BACKGROUND

The new Anti-Money Laundering Package consists of the following acts:

• Regulation (EU) 2024/1620 of the European Parliament and of the Council of May 31 2024 establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism and amending Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010;
• Regulation (EU) 2024/1624 of the European Parliament and of the Council of May 31 2024 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing;
• Directive (EU) 2024/1654 of the European Parliament and of the Council of May 31 2024 amending Directive (EU) 2019/1153 as regards access by competent authorities to centralised bank account registries through the interconnection system and technical measures to facilitate the use of transaction records;
• Directive (EU) 2024/1640 of the European Parliament and of the Council of May 31 2024 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Directive (EU) 2019/1937, and amending and repealing Directive (EU) 2015/849.

WHAT'S NEW?

On June 19 2024, the European Union published the new Anti-Money Laundering Package.

Regulation (EU) 2024/1620 establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA)

Experience with the current anti-money laundering and countering the financing of terrorism (AML/CFT) framework, which relies heavily on the national implementation of AML/CFT measures, has disclosed weaknesses not only with regard to the efficient functioning of that framework of the Union but also with regard to integrating international recommendations. Those weaknesses have led to the emergence of new obstacles to the proper functioning of the internal market, both due to risks within the internal market as well as external threats facing it.

The cross-border nature of crime and criminal proceeds endangers the efforts of the Union financial system with regard to the prevention of money laundering and financing of terrorism. It is necessary to enhance those efforts at Union level through the creation of an authority responsible for contributing to the implementation of harmonised rules in that domain. In addition, such an authority should pursue a harmonised approach to strengthen the Union’s existing preventive AML/CFT framework and specifically AML/CFT supervision and cooperation between Financial Intelligence Units (FIUs). That approach is intended to reduce divergences in national legislation and supervisory practices and introduce structures that benefit the smooth functioning of the internal market in a determined manner and should, consequently, be based on Article 114 of the Treaty on the Functioning of the European Union (TFEU).

Therefore, a Union authority for anti-money laundering and countering the financing of terrorism (the Authority) should be established. The creation of the Authority is crucial for ensuring the efficient and adequate supervision of obliged entities that pose a high risk with regard to money laundering/terrorist financing (‘ML/TF’), strengthening common supervisory approaches for all other obliged entities, and facilitating joint analyses and cooperation between FIUs.

To bring AML/CFT supervision to an efficient and uniform level across the Union, it is necessary to provide the Authority with the following powers: direct supervision of a certain number of selected obliged entities in the financial sector, including crypto-asset service providers; monitoring, analysis and exchange of information concerning ML/TF risks affecting the internal market; coordination and oversight of AML/CFT supervisors of the financial sector; coordination and oversight of AML/CFT supervisors of the non-financial sector, including self-regulatory bodies; and the coordination and support of FIUs.

The powers of the Authority aim to allow it to improve AML/CFT supervision in the Union in various ways. With respect to selected obliged entities, the Authority should ensure group-wide compliance with the requirements laid down in the AML/CFT framework and any other legally binding Union acts that impose AML/CFT-related obligations on financial institutions. With respect to financial supervisors, the Authority should in particular carry out periodic reviews to ensure that all financial supervisors perform their tasks adequately. It should also investigate systematic failures of supervision resulting from breaches, or the non-application or incorrect application, of Union law. With respect to non-financial supervisors, including self-regulatory bodies where appropriate, the Authority should coordinate peer reviews of supervisory standards and practices and request non-financial supervisors to ensure the observance of AML/CFT requirements in their sphere of competence.

Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AMLR)

The main challenge identified in respect of the application of the provisions of Directive (EU) 2015/849 that lay down obligations for obliged entities, is the lack of direct applicability of the rules set out in those provisions and a fragmented approach along national lines. Although those rules have existed and evolved over three decades, they are still implemented in a manner not fully consistent with the requirements of an integrated internal market. Therefore, it is necessary that rules on matters currently covered in Directive (EU) 2015/849 which could be directly applicable by the obliged entities concerned are addressed in a Regulation in order to achieve the desired uniformity of application.

This new instrument is part of a comprehensive package that aims to strengthen the Union’s framework for anti-money laundering and countering the financing of terrorism (‘AML/CFT’). Together, this Regulation, Directive (EU) 2024/1640 of the European Parliament and of the Council and Regulations (EU) 2023/1113  and (EU) 2024/1620 of the European Parliament and of the Council will form the legal framework governing the AML/CFT requirements to be met by obliged entities and underpinning the Union’s AML/CFT institutional framework, including the establishment of an Authority for anti-money laundering and countering the financing of terrorism (AMLA).

Money laundering and terrorist financing are frequently carried out in an international context. Measures adopted at Union level, without taking into account international coordination and cooperation, would have very limited effect. The measures adopted by the Union in that field should therefore be compatible with, and at least as stringent as, actions undertaken at international level. Union action should continue to take particular account of the Financial Action Task Force (FATF) Recommendations and instruments of other international bodies active in the fight against money laundering and terrorist financing. With a view to reinforcing the efficacy of the fight against money laundering and terrorist financing, the relevant Union legal acts should, where appropriate, be aligned with the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation adopted by the FATF in February 2012 (revised FATF Recommendations) and the subsequent amendments to such standards.

The institutions and persons covered by this Regulation play a crucial role as gatekeepers of the Union’s financial system and should therefore take all necessary measures to implement the requirements of this Regulation with a view to preventing criminals from laundering the proceeds of their illegal activities or from financing terrorism. Measures should also be put in place to mitigate any risk of non-implementation or evasion of targeted financial sanctions.

Directive (EU) 2024/1654 amending Directive (EU) 2019/1153 as regards access by competent authorities to centralised bank account registries through the interconnection system and technical measures to facilitate the use of transaction records

Directive (EU) 2019/1153 of the European Parliament and of the Council enables authorities designated by Member States among their authorities competent for the prevention, detection, investigation or prosecution of criminal offences to access and search, subject to certain safeguards and limitations, bank account information. Directive (EU) 2019/1153 defines bank account information as certain information contained in the centralised automated mechanisms put in place by Member States pursuant to Directive (EU) 2015/849 of the European Parliament and of the Council . Such centralised automated mechanisms are referred to in Directive (EU) 2019/1153 as centralised bank account registries.

Transaction records provide crucial information for criminal investigations. However, financial investigations are hampered by the fact that financial institutions and credit institutions, including crypto-asset service providers, provide authorities competent for the prevention, detection, investigation or prosecution of criminal offences with transaction records in different formats, which are not immediately ready for analysis. The cross-border nature of most investigations into serious criminal offences, the disparity of formats used for providing transaction records and difficulties in processing transaction records hamper the exchange of information among Member States’ competent authorities and the development of cross-border financial investigations. In order to improve the capacity of competent authorities to carry out financial investigations, this Directive sets out measures to ensure that financial institutions and credit institutions across the Union, including crypto-asset service providers, provide transaction records in a format that is easy for competent authorities to process and analyse.

Directive (EU) 2024/1640 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AMLD6)

This Directive lays down rules concerning:

• the measures applicable to sectors exposed to money laundering and terrorist financing, at national level;
• the requirements in relation to registration of, identification of, and checks on, senior management and beneficial owners of obliged entities;
• the identification of money laundering and terrorist financing risks at Union and Member State level;
• the set-up of and access to beneficial ownership and bank account registers and access to real estate information;
• the responsibilities and tasks of Financial Intelligence Units (FIUs);
• the responsibilities and tasks of bodies involved in the supervision of obliged entities;
• cooperation between competent authorities and cooperation with authorities covered by other Union legal acts.

WHAT'S NEXT?

The two Directives and the AMLR entered into force on June 9 2024. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with them by 10 July 2027, except in relation to obliged entities referred to in AMLR Article 3, points (3)(n) and (o), to which it shall apply from July 10 2029.

The Regulation establishing AMLA entered into force on June 26 2024 and applies from July 1 2025. However, Articles 1, 4, 49, 53, 54, 55, 57 to 66, 68 to 71, 100, 101 and 107 shall apply from June 26 2024, and Article 103 shall apply from December 31 2025.

