CACEIS May 2023


CONTENT

CACEIS

EUROPEAN UNION

Artificial Intelligence Act (AIA)

EP adopts its position on the Artificial Intelligence Act

CACEIS

  • On May 11 2023, the European Parliament adopted its position on the Artificial Intelligence Act.

    To ensure a human-centric and ethical development of Artificial Intelligence (AI) in Europe, members of the European Parliament endorsed new transparency and risk-management rules for AI systems. MEPs include bans on biometric surveillance, emotion recognition, predictive policing AI systems. Once approved, they will be the world’s first rules on Artificial Intelligence.  Before negotiations with the Council on the final form of the law can begin, this draft negotiating mandate needs to be endorsed by Parliament, with the vote expected during the 12-15 June session.

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

    EP rejects the EU-US Data Privacy Framework

    CACEIS

  • On May 11 2023, the European Parliament rejected the EU-US Data Privacy Framework.

    The European Parliament has concluded that the current data privacy framework between the European Union (EU) and the United States (US) does not establish a sufficient level of protection. The EP calls on the European Commission to continue negotiations with US counterparts to develop a mechanism that ensures essential equivalence in data protection. This mechanism should meet the requirements of Union data protection law and the interpretation of the Charter by the Court of Justice of the European Union (CJEU). The EP urges the Commission not to adopt the adequacy finding until all the recommendations mentioned in the resolution and the opinion of the European Data Protection Board (EDPB) are fully implemented.

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

    ESAs publish consolidated Q&A on the PRIIPs Key Information Document

    CACEIS

  • On May 17 2023, the European Banking Authority (EBA) published European Supervisory Authorities (ESAs - European Banking Authority (EBA); the European Insurance and Occupational Pensions Authority (EIOPA); and the European Securities and Markets Authority (ESMA)) published consolidated Q&A on the PRIIPs Key Information Document.

    Following the Q&A publication of November 14 2022, this document includes Q&As that relate to the amendments introduced in Commission Delegated Regulation (EU) 2021/2268 that are applicable from January 1 2023. Where a Q&A relates to the amendments in Commission Delegated Regulation (EU) 2021/2268, this is specifically indicated underneath the answer.

  • Sustainable Finance Disclosure Regulation (SFDR)

    ESAs publish consolidated Q&A on the SFDR

    CACEIS

  • On May 17 2023, the European Banking Authority (EBA) published European Supervisory Authorities (ESAs - European Banking Authority (EBA); the European Insurance and Occupational Pensions Authority (EIOPA); and the European Securities and Markets Authority (ESMA)) consolidated Q&A on the SFDR.

    This document combines responses given by the European Commission to questions requiring interpretation of Union Law according to Article 16b(5) of the ESA Regulations and responses generated by the ESAs relating to the practical application or implementation of SFDR under Article 16b(1) of the ESA Regulations.

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

    ESMA calls for legislative amendments to prevent undue costs in funds

    CACEIS

  • On May 17 2023, the European Securities and Markets Authority (ESMA) published its opinion on undue costs of UCITS and AIFs. The opinion sets out suggestions to the European Commission for possible clarifications of the legislative provisions under the UCITS Directive and the AIFMD relating to the notion of “undue costs”. Apart from the high investor protection relevance of this matter, ESMA deems that a lack of supervisory convergence on this topic leaves room for regulatory arbitrage and risks hampering competition in the EU market. Furthermore, it may lead to different levels of investor protection depending on where a fund or fund manager is domiciled and jeopardize the Capital Market Union (CMU) objective of promoting retail investor participation in capital markets. ESMA deems that a further specification of the notion of undue/due costs in the UCITS Directive and AIFMD should provide market participants with more clarity and NCAs with a clearer legal basis to take supervisory and enforcement actions where needed to protect investors.

    Annex VI Part 1.I “List of costs” of Commission Delegated Regulation (EU) 2017/653 (“PRIIPs Regulation”) already provides for a list of costs of investment funds (AIFs and UCITS) that should be disclosed. ESMA is of the view that, as a first step, the Commission should clarify the eligibility of costs in light of the list of costs included in the PRIIPs Regulation. This will not only have the benefit of providing clarity on the topic but will also ensure that all costs charged to the fund and its investors will be appropriately disclosed.

    The assessment regarding the eligibility of the cost (“eligibility test”) should also take into account the type of fund, as there are some costs that can be borne by some types of AIFs and their investors, but not by UCITS and their investors. For this reason, and to ensure that the eligibility test is meaningful, it is important for the fund manager to assess the appropriateness of the costs on a case-by-case basis in light of:
    (i) the type of fund and
    (ii) its investment policy.

    Furthermore, as the PRIIPs list is very broad, and in order to ensure legal certainty on what should be considered as an undue cost and provide NCAs with a stronger legal hook to undertake enforcement actions, ESMA could be empowered to develop draft regulatory technical standards in order to:
    a) specify the circumstances in which the costs included in the PRIIPs list should be considered as undue/not eligible, also taking into account the investment policy of the funds; and
    b) specify under which conditions NCAs may authorise on a case-by-case basis additional cost categories which are not included under Annex VI Part 1.I of the Commission Delegated Regulation (EU) 2017/653.

    To avoid that investors are overcharged, bearing in mind that NCAs are not price regulators, it is important from an investor protection perspective not only that the cost is eligible, but that the transaction takes place at prices or at conditions equal to or better than market standards.

    ESMA considers that specific attention should also be given to the role and responsibilities of the compliance function of the fund manager to ensure stringent internal controls and adequate reporting to competent authorities and investors of detected deficiencies and the actions taken or envisaged to address them.

    ESMA deems appropriate to ensure that fund managers reimburse or indemnify investors without undue delay where undue costs have been charged, including cases where costs have been wrongly calculated to the detriment of investors. Lastly, ESMA is of the view that where a manager has intentionally or negligently committed an infringement, the manager should be sanctioned with a fine that is proportionate to the harm caused to investors. In this context, ESMA is of the view that Member States shall empower NCAs to impose sanctions of a minimum given percentage which should be proportionate to the unduly charged fees.

  • European Single Access Point for financial and non-financial information (ESAP)

    Council and the EP reached a provisional agreement on three proposals creating the European Single Access Point (ESAP)

    CACEIS

  • On May 23 2023, the Council of the European Union and European Parliament reached a provisional agreement on three proposals creating the European Single Access Point (ESAP), which is part of the Capital Markets Union (CMU) Action Plan.

    By increasing the circulation of information, also across borders, and by increasing the digital use of that information, ESAP will further foster the integration of financial services and capital markets within the Union and help achieving the objectives of the Capital Markets Union.

    ESAP does not impose any additional information reporting requirements on European companies. This is because ESAP will provide access to information already made public in application of the relevant European directives and regulations. Sustainability information will be made available early on ESAP, supporting the objectives of the European Green Deal.

    Under the provisional agreement, the ESAP platform is expected to be available from summer 2027 and gradually phased in to allow for a robust implementation. Based on coherent phases this phasing-in will ensure that European regulations and directives will in accordance with their priority enter into the scope of ESAP within four years. This ensures that sufficient time is available to define and implement the required technical aspects of the project. During this time, there will also be a regular assessment of ESAP’s functioning and a review clause that should guarantee the adequacy of the platform to the needs of its users and its technical efficiency.

    The agreement is provisional as it still needs to be confirmed by the Council and the Parliament before it can be formally adopted.

  • Retail Investment Strategy (RIS)

    EC adopts Retail Investment Package

    CACEIS

  • On May 24 2023, the European Commission adopted Retail Investment Package.

    The package aims to improve the framework so that consumers are empowered to make retail investment decisions that meet their needs and preferences and to ensure that they are treated fairly and duly protected. The proposed measures aim to enhance retail investor's trust in capital markets and help them achieve better outcomes with their investments, so that they can prepare for their future, such as their retirement. In turn, increasing trust in the capital markets will be essential to make a success of the Capital Markets Union and encourage retail investor participation in the medium term.

    Investor protection rules are set out across sector specific regulation, including the Markets in Financial Instruments Directive (MiFID II), the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation, the Undertaking for Collective Investment in Transferable Securities (UCITS) Directive, the Alternative Investment Fund Managers directive (AIFMD), the Insurance Distribution Directive (IDD), and the taking-up and pursuit of the business of Insurance and Reinsurance Directive (Solvency II). Applicable rules can differ from one financial instrument to another and may sometimes be inconsistent, making the cumulative requirements confusing for retail investors. The safeguards that the framework contains may also not be fully effective in protecting retail investors and ensuring they are treated fairly. At the same time, digitalisation is changing the distribution landscape and has brought new forms of marketing aimed at retail investors.

    This package aims at streamlining and modernising these rules, to place consumers' interests at the centre of retail investing and ensure that retail investors receive the same treatment and protection regardless of which investment products, marketing and distribution channels they choose. Against the backdrop of an ageing EU population and longer life expectancy, long-term investments in capital markets could help people achieve higher and more sustainable returns and a complementary income for their retirement, while at the same time increasing the amount of long-term orientated capital that can be channelled into the economy.

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

    ESMA informs that amended rules for transparency calculations under MiFIR will start to apply on 5 June 2023

    CACEIS

  • On May 31 2023, the European Securities and Markets Authority (ESMA) amended rules for transparency calculations to start applying on June 5 2023.

    The amended RTS 1 and RTS 2, under MiFIR, will start applying on June 5 2023. Some of the amendments will have an impact on the transparency calculations for equity, equity-like and non-equity instruments.

    Change of the LIS thresholds for ETFs

    The pre-trade large in scale (LIS) threshold for ETF will change from €1,000,000 to €3,000,000 and the smallest post-trade LIS thresholds from €10,000,000 to €15,000,000.

    The Financial Instruments Transparency System (FITRS) system provides in the results only the pre-trade LIS value since different thresholds are possible on the post-trade side. Therefore, the applicable thresholds under the annual calculations for ETFs will be corrected for this value on June 5 in the Register, in the delta XML files of 5 June and in the full XML files of 10 June for the annual calculations, the 4-weeks calculations and estimates. The other transparency parameters will not change.

    Due to IT constraints, the publication of the new applicable value can only be done on the application date. Nevertheless, the new pre-trade and post-trade LIS thresholds should be applied from June 5 2023 included.

    Quarterly bond liquidity assessment and SI publication

    The amended RTS 2 requires that publication should be ensured on the first Monday (of the respective publication month of February, May, August and November). Until further notice, ESMA will continue to publish the quarterly assessment on the first day of the respective publication month of February, May, August and November, thereby ensuring that the data is published at least two weeks ahead of the application date.

    Consequently, the quarterly bond liquidity publication will continue to go hand in hand with the systematic internaliser (SI) publication. However, the application date will differ.

    The text requires that the application date of the quarterly liquidity assessment of bonds should now be the third Monday of the respective publication month of February, May, August and November. The new application date will apply from the publication of the quarterly assessment on August 1 2023.

    The application dates for the SI test will not change. Therefore, the SI test should be performed by investment firms by the 15th of the respective publication month of February, May, August and November.

    Annual calculation for non-equity instruments – including LIS and size-specific to the instrument thresholds for bonds

    The amended RTS 2 specifies the segmentation criteria to be used to define the classes of instruments for which the calculations have to be performed. The implementation of such provisions might require IT changes of FITRS and the provision of data by reporting entities should now be done accordingly. Therefore, ESMA plans to perform the first annual calculations with those amendments and the new application date under the amended RTS 2 (first Monday of June) by April 30 2024.

    Annual calculation for equity and equity-like financial instruments

    ESMA will perform the first annual calculations with the new application date (first Monday of April) under the amended RTS 1 will by March 1 2024.

  • Regulation on Markets in Crypto-Assets (MiCA)

    EU Council adopts MiCA and AML/CTF measures for cryptoassets

    CACEIS

  • On May 16 2023, the Council of the EU adopted the Regulation on markets in crypto-assets (MiCA).

    MiCA will protect investors by increasing transparency and putting in place a comprehensive framework for issuers and service providers including compliance with the anti-money laundering rules. The new rules cover issuers of utility tokens, asset referenced tokens and so-called ‘stablecoins’. It also covers service providers such as trading venues and the wallets where crypto-assets are held. This regulatory framework aims to protect investors, preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector.

    It also introduces a harmonized regulatory framework in the European Union which, given the global nature of crypto markets, is an improvement compared to the current situation with national legislation in some member states only.

    The European Commission presented the MiCA proposal on September 24 2020. It is part of the larger digital finance package, which aims to develop a European approach that fosters technological development and ensures financial stability and consumer protection. In addition to the MiCA proposal, the package contains a digital finance strategy, a Digital Operational Resilience Act (DORA), that covers crypto-asset service providers as well, and a proposal on distributed ledger technology (DLT) pilot regime for wholesale uses.

    This package bridges a gap in existing EU legislation by ensuring that the current legal framework does not pose obstacles to the use of new digital financial instruments and, at the same time, ensures that such new technologies and products fall within the scope of financial regulation and operational risk management arrangements of firms active in the EU. Thus, the package aims to support innovation and the uptake of new financial technologies while providing for an appropriate level of consumer and investor protection.

    The Council adopted its negotiating mandate on MiCA on November 24 2021. Trilogues between the co-legislators started on March 31 2022 and ended in a provisional agreement reached on June 30 2022. Today’s formal adoption of the regulation is the final step in the legislative process.

  • FRANCE

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

    France publishes Decree No. 2023-344 on the operation of circuit breaker mechanisms of UCITS and AIFs / La France publie le décret n° 2023-344 relatif aux modalités de fonctionnement des mécanismes coupe-circuit applicables aux OPCVM et FIA

    CACEIS

  • On May 6 2023, France published Decree No. 2023-344 of May 5 2023 on the operating procedures of circuit breaker mechanisms applicable to undertakings for collective investment in transferable securities and alternative investment funds.

    The Decree applies to collective investment schemes referred to in I of Article L. 214-1 of the Monetary and Financial Code and market infrastructure undertakings operating on regulated markets or multilateral trading facilities.

