European regulatory news Q3 & Q4 2021

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16/07 – ESMA publishes Q&A on the application of the UCITS directive

The European Securities Markets Authority (ESMA) has published updated Q&As on the UCITS Directive, in particular: (i) the application of the guidelines to funds with multiple portfolio managers, and; (ii) the crystallisation of performance fees in instances where a new compartment/share class is created in an existing UCITS in the course of the financial year.

16/07 – ESMA publishes Q&A on the application of the AIFMD

ESMA has published updated Q&As on the AIFMD, in particular: (i) the payment of performance fees when the portfolio management function has been delegated to different portfolio managers, and; (ii) the crystallisation of performance fees in instances where a new compartment/share class is created in an existing AIF.

05/08 – EC launches a consultation on its proposal for a directive updating the UCITS Directive

The EU Commission (EC) launches a consultation on its proposal for a directive amending Directive 2009/65/EC as regards the use of key information documents by management companies of UCITS. Feedback period: 05 August 2021 – 09 September 2021.

22/09 – Commission delays alternative investment fund review until Nov. 23

The European Commission will postpone its review of the rules for alternative investment fund managers, like hedge funds and private equity, until November 23, according to its latest agenda, dated from Wednesday. The EU executive had previously planned to unveil the reforms, which could include tighter rules on outsourcing investment decisions and services to companies outside the bloc after Brexit, on October 27. The delay to the final Basel III bank capital reforms appears to have had a knock-on impact on the fund management package. The EU’s proposals for long-term investment funds and a database for company information are also now due November 23.

12/11 – Corrigendum to Commission Implementing Regulation (EU) 2021/955 for the application of Regulation (EU) 2019/1156 on cross-border marketing of AIFs and UCITS is published in the Official Journal

A Corrigendum to Commission Implementing Regulation (EU) 2021/955 laying down Implementing Technicial Standards (ITS) for the application of Regulation (EU) 2019/1156 on cross-border marketing of AIFs and UCITS has been published in the Official Journal. This Corrigendum focuses on Art. 1 which deals with Publication of national provisions concerning marketing requirements and provides that “Competent authorities shall publish on their website the information referred to in Article 5(1) of Regulation (EU) 2019/1156, using the template set out in Annex I to this Regulation.”.


24/06 – CRR: EC adopts final one-year extension of transitional regime for capital requirements for non-EU CCPs

The EU Commission has extended, by one additional year, the current transitional regime regarding the capital requirements that EU banks and investment firms must maintain when exposed to non-EU central counterparties (CCPs). The transitional regime will therefore continue to apply until 28 June 2022. The Commission has emphasised that this is the last and final extension possible under the Capital Requirements Regulation (CRR), that exposures to those non-EU CCPs which will not be recognised by ESMA by 28 June 2022 will no longer be eligible for lower capital requirements after that date, and that stakeholders should start preparing for this possibility.

27/10 – Brussels unveils plans for bank capital reforms

On 27 October 2021, the European Commission adopted a review of EU banking rules (the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD IV)). These new rules will ensure that EU banks become more resilient to potential future economic shocks, while contributing to Europe’s recovery from the COVID-19 pandemic and the transition to climate neutrality. The package is comprised of the following elements: (i) implementing Basel III – strengthening resilience to economic shocks; (ii) sustainability – contributing to the green transition; (iii) stronger enforcement tools – ensuring sound management of EU banks and better protecting financial stability.

27/10 – IOSCO updates its outsourcing principles to ensure operational resilience

The Board of the International Organization of Securities Commissions (IOSCO) published a set of updated outsourcing principles for regulated entities that outsource tasks to service providers. Since the publication of IOSCO´s principles in 2005 and in 2009, new developments in markets and technology have focused regulatory attention on the question of operational resilience, combined with concerns following the COVID 19 pandemic as to business continuity.  The updated Principles on Outsourcing are based on the earlier Outsourcing Principles for Market Intermediaries and for Markets, but their application has been expanded to include trading venues, intermediaries market participants acting on a proprietary basis, credit rating agencies and also FMIs.


12/07 – ESMA launches public consultations on CCP recovery regime

The ESMA launched seven public consultations to gather stakeholder feedback on how to implement its central counterparty (CCP) recovery mandates. The closing date for responses is 20 September 2021.


30/07 – EC launches a targeted consultation on the vulnerabilities of EU financial-market infrastructures to extraterritorial application of third-countries’ unilateral sanctions

In order to respond to a more challenging international environment and within the broader pursuit of an open strategic autonomy in the economic and financial sector, in the Communication ‘The European economic and financial system: fostering openness, strength and resilience’ – COM(2021)32 – published on 19 January 2021, the Commission set out a wide-ranging strategy, structured under three mutually reinforcing pillars: (i) strengthening the international role of the euro; (ii) increasing the EU financial-market infrastructures’ (FMIs) resilience, including to extraterritorial application of third-countries’ unilateral sanctions; (iii) improving the effectiveness of the EU’s sanctions regimes. This restricted-targeted consultation seeks to gather information to better understand the critical vulnerabilities of EU’s FMIs to third-countries’ actions. Target group: largest EU’s financial-market infrastructures, like central securities depositaries (CSDs), central counterparties (CCPs), trading venues and payments infrastructures. Consultation period: 30 July 2021 – 15 October 2021.