On June 18 2024, the European Commission published a targeted consultation on artificial intelligence (AI) in the financial sector.

The targeted consultation will gather input from all financial services stakeholders including companies and consumer associations. Views are particularly welcome from financial firms that provide or deploy/use AI systems. This consultation is designed for respondents developing or planning to develop or use AI applications in financial services.

The present targeted consultation will inform the Commission services on the concrete application and impact of AI in financial services, considering the developments in the different financial services use cases.

The views from stakeholders will support the Commission services in their assessment of market developments and risks related to AI and in the implementation of the AI Act in the financial sector. The consultation is focused on the objectives of the financial sector acquis and the AI Act and is not intended to focus on other policy objectives such as competition policy. It is intended to improve the effective implementation of these legal frameworks.

This targeted consultation will include questions with multiple choice and open answers. The questionnaire contains three parts:

• a first part with general questions on the development of AI;
• a second part with questions related to specific use cases in finance;
• and a third part on the AI Act related to the financial sector.

The consultation closes on September 13 2024.

On June 13 2024, the Council of the European Union agrees position on the General Data Protection Regulation (GDPR) enforcement rules.

The GDPR requires national data protection authorities, which are responsible for enforcing the GDPR, to cooperate when a data protection case concerns cross-border processing. This is the case for instance when the complainant resides in a different member state than the company under investigation.

Once adopted, the regulation will provide tools to speed up the process of handling cross-border complaints filed by citizens or organisations, and any follow-up investigations. This is notably thanks to the harmonisation of the requirements for a cross-border action to be admissible. Wherever in the EU a citizen files a complaint relating to cross-border data processing, the admissibility will be judged on the basis of the same information.

It also clarifies the procedural deadlines and procedural steps of an investigation and for the adoption of a binding opinion by the European Data Protection Board (EDPB), the organisation which brings together all national data protection authorities, in case of disagreement between data protection authorities.

The Council agreed that throughout the cooperation procedure, national data protection authorities should be able to provide their views to the lead supervisory authority and that cooperation tools provided by the GDPR should be used in order to aim at consensus early on in investigations.

The new regulation will harmonise the requirements and procedures for the complainant to be heard if a complaint is rejected and provides common rules on the involvement of the complainant in the procedure. 

The right to be heard for the company or organisation that is being investigated is also ensured at key stages throughout the procedure, including during dispute resolution by the EDPB.

This adoption of a general approach will allow the Council to start negotiations with the European Parliament, which has agreed its position in April 2024, in order to agree on a final legislative text."

On June 28 2024, the European Securities and Markets Authority (ESMA) updated consolidated Q&As on the Packaged retail and insurance-based investment products (PRIIPs) Key Information Document (KID).

The update relates to the following question:

Do FX forwards fall within the scope of the PRIIPs Regulation?

Answer: Yes. 

Article 4(1) of the PRIIP Regulation defines PRIP as an investment, where, regardless of the legal form of the investment, the amount repayable to the retail investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the retail investor. Under Article 4(3), PRIIPs are defined as a product that is a PRIP and/or an insurance-based investment product. 

FX forwards are financial instruments under point 4 of Annex C to Directive 2014/65/EU. Their value, and consequently the amount repayable to investors, fluctuates during the holding period in response to changes in relevant interest rates and FX rates. As a result, they should be considered as PRIPs within the meaning of Article 4(1) and as PRIIPs within the meaning of Article 4(3) of the PRIIPs Regulation.

BACKGROUND

Under the Digital Operational Resilience Act (DORA), Regulatory Technical Standards (RTS) are required to specify the following:

• The criteria for the classification of ICT-related incidents and cyber threats, setting out materiality thresholds and specifying the details of reports of major incidents;
• The contractual arrangements on the use of ICT services supporting critical or important functions provided by ICT third-party service providers;
• ICT risk management tools, methods, processes, and policies and the simplified ICT risk management framework."

WHAT'S NEW?

On June 25 2024, the European Union published the Commission Delegated Regulations on the Digital Operational Resilience Act (DORA) with regard to specific Regulatory Technical Standards (RTS).

The Regulations are as follows:

- Commission Delegated Regulation (EU) 2024/1772 of March 13 2024 supplementing Regulation (EU) 2022/2554 of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for the classification of ICT-related incidents and cyber threats, setting out materiality thresholds and specifying the details of reports of major incidents.

Regulation (EU) 2022/2554 (DORA) aims to harmonise and streamline reporting requirements for ICT-related incidents and for operational or security payment-related incidents concerning credit institutions, payment institutions, account information service providers, and electronic money institutions (‘incidents’). Considering that the reporting requirements cover 20 different types of financial entities, the classification criteria and the materiality thresholds for determining major incidents and significant cyber threats should be specified in a simple, harmonised and consistent way that takes into account the specificities of the services and activities of all relevant financial entities.

In order to ensure proportionality, the classification criteria and the materiality thresholds should reflect the size and overall risk profile, and the nature, scale and complexity of the services of all financial entities. Moreover, the criteria and materiality thresholds should be designed in such a way that they apply consistently to all financial entities, irrespective of their size and risk profile, and do not pose unproportional reporting burden to smaller financial entities. However, in order to address situations where a significant number of clients are affected by an incident which as such does not exceed the applicable threshold, an absolute threshold mainly targeted at larger financial entities should be set out.

The classification criteria should ensure that all relevant types of major incidents are captured. Cyber attacks related to intrusion into network or information systems may not necessarily be captured by many classification criteria. However, they are important since any intrusion in network and information systems may harm the financial entity. Accordingly, the classification criteria ‘critical services affected’ and ‘data losses’ should be specified in such a way as to capture these types of major incidents, in particular unauthorised intrusions which, even if the impacts are not immediately known, may lead to serious consequences, in particular data breaches and data leakages.

Since credit institutions are subject both to the framework for classification of incidents under Article 18 of Regulation (EU) 2022/2554 and to the operational risk framework under Commission Delegated Regulation (EU) 2018/959, the approach for assessing the economic impact of an incident based on the calculation of costs and losses should, to the greatest possible extent, be consistent across both frameworks to avoid introducing incompatible or contradicting requirements.

The criterion in relation to the geographical spread of an incident set out in Article 18(1), point (c), of Regulation (EU) 2022/2554 should focus on the cross-border impact of the incident, since the impact of an incident on the activities of a financial entity within a single jurisdiction will be captured by the other criteria set out in that Article.

Given that the classification criteria are interdependent and linked to each other, the approach for identifying major incidents which are to be reported in accordance with Article 19(1) of Regulation (EU) 2022/2554 should be based on a combination of criteria, where some criteria that are closely related to the definitions of an ICT-related incident and a major ICT-related incident set out in Article 3(8) and (10) of Regulation (EU) 2022/2554 should have more prominence in the classification of major incidents than other criteria.

With a view to ensure that the reports on and notifications of major incidents received by competent authorities under Article 19(1) of Regulation (EU) 2022/2554 serve both for supervisory purposes and for the prevention of contagion across the financial sector, the materiality thresholds should make it possible to capture major incidents, by focusing, inter alia, on the impact on entity specific critical services, the specific absolute and relative thresholds of clients or financial counterparts, transactions that indicate a material impact on the financial entity, and the significance of the impact in other Member States.

Incidents that affect ICT services or network and information systems that support critical or important functions, or financial services requiring authorisation or malicious unauthorised access to network and information systems that support critical or important functions, should be considered as incidents affecting critical services of the financial entities. Malicious, unauthorised access to network and information systems that support critical or important functions of financial entities poses serious risks to the financial entity and, as they may affect other financial entities, should always be considered as major incidents which are to be reported.

Recurring incidents that are linked through a similar apparent root cause, which individually are not major incidents, can indicate significant deficiencies and weaknesses in the financial entity’s incident and risk management procedures. Therefore, recurring incidents should be considered as major collectively where they occur repeatedly over a certain period of time.