    It relates to amendments of the operating rules of the circuit breaker mechanism applicable to listed funds. More particularly, the decree amends the rule governing the circuit breaker used for listed funds by setting a general principle of price regulation whose operating procedures refer to the rules of the regulated market concerned.

    The Decree entered into force on May 7 2023.

    Version française

    Le 6 mai 2023, la France a publié le décret n° 2023-344 du 5 mai 2023 relatif aux modalités de fonctionnement des mécanismes coupe-circuit applicables aux organismes de placement collectif en valeurs mobilières et aux fonds d'investissement alternatifs.

    Le décret s'applique aux organismes de placement collectif mentionnés au I de l'article L. 214-1 du code monétaire et financier et aux entreprises d'infrastructures de marché opérant sur des marchés réglementés ou des systèmes multilatéraux de négociation.

    Il porte sur les modifications des règles de fonctionnement du mécanisme coupe-circuit applicables aux fonds cotés. Plus particulièrement, le décret modifie la règle régissant le coupe-circuit utilisé pour les fonds cotés en fixant un principe général de régulation des prix dont les modalités de fonctionnement renvoient aux règles du marché réglementé concerné.

    Le décret est entré en vigueur le 7 mai 2023.

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

    AMF adopts ESMA guidelines on MiFID 2 remuneration requirements / L'AMF adopte les orientations de l'ESMA sur les exigences de rémunération MiFID 2

    CACEIS

  • On May 22 2023, the Autorité des marchés financiers (AMF) announced adopting the European Securities Markets Association (ESMA) on certain aspects relating to the remuneration requirements of Markets in Financial Instruments Directive (MiFID) 2. The guidelines are incorporated into the new position DOC-2023-03.

    These guidelines cover the following topics: 

    • Design of remuneration policies and practices ; 
    • Governance; 
    • Control of the risks associated with remuneration policies and practices.

    The AMF applies these guidelines to:

    • Investment firms and credit institutions when providing one or more investment services; and
    • Asset management companies that provide one or more investment services.

    The AMF also recalls that these players are also subject to other regulations governing remuneration schemes.

    These ESMA guidelines are intended to replace the guidance on the same subject taken under MiFID 1 and integrated into the AMF’s supervisory practices in its position DOC-2013-24. Therefore, the AMF will repeal this position when the new ESMA guidance comes into force, i.e., on October 3 2023.

    Version française

    Le 22 mai 2023, l'Autorité des marchés financiers (AMF) a annoncé l'adoption de l'Association européenne des marchés financiers (ESMA) sur certains aspects relatifs aux exigences de rémunération de la directive concernant les marchés d'instruments financiers (MiFID) 2. Les lignes directrices sont intégrées dans la nouvelle position DOC-2023-03.

    Ces lignes directrices couvrent les sujets suivants :

    • Conception des politiques et pratiques de rémunération ;
    • Gouvernance ;
    • Maîtrise des risques liés aux politiques et pratiques de rémunération.

    L’AMF applique ces lignes directrices pour :

    • Entreprises d'investissement et établissements de crédit lorsqu'ils fournissent un ou plusieurs services d'investissement ; et
    • Les sociétés de gestion de portefeuille qui fournissent un ou plusieurs services d'investissement.

    L'AMF rappelle également que ces acteurs sont également soumis à d'autres réglementations régissant les régimes de rémunération.

    Ces lignes directrices de l'ESMA ont vocation à se substituer aux orientations sur le même sujet prises sous MiFID 1 et intégrées aux pratiques de surveillance de l'AMF dans sa position DOC-2013-24. L'AMF abrogera donc cette position lors de l'entrée en vigueur de la nouvelle guidance de l'ESMA, soit le 3 octobre 2023.

  • Sustainable Finance Disclosure Regulation (SFDR)

    France publishes Order approving amendments to AMF General Regulations on Energy and Climate Law Report 29 / La France publie l'arrêté portant approbation des modifications du règlement général de l'AMF sur le rapport 29 de la loi énergie-climat

    CACEIS

  • On May 17 2023, France published the Order of April 17 2023 approving amendments to the General Regulations of the Autorité des marchés financiers (AMF).

    On May 16 2023, the Autorité des marchés financiers (AMF) decided to change its doctrine in order to specify the procedures for drawing up and transmitting Report 29 of the Energy and Climate Law (ECL) published by investment service providers (ISPs), including asset management companies (AMCs).

    Reminder on the 29 ECL report: Decree No. 2021-663 of 27 May 2021, known as “Decree 29 ECL is part of the continuity of the French regulatory framework (Article 173-VI of the Energy Transition for Green Growth Act). It also complements certain provisions of Sustainable Finance Disclosure Regulation (SFDR). This Decree details the content of the 29 ECL report aimed at strengthening the transparency of actors around their extra-financial practices, including the consideration of climate and biodiversity risks. 

    The 29 ECL reports must be published annually by the relevant stakeholders, in the mandatory standardized format provided for in Article 4 of the SFDR Delegated Regulation. They must be submitted to the French Environment and Energy Management Agency (ADEME) and, in the case of ISPs, including AMCs, to the AMF no later than 6 months after the end of the financial year.

    Procedures for preparing and transmitting the report 29 ECL: Instructions DOC-2008-03 and DOC-2014-01 are amended to provide for the preparation and transmission of report 29 ECL. The report (for the financial year 2022) as well as all future 29 ELC reports of the ISPs, including the AMCs, are to be prepared on the basis of the template on the ROSA extranet. 

    Three different models have been developed:

    • For players with less than €500 million in balance sheet or outstandings,
    • For those with more than €500 million of balance sheet or outstanding amounts and not reporting the main negative impact indicators (PAI) under the SFDR Delegated Regulation,
    • For those with more than €500m of balance sheet or outstanding amounts and reporting PAI indicators under the SFDR - Delegated Regulation on a voluntary or mandatory basis.

    In addition, these entities must submit to the AMF the quantitative data from their 29 LEC reports and the PAI indicators.

    Version française

    Le 17 mai 2023, la France a publié l'ordonnance du 17 avril 2023 portant approbation des modifications du règlement général de l'Autorité des marchés financiers (AMF).

    Le 16 mai 2023, l'Autorité des marchés financiers (AMF) a décidé de faire évoluer sa doctrine afin de préciser les modalités d'élaboration et de transmission du rapport 29 de la loi énergie climat (ECL) publié par les prestataires de services d'investissement (PSI), y compris les sociétés de gestion d'actifs (SGA).

    Rappel sur le rapport 29 ECL : Le décret n° 2021-663 du 27 mai 2021, dit « Décret 29 ECL s'inscrit dans la continuité du cadre réglementaire français (article 173-VI de la loi relative à la transition énergétique pour la croissance verte). Il complète également certaines dispositions du Sustainable Finance Disclosure Regulation (SFDR). Ce décret détaille le contenu du rapport de la 29 ECL visant à renforcer la transparence des acteurs autour de leurs pratiques extra-financières, notamment la prise en compte des risques climat et biodiversité.

    Les 29 rapports ECL doivent être publiés annuellement par les parties prenantes concernées, dans le format standardisé obligatoire prévu à l'article 4 du règlement délégué SFDR. Ils doivent être déposés auprès de l'Agence de l'environnement et de la maîtrise de l'énergie (ADEME) et, pour les FAI, dont les AMC, auprès de l'AMF au plus tard 6 mois après la clôture de l'exercice.

    Modalités d'établissement et de transmission du rapport 29 ECL : Les instructions DOC-2008-03 et DOC-2014-01 sont modifiées pour prévoir l'établissement et la transmission du rapport 29 ECL. Le rapport (pour l'exercice 2022) ainsi que tous les futurs rapports 29 ELC des FAI, y compris les AMC, doivent être préparés sur la base du modèle disponible sur l'extranet ROSA.

    Trois modèles différents ont été développés :

    • Pour les acteurs ayant moins de 500 M€ de bilan ou d'encours,
    • Pour ceux qui ont plus de 500 millions d'euros de bilan ou d'encours et qui ne reportent pas les principaux indicateurs d'impact négatif (PAI) au titre du règlement délégué SFDR,
    • Pour ceux qui ont plus de 500 M€ de bilan ou d'encours et qui déclarent des indicateurs PAI dans le cadre du SFDR - Règlement Délégué sur une base volontaire ou obligatoire.

    De plus, ces entités doivent transmettre à l'AMF les données quantitatives de leurs 29 déclarations LEC et les indicateurs PAI.

  • BELGIUM

    European Market Infrastructure Regulation (EMIR)

    NBB publishes communication 2023_05 on the new EMIR reporting standards

    CACEIS

  • On May 16 2023, the National Bank of Belgium (NBB) published Communication 2023_05 on the changes to the reporting standards of the European Market Infrastructure Regulation (EMIR) which will apply from April 29 2024. In particular, the Bank draws institutions’ attention to the following changes:

    ISO 20022 XML reporting format: supervised institutions are required to report details of their derivatives contracts in accordance with the ISO 20022 format. In addition, trade repositories (TRs) will be required to provide institutions with the reconciliation and end-of-day status of the reports submitted by them, also in the ISO 20022 format. The NBB expects all institutions subject to the reporting obligation to review their reporting processes to comply with the new requirements.

    Alignment of EMIR reporting with CPMI/IOSCO guidelines: the new reporting standards introduce not only format changes, but also a series of significant changes in the content of information reported by counterparties to a derivatives contract. These changes will bring EMIR reporting rules more in line with the Committee on Payments and Market Infrastructures - International Organization of Securities Commissions (CPMI-IOSCO) guidelines on the definition and format of key data elements reported to TRs, such as the Unique Transaction Identifier (UTI) and Unique Product Identifier (UPI). 

    Reporting arrangements: Article 9 of Regulation 2022/1860 also introduces additional requirements regarding the procedures that financial counterparties (FCs) must put in place where they are solely responsible, including legally, for reporting the details of OTC derivative contracts on behalf of non-financial (NFC) counterparties that are not required to clear their derivatives with a CCP. In addition, CFs are required to put in place procedures to enable relevant NFCs to renew their legal entity identifier (LEI) and to inform the CF in a timely manner of changes in their status. Reporting institutions must notify their competent authority of any significant reporting problems, such as deficiencies in the reporting systems that would affect a significant number of reports, impediments preventing the reporting entity from sending reports to a trade repository in a timely manner, and significant problems resulting in reporting errors that would not lead to rejection by a trade repository. 

    Feedback from TRs: TRs must implement a series of measures and controls to improve the quality of reporting. TRs will have to provide daily feedback to counterparties on the reports they reject, as well as on the reasons for the rejection. They will also have to provide feedback on the reconciliation status of information reported by either counterparty to a derivatives contract. TRs will provide counterparties with information on contracts for which there has been no transmission of revaluation and for which the revaluation is out of date. The Bank strongly encourages counterparties to use the information provided by TRs as part of the end-of-day response mechanism to identify gaps in their reporting processes and to make structural improvements.

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

    FSMA adopts ESMA Guidelines on certain aspects of the remuneration requirements of MiFID II

    CACEIS

  • On May 26 2023, the Financial Services and Markets Authority (FSMA) announced adopting the European Securities and Markets Authority (ESMA) Guidelines on certain aspects of the remuneration requirements of Markets in Financial Instruments Directive (MiFID) II. The FSMA will therefore integrate these guidelines into its control system and supervisory practice.

    These guidelines cover the following topics: 

    • Design of remuneration policies and practices ; 
    • Governance; 
    • Control of the risks associated with remuneration policies and practices.

    Insofar as they relate to the organizational requirements of the MiFID II Directive, the guidelines referred to in this document are addressed to the following undertakings: 

    • Credit institutions incorporated under Belgian law when they provide investment services and activities or when they market or provide advice on structured deposits,
    • Management companies of undertakings for collective investment governed by Belgian law with regard to the exercise of investment services as referred to in Article 3, 23° of the Law of August 3 2012 relating to undertakings for collective investment which comply with the conditions of Directive 2009/65/EC and to undertakings for debt investment.
    • Etc.

    Where they relate to the rules of conduct of the MiFID II Directive, these guidelines also apply to the following regulated undertakings: 

    • Branches established in Belgium of credit institutions and investment firms which are governed by the law of another EEA Member State, in respect of their investment services and activities provided on Belgian territory and the marketing of and provision of advice on structured deposits where these activities are carried out on Belgian territory ; 
    • Branches established in Belgium of management companies of foreign undertakings for collective investment in transferable securities, in respect of the investment services referred to in Article 3, 23° of the Law of August 3 2012 relating to undertakings for collective investment which fulfil the conditions of Directive 2009/65/EC and to undertakings for collective investment in debt securities which they provide on Belgian territory;
    • Branches established in Belgium of external managers of foreign alternative investment funds as regards the provision on Belgian territory, of the services referred to in Article 3, 43°, of the law of April 19 2014 on alternative investment undertakings and their managers ;
    • Etc.

    The guidelines apply from October 3 2023.

  • FSMA adopts ESMA Guidelines on certain aspects of the MiFID II suitability requirements

    CACEIS

  • On May 25 2023, the Financial Services and Markets Authority (FSMA) adopted the European Securities and Markets Authority (ESMA) Guidelines on certain aspects of the Markets in Financial Instruments Directive (MiFID) II suitability requirements.

    These Guidelines aim in particular to clarify how it is appropriate to implement the new legal requirements to integrate the client’s sustainability preferences into the suitability assessment carried out in accordance with MiFID II. The main themes on which they provide details are as follows:

    • Informing customers and supporting them to understand the new concept of “sustainability preferences” and the difference between products with sustainable characteristics and those without;
    • Collecting information regarding the customer’s sustainability preferences;
    • How to assess the client’s sustainability preferences in relation to its investment objectives;
    • Organisational requirements, particularly in terms of training of staff of regulated companies and data retention.

