and interest payment related information), key dates (eg pricing, settlement, issue dates) among other information (eg whether bearer or registered, status of the note, relevant parties, ratings) typically included within a term sheet as the initial use case and scope of work. The BDT Pack includes machine-readable definitions of key fields, expected values, and relevant ISO elements, as well as examples and a user guide.
The BDT as a ‘common language’ is expected to:
- Promote straight-through-processing (STP) and interoperability, assisting firms involved during the issuance process and streamlining post-trade operations.
- Be vendor agnostic, facilitating the exchange of data between multiple solutions and systems.
- Lay a common foundation for leveraging new technologies, such as distributed ledger, and developing new services.
Sustainable Finance / Green Finance
UNEP FI publishes 2023 Climate Risk Landscape report
On March 7 2023, the United Nations Environment Programme Finance Initiative (UNEP FI) published 2023 Climate Risk Landscape report.
In order to better understand climate risks and opportunities and inform their strategies, financial institutions have turned towards climate risk tools, a market that has developed at an impressive pace in the last few years. UNEP FI’s 2023 Climate Risk Landscape report assists financial institutions in better understanding the diverse and dynamic landscape of climate risk tools. The report explores the major market trends in physical risk and transition risk tools and provides detailed analysis on dozens of individual tools.
The project has been supported by a group of 44 banks convened by UNEP FI as part of its Climate Risk and TCFD Programme. It follows the 2021 Climate Risk Landscape Report diving into the similarities and distinctions among climate risk assessment tools, and the 2022 Supplement that incorporated financial institutions’ experience of working with different tool providers.
This publication is produced by the Projects & Regulatory Monitoring teams as well as experts from the Legal Department and the Compliance Department of CACEIS entities, together with the close support of the Communications Department.
Gaëlle Kerboeuf, Group General Secretary, Legal Department
Marie Marion, Group Head of Transversal Functions, Compliance Department
Permanent Editorial Committee
Gaëlle Kerboeuf, Group General Secretary, Legal Department
Marie Marion, Group Head of Transversal Functions, Compliance Department
Corinne Brand, Group Communications Manager
François Honnay, Head of Legal and Compliance (Belgium)
Fanny Thomas, Legal Supervisor (France)
Aude Levant, Group Compliance
Yves Gaveau, Senior Expert Veille réglementaire AdF
Stefan Ullrich, Head of Legal (Germany)
Robin Donagh, Legal Advisor (Ireland)
Costanza Bucci, Head of Legal & Compliance (Italy)
Luciana Vertulli, Compliance Officer (Italy)
Fernand Costinha, Head of Legal (Luxembourg)
Julien Fetick, Senior Financial Lawyer (Luxembourg)
Gérald Stadelmann, Head of Legal (Luxcellence Luxembourg)
Simon Joux, Compliance Officer (Switzerland)
Sarah Anderson, Head of Legal (UK)
Olga Kitenge, Legal, Risk & Compliance (UK)
Chelsea Chan, Head of Trustee and Legal (Hong Kong)
Henk Brink (The Netherlands)
Beatriz Sanchez Jete, Compliance (Spain)
Arrate Okerantza Elejalde, Legal (Spain)
Jessica Silva, Compliance (Brazil)
Luiz Fernando Silva, Compliance (Brazil)
Libia Andrea Carvajal, Compliance (Colombia)
Daiana Garcia, Compliance (Colombia)
Karim Martínez, Compliance (Mexico)
Edgar Zugasti, Compliance (Mexico)
CACEIS Group Communications
CACEIS, Adobe Stock
89-91 rue Gabriel Péri