Considering that cyber threats can have a negative impact on the financial entity and sector, the significant cyber threats which financial entities may submit should indicate the probability of materialisation and the criticality of the potential impact. Accordingly, to ensure a clear and consistent assessment of the significance of cyber threats, the classification of a cyber threat as significant should be dependent on the likelihood that the classification criteria for major incidents and their threshold would be met if the threat had materialised, on the type of cyber threat and on the information available to the financial entity.

- Commission Delegated Regulation (EU) 2024/1773 of March 13 2024 supplementing Regulation (EU) 2022/2554 of the European Parliament and of the Council with regard to regulatory technical standards specifying the detailed content of the policy regarding contractual arrangements on the use of ICT services supporting critical or important functions provided by ICT third-party service providers.

When applying the policy, ICT intra-group service providers, including those fully or collectively owned by financial entities within the same institutional protection scheme, should be considered as ICT third-party services providers. The risks posed by ICT intra-group service providers may be different but the requirements applicable to them are the same under Regulation (EU) 2022/2554. In a similar way, the policy should apply to subcontractors that provide ICT services supporting critical or important functions or material parts thereof to ICT third-party service providers, where a chain of ICT third-party service providers exists.

The ultimate responsibility of the management body in managing a financial entity’s ICT risk is an overarching principle which is also applicable regarding the use of ICT third-party service providers. This responsibility should be further translated into the continuous engagement of the management body in the control and monitoring of ICT risk management, including in the adoption and review, at least once per year, of the policy.

To ensure appropriate reporting to the management body, the policy should clearly specify and identify the internal responsibilities for the approval, management, control and documentation of contractual arrangements on the use of ICT services supporting critical or important functions provided by ICT third-party service providers (‘contractual arrangements’), including the ICT services provided under contractual arrangements referred to in Article 28(1), point (a), of Regulation (EU) 2022/2554.

In order to take into account all possible risks that may arise when contracting ICT services supporting critical or important function, the structure of the policy should follow all the steps of the each main phase of the life cycle for contractual arrangements with third-party providers.

To mitigate the risks identified, the policy should specify the planning of contractual arrangements, including the risk assessment, the due diligence, and the approval process for new or material changes to those contractual arrangements. In order to manage the risks that may arise before entering into a contractual arrangement with an ICT third-party service provider, the policy should specify an appropriate and proportionate process to select and assess the suitability of prospective ICT third-party service providers and require that the financial entity takes into account a non-exhaustive list of elements that the ICT third-party service providers should have in place. The list should include elements related to the business reputation of the service providers, their financial, human and technical resources, their information-security, their organisational structure, including risk management, and their internal controls.

- Commission Delegated Regulation (EU) 2024/1774 of March 13 2024 supplementing Regulation (EU) 2022/2554 of the European Parliament and of the Council with regard to regulatory technical standards specifying ICT risk management tools, methods, processes, and policies and the simplified ICT risk management framework

Financial entities subject to Regulation (EU) 2022/2554 should have a certain flexibility in the way they comply with any requirements as regards ICT security policies, procedures, protocols and tools, and as regards any simplified ICT risk management framework. For that reason, financial entities should be allowed to use any documentation they have already to comply with any documentation requirements that flow from those requirements. It follows that the development, documentation, and implementation of specific ICT security policies should be required only for certain essential elements, taking into account, inter alia, leading industry practices and standards. Furthermore, to cover specific technical implementation aspects, it is necessary to develop, document and implement ICT security procedures to cover specific technical implementation aspects, including capacity and performance management, vulnerability and patch management, data and system security, and logging. To ensure the correct implementation over time of ICT security policies, procedures, protocols, and tools referred to in Title II, Chapter I of this Regulation, it is important that financial entities correctly assign and maintain any roles and responsibilities relating to ICT security, and that they lay down the consequences of non-compliance with ICT security policies or procedures. To limit the risk of conflicts of interests, financial entities should ensure the segregation of duties when assigning ICT roles and responsibilities. To ensure flexibility and to simplify the financial entities’ control framework, financial entities should not be required to develop specific provisions on the consequences of non-compliance with ICT security policies, procedures and protocols referred to in Title II, Chapter I of this Regulation where such provisions are already set out in another policy or procedure. In a dynamic environment where ICT risks constantly evolve, it is important that financial entities develop their set of ICT security policies on the basis of leading practices, and where applicable, of standards as defined in Article 2, point (1), of Regulation (EU) No 1025/2012 of the European Parliament and of the Council. This should enable financial entities referred to in Title II of this Regulation to remain informed and prepared in a changing landscape.

To ensure their digital operational resilience, financial entities referred to in Title II of this Regulation should, as part of their ICT security policies, procedures, protocols, and tools, develop and implement an ICT asset management policy, capacity and performance management procedures, and policies and procedures for ICT operations. Those policies and procedures are necessary to ensure the monitoring of the status of ICT assets throughout their lifecycles, so that those assets are used and maintained effectively (ICT asset management). Those policies and procedures should also ensure the optimisation of ICT systems’ operation and that the ICT systems’ and capacity’s performance meets the established business and information security objectives (capacity and performance management). Lastly, those policies and procedures should ensure the effective and smooth day-to-day management and operation of ICT systems (ICT operations), thereby minimising the risk of loss of confidentiality, integrity, and availability of data. Those policies and procedures are thus necessary to ensure the security of networks, to provide for adequate safeguards against intrusions and data misuse, and to preserve the availability, authenticity, integrity, and confidentiality of data.

To ensure a proper management of the legacy ICT systems risk, financial entities should record and monitor end-dates of ICT third party support services. Because of the potential impact that a loss of confidentiality, integrity and availability of data may have, financial entities should focus on those ICT assets or systems that are critical for business operation when recording and monitoring those end-dates.

Cryptographic controls can ensure the availability, authenticity, integrity, and confidentiality of data. Financial entities referred to in Title II of this Regulation should therefore identify and implement such controls on the basis of a risk-based approach. To that end, financial entities should encrypt the data concerned at rest, in transit or, where necessary, in use, on the basis of the results of a two-pronged process, namely data classification and a comprehensive ICT risk assessment. Given the complexity of encrypting data in use, financial entities referred to in Title II of this Regulation should encrypt date in use only where that would be appropriate in light of the results of the ICT risk assessment. Financial entities referred to in Title II of this Regulation should, however, be able, where encryption of data in use is not feasible or is too complex, to protect the confidentiality, integrity, and availability of the data concerned through other ICT security measures. Given the rapid technological developments in the field of cryptographic techniques, financial entities referred to in Title II of this Regulation should remain abreast of relevant developments in cryptanalysis and consider leading practices and standards. Financial entities referred to in Title II of this Regulation should hence follow a flexible approach, based on risk mitigation and monitoring, to deal with the dynamic landscape of cryptographic threats, including threats from quantum advancements.

WHAT'S NEXT?

The Regulations enter into force on July 15 2024.

On June 6 2024, the European Banking Authority (EBA) published governance regulatory products under the Markets in Crypto-Assets Regulation (MiCA).

EBA has been actively working on shaping the regulatory landscape for crypto assets by publishing three regulatory products on governance, conflicts of interest and remuneration under MiCAR. These products are part of the EBA’s ongoing efforts to foster a transparent, secure, and well-regulated crypto-assets market.

The package of EBA regulatory products on governance and remuneration includes:

Guidelines on the minimum content of the governance arrangements for issuers of ARTs that specify further the various governance provisions in MiCAR, taking into account the principle of proportionality. In addition, these Guidelines clarify the tasks, responsibilities and organisation of the management body, and the organisational arrangements of issuers, including the sound management of risks across all the three lines of defence.

Final draft Regulatory Technical Standards (RTS) on the minimum content of the governance arrangements on the remuneration policy. The RTS are applicable to issuers of significant asset-referenced tokens (ARTs) and electronic money institutions issuing significant e-money tokens (EMTs), and, where Member States require to apply Article 45(1) MiCAR, to issuers of non-significant EMTs.

To ensure that remuneration policies promote the sound and effective risk management of issuers, do not create incentives to reduce risk standards and ensure the cross sectoral consistency, these final draft RTS set out a framework similar to the remuneration framework for investment firms that aims at achieving the same regulatory objectives.