06/08 – ESMA publishes a report on the use of Fintech by Central Securities Depositories

ESMA has published its Report on the use of FinTech by CSDs. ESMA has gathered the views of NCAs and relevant market participants on their experience with and planned future use of FinTech and Distributed-ledger Technology (DLT), as well as on whether the current regulatory framework represents a barrier for them to implement projects involving DLT. The report contains suggestions in a number of areas in which targeted amendments to the CSDR and further guidance could help CSDs in the deployment of DLT. ESMA’s recommendations will inform the EC’s targeted CSDR review. The European Commission is expected to prepare a legislative proposal by the end of 2021.

24/09 – ESMA recommends to European Commission to delay buy-in rules

ESMA has written to the European Commission regarding the implementation of CSDR, urging it to consider a delay of the mandatory buy-in regime. As the final EC legislative proposal for the review of CSDR, possibly including changes to the buy-in regime, is not expected before the end of this year, ESMA is in favour of delaying the entry into force of the buy-in requirements – scheduled on 1 February 2022 – while applying the other settlement discipline requirements, such as settlement fails reporting and cash penalties regime, as planned. ESMA therefore considers it crucial that the EC and the co-legislators clarify their political intentions around the review of the settlement discipline regime and consider whether to postpone the buy-in regime implementation as soon as possible.

22/10 – ESMA publishes key relevant provisions of the laws of Member States under which securities are constituted

In accordance with Article 49(1) of the CSDR, an issuer shall have the right to arrange for its securities admitted to trading on regulated markets or MTFs or traded on trading venues to be recorded in any CSD established in any Member State (subject to compliance by that CSD with other conditions referred to in the regulation). This provision implies that the corporate or similar law of the Member State under which the securities are constituted shall continue to apply. Therefore, Member States shall ensure that a list of key relevant provisions of their law is compiled and national competent authorities shall regularly communicate and update that list to ESMA. On 22nd of October, ESMA has updated this list based on notifications provided by the national competent authorities of the Member States in accordance with Article 49(1) of the CSDR. It is important to note that the competent authorities of the Member States are solely responsible for the content, completeness and accuracy of this list.


22/06 – ECB publishes its opinion on a proposal for a regulation on a pilot regime for market infrastructures based on distributed ledger technology

In this opinion, the ECB welcomes the proposed regulation, which aims to enable investment firms, market operators and central securities depositories (CSDs) to operate market infrastructures based on distributed ledger technology (DLT), either as a DLT multilateral trading facility or a DLT securities settlement system.

14/07 – ECB to launch digital euro experiment

The ECB will create a digital version of the euro currency and investigate its application for 24 months marking the beginning of real-world experimentation with the digital version of the official single EU currency. The experiment will not prejudge any future decision on the possible issuance of a digital euro, which will come only later. In any event, a digital euro would complement cash, not replace it. The aim is to be ready, at the end of these two years, to start developing a digital euro, which could take around three years according to a member of the ECB Executive Board. The investigation will seek to steer the design of the digital currency to minimize financial crime, as well as assess its potential effect on banks, financial stability and monetary policy. The research will also shed light on the changes to the EU legislative framework which might be needed for introducing a digital euro.

06/08 – ESMA publishes a report on the use of Fintech by Central Securities Depositories

ESMA has published its Report on the use of FinTech by CSDs. ESMA has gathered the views of NCAs and relevant market participants on their experience with and planned future use of FinTech and Distributed-ledger Technology (DLT), as well as on whether the current regulatory framework represents a barrier for them to implement projects involving DLT. The report contains suggestions in a number of areas in which targeted amendments to the CSDR and further guidance could help CSDs in the deployment of DLT. ESMA’s recommendations will inform the EC’s targeted CSDR review. The European Commission is expected to prepare a legislative proposal by the end of 2021.

21/09 – EU banking regulator cautions over banks’ ‘reliance’ on digital platforms

Banks risk becoming too reliant on digital platforms, such as comparison websites or big tech, to reach customers, the European Banking Authority warned today. The Paris-based regulator cautioned in a new report that national authorities need to pay more attention to the rapid growth of platforms acting as a “bridge” to consumers, a trend that has accelerated during the pandemic. “The reliance of financial institutions on digital platforms for the marketing and distribution of financial services is creating new forms of financial, operational, and reputational interdependencies within the EU’s banking and payments sector,” stated the report. The EBA said it will help regulators gather and share information on potential dependencies, as well as create indicators to assess “concentration, contagion, and potentially future systemic risks.” The report, which also highlights the benefits platforms can provide in increasing access to financial services, will feed into advice to the European Commission on digital finance, due at the start of 2022.

29/09 – European Parliament resolution of 8 October 2020 on Digital finance published

The “European Parliament resolution of 8 October 2020 with recommendations to the Commission on Digital Finance: emerging risks in crypto-assets — regulatory and supervisory challenges in the area of financial services, institutions and markets” has been published. With this resolution, the EP welcomes the adoption by the EC of the Digital Finance Package including two legislative proposals on crypto-assets and operational resilience. But the EP regrets that the EC did not properly address the problems related to money laundering, terrorism financing and criminal activity associated with crypto-assets, which remain largely unresolved, and requests that the EC take urgent actions in these areas following the recommendations set out in the EP resolution.