    Suitability assessment is one of the essential mechanisms to ensure investor protection when providing any investment advisory service (whether independent or not) or portfolio management. The FSMA attaches great importance to compliance with the rules imposed in this area by MiFID II, which also aim to combat the practice of greenwashing. The FSMA will therefore ensure, through its control actions, to ensure that they are respected and that these guidelines are effectively implemented by the companies concerned.

    These guidelines apply in particular to credit institutions established under Belgian law; to branches established in Belgium of credit institutions governed by the law of another EEA Member State, as regards their investment advisory and/or portfolio management services provided on Belgian territory, and the marketing of and provision of advice on structured deposits when these activities are carried out on Belgian territory; branches established in Belgium of management companies of foreign undertakings for collective investment in transferable securities with regard to the provision of investment services on Belgian territory.

    The guidelines apply as of October 3 2023.

  • GERMANY

    Whistleblower protection

    Bundesrat publishes Act on better protection of whistleblowers and on the implementation of the Directive on the protection of persons reporting breaches of Union law

    CACEIS

  • On May 11 2023, the Bundesrat published Act on better protection of whistleblowers and on the implementation of the Directive on the protection of persons reporting breaches of Union law.

    On May 12 2023, the Federal Council approved the Whistleblower Protection Act, which had been renegotiated in the Mediation Committee. The day before, the Bundestag had confirmed the compromise proposal and changed its original resolution accordingly.

    The "Act for better protection of whistleblowers and for the implementation of the Directive on the protection of persons reporting breaches of Union law" serves to implement an EU directive that should have been implemented by December 17 2021.

    It regulates the handling of reports of fraud, corruption and other grievances in authorities and companies; likewise, with indications of a lack of loyalty to the constitution on the part of employees in the public sector, even if there are no specific criminal offences.

    It contains requirements on procedures and confidentiality of reports and measures to protect whistleblowers from reprisals - but also liability, damages and fines in the event of deliberately false information.

    According to the law, authorities and companies with 50 or more employees must create internal contact points. In addition, the federal government wants to set up an external reporting office at the Federal Office of Justice. The Länder can set up their own external reporting offices. There is no obligation to enable the submission of anonymous reports for either internal or external reporting offices. It is only stipulated that the offices should also process incoming reports anonymously.

    With the approval of the Federal Council, the parliamentary procedure has been completed. The law can now be submitted to the Federal President for signature and then promulgated in the Federal Law Gazette. For the most part, it is to come into force one month after the promulgation - possibly around mid-June 2023.

  • HONG KONG

    Financial Market Infrastructure (FMI)

    HKMA announces mutual access program for Mainland and Hong Kong interest rate swap markets in collaboration with People's bank of China and Securities and Futures Commission

    CACEIS

  • On May 5 2023, the Hong Kong Monetary Authority (HKMA) announced mutual access program for Mainland and Hong Kong interest rate swap markets in collaboration with People's bank of China and Securities and futures commission.

    The programme will begin with Northbound Trading, allowing overseas investors from Hong Kong and other countries and regions to participate in the Mainland interbank financial derivatives market through a connection between financial infrastructure institutions in the two markets. The preparatory work of Swap Connect has progressed smoothly since the joint announcement. Northbound Trading of Swap Connect will launch on May 15 2023.

    It is hereby announced that:

    • Swap Connect refers to an arrangement which will enable investors to participate in the financial derivatives markets in the Mainland and Hong Kong through a connection between Infrastructure Institutions in both places. At the initial stage, Northbound Trading will commence first, allowing investors from Hong Kong and other countries and regions (Overseas Investors) to participate in the Mainland interbank financial derivatives market through mutual access between Hong Kong and Mainland Infrastructure Institutions in respect of trading, clearing and settlement. Southbound Trading, which allows Mainland investors to access the Hong Kong financial derivatives market through mutual access between Infrastructure Institutions in both places, will be explored in due course.
    • Swap Connect is another important measure of the Central Government to support the development of Hong Kong and enhance Mainland-Hong Kong cooperation. It is conducive to the consolidation and enhancement of Hong Kong’s status as an international financial centre, the maintenance of its long-term stability and prosperity, the steady and progressive opening-up of the Mainland financial derivatives market and the diversification of market access channels for Overseas Investors.
    • Swap Connect is subject to the relevant laws and regulations of both markets. Northbound Trading will follow the existing policy framework for the opening-up of the Mainland interbank financial derivatives market and take into account international practices. This will facilitate Overseas Investors to trade in the Mainland interbank financial derivatives market and hedge their risks. Initially, interest rate swaps will be eligible with other products to be included in due course depending on market conditions.
    • The regulators of the financial derivatives markets in Hong Kong and the Mainland will respectively take all necessary measures to establish effective mechanisms under Swap Connect to handle any misconduct in a timely manner for the purpose of investor protection on both sides. The regulators of the financial derivatives markets in Hong Kong and the Mainland will enter into a memorandum of understanding on supervisory cooperation to establish regulatory collaboration arrangements and liaison mechanisms so as to maintain the stability, fairness and orderly trading of financial markets.
    • Hong Kong and Mainland Infrastructure Institutions should actively take forward the development work for Swap Connect in an orderly manner and with prudent risk management. Swap Connect will be launched after the relevant rules have been finalised, system development has been completed, the practical needs of market participants have been addressed, the relevant regulatory approvals have been granted and all other necessary preparations have been made.
    • The official launch of Swap Connect will take place after six months from the date of this announcement.
  • Sustainable Finance / Green Finance

    HKMA publishes a discussion paper on prototype of a green classification framework for Hong Kong

    CACEIS

  • On May 30 2023, the Hong Kong Monetary Authority (HKMA) published a discussion paper on prototype of a green classification framework for Hong Kong.

    The paper aims to outline HKMA's current thinking on local green classification framework (i.e. taxonomy) and seek to gather feedback from stakeholders on its development and application.

    To increase transparency and enable consistent policy making on green finance, the Green and Sustainable Finance Cross-Agency Steering Group (CASG) has been working to explore developing a green classification framework for adoption in the local market, with a view to facilitating easy navigation across the Common Ground Taxonomy (CGT), Mainland China’s and the European Union’s taxonomies. The HKMA has commissioned an external consultant, Climate Bonds Initiative, to develop a prototype of such a framework to demonstrate our approach and facilitate discussion with stakeholders. 

    The HKMA is inviting institutions to share any views in relation to the prototype and the questions raised in the paper by June 30 2023.

  • ITALY

    Blockchain / Distributed Ledger Technology (DLT)

    CONSOB publishes a notice on compliance with the Guidelines on Standard Forms for Applications for Authorisation to Operate a DLT Market Infrastructure

    CACEIS

  • On May 3 2023, the Commissione Nazionale per le Societa e la Borsa (CONSOB) published a notice on compliance with the Guidelines on Standard Forms for Applications for Authorisation to Operate a DLT Market Infrastructure. 

    CONSOB and the Bank of Italy, as competent authorities, are complying with the guidelines issued by the European Securities and Markets Authority (ESMA) regarding the standard forms for submitting applications for authorization to operate a DLT market infrastructure. These guidelines aim to ensure consistent and uniform application of the Pilot Regulation and apply to both competent authorities and applicants.

    The Guidelines apply to competent authorities and to applicants for a specific authorization for the management of DLT market infrastructures. They aim, in particular, to establish standard forms for the presentation of applications for specific authorization to operate DLT market infrastructures. Entities intending to submit an application for specific authorization to manage a DLT market infrastructure are required to comply with the interpretative guidelines provided by ESMA through the Guidelines covered by this notice, applicable from March 23 2023. 

    Taking into account the division of responsibilities between CONSOB and the Bank of Italy pursuant to article 29 of the Decree Law of March 17 2023, n. 25, applications for specific authorization to manage a DLT infrastructure must be presented to CONSOB: 

    • for DLT MTFs: when the applicant (i) is an operator of a regulated market; (ii) simultaneously submits an application for authorization pursuant to article 19, paragraph 1, of the TUF, or is already authorized pursuant to the same article; without prejudice to the cases of MTF DLT wholesale of government bonds; 
    • for SS DLT: in all cases; 
    • for TSS DLT: in all cases, with the exception of cases of TSS DLT wholesale of government bonds. 

    Applications for specific authorization must be submitted by filling in the relevant forms in Italian and English and sending them to the Markets Division, to the certified e-mail address dme@pec.consob.it. Interested operators will also be able to activate preliminary contacts with the Offices by sending requests for information to the following dedicated e-mail address pilot.regime@consob.it.

  • FinTech / RegTech / BigTech / SupTech / Digital Economy

    Italy publishes Fintech Decree

    CACEIS

  • On May 10 2023, the Italian Government published Law No. 52 of May 10 2023, which converts into law, with amendments, of the decree-law of March 17 2023, n. 25, containing urgent provisions on the issue and circulation of certain financial instruments in digital form and simplification of FinTech experimentation.

    The Decree aligns the Italian national system to the provisions of Regulation (EU) 2022/858. The Regulation establishes distributed ledger technology (DLT) pilot regime. 

    This Decree is introducing a regulatory regime for the issuance of digital financial instruments and circulation through DLT and ensures that Italian operators are not in a disadvantage compared to its competition in other EU Member States.

  • LUXEMBOURG

    Capital requirements / CRD / CRR / Basel III/IV

    CSSF publishes Circular 23/836 on EBA Guidelines on remuneration practices and the gender pay gap / La CSSF publie la circulaire 23/836 sur les orientations de l'ABE sur les pratiques de rémunération et l'écart de rémunération entre les deux sexes

    CACEIS

  • On May 26 2023, the Commission de Surveillance du secteur financier (CSSF) published the Circular CSSF 23/836 on the Application of the EBA Guidelines on the benchmarking exercises on remuneration practices, the gender pay gap and approved higher ratios under Directive 2013/36/EU (EBA/GL/2022/06).

    The purpose of this circular is to inform you that the CSSF, in its capacity as competent authority, applies the EBA Guidelines on the benchmarking exercises on remuneration practices, the gender pay gap and approved higher ratios under Directive 2013/36/EU (EBA/GL/2022/06) (the “Guidelines”), published on June 30 2022. Consequently, the CSSF has integrated the Guidelines into its administrative practice and regulatory approach with a view to promoting supervisory convergence in this field at European level.

    All credit institutions, as defined in point (12) of Article 1 of the amended Law of April 5 1993 on the financial sector (“LFS”), and all CRR investment firms, as defined in point (9a) of Article 1 of the LFS shall duly comply with them.

    Remuneration data will be collected at the level of application of disclosure requirements as set out in Articles 6 (3) and 13 of Regulation (EU) 575/2013. Gender pay gap data and higher ratios data will be collected only on an individual level.

    The Guidelines apply as of December 31 2022.

    These Guidelines specify, for the purposes of the oversight of remuneration policies, the information to be provided by selected institutions to the CSSF, namely: 

    • data for benchmarking remuneration trends and practices, including information disclosed in accordance with the criteria for disclosure established in points (g), (h), (i) and (k) of Article 450(1) of the amended Regulation (EU) No 575/20132 (“remuneration data”), to be provided annually; 
    • data for benchmarking the gender pay gap (“gender pay gap data”), to be provided every three years (starting from 2024 for the financial year 2023).

    These Guidelines specify how the CSSF will collect the higher ratios data, the remuneration data and the gender pay gap data (collectively referred to as “benchmarking data”) from institutions, and how the CSSF will submit the benchmarking data to the EBA.

    Version française

    Le 26 mai 2023, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire CSSF 23/836 relative à l'application des orientations de l'ABE sur les exercices de benchmarking sur les pratiques de rémunération, l'écart de rémunération entre les hommes et les femmes et les ratios supérieurs approuvés en vertu de la directive 2013/36 /UE (EBA/GL/2022/06).

    La présente circulaire a pour objet de vous informer que la CSSF, en sa qualité d'autorité compétente, applique les orientations de l'ABE sur les exercices de benchmarking sur les pratiques de rémunération, l'écart de rémunération entre hommes et femmes et les ratios supérieurs approuvés en vertu de la Directive 2013/36/UE (EBA/GL/2022/06) (les « Orientations »), publiée le 30 juin 2022. En conséquence, la CSSF a intégré les Orientations dans sa pratique administrative et son approche réglementaire en vue de promouvoir convergence prudentielle dans ce domaine au niveau européen.

    Tous les établissements de crédit, tels que définis à l'article 1er, point (12), de la loi modifiée du 5 avril 1993 relative au secteur financier (« LSF »), et toutes les entreprises d'investissement CRR, telles que définies à l'article 1er, point (9a) du LFS s'y conformera dûment.

    Les données de rémunération seront collectées au niveau de l'application des exigences de divulgation telles que définies aux articles 6, paragraphe 3, et 13 du règlement (UE) 575/2013. Les données sur l'écart de rémunération entre les sexes et les données sur les ratios plus élevés ne seront collectées qu'au niveau individuel.

    Les lignes directrices s'appliquent à compter du 31 décembre 2022.

    Les présentes Orientations précisent, aux fins de la surveillance des politiques de rémunération, les informations que les établissements sélectionnés doivent fournir à la CSSF, à savoir :

    • des données permettant d'évaluer les tendances et les pratiques en matière de rémunération, y compris les informations publiées conformément aux critères de publication établis à l'article 450, paragraphe 1, points (g), (h), (i) et (k) du règlement (UE) modifié n° 575/20132 (« données de rémunération »), à fournir annuellement ;
    • des données de benchmarking de l'écart salarial entre les hommes et les femmes (« gender pay gap data »), à fournir tous les trois ans (à partir de 2024 pour l'exercice 2023).

    Les présentes Orientations précisent comment la CSSF collectera auprès des établissements les données sur les ratios les plus élevés, les données sur les rémunérations et les données sur l'écart salarial entre hommes et femmes (collectivement dénommées « données de benchmarking »), et comment la CSSF soumettra les données de benchmarking à l'ABE.