Final draft RTS on conflicts of interest for issuers of ARTs that specify the requirements for policies and procedures on conflicts of interest (CoI). Issuers of ARTs shall implement and maintain effective policies and procedures to identify, prevent, manage and disclose conflicts of interest. For CoI to be effectively managed, the policies and procedures should ensure that there are sufficient resources available for their management.

The final draft RTS underline that Issuers of ARTs should pay particular attention to conflicts of interest that could arise in relation to the reserve of assets. Where the issuer of ARTs is a member of a group, the policies and procedures must also take into account any circumstances which may give rise to a CoI due to the structure and business activities of other entities within the group.

The EBA guidelines on the minimum content of the governance arrangements for issuers of ARTs have been developed in accordance with Article 34(13) of MiCAR which mandates the EBA in close cooperation with European Securities and Markets Authority (ESMA) and European Central Bank (ECB) to issue guidelines to specify the minimum content of the governance arrangements for issuers of ARTs in particular regarding the monitoring tools for the risks; the business continuity plans; the internal control mechanism; and the audits, including the minimum documentation to be used in the audits. These Guidelines apply from three months after the date of publication on the EBA’s website of the guidelines in all EU official languages.

The RTS on the minimum content of the governance arrangements on the remuneration policy have been developed in accordance with Article 45(7) of MiCAR which mandates the EBA in close cooperation with ESMA to develop the RTS specifying the main governance processes regarding the adoption and maintenance of the remuneration policy and the main policy’s elements that should be adopted by the issuer as part of the remuneration policy. The draft regulatory technical standards will be submitted to the Commission for endorsement following which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union.

The RTS on conflicts of interest for issuers of ARTs have been developed in accordance with Article 32(5) of MiCAR which mandates the EBA to specify the requirements for the conflicts of interest policies and procedures for issuers of asset-referenced tokens as well as the details and methodology for the content of the disclosure. It has been elaborated in close cooperation with the European Securities and Markets Authority (ESMA), who is mandated to develop a similar RTS for crypto-asset service providers (CASPs) under Article 72(5) of MiCAR. The EBA will submit these draft RTS to the European Commission for adoption. Once the RTS entered into force, the RTS will be directly applicable in all Member States.

On June 19 2024, the European Banking Authority (EBA) published a package of technical standards and guidelines under Markets in Crypto-Assets Regulation (MiCA) on the topics of reporting, liquidity stress testing and supervisory colleges.

This package completes the delivery of EBA technical standards under MiCAR. The package of EBA regulatory products comprises:

• Final draft Regulatory Technical Standards (RTS) on the use of asset-referenced tokens (ARTs) and electronic money tokens (EMTs) denominated in a non-EU currency as a means of exchange. The draft RTS specify the methodology to be applied by issuers of ARTs and of EMTs denominated in a non-EU currency for estimating the number and value of transactions associated to uses of these tokens “as a means of exchange”, for the purpose of the reporting under MiCAR. The drat RTS aim at contributing to the objective of MiCAR of monitoring and preventing risks that the wide use of ARTs and of EMTs denominated in a non-EU currency as a means of exchange may have on monetary policy transmission and monetary sovereignty within the EU.
• Final draft Implementing Technical Standards (ITS) on the reporting obligations of issuers of ARTs and EMTs denominated in a non-EU currency, and of crypto-asset service providers (CASPs). The final draft ITS provide specific templates and related instructions for the issuers of ARTs and of EMTs denominated in a non-EU currency to comply with their reporting obligations. These reporting templates will assist the significance assessment of the tokens; provide information on whether the threshold defined in Article 23 of MiCAR has been met, therefore restricting the issuance of a token; and being the only reporting obligation set out in MiCAR for the issuer, serves general supervisory reporting purposes as well. The draft ITS also provide templates and related instructions that CASPs must provide to issuers of ARTs and of EMTs denominated in a non-EU currency. The draft ITS specify the reporting frequency and related reference and remittance dates as well. The EBA will also develop the related technical package, including the Data Point Model (DPM) and validation rules, and will publish it with its 4.0 Reporting framework release. 
• Guidelines (GL) on liquidity stress testing. The Guidelines lay out the risks to be covered in the liquidity stress testing and identify the common reference parameters of the stress test scenarios to be included in the liquidity stress testing to be applied. Following application of the Guidelines, the supervisor may strengthen the liquidity requirements of the relevant issuer to cover those risks based on the outcome of the liquidity stress testing.
• Final draft RTS on supervisory colleges. The draft RTS specify the conditions under which certain entities, such as custodians of the reserve of assets, trading platforms and crypto-asset service providers (CASPs) providing custody and administration of crypto-assets on behalf of clients, are to be deemed “the most relevant” in their category, and the conditions under which a significant ART or EMT is to be deemed to be “used at large scale”, for the purpose of determining the composition of a supervisory college under MiCAR. The EBA is required to establish such a college in accordance with MiCAR for each significant ART and significant EMT. In addition, the RTS specify the general conditions for the functioning of supervisory colleges, including aspects related to participation in college meetings, voting procedures, exchange of information and the entrustment of tasks among college members.

The draft RTS on the use of ARTs and EMTs denominated in a non-EU currency as a means of exchange have been developed in accordance with Article 22(6) of MiCAR which mandates the EBA, in close cooperation with the European Central Bank (ECB), to develop the RTS specifying the methodology to estimate the quarterly average number and average aggregate value of transactions per day that are associated to uses of an ART as a means of exchange within a single currency area. In accordance with Article 58(3) of MiCAR, these RTS shall also apply mutatis mutandis to EMTs denominated in a non-EU currency.

The ITS on the reporting obligations of issuers of ARTs and EMTs denominated in a non-EU currency, and of CASPs have been developed in accordance with Article 22(7) of MiCAR, which mandates the EBA to draft ITS to establish standard forms, formats and templates for the purposes of the reporting in Article 22(1), and for the purpose of the reporting by CASPs to the issuer in accordance with Article 22(3). In accordance with Article 58(3) of MiCAR, these ITS shall also apply mutatis mutandis to EMTs denominated in a non-EU currency.

The Guidelines on liquidity stress testing have been Article 45(8) of MiCAR which mandates the EBA, in close cooperation with the European Securities and Markets Authority (ESMA) and the ECB, to issue guidelines with a view to establishing the common reference parameters of the stress test scenarios to be included in the stress tests referred to in Article 45(4) of MiCAR.

The draft RTS on supervisory colleges have been developed in accordance with Article 119(8) of MiCAR which mandates the EBA, in cooperation with ESMA and the ECB, to develop draft regulatory technical standards (RTS) specifying: (i) the conditions under which the entities referred to in Article 119(2)(d), (e), (f) and (h) of MiCAR are to be considered “the most relevant” in their category; (ii) the conditions under which it is considered that ARTs and EMTs are “used at large scale”, as referred to in Article 119(2)(l) of MiCAR; and (iii) the details of the practical arrangements regarding the functioning of supervisory colleges under MiCAR.

On June 27 2024, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) published joint guidelines on the suitability of members of the management body, and on the assessment of shareholders and members with qualifying holdings for issuers of asset reference tokens (ARTs) and crypto-asset service providers (CASPs), under the Markets in Crypto Assets regulation (MiCA).

These two sets of guidelines are part of the EBA and ESMA‘s ongoing efforts to foster a transparent, secure, and well-regulated crypto-assets market, and complement the recently published governance package.

The first set of guidelines covers the presence of suitable management bodies within issuers of ARTs and CASPs, contributing to increase the trust in the financial system. Having robust governance arrangements in place will foster confidence in those assets and services, supporting the development of a healthy crypto-asset ecosystem.

It provides common criteria to assess the knowledge, skills, experience, reputation, honesty and integrity of members of the management body, as well as if they can commit sufficient time to perform their duties to ensure a sound management of these entities.

The second set of guidelines concerns the assessment of the suitability of shareholders or members with direct or indirect qualifying holdings in a supervised entity. This assessment is a key aspect of the gatekeeping function exercised by supervisory authorities, considering the significant influence that these persons may exercise on the management of the supervised entity.