28/10 – The FATF updated its 2019 guidance for a risk-based approach to virtual assets and virtual asset service providers

The virtual asset sector is fast-moving and technologically dynamic, which means continued monitoring and engagement between the public and private sectors is necessary. The FATF standards require countries to assess and mitigate their risks associated with virtual asset financial activities and providers, license or register providers and subject them to supervision or monitoring by competent national authorities. VASPs are subject to the same relevant FATF measures that apply to financial institutions. This guidance will help countries and VASPs understand their anti-money laundering and counter-terrorist financing obligations, and effectively implement the FATF’s requirements as they apply to this sector.


13/07 – ESMA publishes methodology for assessing third-country CCPs systemic importance

ESMA has published a methodology for assessing whether a third country central counterparty (TC-CCP) or some of its clearing services are of such substantial systemic importance that the TC-CCP should not be recognised to provide certain clearing services or activities in the EU. The methodology has been developed by ESMA’s CCP Supervisory Committee and is based on the requirements of Article 25 (2c) of EMIR.

13/07 – ESMA consults on EMIR reporting guidelines

On 13 July 2021, ESMA launched a public consultation on its draft Guidelines for derivatives reporting under EMIR. The deadline for comments on this consultation is 30 September 2021. ESMA intends to publish a final report in Q4 2021/Q1 2022.

08/09 – Publication of a Delegated regulation specifying the conditions when commercial terms of central clearing are FRANDT

The delegated regulation applies to clearing members and clients which provide clearing services in the EU, whether those services are provided directly or indirectly, where those services are provided in relation to OTC derivative contracts that are subject to the clearing obligation. Commercial terms for clearing services provided by clearing service providers shall be considered to be fair, reasonable, non-discriminatory and transparent where they meet the requirements laid down in the Annex. Commercial terms for clearing services agreed before 9 September 2021 shall be reviewed and, where necessary to meet the requirements laid down in the Annex, modified by 9 September 2022. This Regulation entered into force on September 9, 2021. It will apply from 9 March 2022.

16/09 – EU banks, investors press Brussels to extend access to UK clearinghouses beyond mid-2022

EU banks, traders and investors are pressing Brussels to extend equivalence for U.K. clearinghouses beyond mid-2022, when it is due to expire. Nine industry associations wrote today to Financial Services Commissioner Mairead McGuinness warning of a “significant risk of market disruption” without an extension. Clearinghouses are the only remaining area of U.K. financial services to benefit from post-Brexit equivalence — meaning London businesses can continue to serve the EU market — due to fears of disruption to the economically critical area of euro interest rate swaps. But the Commission wants to wrestle control of derivatives clearing out of London — which it has so far failed to do.  With the equivalence decision due to expire on June 30, 2022, the industry associations want clarity “to prevent negative financial, commercial, operational and level playing field effects on EU counterparties and clearing members and to enable continued access to global pools of liquidity,” the letter says. U.K. clearinghouses may need to give notice three months notice before memberships are terminated — making March 2022 a hard deadline for the industry. Any shift to EU clearinghouses should be “voluntary and market driven and needs to be given sufficient time to develop,” the associations argued, highlighting some switches taking place. However, McGuinness has dismissed the idea of letting them make the shift on their own time frame.

30/09 – ESMA updated Q&A on EMIR implementation

With this update, the ESMA amended the following questions: (i) question 3b Reporting of valuations (article 9 of EMIR); (ii) question 40 LEI changes due to mergers and acquisitions: update of identification code to LEI (article 9 of EMIR).

05/11 – EBA consults on draft technical standards on initial margin model validation under EMIR

The EBA launched a public consultation on its draft RTS on Initial Margin Model Validation (IMMV) under the EMIR. The consultation paper sets out the supervisory procedures for initial and ongoing validation of initial margin models, which will be used to determine the level of margin requirements for uncleared OTC derivatives. Supervisory validation will ensure harmonised supervisory procedures and an appropriately prudent approach to the level of initial margins for EU derivatives counterparts. The consultation runs until 4 February 2022.


28/09 – ESMA publishes 2022 work programme

ESMA has published its 2022 work programme. The programme sets out ESMA’s priority work areas for the next twelve months, including: (i) contributing to the EU’s priorities regarding the development of the Capital Markets Union (CMU), sustainable finance and innovation; (ii) ensuring the convergence of supervisory and regulatory practices across the EU, with a particular focus on the supervision of investment firms’ cross-border activities, NCAs’ handling of Brexit related relocations, central securities depositories’ supervision, prospectus scrutiny and approval procedures, the implementation of simple, transparent and standardised criteria and the supervision of central counterparties’ (CCPs’) business continuity under remote working arrangements; (iii) strengthening its risk identification work, including providing insight on the advice on, and distribution of, products to retail investors, under its new coordination role for mystery shopping; (iv) contributing to the reviews of the Prospectus and Transparency Directives, MiFID2/MiFIR, PRIIPS, the Short Selling Regulation, and the Central Securities Depositories Regulation (CSDR); and (v) focusing on new entities coming under its direct supervision, including critical benchmarks, data reporting service providers and Tier 2 C.


27/05 – Investment market transparency – amended ancillary activity exemption (specifications)

Following changes to the ancillary activity exemption in the amended MIFID II (Directive 2021/338), this initiative specifies the criteria for establishing whether an activity is ancillary to a trader’s main business. Changes to the criteria for granting the exemption include discontinuing the overall market size test and introducing a new de minimis threshold test for small-scale trading. There is no change to the methodology for the trading and capital employed tests. Feedback period closed.