  • CSSF publishes Circular 23/837 on the EBA Guidelines on data collection exercises on high earners / La CSSF publie la circulaire 23/837 relative à l'application des orientations de l'ABE sur les exercices de collecte de données concernant les hauts revenu

    CACEIS

  • On May 26 2023, the Commission de Surveillance du secteur financier (CSSF) published the Circular CSSF 23/837 on the Application of the EBA Guidelines on the data collection exercises regarding high earners under Directive 2013/36/EU and under Directive (EU) 2019/2034 (EBA/GL/2022/08).

    The purpose of this circular is to inform you that the CSSF, in its capacity as competent authority, applies the EBA Guidelines on the data collection exercises regarding high earners under Directive 2013/36/EU and under Directive (EU) 2019/2034 (EBA/GL/2022/08), published on June 30 2022. Consequently, the CSSF has integrated the Guidelines into its administrative practice and regulatory approach with a view to promoting supervisory convergence in this field at European level.

    All credit institutions, as defined in point (12) of Article 1 of the amended Law of April 5 1993 on the financial sector, all CRR investment firms, as defined in point (9a) of Article 1 of the LFS, and all non-SNI IFR investment firms, as defined in point (9a-2) of Article 1 of the LFS shall duly comply with the Guidelines.

    The Guidelines apply as of December 31 2022.

    The Guidelines specify the information to be provided annually by relevant institutions on individuals remunerated EUR 1 million or more per financial year (“high earners”). 

    The Guidelines also specify how the CSSF will collect the high earners data from relevant institutions, and how the CSSF will submit the high earners data to the EBA.

    The revised Guidelines on the high earner data collection exercises under the Capital Requirements Directive (CRD) and Investment Firms Directive (IFD) reflect the amended remuneration framework laid down in the Capital Requirements Directive (CRDV), including the introduction of derogations to pay out a part of the variable remuneration in instruments and under deferral arrangements. In addition, the need to update these Guidelines stems from the specific remuneration regime that has been introduced for investment firms and is laid down in the Investment Firms Directive (IFD) and Investment Firms Regulation (IFR).

    Version française

    Le 26 mai 2023, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire CSSF 23/837 sur l'application des orientations de l'ABE sur les exercices de collecte de données concernant les hauts revenus en vertu de la directive 2013/36/UE et de la directive (UE) 2019/2034 (EBA/GL/2022/08).

    La présente circulaire a pour objet de vous informer que la CSSF, en sa qualité d'autorité compétente, applique les orientations de l'ABE sur les exercices de collecte de données concernant les hauts revenus en vertu de la directive 2013/36/UE et de la directive (UE) 2019/2034 (EBA/GL/2022/08), publiée le 30 juin 2022. En conséquence, la CSSF a intégré les Orientations dans sa pratique administrative et son approche réglementaire en vue de promouvoir la convergence prudentielle dans ce domaine au niveau européen.

    Tous les établissements de crédit, tels que définis à l'article 1er, point (12), de la loi modifiée du 5 avril 1993 relative au secteur financier, toutes les entreprises d'investissement CRR, telles que définies à l'article 1er, point (9a) de la LSF, et tous les non- Les entreprises d'investissement SNI IFR, telles que définies à l'article 1er, point (9a-2) de la LSF, se conforment dûment aux Orientations.

    Les lignes directrices s'appliquent à compter du 31 décembre 2022.

    Les lignes directrices précisent les informations à fournir annuellement par les institutions concernées sur les personnes rémunérées au moins 1 million d'euros par exercice (« hauts revenus »).

    Les lignes directrices précisent également comment la CSSF collectera les données sur les hauts revenus auprès des institutions concernées et comment la CSSF soumettra les données sur les hauts revenus à l'ABE.

    Les lignes directrices révisées sur les exercices de collecte de données sur les hauts revenus au titre de la directive sur les exigences de fonds propres (CRD) et de la directive sur les entreprises d'investissement (IFD) reflètent le cadre de rémunération modifié établi dans la directive sur les exigences de fonds propres (CRDV), y compris l'introduction de dérogations au paiement d'un partie de la rémunération variable en instruments et dans le cadre d'accords de report. En outre, la nécessité de mettre à jour ces lignes directrices découle du régime de rémunération spécifique qui a été introduit pour les entreprises d'investissement et qui est défini dans la directive sur les entreprises d'investissement (IFD) et le règlement sur les entreprises d'investissement (IFR).

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

    Chambre des députés announces OECD focus on Luxembourg's whistleblower legislation / La Chambre des députés annonce que l'OCDE se concentre sur la législation luxembourgeoise sur les lanceurs d'alerte

    CACEIS

  • On 3 May 2023, the Chambre des députés de Luxembourg announced an OECD focus on Luxembourg's whistleblower legislation.

    The new law allows people who have doubts about the need to report irregularities they observe to find an interlocutor. Some representatives of the OECD working group asked for more information about the different reporting channels foreseen, the reporting office to be set up and the list of authorities to which a report can be made. The Chairman of the Justice Committee stated in this context that one of the objectives had been to establish a diversified list of authorities in order to cover many areas. In this way, a risk in the field of finance could, for example, be reported to the Commission de Surveillance du Secteur Financier (CSSF) while a risk in the field of industry could be reported to the Inspectorate of Labour and Mines.

    Another topic raised during the discussions in parliamentary committee was that of professional secrecy, which is exempt from the new law.

    Luxembourg is one of the countries that have signed the OECD Convention on Bribery. In this way, it is subject to evaluations concerning its implementation and application. A representative of the OECD working group explained that the last comprehensive assessment of the legislative framework and measures put in place in the Grand Duchy to prevent corruption dates back to 2011.

    Version française

    Le 3 mai 2023, la Chambre des députés de Luxembourg a annoncé un focus de l'OCDE sur la législation luxembourgeoise sur les lanceurs d'alerte.

    La nouvelle loi permet aux personnes qui ont des doutes sur la nécessité de signaler les irrégularités qu'elles constatent de trouver un interlocuteur. Certains représentants du groupe de travail de l'OCDE ont demandé plus d'informations sur les différents canaux de signalement prévus, le bureau de signalement à mettre en place et la liste des autorités auxquelles un signalement peut être fait. Le président de la commission de la justice a déclaré dans ce contexte que l'un des objectifs avait été d'établir une liste diversifiée d'autorités afin de couvrir de nombreux domaines. Ainsi, un risque dans le domaine de la finance pourrait, par exemple, être signalé à la Commission de Surveillance du Secteur Financier (CSSF) tandis qu'un risque dans le domaine de l'industrie pourrait être signalé à l'Inspection du Travail et des Mines.

    Un autre sujet évoqué lors des discussions en commission parlementaire a été celui du secret professionnel, qui est exempté de la nouvelle loi.

    Le Luxembourg fait partie des pays signataires de la Convention de l'OCDE sur la corruption. Ainsi, il fait l'objet d'évaluations concernant sa mise en œuvre et son application. Un représentant du groupe de travail de l'OCDE a expliqué que la dernière évaluation complète du cadre législatif et des mesures mises en place au Grand-Duché pour prévenir la corruption remonte à 2011.

  • Chambre des députés adopts Bill n°7945 transposing Whistleblowers Directive into national law / La Chambre des députés adopte le projet de loi n°7945 transposant la directive sur les lanceurs d'alerte (whistleblowers) en droit national

    CACEIS

  • On May 2 2023, the Chambre des députés adopted Bill n°7945 transposing Directive (EU) 2019/1937 of the European Parliament and of the Council of October 23 2019 on the protection of persons who report breaches of Union law. A second vote is expected by the end of the first week of May, and will come into force three days after the publication.

    The Directive aims to introduce a legal framework for setting minimum standards, common to all Member States, in an effort to stitch together whistleblower protection legislation within the European Union. That said, Member States remain free to expand this legal framework. While the directive covers only certain acts of the European Union, the material scope of the directive will extend to all national law. This decision is made with the interests of a simplified and coherent framework in mind.

    This Act expands on existing Union Acts, namely Regulation (EU) No 596/2014 of the European Parliament and of the Council and Commission Implementing Directive (EU) 2015/2392, adopted based on this regulation, and Directives 2013/36/EU, 2014/65/EU, (EU) 2016/97, which contain detailed rules on the protection of whistleblowers. Protection provisions contained in special laws take precedence over the general provisions of this law, which complete them in areas not covered to the extent by the sectoral laws. The provisions contained in this Directive, therefore, are to be taken in addition, and not in replacement, to the initiatives of the European Union already anchored in national legislation. 

    Notably, the scope of application of the adopted approach is in line with the scope of application of current case-law, which itself applies to all national law. Consequently, added access to internal and external reporting channels will ease whistleblowers’ access to reporting methods. With this in mind, disclosure to the public should be considered as a last resort, in cases where access to these channels is made impossible. Failure to actualize internal reporting channels may lead to a fine of up to €250,000.

    Legislators are planning to introduce a reporting office tasked with informing and assisting reporting persons, (e.g. advising them on which authority to contact). The office shall also bear responsibility for raising public awareness of the rights of whistleblowers. The powers of this body are without prejudice to the powers exercised by the competent sectoral authorities.

    The Directive offers a broad definition of a personal scope, including not only workers and civil servants, but also shareholders, persons whose employment relationship has ended or has not yet started, subcontractors, etc. Thus, the Bill proposes to expand the means of protection to cover more categories of people.

    The Directive obliges legal entities governed by private law with more than 50 employees to set up internal reporting channels, in order to allow whistleblowers to inform their employer in complete confidentiality of major violations. The whistleblower is encouraged to report behavior contrary to the rules in force internally to the legal entity concerned.

    Version française

    Le 2 mai 2023, la Chambre des députés a adopté le projet de loi n°7945 transposant la directive (UE) 2019/1937 du Parlement européen et du Conseil du 23 octobre 2019 relative à la protection des personnes qui signalent des infractions au droit de l'Union. Un second vote est attendu d'ici la fin de la première semaine de mai, et entrera en vigueur trois jours après la publication.

    La directive vise à introduire un cadre juridique pour la fixation de normes minimales, communes à tous les États membres, dans le but d'assembler une législation sur la protection des lanceurs d'alerte au sein de l'Union européenne. Cela dit, les États membres restent libres d'étendre ce cadre juridique. Alors que la directive ne couvre que certains actes de l'Union européenne, le champ d'application matériel de la directive s'étendra à l'ensemble du droit national. Cette décision est prise dans l'intérêt d'un cadre simplifié et cohérent.

    Le présent acte complète les actes de l'Union existants, à savoir le règlement (UE) n° 596/2014 du Parlement européen et du Conseil et la directive d'exécution (UE) 2015/2392 de la Commission, adoptée sur la base de ce règlement, et les directives 2013/36/UE, 2014/65/UE, (UE) 2016/97, qui contiennent des règles détaillées sur la protection des lanceurs d'alerte. Les dispositions de protection contenues dans les lois spéciales priment sur les dispositions générales de la présente loi qui les complètent dans les domaines non couverts dans la mesure des lois sectorielles. Les dispositions contenues dans la présente directive doivent donc être prises en complément, et non en remplacement, des initiatives de l'Union européenne déjà ancrées dans la législation nationale.

    Notamment, le champ d'application de l'approche retenue est conforme au champ d'application de la jurisprudence actuelle, qui s'applique elle-même à l'ensemble du droit national. Par conséquent, un accès accru aux canaux de signalement internes et externes facilitera l'accès des dénonciateurs aux méthodes de signalement. Dans cette optique, la divulgation au public doit être considérée comme un dernier recours, dans les cas où l'accès à ces canaux est rendu impossible. La non-actualisation des canaux de signalement internes peut entraîner une amende pouvant aller jusqu'à 250 000 €.

    Les législateurs envisagent de mettre en place un bureau de signalement chargé d'informer et d'aider les déclarants (par exemple, en les conseillant sur l'autorité à contacter). Le bureau est également chargé de sensibiliser le public aux droits des lanceurs d'alerte. Les attributions de cet organe sont sans préjudice des attributions exercées par les autorités sectorielles compétentes.

    La directive propose une définition large du champ d'application personnel, incluant non seulement les travailleurs et les fonctionnaires, mais aussi les actionnaires, les personnes dont la relation de travail a pris fin ou n'a pas encore commencé, les sous-traitants, etc. Ainsi, le projet de loi propose d'élargir les moyens de protection pour couvrir plus de catégories de personnes.

    La directive oblige les personnes morales de droit privé comptant plus de 50 salariés à mettre en place des canaux de signalement internes, afin de permettre aux lanceurs d'alerte d'informer leur employeur en toute confidentialité des infractions majeures. Le lanceur d'alerte est incité à signaler les comportements contraires aux règles en vigueur en interne auprès de l'entité juridique concernée.

  • Financial supervision

    CSSF publishes Circular CSSF 23/833 on new communication methods for procedures and reporting to CSSF / La CSSF publie la circulaire CSSF 23/833 relative aux nouveaux modes de communication des procédures et de reporting à la CSSF

    CACEIS

  • On May 16 2023, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 23/833 on communication methods of procedures and reporting to the CSSF.

    The purpose of this circular is to repeal CSSF circulars 08/334 on encryption specifications for declarants and CSSF 08/344 concerning the provisions relating to the transmission of reporting files to the CSSF. 

    The CSSF wishes to inform professionals of the methods of communication applicable from now on.

    Depending on the approach or reporting concerned, professionals may use the following means of exchange:

    • eDesk,
    • API interface made available by the CSSF,
    • MFT,
    • External transmission channels (currently eFile & Sofie).

    Version française

    Le 16 mai 2023, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire CSSF 23/833 relative aux modalités de communication des procédures et de reporting à la CSSF.

    Cette circulaire a pour objet d'abroger les circulaires CSSF 08/334 relative aux spécifications de chiffrement pour les déclarants et CSSF 08/344 concernant les dispositions relatives à la transmission des fichiers de déclaration à la CSSF.

    La CSSF souhaite informer les professionnels des modalités de communication applicables désormais.