It equips competent authorities with a common methodology to assess the suitability of the shareholders and members with direct or indirect qualifying holdings for the purpose of granting authorisation as issuers of ARTs or as CASPs, and for carrying out the prudential assessment of proposed acquisitions.

These guidelines apply from 2 months after the date of publication of the guidelines in all EU official languages on the ESMA and EBA websites.

On June 19 2024, the Council of the European Union agreed on its position on a proposal to simplify certain reporting requirements in the field of financial services and investment support.

The proposal updates existing rules on data sharing between the European Supervisory authorities (ESAs) and other financial sector authorities with the aim to reduce administrative burden for authorities in the financial sector. With this negotiating mandate, the Council is ready to engage in negotiations with the European Parliament on the final shape of the legislation.

The main aim of the proposal is to facilitate data sharing between ESAs and other financial sector authorities, and restrain new reporting requirements. This aims to promote a more efficient collection of data and avoid double reporting with a direct benefit to European and national authorities and an indirect benefit for those financial sector entities having to provide information.

The proposal also aims to reduce the frequency of reporting for InvestEU implementing partners from every 6 months to once a year for most elements of the reporting requirements. This will lower the administrative burden on implementing partners, and therefore indirectly on businesses and SMEs.

Regarding the scope, the Council clarified that the exchange of information should lie with the ESAs and the European Systemic Risk Board (ESRB), which should share the information received from the national competent authorities with other ESAs and Union and national authorities and that it should concern only data stemming from reporting requirements under Union not national law. The proposed peer reviews on reporting requirements should also be based on data collections stemming from EU law only.

Whereas the Council agreed to include the European Central Bank’s Single Supervisory Mechanism and the Single Resolution Board in the set of authorities that are allowed to issue a request for data sharing, it decided to leave the newly created Anti-Money Laundering and Countering the Financing of Terrorism Authority (AMLA) out of the scope of the regulation at this stage and to reevaluate its inclusion within 2 years after the entry into force of the regulation.

The Council agreed that authorities may decide at their own discretion to grant access to information to the Commission and to third parties such as financial institutions, researchers, and other entities with a legitimate interest, provided that specific conditions are met to safeguard this data.

The European Parliament adopted its negotiating mandate on March 12 2024. The Council’s agreement paves the way to interinstitutional negotiations in view of reaching an agreement on the final shape of the text. Once an agreement is reached, it would have to be formally adopted by both institutions before becoming law.

On June 18 2024, the European Union published a Commission Delegated Regulation 2024/1700 supplementing Securitisation regulation by specifying, for STS non-ABCP traditional securitisation, and for STS on-balance-sheet securitisation, the content, methodologies and presentation of information related to the PAI of the assets financed by the underlying exposures on sustainability factors.

To ensure that investors have all the necessary information to be able to take informed decisions regarding the sustainability impacts of their investments, sustainability-related disclosures should be sufficiently clear, concise, and prominent.

To improve the comparability of principal adverse impacts of the assets financed by underlying exposures on sustainability factors, it is necessary to distinguish between, on the one hand, indicators of adverse impacts that, based on the materiality of their exposures, always lead to principal adverse impacts, and, on the other hand, additional indicators of adverse impacts that the originators consider as particularly relevant.

Since information may not always be readily available for all of the sustainability indicators, originators should only be required to report on at least one additional indicator of principal adverse impacts relating to the climate or other environmental-related sustainability factors, and on at least one additional indicator of principal adverse impacts on social- or governance-related sustainability factors.

For all indicators, considering that information on principal adverse impacts may not be readily available, originators should be allowed to use data they obtained either directly from obligors or from external experts, or to use assumptions that they deem reasonable. Originators should, however, provide a detailed explanation of how they used their best efforts to obtain information on principal adverse impacts from such obligors, external experts, or by making reasonable assumption.

According to Article 7(2), third subparagraph of Regulation (EU) 2017/2402 juncto Article 7(1), point (a), of that Regulation, information relating to securitisations where a prospectus is to be drawn up is to be made available by means of a securitisation repository registered with ESMA. To facilitate the tracking of the information on principal adverse impacts made available via that securitisation repository, originators should use an item code that is consistent with the codes set out in Table 3 of Annex I to Commission Delegated Regulation (EU) 2020/1224.

Both Article 22(4), second subparagraph, and Article 26d(4), second subparagraph, of Regulation (EU) 2017/2402 refer to available information on the principal adverse impacts of the assets financed by the underlying exposures on sustainability factors. To facilitate a comprehensive view by originators of the obligations to disclose such information and to ensure coherence between the rules and standardised templates for disclosures of such principal adverse impacts on sustainability factors concerning, on the one hand, non-ABCP traditional STS securitisations and, on the other hand, on-balance-sheet STS securitisations, it is appropriate to include the regulatory technical standards, which should enter into force at the same time, in a single Regulation.

The Regulation entered into force on July 8 2024.

On June 4 2024, the European Supervisory Authorities (ESAs) published reports on greenwashing.

The European Banking Authority (EBA) final Report provides an overview of greenwashing risk in the banking sector and its impact on banks, investment firms and payment service providers, with a focus on the changes during the last year. It also provides recommendations to institutions, supervisors, and policymakers.

The outcome of the quantitative analysis of greenwashing shows a clear increase in this trend across all sectors, including by EU banks. The total number of alleged cases continued to increase in 2023 (+21.1% in all regions and +26.1% in the EU compared to 2022).

The final Report investigates the actual and potential alleged greenwashing occurrences as reported by the competent authorities and provides updates on the adverse impact that greenwashing can have on institutions and consumers. Reputational and operational risks continue to be considered most impacted by greenwashing. This is in line with the observation that litigation risk resulting from greenwashing has been in a rising trend in the last years.

As institutions are expanding their offering of sustainable finance products and adapting their business models to meet challenges in relation to the transition towards a more sustainable economy, addressing greenwashing is key to provide confidence in the market and to maintain the trust of investors and consumers.

At a legislative and regulatory level, the EBA considers that the existing framework already provides key foundations to address greenwashing in the banking sector. Therefore, in the short-term, priority should be given to finalising the existing and planned initiatives, and to supporting a robust implementation of the full set of new regulations. Efforts to address challenges related to data, usability, consistency, and international interoperability should be further pursued.

The EBA recommends that institutions take a series of measures at both the entity level and the product level to ensure that sustainability claims are accurate, substantiated, up to date, that they fairly represent the institution’s overall profile or the profile of the product, and are presented in an understandable manner.

The EBA recommends that competent authorities pursue their planned and on-going efforts and activities to identify and monitor greenwashing risk within the remit of their respective prudential supervision and/or conduct supervision mandate.

‘Sustainability claims’ made by insurance and pension providers should be accurate, substantiated, accessible and up to date. Relying on the ESAs’ understanding of ‘greenwashing’ and EIOPA’s understanding of ‘sustainability claims’, EIOPA sets out a common approach to supervise sustainability claims and greenwashing in the insurance and pensions sectors. This common approach composed of four principles follows a public consultation that ended in March 2024. EIOPA applied this approach to a set of examples of sound and misleading sustainability claims across the stages of the insurance and pension lifecycles.

While providers reported generally complying with sustainability-related requirements, EIOPA sees room for improvement. To assess the status of implementation of the current sustainability related requirements, EIOPA coordinated a survey to undertakings on sustainability. 16 National Competent Authorities (NCAs) participated in this exercise which covered 99 insurance and pension providers. In relation to SFDR, EIOPA sees room for improvement particularly regarding Article 10 SFDR requirements (i.e., product-level website disclosures). Despite POG being a well-established concept in the insurance regulatory landscape, the integration of sustainability-related objectives in the POG process is not adequate, especially for non-life products. In relation to the integration of sustainability preferences in the suitability assessment under the Insurance Distribution Directive (IDD), assessments undertaken by Insurance Based Investment Products (IBIP) distributors appears at times to be insufficiently granular and precise.