11/06 – ESMA publishes a new Q&A on information on costs and charges

On 28 may 2021, ESMA has updated its Q&As on the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation  (MiFID II/ MiFIR) by adding one new Q&A on Information on costs and charges (section 9 of the Q&As). ESMA clarifies that ex-ante costs and charges information disclosed to the client when investment advice is provided would not need to be provided a second time in the context of the subsequent RTO.

09/07 – ESMA consults on the review of transparency requirements under MIFIR

ESMA launched a consultation on the review of regulatory technical standards – RTS 1 equity and RTS 2 – non-equity transparency – on transparency requirements under MiFIR. The consultation focuses on technical issues and addresses topics that do not require a prior change of MiFID II/MiFIR. The review includes: (i) providing more clarity on non-price forming transactions and the reporting of such transactions; (ii) a recalibration of the regime for commodity derivatives; (iii) providing further clarity on the reporting fields for post-trade transparency and the reporting of reference data; (iv) providing clarification on the pre-trade transparency requirements for new types of trading systems, and; (v) increasing the pre- and post-trade large in scale thresholds for the trading of Exchange Traded Funds (ETFs). Feedback is open until October 1st, 2021.

19/07 – ESMA updates its Q&A on MiFIR data reporting (q&a)

On 19 July 2021, the ESMA has updated its Questions and Answers on MIFIR Data Reporting by amending question 6 section 2 on LEI code.

19/07 – ESMA consults on remuneration requirements under MIFID II

ESMA launched a consultation on draft ESMA guidelines on certain aspects of the MiFID II remuneration requirements: remuneration of staff involved in the provision of investment and ancillary services and activities, or in selling or advising on structured deposits to clients. The purpose of these draft guidelines is to enhance clarity and foster convergence in the implementation of certain aspects of the new MiFID II remuneration requirements, replacing the existing ESMA guidelines on the same topic, issued in 2013. The deadline for comments on this consultation paper is 19 October 2021.

21/07 – ESMA publishes the results of the 2020 Common Supervisory Action (CSA) on MIFID II suitability requirements

The 2020 CSA has shown that firms overall comply with key elements of the suitability requirements that were already regulated under MiFID. However, shortcomings and areas of improvement have emerged about some of the new requirements introduced by MiFID II, notably the requirement to consider the cost and complexity of equivalent products, the costs and benefits of switching investments and suitability reports. ESMA will update in 2021/2022 its guidelines on suitability to address some areas where a lack of convergence has emerged or/and to further clarify some of the new MiFID II requirements. The review of the guidelines also aim to align the suitability guidelines to the guidelines on appropriateness and execution-only and to the revised MiFID II Delegated Regulation on the topic of sustainable finance.

18/08 – ESMA publishes guidelines on the MIFID II/ MIFIR obligations on market data

These guidelines apply to national competent authorities (NCAs), trading venues, approved publication arrangements (APAs), consolidated tape providers (CTPs) and systematic internalisers (SIs). From 2022 onwards, ESMA will carry out supervision on APAs and CTPs, as stipulated in Regulation (EU) No 2019/2175. As of that time, references to NCAs should be read as references to NCAs supervising trading venues, SIs, and those carrying out supervision on their national APAs and CTPs exempted from ESMA supervision. While the guidelines are not addressed to ESMA, APAs and CTPs for which ESMA will be the responsible competent authority from 2022 onwards will themselves be subject to the guidelines. These guidelines apply in relation to Articles 13, 15(1) and 18(8) of MiFIR as further specified in Articles 6 to 11 of Delegated Regulation 2017/567 and of Articles 64(1) and (2) and 65(1) and (2) of MiFID II1 as further specified in Articles 84 to 89 of Delegated Regulation 2017/565. The guidelines apply in relation to market data that trading venues, SIs, APAs and CTPs have to make public for the purpose of the pre-trade and post-trade transparency regime. These guidelines apply from 1 January 2022.

24/08 – ESMA launches a consultation paper and Draft RTS under MIFIR regarding suitability assessments of Data Reporting Services Providers (DRSPs) management body members

Article 27f(5) MiFIR (see Annex II to this consultation paper for the full text of this Article) provides that ESMA shall develop draft RTS for the assessment of the suitability of the members of the management body of DRSPs, taking into account different roles and functions carried out by them and the need to avoid conflicts of interest between members of the management body and users of the Publication Arrangement (APA), Consolidated Tape Provider (CTP) or Approved Reporting Mechanism (ARM). This consultation paper represents the first stage in the development of the draft RTS and sets out proposals for their content on which ESMA is seeking the views of external stakeholders. ESMA invites all stakeholders to respond to this consultation by 24 September 2021. ESMA will finalise and submit its draft RTS to the European Commission by Q1/2022.

24/09 – ESMA consults on proposals for a review of the MIFID II best execution reporting regime

ESMA has launched a consultation on proposals for improvements to the MiFID II framework on best execution reports. These proposals aim at ensuring effective and consistent regulation and supervision and enhancing investor protection. Views are sought on informal proposals for new regulatory technical standards (RTS) that could replace the current versions of RTS 27 (applicable to execution venues) and RTS 28 (applicable to investment firms) in order to address shortcomings and make reports more useful and effective.  The consultation outcome will not lead to any immediate change to RTS 27 and 28, but will be taken into account in the assessment of the adequacy of the regime, including the future formal review of the technical standards as required under MiFID2 Quick Fix. The consultation closes on 23 December 2021.