    Selon la démarche ou le reporting concerné, les professionnels peuvent utiliser les moyens d'échange suivants :

    • bureau électronique,
    • Interface API mise à disposition par la CSSF,
    • MFT,
    • Canaux de transmission externes (actuellement eFile & Sofie).
  • Markets in financial instruments Directive and Regulation (MiFID II / MiFIR)

    CSSF publishes Circular 23/835 on the application of ESMA Guidelines on certain aspects of MiFID II suitability requirements / La CSSF publie la Circulaire 23/835 sur l'application des orientations de l'ESMA sur certaines exigences d'adéquation MiFID II

    CACEIS

  • On May 24 2023, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 23/835 on the application of the ESMA Guidelines on certain aspects of the MiFID II suitability requirements.

    The purpose of the Guidelines is to clarify the application of certain aspects of the MiFID II suitability requirements in order to ensure the common, uniform, and consistent application of Article 25(2) of MiFID II3 and of Articles 54 and 55 of the MiFID II Delegated Regulation. 

    These guidelines shall apply to investment firms and credit institutions when providing the investment services  of portfolio management or investment advice, or when selling or advising clients in relation to structured deposits, and to UCITS management companies and external alternative investment fund managers when providing the services of individual portfolio management or investment advice.

    The Guidelines and this circular shall apply from October 3 2023 onwards.

    The assessment of suitability is one of the most important requirements for investor protection in the MiFID II framework. It applies to the provision of any type of investment advice (whether independent or not) and portfolio management. In accordance with the obligations set out in Article 25(2) of Directive 2014/65/EU on Markets in Financial Instruments (MiFID II) and Articles 54 and 55 of the Commission Delegated Regulation (EU) 2017/565 (MiFID II Delegated Regulation), investment firms providing investment advice or portfolio management have to provide suitable personal recommendations to their clients or have to make suitable investment decisions on behalf of their clients. 

    The Final Report issued integrates sustainability factors, risk and preferences into certain organisational requirements and operating conditions for investment firms.

    Version française

    Le 24 mai 2023, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire CSSF 23/835 relative à l'application des orientations de l'ESMA sur certains aspects des exigences d'adéquation MiFID II.

    L'objectif des Orientations est de clarifier l'application de certains aspects des exigences d'adéquation de MiFID II afin d'assurer l'application commune, uniforme et cohérente de l'article 25(2) de MiFID II3 et des articles 54 et 55 de MiFID II. Règlement délégué.

    Les présentes orientations s'appliquent aux entreprises d'investissement et aux établissements de crédit lorsqu'ils fournissent des services d'investissement de gestion de portefeuille ou de conseil en investissement, ou lorsqu'ils vendent ou conseillent des clients en matière de dépôts structurés, et aux sociétés de gestion d'OPCVM et aux gestionnaires de fonds d'investissement alternatifs externes lorsqu'ils fournissent des services de gestion de portefeuille individuelle ou conseil en investissement.

    Les Lignes directrices et la présente circulaire s'appliquent à partir du 3 octobre 2023.

    L'évaluation de l'adéquation est l'une des exigences les plus importantes pour la protection des investisseurs dans le cadre MiFID II. Elle s'applique à la fourniture de tout type de conseil en investissement (indépendant ou non) et de gestion de portefeuille. Conformément aux obligations énoncées à l'article 25, paragraphe 2, de la directive 2014/65/UE sur les marchés financiers (MiFID II) et des articles 54 et 55 du règlement délégué (UE) 2017/565 de la Commission (règlement délégué MiFID II), les entreprises d'investissement fournissant des conseils en investissement ou des services de gestion de portefeuille doivent fournir des recommandations personnelles appropriées à leurs clients ou doivent fournir des décisions d'investissement pour le compte de leurs clients.

    Le rapport final publié intègre les facteurs de durabilité, le risque et les préférences dans certaines exigences organisationnelles et conditions de fonctionnement des entreprises d'investissement.

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

    CSSF publishes Circular 23/838 on the EBA Guidelines on benchmarking on remuneration and the gender pay gap / La CSSF publie la circulaire 23/838 sur les orientations de l'ABE sur le benchmarking sur la rémunération et son écart entre les deux sexes

    CACEIS

  • On May 26 2023, the Commission de Surveillance du secteur financier (CSSF) publishes Circular CSSF 23/838 on the application of the EBA Guidelines on the benchmarking exercises on remuneration practices and the gender pay gap under Directive (EU) 2019/2034 (EBA/GL/2022/07).

    The purpose of this circular is to inform you that the CSSF, in its capacity as competent authority, applies the EBA Guidelines on the benchmarking exercises on remuneration practices and the gender pay gap under Directive (EU) 2019/2034 (EBA/GL/2022/07), published on 30 June 2022. Consequently, the CSSF has integrated the Guidelines into its administrative practice and regulatory approach with a view to promoting supervisory convergence in this field at European level. 

    All non-SNI IFR investment firms, as defined in point (9a-2) of Article 1 of the amended Law of April 5 1993 on the financial sector (“LFS”) shall duly comply with them.

    These Guidelines specify, for the purposes of the oversight of remuneration policies, the information to be provided by selected non-SNI IFR investment firms to the CSSF, namely:

    • data for benchmarking remuneration trends and practices, including information disclosed in accordance with points (c) and (d) of the first subparagraph of Article 51 of Regulation (EU) 2019/20332 (“remuneration data”), to be provided annually;
    • data for benchmarking the gender pay gap (“gender pay gap data”), to be provided every three years (starting from 2024 for the financial year 2023).

    Institutions are selected by the CSSF based on the criteria specified in section 1 of the Guidelines for the remuneration data and section 2 for the gender pay gap data.

    The Guidelines also specify how the CSSF will collect the remuneration data and the gender pay gap data (collectively referred to as “benchmarking data”) from the non-SNI IFR investment firms, and how the CSSF will submit the benchmarking data to the EBA.

    Gender pay gap data will be collected at the individual level.

    Remuneration data will be collected at the individual level if Article 7 of Regulation (EU) 2019/2033 (IFR) does not apply.

    Version française

    Le 26 mai 2023, la Commission de Surveillance du secteur financier (CSSF) publie la circulaire CSSF 23/838 relative à l'application des orientations de l'ABE sur les exercices de benchmarking sur les pratiques de rémunération et l'écart de rémunération entre hommes et femmes sous Directive (UE) 2019/2034 (EBA/GL/2022/07).

    La présente circulaire a pour objet de vous informer que la CSSF, en sa qualité d'autorité compétente, applique les Orientations de l'ABE sur les exercices de benchmarking sur les pratiques de rémunération et l'écart de rémunération entre les hommes et les femmes au titre de la directive (UE) 2019/2034 (EBA/GL/2022/07), publiée le 30 juin 2022. En conséquence, la CSSF a intégré les Orientations dans sa pratique administrative et son approche réglementaire en vue de promouvoir la convergence prudentielle dans ce domaine au niveau européen.

    Toutes les entreprises d'investissement non SNI IFR, telles que définies au point (9a-2) de l'article 1er de la loi modifiée du 5 avril 1993 relative au secteur financier (« LSF ») doivent s'y conformer.

    Les présentes Orientations précisent, aux fins de la surveillance des politiques de rémunération, les informations que les entreprises d'investissement IFR non SNI sélectionnées doivent fournir à la CSSF, à savoir :

    • des données permettant de comparer les tendances et les pratiques en matière de rémunération, y compris les informations publiées conformément à l'article 51, premier alinéa, points c) et d), du règlement (UE) 2019/20332 (""données sur la rémunération""), à fournir annuellement ;
    • des données de benchmarking de l'écart salarial entre les hommes et les femmes (« gender pay gap data »), à fournir tous les trois ans (à partir de 2024 pour l'exercice 2023).

    Les établissements sont sélectionnés par la CSSF sur la base des critères précisés à la section 1 des Lignes directrices pour les données sur les rémunérations et à la section 2 pour les données sur les écarts de rémunération entre hommes et femmes.

    Les Orientations précisent également comment la CSSF collectera les données de rémunération et les données d'écart de rémunération entre les hommes et les femmes (collectivement dénommées « données de benchmarking ») auprès des entreprises d'investissement IFR non SNI, et comment la CSSF soumettra les données de benchmarking à l'ABE.

    Les données sur l'écart de rémunération entre les sexes seront recueillies au niveau individuel.

    Les données de rémunération seront collectées au niveau individuel si l'article 7 du règlement (UE) 2019/2033 (IFR) ne s'applique pas.

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

    CSSF publishes Circular CSSF 23/834 on mandatory use of IMAS Portal for certain supervisory processes / La CSSF publie la circulaire CSSF 23/834 relative à l'utilisation obligatoire du portail IMAS pour certains processus de surveillance

    CACEIS

  • On May 16 2023, the Commission de Surveillance du secteur financier (CSSF) published the Circular CSSF 23/834 on Mandatory use of IMAS Portal for certain supervisory processes.

    The IMAS Portal is a digital interface of the Single Supervisory Mechanism (SSM) for certain supervisory processes. It is part of the commitment of the European Central Bank and of the national competent authorities within the SSM to enhance efficiency through digitalisation, as well as to increase communication and transparency of their processes. The use of the portal does not change the legal environment under which the ECB and the CSSF interact with the relevant parties and does not change the allocation of legal responsibilities between the CSSF and the ECB in the framework of the SSM.

    This circular repeals and replaces Circular CSSF 20/763 of December 15 2020 and Circular CSSF 21/781 of September 23 2021.

    This circular applies to all credit institutions incorporated under Luxembourg law for the following supervisory processes.

    For significant and less significant institutions:

    • Acquisition of qualifying holdings 
    • Passporting notifications (initial and subsequent changes); 
    • Licensing procedures; 
    • Voluntary withdrawals of licensing authorisations.

    For significant institutions only:

    • Appointments of the members of the management body, in their executive and supervisory (non-executive) functions;
    • Authorisation procedures for (mixed) financial holding companies ;
    • Credit quality on-site inspections;
    • Internal models (non-material model changes and extensions);
    • Notification of outsourcing arrangements.

    Please note that the IMAS Portal should not be used in the following supervisory processes: 

    • Applications for third-country branches;
    • Licence lapsing notifications;
    • Fit and proper assessments in the following cases:
          o Notification of key function holders (who are not expected to also become members of
             the management body);
          o Notification of renewals (without any change in the executive or non executive nature of
             the mandate);
          o Communication of new material facts regarding appointees previously assessed and
             approved. 

    The use of the IMAS Portal allows a more efficient processing of files at the SSM level and increases the transparency of the different processes and related communications. In this context, the CSSF has decided to make its use mandatory for supervisory processes within the scope of this circular. 

    The creation, activation and management of the IMAS account are described on the following page ("Account Activation" section): www.bankingsupervision.europa.eu/banking/portal/imas/html/index.en.html

    For less significant institutions, the email address to which the registration  document must be sent is the one of the CSSF agent in charge of the bank with a copy to the following address: banking_license@cssf.lu

    The submission of original documents is no longer required for supervisory processes within the scope of this circular. However, the relevant parties must ensure that the documents sent electronically constitute a true copy of the original and that the original documents are available upon the CSSF’s request. 

    The CSSF underlines that the relevant parties must use the IMAS Portal not only for the submission of their initial applications but also for any subsequent exchange of information. E-mails outside the IMAS Portal may be necessary; however, the communication required to complete the documentation and advance the process must be done within the IMAS Portal.

    Version française

    Le 16 mai 2023, la Commission de Surveillance du secteur financier (CSSF) a publié la Circulaire CSSF 23/834 sur l'utilisation obligatoire du portail IMAS pour certains processus de surveillance.

    Le portail IMAS est une interface numérique du mécanisme de surveillance unique (MSU) pour certains processus de surveillance. Cela fait partie de l'engagement de la Banque centrale européenne et des autorités nationales compétentes au sein du MSU d'améliorer l'efficacité grâce à la numérisation, ainsi que d'accroître la communication et la transparence de leurs processus. L'utilisation du portail ne modifie pas l'environnement juridique dans lequel la BCE et la CSSF interagissent avec les parties concernées et ne modifie pas la répartition des responsabilités juridiques entre la CSSF et la BCE dans le cadre du MSU.

    La présente circulaire abroge et remplace la circulaire CSSF 20/763 du 15 décembre 2020 et la circulaire CSSF 21/781 du 23 septembre 2021.

    Cette circulaire s'applique à tous les établissements de crédit de droit luxembourgeois pour les processus de surveillance suivants.

    Pour les établissements importants et moins importants :

    • Acquisition de participations qualifiées
    • Notifications de passeport (changements initiaux et ultérieurs) ;
    • Procédures d'octroi de licences ;
    • Retraits volontaires des autorisations de licence.

    Pour les établissements importants uniquement :

    • Nominations des membres de l'organe de direction, dans leurs fonctions exécutives et de surveillance (non exécutives) ;
    • Les procédures d'agrément des holdings financières (mixtes) ;
    • Inspections sur place de la qualité du crédit;
    • Modèles internes (modifications et extensions non matérielles du modèle) ;
    • Notification des ententes d'externalisation.

    Veuillez noter que le portail IMAS ne doit pas être utilisé dans les processus de supervision suivants :

    • Demandes de succursales dans des pays tiers ;
    • Notifications d'expiration de licence ;
    • Évaluations d'aptitude et d'adéquation dans les cas suivants :
      o Notification des titulaires de fonctions clés (dont il n'est pas attendu qu'ils deviennent également membres de l'organe de direction) ;
      o Notification des renouvellements (sans modification du caractère exécutif ou non exécutif du mandat) ;
      o Communication de nouveaux faits importants concernant les personnes nommées précédemment évaluées et approuvées.

    L'utilisation du portail IMAS permet un traitement plus efficace des dossiers au niveau du SSM et augmente la transparence des différents processus et des communications associées. Dans ce contexte, la CSSF a décidé de rendre son utilisation obligatoire pour les processus de surveillance entrant dans le champ d'application de la présente circulaire.