The understanding of what is a non-life product with sustainability features varies across undertakings. Based on the survey to undertakings, European Insurance and Occupational Pensions Authority (EIOPA) finds that 16 out of 46 manufacturers of non-life products classified – with internal classification processes – some of their non-life insurance products as having sustainability features or as being “green”. A lack of standards in relation to non-life products with sustainability features can lead to a higher risk of greenwashing

To address existing challenges and combat greenwashing, EIOPA lays out a set of key proposals aimed at enhancing the supervision of greenwashing and at improving the sustainable finance regulatory framework. These key proposals are included throughout the report and are listed as follows:

• Proposal 1 – Using the ESAs common understanding of greenwashing as a reference point.
• Proposal 2 – Building a common EU supervisory approach in relation to sustainability claims and greenwashing.
• Proposal 3 – Tackling greenwashing through enhanced supervision and targeted supervisory activities.
• Proposal 4 – Preventing greenwashing.
• Proposal 5 – Enhancing supervisory resources and expertise to tackle greenwashing.
• Proposal 6 – Closing the gap related to non-life insurance products with sustainability features .
• Proposal 7 – Consumer-centric sustainability preferences.
• Proposal 8 – A sustainability-related investment framework that works for insurance and pension consumers and providers.
• Proposal 9 – Enhancing sustainable finance and mitigating greenwashing in the occupational pensions sector.

In their respective reports the ESAs reiterate the common high-level understanding of greenwashing as a practice whereby sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may be misleading to consumers, investors, or other market participants. The ESAs stress again that financial market players have a responsibility to provide sustainability information that is fair, clear, and not misleading. 

Each ESA provides a stocktake of the current supervisory response to greenwashing risks under their remit and notes that national competent authorities (NCAs) are already taking steps in the area of supervision of sustainability-related claims. In addition, the ESAs provide a forward-looking view of how sustainability-related supervision can be gradually enhanced in coming years. 

While the ESAs' reports focus on the EU's financial sector, they acknowledge that addressing greenwashing requires a global response, involving close cooperation among financial supervisors and the development of interoperable standards for sustainability disclosures.

The Final Report investigates the role of supervision in mitigating greenwashing risks. It takes stock of the current supervisory response, based on a survey of National Competent Authorities (NCAs) and builds on preliminary findings from ongoing supervisory activities coordinated by European Securities and Markets Authority (ESMA).

The Final Report also provides a forward-looking view of how supervision could be gradually enhanced in coming years, a journey through which NCAs should also achieve supervisory convergence. Supervisors’ ability to challenge sustainability-related claims is expected to grow in the next years as their expertise deepens. The Final Report identifies a series of actions for NCAs, ESMA and the EC to consider to enhance supervision across key sectors of the SIVC – issuers, investment managers, investment service providers and benchmarks administrators.

NCAs are already taking steps to prioritise the supervision of sustainability-related claims, performing critical scrutiny of documentation, and exercising professional judgement. In general, the supervision of sustainability-related claims complements the oversight provided to other key components of the SIVC. Indeed, the internal governance of supervised entities and, where relevant, external assurance service providers play important roles in ensuring compliance with the relevant requirements. Coming next in the oversight sequencing, NCAs are not required to "redo" the work undertaken by these entities, but they have a broad responsibility to protect investors and ascertain the proper application of a range of sustainability-related requirements.

NCAs and ESMA have been implementing a risk-based approach to supervision, focusing their supervisory attention and resources on the most significant risks.

NCAs can leverage on their mandate to protect investors and on existing provisions in the EU Regulatory Framework, for sustainability-related supervision andenforcement. As a type of miscommunication or misconduct, greenwashing can be captured by existing EU rules prohibiting misleading information. Greenwashing can also be addressed by acting on infringements against a series of specific sustainability-related requirements introduced in the EU in recent years.

So far, NCAs have reported having detected only a limited number of actual or potential occurrences of greenwashing. This may reflect multiple factors, including low level of signals (e.g., complaints) reaching NCAs, limited financial literacy, constraints on NCAs’ resources and expertise for detection, and NCAs’ difficulties to access good quality data. Regarding the detection of actual occurrences, it may to some extent reflect early successes by NCAs in preventing greenwashing in certain areas.

Formal enforcement decisions are, up to now, limited as well. This reflects the fact that NCAs have addressed irregularities related to sustainability-related claims mostly in their ongoing supervision. In addition, NCAs have generally favoured a gradual approach, accompanying market players in the implementation of a new, complex regulatory framework. Finally, NCAs face challenges in establishing infringements, where the regulatory framework builds on unclear or ambiguous definitions.

To address the need for specialised knowledge, NCAs and ESMA have started building sustainability-related capacities and expertise through training programs, recruitments, cooperation with relevant national agencies or dialogue with nongovernmental organizations (NGOs). Most NCAs consider, however,that their resources are not sufficient.

Effective supervision builds on NCAs’ access to relevant, high-quality and comparable data. NCAs almost unanimously identified access to data as a challenge in at least one SIVC sector, with data referring either (1) to information that is the subject of supervision (e.g., regulatory disclosures, certain advertisements) or (2) to information that can serve supervisors in their work (e.g., news reports, data on sustainability profile of funds’ underlying assets). A growing number of NCAs are considering purchasing third-party data to assist their supervision.

The use of SupTech (Supervisory Technology) tools may increase supervisory efficiency, without replacing professional judgment exercised by supervisors. Only a few NCAs reported using SupTech tools by now. However, the majority of NCAs either are already developing such tools, planning, or considering doing so in the future.

ESMA will continue monitoring greenwashing risks and supervisory progress, including via the ongoing Union Strategic Supervisory Priority on “ESG Disclosures”. 

Building on the preliminary regulatory remediation actions identified in the Progress Report, ESMA will publish an Opinion with views on how the EU regulatory framework for sustainable finance could further facilitate the investors’ journey.

On June 13 2024, Belgium published a Royal Decree approving the regulations of the Financial Services and Markets Authority (FSMA) amending the regulations of the FSMA regarding the accreditation of compliance officers.

The Decree entered into force on June 13 2024.

On the occasion of the twentieth anniversary of the Financial Supervision Act, the FSMA launched the initiative entitled "20 projects for the future". On October 4 2022, it published a press release on its website. These projects relate to seven topical themes, with an even more far-reaching protection of financial consumers and shareholders as the central guideline.

One of the proposals formulated by the FSMA concerned the compliance function of small companies. In recent years, the FSMA has established that certain regulated companies have had problems in establishing a responsible to recruit the compliance function that meets all the conditions for recognition laid down in the FSMA Regulation of October 17 2011, in particular the condition requiring him to have at least three years of appropriate experience.

That condition remains relevant. It enables the FSMA to verify whether the persons appointed by regulated companies to assume responsibility for the compliance function have acquired appropriate experience in positions in which they have not only had to apply the rules of conduct which they must ensure within the company, but also have a discretion in relation to the application of those rules.

However, in the light of the principle of proportionality, it is proposed to relax that condition requiring the person concerned to have at least three years of appropriate experience by providing for a possible exemption, under certain conditions, where the candidate compliance officer is appointed to a company whose activities and size so warrant. The FSMA's application of the proportionality criterion will also take into account the risks, in particular for the protection of customers.

In any event, since credit institutions and stockbroking firms, even small ones, do not in any event satisfy those proportionality criteria, the candidate compliance officers they appoint are not eligible for that exemption. On the other hand, insurance undertakings referred to in Article 272 of the Law of March 13 2016 on the legal status and supervision of insurance or reinsurance undertakings automatically meet those proportionality criteria. Indeed, they are already subject to a specific prudential regime, in particular by virtue of their size. Candidates employed by those insurance undertakings are therefore eligible for that exemption, provided that they satisfy the other conditions.

The conditions imposed for the grant of such an exemption are intended to ensure that the candidate, on the one hand, has sufficient professional knowledge or a minimum of one year's appropriate experience (even if he does not yet have the three years of appropriate experience required by the regulations) and, on the other hand, is placed in a situation in which he can acquire the appropriate experience that is lacking after his recognition.