30/09 – ESMA updated Q&A on MIFID II and MIFIR on transparency topics

With this update, ESMA amended the question 3/Part 3″Equity transparency” about default transparency regime for equity instruments; and added a question 22 / Part 4 “Non equity transparency ” about Reporting of Field 25 of RTS 2.

20/10 – Commission Delegated Regulation (EU) 2021/1833 of 14 July 2021 published in the Official Journal

On 20 October 2021, there was published in the Official Journal of the EU Commission Delegated Regulation (EU) 2021/1833 of 14 July 2021 supplementing MiFID II by specifying the criteria for establishing when an activity is to be considered to be ancillary to the main business at group level. This Regulation shall enter into force on 9 November 2021.


15/06 – MMF – EC adopts delegated regulation clarifying reverse repurchase agreement exemption

The Commission has adopted the Delegated Regulation to clarify the legal basis for the application of the exemption from the supplementary qualitative and quantitative requirements on eligible investments in reverse repurchase agreements, namely to specify that the exemption applies to transactions entered into with credit institutions, investment firms and insurance undertakings established in the EU or covered by an equivalence decision adopted under the Capital Requirements Regulation (CRR), MiFIR or the Solvency II Directive.

23/08 – Delegated Regulation on reverse repurchase agreement exemption published in Official Journal

Commission Delegated Regulation (EU) 2021/1383 amending Commission Delegated Regulation (EU) 2018/990 with regard to requirements for assets received by money market funds as part of reverse repurchase agreements has been published in the Official Journal. Eligible investments in reverse repurchase agreements by managers of money market funds are subject to supplementary qualitative and quantitative requirements, including a specific adjustment to the value of an asset (a haircut). However, those requirements do not apply to transactions entered into with credit institutions, investment firms and insurance undertakings that are established in the Union or that are covered by an equivalence decision. This Regulation will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union, on September 12, 2021.

11/10 – FSB publishes final report with policy proposals to enhance money market fund resilience

The report reflects public feedback received on a consultative version of the report, which the FSB published in June 2021. The policy proposals form part of the FSB’s work programme on non-bank financial intermediation and are intended to inform jurisdiction-specific reforms and any necessary adjustments to the policy recommendations for MMFs issued by IOSCO. Enhancing MMF resilience will help address systemic risks and minimise the need for future extraordinary central bank interventions to support the sector. The report considers the likely effects of policy options which address MMFs’ vulnerabilities.


16/07 – ESMA publishes Q&As on the Prospectus Regulation

ESMA has published updated Q&As on the Prospectus Regulation, in particular: (i) regarding updating information on new or expired registration documents in tripartite prospectuses; (ii) the application of Articles 1(6b) and 3(2), and; (iii) the application of Level 3 guidance to EU recovery prospectuses.


15/07 – EC launches a consultation on its proposal for a Regulation on packaged retail and insurance-based investment products

The Commission adopted a related proposal for a regulation amending the PRIIPs Regulation as regards an extension of the transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a KID. This transitional arrangement under Article 32 of the PRIIPs Regulation currently applies until 31 December 2021. The proposed regulation provides for an extension by six months to 30 June 2022. Feedback period: 15 July 2021 – 09 September 2021.

07/09 – EC adopts improved disclosure rules for retail investment products

The Delegated Regulation sets out what should be included in the so-called “PRIIPs KID”. The PRIIPs KID is a document private investors receive when they purchase certain investment products which summarises and explains the key elements of each investment products. The PRIIPs KID will now be the only document of its kind given to private investors across major retail investment products types, including investment funds, life-insurance investment products, and structured products. These rules will now be subject to scrutiny by the European Parliament and the Council. They are scheduled to apply from 1 July 2022. This is intended to coincide with targeted quick-fix amendments of the PRIIPs Regulation and the UCITS Directive, which will end the obligation for retail investment funds to publish UCITS KIIDs as of 1 July 2022, to avoid duplicate pre-contractual disclosures.

21/10 – ESAs invite stakeholders’ input on PRIIPs review

The input provided will feed into the ESAs’ technical advice to the European Commission on a review of the KID for PRIIPs. The request is closely connected to the European Commission’s Capital Markets Union Action Plan and its future strategy for retail investments in Europe. The ESAs are requesting information from stakeholders on a range of topics including the practical application of the existing KID such as its use by financial advisors or the use of digital media, the scope of the PRIIPs Regulation and  the degree of complexity and readability of the KID.  The call for evidence is open until Thursday, December 16, 2021. The ESAs also plan to hold a stakeholder event in Q1 2022 before finalising the advice.

03/11 – ECON committee adopts reports on PRIIPs KIDs amendments

The ECON committee has adopted two reports on the EU Commission’s proposals concerning the use of key information documents (KIDs) under the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation by management companies of undertakings for collective investment in transferable securities (UCITS). Among other things, the ECON Committee proposes that the Commission’s proposal to extend the transitional arrangement by six months to 30 June 2022 be extended by twelve months to 31 December 2022 in order to give the concerned management companies, investment companies and persons advising on, or selling, units of UCITS, sufficient time to prepare for the end of the transitional arrangement and thus for the obligation to produce a KID.