    La création, l'activation et la gestion du compte IMAS sont décrites sur la page suivante (rubrique ""Account Activation"") : www.bankingsupervision.europa.eu/banking/portal/imas/html/index.en.html

    Pour les établissements moins importants, l'adresse email à laquelle le document d'enregistrement doit être envoyé est celle de l'agent CSSF en charge de la banque avec copie à l'adresse suivante : banking_license@cssf.lu

    La remise de documents originaux n'est plus requise pour les processus de surveillance dans le cadre de la présente circulaire. Toutefois, les parties concernées doivent s'assurer que les documents transmis par voie électronique constituent une copie conforme de l'original et que les documents originaux sont disponibles sur demande de la CSSF.

    La CSSF souligne que les parties concernées doivent utiliser le portail IMAS non seulement pour le dépôt de leurs demandes initiales mais également pour tout échange ultérieur d'informations. Des e-mails en dehors du portail IMAS peuvent être nécessaires ; cependant, la communication requise pour compléter la documentation et faire avancer le processus doit être effectuée dans le portail IMAS.

  • Sustainable Finance / Green Finance

    CSSF extends the initial submission deadline for the SFDR data collection exercise on precontractual disclosures / La CSSF prolonge le délai de soumission initial de l'exercice de collecte de données SFDR sur les divulgations précontractuelles

    CACEIS

  • On May 4 2023, the Commission de Surveillance du secteur financier (CSSF) extended the initial submission deadline for the SFDR data collection exercise on precontractual disclosures.

    This communiqué follows up on the CSSF communiqué published on March 24 2023 in relation to the SFDR data collection exercise on precontractual disclosures.

    In order to give due account to discussions held in this context with financial market participants (FMPs), the CSSF is hereby extending the deadline by which FMPs are asked to submit the initial report(s) on precontractual information of all financial products within the scope of the data collection exercise.

    FMPs are requested to provide the relevant information on a best effort basis by June 15 2023, and in any event by October 31 2023 at the latest. After the initial declaration, FMPs remain responsible for ensuring that the information provided is being kept up to date; in case of changes to the precontractual documents/templates, FMPs must update the data reported under the SFDR data collection by transmitting subsequent declarations.

    Version française

    Le 4 mai 2023, la Commission de Surveillance du secteur financier (CSSF) a prolongé le délai de soumission initial de l'exercice de collecte de données SFDR sur les divulgations précontractuelles.

    Ce communiqué fait suite au communiqué de la CSSF publié le 24 mars 2023 relatif à l'exercice de collecte de données SFDR sur les divulgations précontractuelles.

    Afin de tenir dûment compte des discussions tenues dans ce cadre avec les acteurs des marchés financiers (FMP), la CSSF prolonge le délai dans lequel les FMP sont invités à remettre le(s) rapport(s) initial(aux) d'information précontractuelle de tous les produits financiers entrant dans le champ d'application de l'exercice de collecte de données.

    Les FMP sont priés de fournir les informations pertinentes dans la mesure du possible d'ici le 15 juin 2023, et en tout état de cause d'ici le 31 octobre 2023 au plus tard. Après la déclaration initiale, les FMP restent responsables de la mise à jour des informations fournies ; en cas de modification des documents/modèles précontractuels, les FMP doivent mettre à jour les données déclarées dans le cadre de la collecte de données SFDR en transmettant les déclarations ultérieures.

  • ICMA launches new sustainable bond database powered by the LGX DataHub / L'ICMA lance une nouvelle base de données d'obligations durables alimentée par le LGX DataHub

    CACEIS

  • On May 17 2023, the International Capital Market Association (ICMA) and the Luxembourg Stock Exchange (LuxSE) announced the launch of ICMA’s new database dedicated to sustainable bond data. 

    Established by ICMA and built and fed by the Luxembourg Green Exchange (LGX), LuxSE’s leading platform for sustainable finance, the database provides ICMA members and the wider financial community with important insights into the sustainable bond market. A comprehensive database which includes bonds from over 2,100 issuers and more than 8,700 listed green, social, sustainability and sustainability-linked (GSSS) bonds aligned with ICMA’s Principles, it is openly available to all on ICMA’s website.

    The availability of structured bond data is of considerable and growing importance for all participants in the global bond markets. ICMA’s new sustainable bond database details the evolution of GSSS bond issuance since 2019, with breakdowns per region, issuer sector, currency and time to maturity for each bond category, as well as an overview of the intended contribution of different categories of GSSS bonds to the United Nations Sustainable Development Goals, as reflected in the pre-issuance bond documentation.

    By providing valuable market insights, the database aims to assist market practitioners to strengthen their knowledge of the sustainable bond market, follow market developments, identify sustainable opportunities and incorporate ESG factors into their decisions.

    ICMA's new user-friendly database will facilitate access to reliable and meaningful sustainable bond issuer data and increase transparency around sustainable debt markets. The data included in the database is provided by the LGX DataHub, LuxSE’s proprietary tool providing up to 150 structured and granular sustainability data points on more than 11,000 listed GSSS bonds.

    Version française

    Le 17 mai 2023, l'International Capital Market Association (ICMA) et la Bourse de Luxembourg (LuxSE) ont annoncé le lancement de la nouvelle base de données de l'ICMA dédiée aux données obligataires durables.

    Créée par l'ICMA et construite et alimentée par le Luxembourg Green Exchange (LGX), la principale plate-forme de LuxSE pour la finance durable, la base de données fournit aux membres de l'ICMA et à la communauté financière au sens large des informations importantes sur le marché des obligations durables. Une base de données complète qui comprend des obligations de plus de 2 100 émetteurs et plus de 8 700 obligations vertes, sociales, durables et liées à la durabilité (GSSS) répertoriées et alignées sur les principes de l'ICMA, elle est ouverte à tous sur le site Web de l'ICMA.

    La disponibilité de données sur les obligations structurées est d'une importance considérable et croissante pour tous les acteurs des marchés obligataires mondiaux. La nouvelle base de données d'obligations durables de l'ICMA détaille l'évolution des émissions d'obligations GSSS depuis 2019, avec des ventilations par région, secteur d'émetteur, devise et durée jusqu'à l'échéance pour chaque catégorie d'obligations, ainsi qu'un aperçu de la contribution prévue des différentes catégories d'obligations GSSS à la Objectifs de développement durable des Nations Unies, tels que reflétés dans la documentation obligataire préalable à l'émission.

    En fournissant des informations précieuses sur le marché, la base de données vise à aider les praticiens du marché à renforcer leur connaissance du marché des obligations durables, à suivre les évolutions du marché, à identifier les opportunités durables et à intégrer les facteurs ESG dans leurs décisions.

    La nouvelle base de données conviviale de l'ICMA facilitera l'accès à des données fiables et significatives sur les émetteurs d'obligations durables et augmentera la transparence autour des marchés de la dette durable. Les données incluses dans la base de données sont fournies par le LGX DataHub, l'outil propriétaire de LuxSE fournissant jusqu'à 150 points de données de durabilité structurés et granulaires sur plus de 11 000 obligations GSSS cotées.

  • Sustainable Finance Disclosure Regulation (SFDR)

    CSSF updates Q&A on the SFDR (5/5/2023) / La CSSF met à jour les questions-réponses sur le SFDR (5/5/2023)

    CACEIS

  • On May 5 2023, the Commission de Surveillance du secteur financier (CSSF) updated its Questions and Answers on Sustainability Reporting in the Financial Services Sector (SFDR).

    The update refers to Section I: Key European and CSSF publications: Clarifications at European level and CSSF communiqués where Question 8 was deleted. 

    (Q8. Methodology used to define sustainable investments Shall the methodology used to define sustainable investments be made available to investors?)

    The CSSF expects that the methodology used for the definition of a sustainable investment within the meaning of Article 2(17) SFDR, as well as, where applicable, the applied thresholds (for example the threshold used when applying a pass-fail approach), be made available by FMPs to investors via appropriate means, like for example, through mandatory disclosure templates, prospectus/issuing document and/or website disclosures.

    Version française

    Le 5 mai 2023, la Commission de Surveillance du secteur financier (CSSF) a mis à jour ses questions et réponses sur le reporting de développement durable dans le secteur des services financiers (SFDR).

    La mise à jour fait référence à la Section I : Principales publications européennes et CSSF : Clarifications au niveau européen et communiqués CSSF où la Question 8 a été supprimée.

    (Q8. Méthodologie utilisée pour définir les investissements durables La méthodologie utilisée pour définir les investissements durables sera-t-elle mise à la disposition des investisseurs ?)

    La CSSF s'attend à ce que la méthodologie utilisée pour la définition d'un investissement durable au sens de l'article 2(17) SFDR, ainsi que, le cas échéant, les seuils appliqués (par exemple le seuil utilisé lors de l'application d'une approche réussite-échec), être mis à la disposition des investisseurs par les FMP par des moyens appropriés, comme par exemple, par le biais de modèles de divulgation obligatoire, de prospectus/document d'émission et/ou de divulgations sur le site Web.

  • SWITZERLAND

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

    Federal Council sets new provisions for entry into force of data protection law / Le Conseil fédéral fixe de nouvelles dispositions pour l'entrée en vigueur de la loi sur la protection des données

    CACEIS

  • On May 10 2023, the Federal Council set out new provisions for the entry into force of its data protection law. 

    According to the new Data Protection Act (nLPD), it will no longer be the Federal Council, but Parliament alone to elect the Federal Data Protection and Information Commissioner. Several articles were amended to regulate its working relationship. At its meeting on May 10 2023, the Federal Council decided to set the entry into force of these amendments at the same date as the new Data Protection Act to enter into force, i.e. September 1 2023.

    The revised Data Protection Act will enter into force in September 2023. The procedure for appointing the Federal Data Protection and Information Commissioner has been amended. Currently, the Federal Council appoints the officer and then the Federal Assembly approves the appointment. In future, he will only be elected by the Federal Assembly. The aim is to strengthen the independence of the officer and his democratic legitimacy.

    This paradigm shift will have procedural and personnel law implications, which is why clarifications are added to the nLPD. In particular, the provisions relating to the employee's occupational pension plans and disciplinary measures have been amended, as has the article on his ancillary activities. The Federal Assembly adopted these provisions on June 17 2022 and the Federal Council set their entry into force on September 1 2023, as did the Ordinance on the Employment Relations of the Head of the Federal Data Protection and Information Commissioner. The entire new data protection law will be legally binding from September 2023.

    Thanks to the new law, data protection will be adapted to technological advances, and the rights of individuals vis-à-vis their data will be improved. It also takes into account the revision of the Council of Europe Convention on Data Protection. These changes are important to ensure that the European Union continues to recognise Switzerland as a third country with an adequate level of data protection, and that cross-border data exchange remains possible without additional requirements.

    Version française

    Le 10 mai 2023, le Conseil fédéral a arrêté de nouvelles dispositions pour l'entrée en vigueur de sa loi sur la protection des données.

    Selon la nouvelle loi sur la protection des données (nLPD), ce n'est plus au Conseil fédéral, mais au seul Parlement d'élire le Commissaire fédéral à la protection des données et à la transparence. Plusieurs articles ont été modifiés pour réglementer ses relations de travail. Lors de sa séance du 10 mai 2023, le Conseil fédéral a décidé de fixer l'entrée en vigueur de ces modifications à la même date que l'entrée en vigueur de la nouvelle loi sur la protection des données, soit le 1er septembre 2023.

    La loi révisée sur la protection des données entrera en vigueur en septembre 2023. La procédure de nomination du préposé fédéral à la protection des données et à la transparence a été modifiée. Actuellement, le Conseil fédéral nomme l'officier, puis l'Assemblée fédérale approuve la nomination. A l'avenir, il ne sera élu que par l'Assemblée fédérale. L'objectif est de renforcer l'indépendance de l'officier et sa légitimité démocratique.

    Ce changement de paradigme aura des implications en droit procédural et en droit du personnel, c'est pourquoi des précisions sont apportées à la nLPD. En particulier, les dispositions relatives à la prévoyance professionnelle et aux mesures disciplinaires du salarié ont été modifiées, ainsi que l'article sur ses activités annexes. L'Assemblée fédérale a adopté ces dispositions le 17 juin 2022 et le Conseil fédéral a fixé leur entrée en vigueur au 1er septembre 2023, tout comme l'Ordonnance sur les relations de travail du chef du Préposé fédéral à la protection des données et à la transparence. L'ensemble de la nouvelle loi sur la protection des données sera juridiquement contraignant à partir de septembre 2023.

    Grâce à la nouvelle loi, la protection des données sera adaptée aux avancées technologiques, et les droits des individus vis-à-vis de leurs données seront améliorés. Il tient également compte de la révision de la Convention du Conseil de l'Europe sur la protection des données. Ces changements sont importants pour garantir que l'Union européenne continue de reconnaître la Suisse comme un pays tiers avec un niveau adéquat de protection des données et que l'échange transfrontalier de données reste possible sans exigences supplémentaires.

  • FINMA adopts fully revised Ordinance on Data Processing / La FINMA adopte l'ordonnance entièrement révisée sur le traitement des données

    CACEIS

  • On May 24 2023, the Eidgenössische Finanzmarktaufsicht (FINMA) adopted the fully revised FINMA Ordinance on Data Processing.

    The FINMA Ordinance on Data Processing details how FINMA processes data while fulfilling its statutory duties. Through the complete revision of its Ordinance on Data Processing, FINMA is supplementing and setting out more precisely the existing implementing provisions in light of the new federal regulations on data protection.

    FINMA does not envisage any material adjustments to its existing practice for data processing as a result of the complete revision of the ordinance. The fully revised FINMA Ordinance on Data Processing will enter into force at the same time as the fully revised Swiss Data Protection Act on September 1 2023.

    Version française

    Le 24 mai 2023, l'Eidgenössische Finanzmarktaufsicht (FINMA) a adopté l'ordonnance entièrement révisée de la FINMA sur le traitement des données.