To that end, it is provided that a candidate compliance officer may be exempted from the requirement to have three years' appropriate experience only if the regulated undertaking concerned enables him to acquire the missing required appropriate experience by being supervised, in the performance of his duties, by an expert appointed for that purpose for the remainder of those three years. That expert must himself satisfy the requirement of three years' appropriate experience and the conditions relating to professional knowledge, diploma, skills and professional conduct set out in the regulations of October 17 2011 in order to be able to assess the expertise of the candidate compliance officers. As regards, in particular, the condition relating to professional knowledge, this means, inter alia, that the undertaking concerned must demonstrate that the expert appointed has not only passed the test referred to in Article 3(1)(3)(a), of the Regulations, but also that, from the time of passing that examination, he has completed the required continuing training courses, with a minimum duration of 20 hours every 3 years (if he is not also recognised as a compliance officer) or with a minimum duration of 40 hours every 3 years (if he is also recognised as a compliance officer). It does not really matter whether the expert is an internal employee of the company (such as the compliance officer to be replaced who will perform a different function within the company, but will still spend time supervising her new compliance officer) or an external person (such as a lawyer, a consultant or even a compliance officer from another company). The FSMA will ensure that the nature and content of this guidance enable the candidate compliance officer to acquire appropriate experience similar to that which he would have had to demonstrate if he had not qualified for the exemption. The undertaking concerned will have to demonstrate, inter alia, the effective nature of the guidance and the sufficient availability of the expert.

This exemption from the condition of appropriate experience is provided for in Article 3, § 1, 1°, third paragraph, of the Regulation of October 17 2011.

Candidates benefiting from this exemption must meet the other recognition conditions, including the requirement to possess the necessary skills to take responsibility for the position of compliance officer. This means, among other things, that the FSMA will assess, independently of the condition of appropriate experience, whether a candidate is able to respond adequately in certain situations and, in particular, whether he or she has sufficient maturity, is able to make independent judgements and can steer the company's decision-making in a certain direction. If a candidate does not meet those conditions, recognition will be refused, even if he or she fulfils the conditions for exemption from the condition of appropriate experience.

In addition, Article 3, § 2, of the Rules of Procedure has been amended. The mechanism of inclusion on the provisional list of compliance officers who do not yet meet the requirement of professional knowledge is deleted. With a view to administrative simplification, it is stipulated that approved compliance officers who have not yet passed the examination (and therefore do not yet meet the professional experience condition) will henceforth be included on the list of compliance officers approved by the FSMA. However, the list will mention that they still have to pass the exam. As before, the regulated companies concerned have a period of one year from the accreditation of their compliance officer to prove that they have passed the examination. In exceptional circumstances duly justified by the company concerned, the FSMA may grant derogations from this one-year period.

On June 26 2024, the Financial Services and Markets Authority (FSMA) adopted a regulation laying down the procedures for taking the oath of office and the rules applicable to complaints of an ethical nature.

On May 8 2024, the FSMA adopted a regulation setting out the procedures for taking the oath and receiving, admissibility and processing of complaints sent in this context. On June 20 2024, the Royal Decree approving this FSMA regulation was published in the Belgian Official Gazette. In this publication, the FSMA provides information on the taking of oaths and on the functioning of the complaints channel.

The new FSMA regulation sets out:

• the manner in which the oath is taken; and
• the procedures for receiving, admissibility and processing of complaints.

As a reminder, the new disciplinary system of the bank oath will come into force on January 15 2025 for fit and proper persons and managers responsible for credit institutions and on July 15 2026 for other banking service providers.

These persons will henceforth be bound by various ethical rules and will have to take an oath within six months of taking up their actual duties.

The place of swearing-in depends on the functions held by the banking service provider concerned.

Fit & proper persons shall take an oath with the FSMA. The FSMA will organise a minimum of six sessions per year. It will soon publish the dates and terms of registration on its website.

Other banking service providers will take the oath of office with the entity concerned (or its Belgian branch) on whose behalf they are acting. The organisational arrangements will have to take into account the solemnity required and the six-month period available to banking service providers to take the oath.

The FSMA Regulation of May 8 2024 also specifies the criteria that must be met by complaints relating to possible failure to take an oath or alleged violations of the rules of professional conduct. These complaints must therefore be documented, convincing and serious. The FSMA will soon provide specific channels for the reception and follow-up of these complaints.

To guide the various players in the sector and help the general public better understand this new disciplinary regime, the FSMA has updated the questions and answers (FAQs) published on its website to reflect the content of its regulation of May 8 2024.

The questions are as follows:

• Who is concerned?
• Which persons within a covered entity are directly involved in the exercise of banking activities in Belgium or provide banking services in Belgium (Category 4)?
• Who are the responsible executives (Category 2)?
• What are banking service providers required to do?
• What does the taking of the bank oath consist of?
• When does a banking service provider have to take the bank oath?
• To whom do banking service providers have to swear?
• How does the swearing-in process with the FSMA work?
• How does the oath of office work with a credit institution or a banking and investment services agent?
• Does a banking service provider have to take the oath of office again if it combines or changes functions?
• Where can I find the details of the procedures applicable to the taking of the bank oath?
• What are the individual rules of conduct?
• What is the certificate of absence of professional prohibition?
• What sanctions can be imposed on banking service providers?
• Who imposes disciplinary sanctions against banking service providers?
• When is disciplinary proceedings against banking service providers initiated?
• Who can make a complaint?
• How do I make a complaint?
• What criteria must a complaint meet to be examined?
• Where can I find details of the procedures applicable to the reception, admissibility and processing of complaints?
• How is the disciplinary procedure against banking service providers conducted?
• What does the Central Register of Disciplinary Sanctions and Professional Bans contain?
• What are the entities concerned?
• What is the list of banking service providers?
• What sanctions can be imposed on the entities concerned?
• When does this new disciplinary regime come into force?

On June 19 2024, Belgium published a Royal Decree transposing certain provisions of Directive 2022/2556.

This Decision provides for the partial transposition of Directive 2022/2556 of the European Parliament and of the Council of December 14 2022 amending Directives 2009/65/EC, 2009/138/EG, 2011/61/EU, 2013/36/EU, 2014/59/EU, 2014/65/EU,(EU) 2015/2366 and (EU) 2016/2341 as regards digital operational resilience for the financial sector.

The following amendments are made to Article 10, § 1 of the Royal Decree of December 19 2017 laying down detailed rules for the transposition of the Markets in Financial Instruments Directive:

• the first paragraph is replaced by the following:
  'Regulated undertakings engaged in algorithmic trading have put in place appropriate and effective systems and risk controls for their business activity in order to ensure that their trading systems are resilient and have sufficient capacity in accordance with the requirements of Chapter II of Regulation (EU) 2022/2554, are subject to appropriate trading thresholds and limits, and prevent erroneous orders from being sent or from otherwise functioning in such a way as to lead to or contribute to the emergence of a disorderly market.';
• the second paragraph is replaced by the following:
  'Regulated undertakings shall have effective arrangements in place to deal with business continuity in the event of any failure of their trading systems, including ICT business continuity policies and plans established in accordance with Article 11 of Regulation (EU) 2022/2554 and shall ensure that their systems are fully tested and properly audited to ensure that they comply with the requirements of this paragraph and the specific requirements of Chapters II and IV of the same Regulation.’

This Decision shall enter into force on January 17 2025.

On June 21 2024, the Financial Services and Markets Authority (FSMA) published its 2023 annual report highlighting the fees related to funds and the investments of retail investors.

Consumers who wish to invest in funds should consider entry costs as well as management and other administrative and operating costs. These costs and fees have a considerable impact on the return they can achieve and are therefore decisive for the value for money they can achieve.

The FSMA ensures that the funds generate value for money. Fund distributors must offer consumers real prospects for returns and not charge them unjustifiably high fees. Two years ago, the FSMA presented an initial study on this subject. An update of this study reveals that fund fees have changed slightly.

The FSMA recommends that consumers find out about the fees they will be charged if they want to obtain a Value for Money by investing in a fund. 

On the occasion of the publication of its annual report, the FSMA also presented statistics on the investments of Belgian retail investors. These statistics are based on the analysis of data from stock market transaction reports. 