30/06 – EBA consults on technical standards on risk retention requirements under the securitisation regulation

EBA launches a consultation on draft RTS specifying the risk retention-related requirements for originators, sponsors, original lenders and servicers under Article 6(7) of the Securitisation Regulation. The EBA notes it has carried over a substantial part of the risk retention provisions it sets out in final draft RTS in 2018, with certain modifications. Comments on the consultation are due by 30 September 2021. The EBA will submit final draft RTS to the EU Commission for adoption.

23/07 – EC launches targeted consultation on the functioning of the EU securitisation framework

In order to deliver on the Commission’s commitment in the capital markets union (CMU) action plan and in order to prepare the report mandated by Article 46 of the Securitisation Regulation, this targeted consultation seeks stakeholders’ feedback on a broad range of issues. It covers the areas mandated by Article 46, namely: (i) the effects of the regulation; (ii) private securitisations; (iii) the need for an equivalence regime in the area of STS securitisations; (iv) disclosure of information on environmental performance and sustainability (Section 6) and; (v) the need for establishing a system of limited licensed banks performing the functions of SSPEs – securitisation special purpose entities (Section 7).  In addition, the questionnaire seeks feedback on a number of additional issues that have been identified and raised by stakeholders and by the Joint Committee of the ESAs as having an impact on the functioning of the securitisation framework. Consultation period : 23 July 2021 – 17 September 2021.

12/10 – ESMA publishes final report on draft technical standards for STS notification templates

In particular, the amendments provide guidance on the treatment of on-balance sheet (synthetic) securitisations, in light of their introduction to the STS framework. The final report sets out the final draft regulatory and implementing technical standards (RTS and ITS). The draft RTS specify the information that the originator, sponsor and Securitisation Special Purpose Entity are required to provide in order to comply with the STS notification requirements for synthetic securitisations under the Securitisation Regulation. The ITS specify the templates to be used for notifying ESMA. They are intended to build on existing STS notification technical standards for traditional securitisations whilst accounting for features specific to synthetic securitisations. The report has been submitted to the EU Commission for endorsement. In the interim, originators may use the temporary STS synthetic notification templates, which were first published in May 2021, and were updated following consultation feedback in April 2021.


01/07 – BIS publishes technical amendments finalised for minimum haircut floors for securities financing transactions

Basel Committee has finalised technical amendments to the calculation of minimum haircut floors for securities financing transactions. The regulatory treatment of collateral upgrade transactions has been clarified. The calculation formula applied to netting sets has been revised.

30/09 – ESMA updated Q&As on SFTR data reporting

Esma updated Q&A on SFTR data reporting and added a new question 11 about LEI changes due to mergers and acquisitions.


24/09 – ESMA consults on the review of the short selling regulation

ESMA has launched a consultation paper on the review of the Short Selling Regulation (SSR). The CP sets out suggestions for operational improvements and policy clarifications on:  (i) the calculation of net short positions, the prohibition of uncovered short selling and the locate rule under which short selling trades can take place; (ii) the mechanism for transparency of net short positions and the proposal to publish aggregated net short positions per issuer based on all individual positions and the scope of the exemptions for shares that are more heavily traded in a third country; and (iii) the introduction of a centralised notification and publication system to reduce reporting burdens, increase cost efficiency and foster ESMA’s monitoring capacity and coordination powers in case of potential threats at EU level. ESMA will consider the responses it receives to this consultation paper by 19 November 2021 and expects to publish a final report by the end of Q1 2022.

21/09 – ESMA consults on proposed amendments to address emergency measures and ‘meme stocks’

ESMA has published a consultation paper on proposed amendments to the SSR. The proposals are intended to strengthen the SSR in light of the lessons learnt from the emergency measures adopted by relevant competent authorities (RCAs) during the COVID-19 crisis and the high volatility which took place in the US markets due to ‘meme stocks’, such as GameStop and BlackBerry. In particular, ESMA is proposing to: (i) clarify certain provisions and improve procedures to ensure the issuance of short and long term short selling bans is sufficiently flexible to allow RCAs to manage emergency situations effectively; (ii) amend the framework for calculating net short positions (NSPs), the locate rule and the list of exempted shares; and (iii) improve the system for publishing and disclosing NSPs. Comments are due by 19 November 2021. ESMA intends to publish a final report in early 2022.

27/09 – EC adopts delegated regulation lowering net short positions notification threshold

The EU Commission has adopted a Delegated Regulation amending Article 5(2) of the SSR to permanently lower the notification threshold of net short positions in shares from 0.2% to 0.1%. The Delegated Regulation has been adopted following the expiry of temporary emergency decisions adopted by ESMA to lower the threshold in response to the COVID-19 pandemic, as well as the publication of an ESMA opinion in May 2021 noting that the lower threshold significantly improved transparency and monitoring of significant net short positions resulting in increased regulatory efficiency. The Delegated Regulation enters into force on the twentieth day following its publication in the Official Journal.  