    L'Ordonnance de la FINMA sur le traitement des données précise comment la FINMA traite les données dans l'accomplissement de ses obligations légales. Par la révision complète de son ordonnance sur le traitement des données, la FINMA complète et précise les dispositions d'exécution existantes à la lumière de la nouvelle réglementation fédérale sur la protection des données.

    La FINMA n'envisage aucune modification substantielle de sa pratique actuelle en matière de traitement des données à la suite de la révision complète de l'ordonnance. L'Ordonnance de la FINMA sur le traitement des données entièrement révisée entrera en vigueur en même temps que la loi suisse sur la protection des données entièrement révisée le 1er septembre 2023.

  • NETHERLANDS

    Regulation on digital operational resilience for the financial sector (DORA)

    The Netherlands implements Digital Operational Resilience of the Financial Sector Act

    CACEIS

  • On May 24 2023, the Netherlands implemented the Digital Operational Resilience package into the Financial Sector Act as published in the Overheid (Government Documents in the Netherlands).

    The digital operational resilience package of the financial sector aims to improve the cyber and ICT resilience of the financial sector by imposing obligations on the ICT management of a financial undertaking, requiring ethical hacking tests for financial undertakings and giving the European Supervisory Authorities (ESAs) supervisory powers over 'third-party service providers' (such as cloud service providers) providing services to financial companies. The package consists of a regulation (Regulation 2022/2554) and a Directive (RL 2022/2556).

    The consultation concerns a proposal to amend the Financial Supervision Act in connection with the implementation of the Digital Operational Resilience Directive for the financial sector. With these changes, the existing articles (Financial Supervision Act) are brought into line with the new requirements.

    First of all, the regulation contains a general framework within which financial companies are required to take measures to mitigate ICT risks control (Articles 5 to 16). This is how the financial company serves among other things, to draw up frameworks to manage ICT risks, to ensure that ensure that it uses adequate ICT systems and maintains them properly, take protective and preventive measures where necessary and draw up continuity plans and update them regularly. For a number of companies, which pose a relatively low risk to the financial system, there is a simplified framework from the point of view of proportionality for ICT risk management. Subsequently, financial companies are obliged to report serious ICT-related incidents to the competent authority, and for this set up systems to monitor, record and report incidents classified (Articles 17 to 23). In addition, financial companies periodically provide digital resilience to test for preparedness, possible weaknesses and shortcomings (articles 24 to and with 27). All financial companies will have to test their ICT systems annually at a certain basic level, where significant institutions, which are designated by the competent authorities, as well at least once every three years advanced ethical hacking tests based on receive up-to-date threat information, so-called ‘Threat Led Penetration Testing” (TLPT). Subsequently, provisions are introduced with regard to management of ICT risks from third parties that offer ICT services to financial companies (Articles 28 to 30). Financial companies that use the services of certain third parties (eg. cloud service providers) will include the functioning of these services, and any additional risks that these services may pose to the core processes of the financial institution, must be mapped and maintained monitor. In order to be able to carry out this monitoring effectively, certain aspects of the service and the relationship between service provider and financial undertaking must be laid down in contractual agreements. This contain, for example, agreements about the locations where personal data is stored processed and any exit strategies if the financial institution wants switch providers. In addition to standardized contract clauses voluntary clauses are also being developed, specifically for cloud service providers. In addition, financial companies must prevent concentration risks from arising due to too large dependence on certain service providers to perform critical processes. Furthermore, critical third-party providers of ICT services are subject to an oversight framework at Union level (Articles 31 to 44). ICT providers are considered critical at EU level based on (a combination of) the nature, size, and importance of their services, customers, and market share, as well as the extent to which their services can be replaced and the cross-border thereof. These are usually very large technology companies that serve a large part of the financial sector at EU level, where there are risks of a disruption in this service providers can cause problems for several financial companies in the EU, and hence financial stability in general. The European Supervisory Authorities (ESAs) will jointly receive a mandate, these are the European Banking Authority (EBA), the European authority for Insurance and Occupational Pensions (EIOPA) and the European Authority for Securities and Markets (ESMA). Within this joint mandate, the ETAs, among other things, perform audits and make binding recommendations to the critical third party provider of ICT services. The national competent authority may, if the critical third-party provider of ICT services does not follow recommendations, take follow-up measures towards the financial company, whereby in extreme cases it may be required that the financial company must terminate the service. Finally, the regulation provides a legal framework for financial companies to interact with each other share information about cyber threats (Article 45).

  • MEXICO

    Financial supervision

    CONDUSEF launches the Single Registry of Procedures (RUT) in all its User Service Units and FIs

    CACEIS

  • On May 29 2023, the Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros (CONDUSEF) launched the Single Registry of Procedures (RUT) in all its User Service Units and FIs.

    In order to bring the procedures and services offered by CONDUSEF closer to a greater number of users of financial products and services, the National Commission launched in 2022 the Single Registry of Procedures (RUT), an internet portal that functions as a remote window for users to initiate and follow up on various procedures or services in charge of this National Commission.

    Initially, this tool worked for certain procedures and services, with some financial institutions and in certain User Service Units. However, as of June 1, 2023, users will be able to carry out procedures before CONDUSEF through the RUT related to any financial institution and regardless of the State in which they are.

    Through the RUT, users will be able to present in a single platform and with a single record for access, complaints, claims, requests for opinions, requests for ombudsman, among other procedures that this National Commission has at its disposal.

    They will be able to vent and follow up on telephone reconciliation hearings through the RUT, with any financial institution.

    To register for the RUT, available at: rut.condusef.gob.mx/public/, you only need to have at hand valid official identification, CURP and access to an electronic device with internet, which allows you to scan and print documents.

  • Sustainable Finance / Green Finance

    CNBV issues Press Release No. 35: Mexico advances in the implementation of the Sustainable Taxonomy

    CACEIS

  • On May 14 2023, the Comisión Nacional Bancaria y de Valores (CNBV) issued the Press Release No. 35: Mexico advances in the implementation of the Sustainable Taxonomy.

    Leading experts from different fields involved in the creation of the Sustainable Taxonomy of Mexico, participated in various working groups whose main objective was to define the next steps for the implementation of this transformative tool, in order to guide the country's economy towards a more sustainable and environmentally friendly path.

    The Sustainable Taxonomy of Mexico, the result of the successful articulation of efforts by the Ministry of Finance and Public Credit, among various economic associations, academic institutions, secretariats of State such as SEMARNAT and civil society organizations, has achieved a solid consensus. It is important to highlight that there has been no resistance from the economic sectors, but on the contrary, the potential that this tool has to promote the transition towards a sustainable economy has been enthusiastically received.

    The implementation of Mexico's Sustainable Taxonomy represents a considerable challenge, as it will involve the collaboration of around 300 financial institutions. However, the initial consensus reached around this document will lay the foundation for successful assimilation and implementation.

    The next steps for the implementation of the Sustainable Taxonomy of Mexico will focus on achieving the following:

    • Pilot tests in financial institutions: Pilot tests will be carried out to ensure solid results and subsequent adoption of the Taxonomy. This will allow our country's financial institutions to effectively integrate and apply the Taxonomy in their operations.
    • Development of complementary regulations and legislation: Work will be done on the creation of complementary regulations and legislations that provide legal certainty to the actors involved in the implementation of the Taxonomy. These regulations and laws will establish a clear and robust framework to support the adoption and implementation of the Taxonomy in the financial field.
    • Finalization of the technical criteria for Sustainable Cities in Mexico: The technical criteria necessary to expand the Taxonomy to the topic of Sustainable Cities in Mexico will be concluded. This will allow us to assess and channel financial resources towards sustainable urban projects and infrastructures that promote climate resilience and quality of life in our cities.
    • Creation of financial instruments with sustainable and social criteria: Specific financial instruments will be developed to promote investment in projects aligned with sustainability and social responsibility. These will encourage the channeling of resources to sectors and activities that generate a positive impact on the environment and society.

    With these steps, the Mexico's Sustainable Taxonomy will lay the foundations for a more sustainable and responsible economy. We will work closely with financial institutions, government actors and civil society to achieve an effective transition towards financial practices aligned with the objectives of sustainability and equitable development of our country.

    This important milestone marks a significant step towards a greener and more resilient economy in Mexico. We appreciate the commitment and collaboration of all the actors involved in the creation of the Sustainable Taxonomy, and we reaffirm our commitment to continue working together to achieve a sustainable transformation of our economy.

  • Taxonomy Regulation

    SHCP presents Mexico's Sustainable Taxonomy

    CACEIS

  • On May 3 2023, the Secretaría de Hacienda y Crédito Público (SHCP) presented Mexico's Sustainable Taxonomy in New York to investors.

    The Sustainable Taxonomy of Mexico is a unique initiative worldwide, designed to promote a just transition and encourage environmental and social investments with a focus on environmental and social justice. In addition, it is the first in the world to define gender equality as a priority objective. This tool employs a rigorous methodology with high technical standards and international criteria to identify and define activities that have a positive impact on the environment and society. The Taxonomy is part of Mexico's Sustainable Finance Strategy that seeks to establish a sustainable financial ecosystem and facilitate that each sustainable project in Mexico finds at least one source of financing through high-quality financial instruments. At this stage, the Taxonomy establishes a common standard to identify elements of climate change mitigation and adaptation, as well as gender equity, in 124 economic activities belonging to six different economic sectors.

    In addition, Mexico's Sustainable Taxonomy is the first to include cross-cutting guidelines to ensure compliance with gender equality in economic activities. It presents a gender equality index with three pillars: decent work, well-being and social inclusion, and seeks to promote a comprehensive approach to sustainability to promote the integral well-being of people and the environment. This element has been the basis for developing a gender bond market since 2020. Currently, the gender bond market in Mexico has mobilized about 623 million dollars through five issues made in Mexican government agencies and multilateral organizations.

  • UNITED KINGDOM

    Consumer protection

    FCA publishes findings from its review of fair value frameworks

    CACEIS

  • On May 10 2023, the Financial Conduct Authority (FCA) published findings of their review into firms’ approaches to fair value assessments under the Consumer Duty.

    The Consumer Duty will set higher and clearer standards of consumer protection across financial services and require firms to act to deliver good outcomes for customers. Firms need to deliver and assess 4 outcomes under the Consumer Duty, including price and value. Firms must undertake fair value assessments as a way of demonstrating if the price a consumer pays for a product or service is reasonable compared to the overall benefits they can expect to receive. To help firms better understand the expectations, the FCA has committed to providing regular feedback to industry on the work they do to assess firms progress in embedding the Duty.

    The FCA has conducted a review of fair value assessment frameworks used by 14 firms, which outline their approach in this area. The observations from this review are shared to assist other firms in implementing the FCA's requirements on price and value. It is important to note that this publication does not introduce new obligations for firms. 

    The FCA assessed fair value frameworks against five criteria:

    • Understanding of fair value rules.
    • Assessing value.
    • Considering contextual factors.
    • Assessing differential outcomes.
    • Data and governance.

    However, the ""what we found"" section highlights suggested areas of focus. The FCA identified several key findings:

    • Understanding fair value: Many firms showed a good understanding of fair value, but some relied on unsubstantiated claims. Clarification on the distinction between manufacturers and distributors was needed.
    • Assessing value: Most firms assessed costs and benefits well, but some lacked adaptability across different market sectors and didn't consider profit margins or non-financial costs and benefits.
    • Considering contextual factors: Many firms considered contextual factors, but some overlooked them, especially large firms with complex business models. Information sharing with other firms in the distribution chain was also lacking.
    • Assessing differential outcomes: Some firms analyzed differential outcomes for customers, but many relied on average outcomes instead of examining the full distribution. Demonstrating fair value for each customer group was not always clear.
    • Data and governance: Most firms had data-led plans for monitoring and reviewing outcomes, but some lacked specific plans and addressed data gaps. Clear limitations and detailed information were needed in presenting evidence.

    The section on "good practice" presents positive examples identified during the review, while the "areas for improvement" highlight practices and instances where firms may need to enhance their approach to meet the expectations of the Duty, which comes into force on July 31, 2023.

    Firms are encouraged to consider the review findings and improve their implementation of price and value outcome rules. The FCA will provide support, feedback, and engagement to assist firms in embedding the Duty. The FCA will also monitor firms' fair value practices, conduct targeted engagement with smaller firms, and share market feedback on fair value and other aspects of the Duty.

  • Financial Market Amendment Law

    UK government publishes the Financial Services and Markets Act 2000 (Commodity Derivatives and Emission Allowances) Order 2023

    CACEIS

  • On May 17 2023, the UK Government published the Financial Services and Markets Act 2000 (Commodity Derivatives and Emission Allowances) Order 2023.

    This Order, issued by the Treasury under the Financial Services and Markets Act 2000, makes amendments to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017. The Order will come into force on January 1 2025.

    The amendments specified in the Order involve various changes to definitions, including the definition of "investment firm" and "qualifying credit institution." Article 72J, related to the exemption under the markets in financial instruments directive, is omitted. Additionally, changes are made to exemptions from the definition of "investment firm" in Part 1 of Schedule 3. The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 are also amended, primarily in relation to regulation 30 concerning algorithmic trading and regulation 47 regarding notifications, reports, and applications.

    These amendments have been approved by both Houses of Parliament and are part of the ongoing process of adjusting regulations following the withdrawal of the United Kingdom from the European Union.

  • Investor protection / Consumer protection

    FCA warns of impending Consumer Duty deadline

    CACEIS

  • On May 10 2023, the Financial Conduct Authority (FCA) published a warning on impending Consumer Duty deadline.

    The FCA is urging firms to prepare for the upcoming Consumer Duty, which will commence on July 31 2023. In a speech, Sheldon Mills, Executive Director of Consumers and Competition at the FCA, emphasized that firms ignoring the Duty or posing significant harm to consumers will face swift action from the regulator. The FCA's approach will be proportionate, focusing on outcomes and prioritizing the most serious breaches. Robust actions, interventions, investigations, and disciplinary sanctions are among the measures the FCA may take.