22/09 – Insurance rules’ review: encouraging solid and reliable insurers to invest in Europe’s recovery

On 22 September 2021, the Commission adopted a comprehensive ‘review package’ of Solvency II rules. The overall aim is to ensure that insurers and reinsurers in the EU keep investing, and support the political priorities of the EU – in particular: (i) financing the post-Covid recovery; (ii) completing the capital markets union; (iii) channelling funds to implement the European green deal. The review also fills the gaps in the current rules and makes the insurance and reinsurance sector more resilient, so that it can weather future crises and protect policyholders. This is important because insurers have the potential to provide European businesses with long-term financing and offers vital protection to the EU economy, helping households and businesses manage their risk. Next steps: European Parliament and Council to negotiate the final legislative texts on the basis of the EC’s proposals.


04/06 – Taxonomy: EC adopts delegated regulation supplementing Regulation (EU) 2020/852 on the technical screening criteria

This Delegated Regulation has been adopted on June 6, 2021. It specifies the technical screening criteria under which certain economic activities qualify as contributing substantially to climate change mitigation and climate change adaptation and for determining whether those economic activities cause significant harm to any of the other relevant environmental objectives. The draft delegated act was sent to the Council and to the European Parliament and is therefore subject to the “scrutiny” procedure.

30/06 – EC launches initiative on a taxonomy complementary climate delegated act

Draft act is upcomming. Final adoption by the Commission is scheduled for the fourth quarter of 2021.

30/06 – IOSCO consults on sustainability-related regulatory and supervisory expectations in asset management

IOSCO is requesting feedback on proposed recommendations about sustainability-related regulatory and supervisory expectations in asset management. The IOSCO Consultation Report focuses on investor protection issues and proposes that securities regulators consider setting regulatory and supervisory expectations for asset managers regarding sustainability-related risks and opportunities. The recommendations cover five areas: (i) asset manager practices, policies, procedures and disclosure; (ii) product disclosure; (iii) supervision and enforcement; (iv) terminology, and; (v) financial and investor education.

02/07 – EBA publishes its report on management and supervision of ESG risks for credit institutions and investment firms

The EBA published its report on ESG risks management and supervision. The report, which is a key component of the EBA’s broader ESG work, provides a comprehensive proposal on how ESG factors and ESG risks should be included in the regulatory and supervisory framework for credit institutions and investment firms.

06/07 – EC adopts delegated regulation on the obligation for certain companies to publish non-financial information

The Delegated Act specifies the disclosure obligations under Article 8 of the Taxonomy Regulation. The rules set out in the Delegated Act allows companies to translate the technical screening criteria of the Climate Delegated Act (and the future Environmental Delegated Act) into quantitative economic performance indicators – the KPIs – which will be publicly disclosed (e.g. the percentage of environmentally sustainable economic activities in a company’s turnover or capital expenditure). This disclosure will help investors and the public to understand the companies’ trajectory towards sustainability through the annual publication of their KPIs associated with environmentally sustainable economic activities. The Delegated Act will therefore increase transparency in the market and help prevent greenwashing by informing investors about companies’ environmental performance.

06/07 – EC adopts a communication on renewed sustainable finance strategy

The EU Commission has adopted a set of measures intended to build a stronger European sustainable finance system. The EU Commission has created a sustainable finance strategy focused on six sets of actions: (i) extending the existing sustainable finance toolbox to facilitate access to transition finance; (ii) improving the inclusiveness of small and medium-sized enterprises (SMEs), and consumers, by giving them the right tools and incentives to access transition finance; (iii) enhancing the resilience of the economic and financial system to sustainability risks; (iv) increasing the contribution of the financial sector to sustainability; (v) ensuring the integrity of the EU financial system and monitoring its transition to sustainability; and (vi) developing international sustainable finance initiatives and standards, and supporting EU partner countries.

08/07 – Ecofriendly investment – EU standard for ‘green bonds’

The shift to a low-carbon economy involves investing in ecofriendly assets and projects. Getting public and private investors to buy ‘green bonds’ is an important way of raising the necessary capital. This initiative aims to attract more finance for sustainable investment by establishing an EU standard for ‘green bonds’, setting out clearly which assets and projects the money can be used for. It builds on a June 2019 report by the Commission’s technical expert group on sustainable finance. Feedback period is open until 27 September 2021.

08/07 – EC announces that SFDR RTS are delayed until 1 July 2022

The EU Commission announced that the RTS supplementing SFDR will be delayed by six months. Several RTS are expected under SFDR: (i) RTS were required on the content, methodologies and presentation of disclosures. European Supervisory Authorities (ESAs) have prepared draft RTS and submitted them to the Commission on 4 February 2021; (ii) the Taxonomy Regulation amended SFDR to create new RTS empowerments on taxonomy-related disclosures. On 17 March 2021, the ESAs launched a consultation on this additional set of draft RTS. The EC intends to consolidate all the RTS in a single delegated act and defer the dates of application of 1 January 2022 to 1 July 2022.

14/07 – EC consults on extending EU taxonomy environmental objectives and on new social taxonomy

The EU Commission’s Platform on Sustainable Finance expert group has published for consultation two draft reports on an extended taxonomy linked to environmental objectives and on a suggested new social taxonomy structure.

The draft report on taxonomy extension options linked to environmental objectives examines the premises, issues and options for and against extending the EU Taxonomy beyond green to include significantly harmful (SH) activities and no significant impact (NSI) activities, both relating to environmental sustainability within the overall EU sustainable finance framework.

The draft report on a suggested new social taxonomy explores the need to extend the scope of the EU Taxonomy to include social objectives.  The report suggests vertical and horizontal social taxonomy structure dimensions. The vertical dimension focuses on products and services for basic human needs and basic infrastructure. The horizontal dimension considers the impacts on different groups of stakeholders affected by economic activities such as workers, consumers and communities and it also covers corporate governance.

Comments on both consultations are due by 27 August 2021. The Platform intends to submit final advice reports to the EU Commission in autumn 2021.

26/07 – SFDR – EC publishes answers to questions submitted by ESAs

The EU Commission has published its answers to a series of questions submitted by the Joint Committee of ESAs concerning the interpretation of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR). The EC adopted the answers on 6 July 2021 and the full set of Q&As have now been published by ESMA. Amongst other things, the Q&A address: (i) whether SFDR applies to registered (sub-threshold) AIFMs; (ii) whether SFDR applies to non-EU AIFMs; (iii) the 500-employee criterion; (iv) whether a product to which Article 9(1), (2) or (3) of SFDR applies must only invest in sustainable investments; and (v) whether the name of a product, which may include words like ‘sustainable’, ‘sustainability’, or ‘ESG’ can be considered to qualify a product to be promoting an environmental or social characteristic or to be having sustainable investment as its objective.

26/07 – IOSCO consults on ESG ratings and data providers

IOSCO issued its Consultation Report on ESG Ratings and Data Products Providers to seek feedback on a set of proposed recommendations. The Consultation Report notes that “regulators may wish to consider focusing greater attention on the use of ESG rating and data products and the activities of ESG rating and data products providers in their jurisdictions”. This is followed by a set of proposed recommendations addressed to ESG rating and data products providers. Comments are due by September 6, 2021.

02/08 – Six amending delegated acts have been published in the Official Journal to integrate sustainability matters in sectoral legislation

These texts were expected since the publication of drafts by the EC in April 2021. The delegated acts amends sectoral legislation (such as MiFID, IDD, UCITS, AIFMD) to integrate sustainability matters in fiduciary duties, investment and insurance advice, portfolio management and distribution in order to ensure that financial firms, e.g. advisers, asset managers, portfolio managers, or insurers, include sustainability in their procedures and their investment advice to clients. One item of particular importance is the integration of the sustainability preferences of clients in the suitability process under MiFID or the distribution of products under IDD. The final version of the text do not deviate from the April drafts. Another item of interest is the application date (August 2022) as opposed to October 2022 as expected in the draft version.

For MiFID and IDD, these texts also integrate sustainability matters (i.e.: sustainability risks, sustainability factors, sustainability preferences) in the product governance obligations.

  • Commission Delegated Regulation (EU) 2021/1253 of 21 April 2021 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms (Application date: 2 August 2022)
  • Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations (Transposition date: 21 August 2022, Application date: 22 November 2022)
  • Commission Delegated Regulation (EU) 2021/1256 of 21 April 2021 amending Delegated Regulation (EU) 2015/35 as regards the integration of sustainability risks in the governance of insurance and reinsurance undertakings (Application date: 2 August 2022)
  • Commission Delegated Regulation (EU) 2021/1257 of 21 April 2021 amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the integration of sustainability factors, risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules on conduct of business and investment advice for insurance-based investment products (Application date: 2 August 2022)
  • Commission Delegated Directive (EU) 2021/1270 of 21 April 2021 amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for Undertakings for Collective Investment in Transferable Securities (UCITS) (Transposition date: 31 July 2022, Application Date: 1 August 2022)
  • Commission Delegated Regulation (EU) 2021/1255 of 21 April 2021 amending Delegated Regulation (EU) No 231/2013 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers (Application date: 1 August 2022)
  • In addition, a corrigendum was also published on the same day to correct to cross-references errors in the MiFID Delegated Regulation 2017/565:
  • Commission Delegated Regulation (EU) 2021/1254 of 21 April 2021 correcting Delegated Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (Application date: 22 August 2022).
03/08 – Taxonomy – Platform on sustainable finance calls for feedback on preliminary recommendations for technical screening criteria for the EU taxonomy

This call for feedback is part of ongoing work by the Platform on sustainable finance, which was set up by the Commission to provide advice on the further development of the EU taxonomy. The purpose of this call for feedback by the Platform is to gather further evidence and feedback on the proposed draft recommendations for technical screening criteria. The draft report focuses primarily on presenting a first set of priority economic activities and draft recommendations for associated substantial contribution and do no significant harm (DNSH) technical screening criteria in relation to the 4 non-climate environmental objectives covering water, circular economy, pollution prevention, and biodiversity & ecosystems. Feedback period : 3 August to 24 September 2021.

22/10 – ESAs publish final report on SFDR RTS

The RTS, once adopted by the European Commission, will complete the level 1 of SFDR which is applicable since 10 March 2021. They are composed of the first set of draft RTS that were published on 4 February 2021, amended by another set of RTS that are based on the consultation that took place in Q2 2021 on Taxonomy-related sustainability disclosures. For precontractual disclosures and periodic reports, the templates have been adapted to include information about the taxonomy-alignment of investments of a financial product with a sustainable objective. While the RTS do not deviate significantly from the previous versions and consultations, a few key changes have made to the methodology of calculation of the taxonomy alignment. The expected application date is 1 July 2022.