    Mills acknowledged the efforts made by financial services firms to implement the Consumer Duty and highlighted its potential to enhance sector competitiveness. By requiring firms to prioritize consumer protection, the Duty can drive innovation and competition to better serve customers. When applied correctly, the Consumer Duty can help firms retain and attract customers, ultimately bolstering the competitiveness of the financial services sector.

    To support firms, the FCA is sharing insights from its review of fair value assessment frameworks, outlining good practices and areas for improvement. The review revealed that while firms have considered the FCA's price and value requirements, some still have work to do to meet the rules. The FCA has identified four key areas for firms to focus on, such as collecting evidence demonstrating fair value and establishing clear oversight of actions if products do not provide fair value.

    Given the current cost of living pressures, ensuring consumers receive fair value becomes even more crucial. This focus on fair value can also contribute to the industry's competitiveness as firms strive to offer the best products and services to attract customers.

  • Prospectus Regulation

    FCA publishes an engagement paper on admission to trading on a regulated market

    CACEIS

  • On May 18 2023, the Financial Conduct of Authority (FCA) published an engagement paper on admission to trading on a regulated market.

    It presents their initial considerations for developing admission rules for issuers seeking securities trading on regulated markets under the new public offers and admission to trading regime. The FCA aims to align their approach more closely with the specific needs of issuers and investors, leveraging their enhanced regulatory powers. While recognizing the value of existing requirements outlined in the UK Prospectus Regulation for investor protection and market effectiveness, the FCA is open to making necessary changes to address any friction or unintended consequences. The paper highlights areas where small modifications could collectively lead to significant improvements, including the scope of prospectus requirements, content, format, and the responsibility and approval process for prospectus documents. The FCA seeks feedback and input from stakeholders to inform their decision-making process.

  • Whistleblower protection

    FCA publishes a press release on actions to improve the confidence of whistleblowers

    CACEIS

  • On May 4 2023, the Financial Conduct Authority (FCA) published a press release on actions to improve the confidence of whistleblowers.

    The Financial Conduct Authority (FCA) has conducted a qualitative survey to gather insights from whistleblowers who have provided information to the organization. The survey aimed to understand their experiences and identify areas for improvement. Based on the survey findings, the FCA has outlined a series of actions to enhance its whistleblowing processes. 

    The FCA aims to enhance the utilization of whistleblowers' information by optimizing data usage and streamlining the whistleblowing processes. Additionally, they will enhance their webform to ensure that all disclosures are fully captured. Collaborating with the Department for Business and Trade, the FCA supports a review of whistleblower legislation to enhance the overall whistleblowing system. While legal obligations may limit the information shared, the FCA remains committed to providing whistleblowers with as much information as possible. They recognize the value of whistleblowers' insights in identifying and addressing issues in regulated firms and markets, such as consumer mis-selling and internal whistleblowing failures.

  • BRAZIL

    Consumer protection

    ANBIMA releases Guidance on self-regulatory rules for product advertising

    CACEIS

  • On May 12 2023, the Brazilian Financial and Capital Markets Association (ANBIMA) released Guidance on self-regulatory rules for product advertising with the objective to assist the market in the preparation of ads on social networks and printed vehicles.

    Institutions that follow the codes of Distribution and Administration of Third Party Resources can now count on the help of the document "Useful Information for Announcements of Investment Products".

    The publication gathers tips, in simple and direct language, to facilitate compliance with self-regulatory rules for institutions that advertise investment products on social networks, print media outlets and others.

  • Depositor protection rules

    CVM publishes rules on BDR

    CACEIS

  • On May 11 2023, the Comissão de Valores Mobiliários (CVM) published rules on the Brazilian Depositary Receipts (BDR).

    CVM Resolutions 182 and 183, changing the rules applicable to BDR programs modernize mechanisms to protect the Brazilian capital market and its investors.

    CVM Resolution 182: regulates aspects related to the ballast of BDR, its classification in different levels and the registration requirements of the programs, replacing CVM Instruction 332.

    CVM Resolution 183: promotes complementary changes in CVM Resolutions 80 and 160, mainly linked to the registration of foreign issuer required in BDR Levels II and III programs.

    Changes implemented

    Foreign regulators: rule brings greater clarity as to the expected attribution regarding the supervision of foreign regulators when securities from another jurisdiction are admitted as BDR backing traded in Brazil.

    Requirements for obtaining issuer registration: The standard provides three framework alternatives for obtaining registration by the foreign issuer and eliminates requirements related to the location of the issuer's assets and revenues.

    Replacement of the concept of "publicly-held or similar company": term has been replaced by an indicative list of specific characteristics necessary for foreign issuers issuing securities that serve as a backstop for BDRs.

    Investment entities: creation of a differentiated information regime applicable to issuers classified as investment entities.

    Public Consultation

    The drafts of the edited standards had been submitted for public consultation in June 2021. Among the main changes in relation to the text that had been presented to receive comments and suggestions, the following stand out:

    BDR public offerings in Level I and Level II sponsored programs: it was decided to maintain the possibility of BDR Levels I and II public offerings aimed exclusively at professional investors.

    Relaxation of requirements related to obtaining registration: quantitative levels of 25% of outstanding shares and R$ 25 million of average daily financial volume – required of issuers who claim registration based on the fact that they already have securities traded in other jurisdictions – were reduced to 10% and R$ 10 million, respectively.

    BDR of Brazilian issuer debt: admission of the possibility that the security representing Brazilian issuer debt, even when not traded in an organized market, represents BDR backing traded in Brazil.

    Integration with the regulatory framework of public offerings: rules of BDR public offerings were integrated into the general rules of public offerings provided for in CVM Resolution 160, seeking to preserve, whenever possible, the consistency of the requirements incident on BDR offerings and offerings of the security that serves as BDR's backing.

    Additional amendment to CVM Resolution 160: in view of the concomitant changes in CVM Resolution 160, the CVM at the same time modified the rule to remove the restriction on trading in the secondary market of securities subject to a public offering ("lock-up") in the case of securities representing fixed income and traded within the scope of committed operations without free movement.

    CVM Resolutions 182 and 183 entered into force on June 1 2023.

  • Distribution of funds

    ANBIMA advises on the new rules for foreign investment intermediation services and updates to the Distribution Code

    CACEIS

  • On May 15 2023, the Brazilian Financial and Capital Markets Association (ANBIMA) advised on the new rules for foreign investment intermediation services and updates to the Distribution Code.

    The new rules of the Distribution Code are already in force to self-regulate institutions that intermediate the offer of investment services abroad. Also already in force are the changes regarding privacy and protection of personal data, information security and cybersecurity and business continuity plan. Members of ANBIMA in Action, a set of activities elected as priorities for the 2023/2024 biennium, approved the changes in a public hearing at the end of 2022 and published in March of this year.

    The new rule for offering intermediation of investment products abroad provides that the effort to attract customers must be made from the Brazilian institution, which will analyze the profile of the investor. In addition, the national houses will have to evaluate whether the structure of the services of the foreign intermediary is compatible with the client residing in Brazil.

    In order for the investor to decide on the application in the best way, the local institution must provide him with information regarding the foreign intermediary, such as the services provided, the area of operation, and the protection mechanisms in the host country of the international partner.

    Due Diligence Questionnaire

    To verify if foreign institutions have a service structure provided in Brazil, we provide the due diligence questionnaire, which the houses that offer the intermediation service must send and charge their international partners to answer the questions. If the foreign institution is from the same conglomerate or economic group, the application of the questionnaire is not necessary.

    Available in English and Portuguese, the document includes topics related to registration and financial data, information on compliance and programs to prevent and combat money laundering and terrorist financing, as well as questions about risk management and the structure of service and information security. The objective is for the local institution to make a good assessment of the profile of the foreign intermediary and, thus, to be able to make the appropriate indication to the clients. Once completed, the questionnaire should be available to our Supervisor for any consultations.

    We also provide a document in the format of questions and answers to help answer questions from the institutions that make the intermediation service. The material addresses points such as: advertising of products, registration of investors and information that must be provided to the client.

    Other updates

    Also already in place are the amendments to the code that provide for institutions to have action and incident response plans. The goal is to maintain internal procedures and controls for privacy, personal data protection, information security and cyber, as well as contingency.

    The rules relax the guidelines for how institutions should proceed in contingency situations and dispense with the obligation for them to perform validation or tests on the continuity of their business at annual or lower intervals, in case of activation of the plan.

    In addition, the standards of privacy and protection of personal data, information security and cybersecurity and business continuity plan are already valid.

    The changes regarding the suitability process, also released in March this year, will only take effect on September 5 2023.

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

    CVM issues new circular letter to clarify provisions of CVM Resolution 175

    CACEIS

  • On May 3 2023, the Comissão de Valores Mobiliários (CVM) issued a new circular letter to clarify provisions of CVM Resolution 175.

    The document clarifies and discloses new interpretations of the technical area on CVM Resolution 175. This time, on provisions of Normative Annex I of the new Regulatory Framework for Investment Funds, issued on 12/23/2022.

    The document presents 39 answers to the questions received by the technical area, divided into 17 topics:

    • Exposure to capital risk
    • Portion of the performance fee to be paid to the distributor
    • Exception for restricted classes
    • Investment abroad
    • Portfolio of funds
    • Interlocution between essential providers and CVM
    • Misframing and deadlines for communication
    • Checks required by the Administrator
    • Limits per issuer
    • Quota investment class
    • Responsibilities of custodians
    • ISIN and other codes
    • Maximum deadlines for reaching the limits applicable to classes
    • Single class distribution
    • Management fee exposure
    • Cryptoassets
    • Carbon credit

    Regulatory Framework for Investment Funds

    CVM Resolution 175 was issued on 12/23/2022 and configures the systematization of 38 standards in a single resolution. The measure, which reflects the innovations introduced in the legal system of investment funds by the Law of Economic Freedom, promotes innovations for the investment fund industry and greater security for investors' assets.

    CVM Resolution 181, published on 3/28/2023, promoted punctual changes in RCVM 175 and established 2/10/2023 as the new term of validity of the standard.

  • CVM publishes Normative Annexes of Investment Funds

    CACEIS

  • On May 31 2023, the Comissão de Valores Mobiliários (CVM) published the Normative Annexes of Investment Funds.

    CVM Resolution 184, which makes specific changes to CVM Resolution 175, constitutes the regulatory framework for investment funds, and adds nine Normative Annexes to the standard.

    The point adjustments are related to:

    • the inclusion of the voting policy at the meeting of holders of securities among the information that must be made available to the quotaholders.
    • a textual refinement, through the replacement of the term "socio-environmental" by "social, environmental or governance".
    • the inclusion in the FIF rule of a section dedicated to individual scheduled retirement funds.

    Normative Annexes

    The regulatory framework of the funds is now composed of a general rule, applicable to all investment funds, and 11 Normative Annexes, containing the specificities of the different categories of investment funds. The following annexes have been added to the rules of the FIF (Normative Annex I) and FIDC (Normative Annex II):

    • Normative Annex III: Real Estate Investment Funds (FII)
    • Normative Annex IV: Private Equity Investment Funds (FIP)
    • Normative Annex V: Market Index Investment Funds (ETF)
    • Normative Annex VII: Privatization Mutual Funds (FMP-FGTS)
    • Normative Annex VIII: Investment Funds in the National Film Industry (FUNCINE)
    • Normative Annex IX: Incentivized Stock Mutual Funds (FMAI)
    • Normative Annex X: Cultural and Artistic Investment Funds (FICART)
    • Normative Annex XI: "Social Security Funds"
    • Normative Annex XII: Investment Funds in Credit Rights of Projects of Social Interest (FIDC-PIPS)

    Agribusiness and 'pension funds'

    It is important to highlight that the Normative Annex VI, which will be edited in due course, was reserved for the norm of the Investment Fund in Agribusiness Production Chains (FIAGRO). It should also be clarified that the so-called "pension funds" do not represent a specific category of investment fund like the others. However, in order to make the rule better systematized, the content was the subject of its own annex.

    Review, consolidation, and enhancements

    In compliance with Decree 10,139 of 2019, the CVM submitted all the rules issued by the Autarchy to relevant review and consolidation procedures. During the process, because it did not involve changes in the merits of the regulations, there was no need to perform a Regulatory Impact Analysis or measures related to the Public Hearing.

    Throughout this period of review and consolidation, opportunities for improvements in the FII, FIP and ETF rules were identified. Therefore, one of the next steps in improving the regulation of investment funds should be dedicated to the modernization of these funds, taking into account, including, the suggestions that the CVM receives from market agents and investors on the subject.

    CVM Resolution 184 enters into force on 2/10/2023.

  • COLOMBIA

    Final Beneficiary Regulations

    DIAN clarifies term in Resolution No.164 of 2021

    CACEIS

  • On May 15 2023, the Dirección de Impuestos y Aduanas Nacionales (DIAN) issued a clarification to the question: "What should be understood by "foreign legal person" for the purposes of numeral 4 of article 4 the DIAN Resolution No. 164 of 2021?"

    Legal Thesis For the purposes of numeral 4 of article 4 of DIAN Resolution No. 164 of 2021, by "legal entity foreign" should be understood as that entity that is not assimilated to a national company -for tax purposes Colombians- in accordance with article 12-1 of the Tax Code; which implies that:
    (i) it has its domicile abroad,
    (ii) has separate and independent legal status from its partners, shareholders or participate under the commercial legislation of the country (other than Colombia) in which it is incorporated, and
    (iii) do not has its effective headquarters of administration in Colombian territory.

  • CONTACTS

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

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

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

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

    Design
    CACEIS Group Communications

    Photos credit
    CACEIS, Adobe Stock

    CACEIS
    89-91 rue Gabriel Péri
    92120 Montrouge

    Important information – CACEIS’ corporate identity is currently being used to sell fraudulent term deposit products. CACEIS has nothing to do with such offers and does not even sell investment products. Please be vigilant and avoid becoming the victim of this type of fraud.
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