The study highlights some significant developments:

• Investments in exchange-traded funds (ETFs) are becoming increasingly popular. Young people, in particular, are investing more and more in these index trackers.
• Belgian retail investors have a very limited number of stocks in their portfolio. More than one in three investors have only traded one share.
• Only a third of investors who made their first stock market transactions during the Covid crisis in 2020 were still making investments in 2023.

On June 10 2024, the Comissão de Valores Mobiliários (CVM) announced new service promotes greater agility for independent auditors.

The Brazilian Securities and Exchange Commission (CVM) launched a new registration system for independent auditors of the Authority, Infoaudi. 

The novelty is in line with the Autarchy's proposal to modernize its processes to consolidate itself as a technological regulator (Regtech).

Currently, the CVM has about 350 registered independent auditors, who will be able to use the system to directly update their data and information, in addition to attaching the documents required by CVM Resolution 23. By registering the information in Infoaudi, a SEI administrative process will be automatically generated, and the data will be confirmed and validated by the Audit Standards Management (GNA) of the Superintendence of Accounting and Auditing Standards (SNC) of the CVM, which will grant, reject or place it in any requirement. The issuance of a Certificate of Confirmation of Registration was requested by independent auditors and became one of the novelties brought by the system. 

The document proves the registration with the CVM and, until then, it was only possible through the issuance of an official letter by the Agency, after request from the auditors. With automation, it will be possible for the auditor himself to issue, through Infoaudi, as many certificates as he needs in a single day.

The extract from the registration with the Autarchy is another highlight. The history of the independent auditor at CVM was exclusive to the regulator, and is now also available on Infoaudi. The registration form, with all the information management of the independent auditor at CVM, can be accessed by the user himself in the system.

In addition, Infoaudi will enable more agility in the process of updating information and better checking of data by the user himself.

The external public will also be able to consult the independent auditor's information in Infoaudi. The basic information of the independent auditors' registration will be available in the form of a form, in compliance with the General Data Protection Law (LGPD). Likewise, the certificates issued by the independent auditors can be validated and confirmed directly in the system. The objective is for the information to help in case of eventual professional hiring, for example.

On June 26 2024, the Banco Central do Brasil (BCB) disclosed procedures to be observed by financial institutions, payment institutions and other institution.

Procedures are to be observed by financial institutions, payment institutions and other institutions authorized to operate by the Central Bank of Brazil in communicating to this Authority the information related to the contracting of relevant data processing and storage and cloud computing services referred to in CMN Resolution No. 4,893, of February 26 2021 and BCB Resolution No. 85, of April 8 2021 and its subsequent amendments.

Procedures to be observed by financial institutions, payment institutions and other institutions authorized to operate by the Central Bank of Brazil in the communication to this Authority of information related to the contracting of services data processing and storage and cloud computing referred to in Arts. 15 and 16, § 1 of CMN Resolution No. 4,893, of February 26 2021, and arts. 15 and 16, § 1 of BCB Resolution No. 85, of April 8 2021.

The communication of the contracting of a relevant service of data processing and storage and cloud computing must be made by means of a Relevant Communication (CR) of the subject "Communication of contracting of a relevant service" by the institution contractor.

The request for authorization to contract a relevant data processing and storage and cloud computing service when there is no agreement between the Central Bank of Brazil and the supervisory authorities of the countries where the service will be provided provided must be forwarded through the CR of the subject "Request for authorization to hire a relevant service provided abroad".

 The CR models will be available in the APS-Siscom System, If the models are not available, the institution must contact the responsible supervisor for regularization.

Information on current contracts entered into by a single credit union may be forwarded individually or in a consolidated manner by a central credit union or confederation of the cooperative system to which it belongs.

Information on current contracts entered into by individual companies that are members of prudential conglomerates may be submitted individually or in a consolidated manner by the conglomerate's lead institution.

On June 4 2024, the Comissão de Valores Mobiliários (CVM) disclosed the reform of the rule on shareholders' meetings.

CVM Resolution 204, which amends CVM Resolution 81 and brings innovations related to shareholders' meetings.

The reform promotes improvements in the rules related to remote participation and voting at shareholders' meetings, seeking to make the process more effective and less burdensome for the participants involved.

Main innovations of the new standard are the following: 

• Expansion of the ballot: the disclosure of the remote voting ballot is now mandatory for all shareholders' meetings (general or special, ordinary or extraordinary).
• Improvements in the flow of transmission of voting instructions: among the changes implemented, the highlights are the extension of the deadline for sending the voting instruction by the shareholder (which is now 4 days before the meeting) and the provision that the sending of voting instructions can be made through the central depositary.
• Installation of the Fiscal Council: requests for installation made through the remote voting ballot are void if there are no candidates for the body.
• Exemption from the availability of the ballot: permission for exemption in case of low shareholder adherence to remote voting.

The proposed changes were presented to the public through Public Consultation 01/23. Regarding the version that received comments from the public, the main changes were:

• Deadlines for submission of the Bulletin: 21 days for Extraordinary General Meetings, except in specific and exceptional cases.
• Deadline for resubmission of the bulletin by the Company: up to 20 days for the inclusion of candidates (Board of Directors and Fiscal Council).
• Inclusion of a minimum percentage for exemption from the availability of the bulletin: permission for exemption if the company has received votes corresponding to shares representing less than 0.5% of the capital stock.
• Multiple Voting: Provision that requests sent through the ballot for the adoption of multiple voting are void if there are no candidates other than those nominated by management or the controlling shareholder.
• Voting Maps: new systematization of production and availability of voting maps.
• Voting on alternative proposals: exclusion of the provision that shareholders could, through the bulletin, follow the resolution taken by the majority of those present, in the event of a change in the management's proposal for one of the items on the meeting's agenda.
• Participation rules: Requirement of the presence of the Chairman of the Board, the Secretary and at least one administrator when the meeting is in person or hybrid.
• Electronic Systems: Facilitates the use of electronic systems to send ballot papers directly to the Company and participate remotely during the meeting.

CVM Resolution 204 enters into force on January 2 2025, in view of the need to adapt systems and issuer routines.

On June 12 2024, the Banco Central do Brasil (BCB) published the Normative Instruction No. 479 on the composition of the Business Indicator (BI).

This Normative Instruction details the method of calculating the BI referred to in BCB Resolution No. 356, of November 28, 2023.

The interest, leasing and equity (ILDC) component, referred to in article 6 of BCB Resolution No. 356, of November 28, 2023, must include:

• interest and leasing income (II);
• interest expense and leasing (EI);
• interest-bearing assets (IEA);
• income from participations (DI).

The services component (SC), referred to in article 7 of BCB Resolution No. 356, of November 28, 2023, must include:

• revenue from services (FI);
• service expenses (FE);
• other operating revenues (OOI);
• other operating expenses (OOE).

The net result of the trading book (NTB), referred to in item IV of article 8 of BCB Resolution No. 356, of November 28, 2023, must consider the criteria for the classification of the instruments referred to in BCB Resolution No. 111, of July 6 2021, and include:

• profits or losses due to the adjustment to the market value of instruments classified in the trading book;
• profits or losses arising from the outright sale or transfer of control of instruments classified in the trading book;
• profits or losses related to derivative financial instruments identified as accounting hedging of instruments classified in the trading book; and
• profits or losses arising from exchange variation on instruments classified in the trading book.

The net result of the banking book (NBB), referred to in item V of article 8 of BCB Resolution No. 356, of November 28 2023, must consider the classification criteria of the instruments referred to in BCB Resolution No. 111, of 2021, and include:

• profits or losses recognized in the results of the period and due to the adjustment to the market value of instruments classified in the banking book;
• profits or losses arising from the outright sale or transfer of control of instruments classified in the banking book;
• profits or losses related to derivative financial instruments identified as accounting hedging of instruments classified in the banking book; and
• profits or losses arising from exchange rate variation on instruments classified in the banking book.

The revenues and expenses related to payment services, referred to in paragraph 1 of article 9, of BCB Resolution No. 356, of November 28, 2023, correspond to:

I - revenue from payment services;

II - payment services expense;

The administrative expenses, referred to in article 9, item I, of BCB Resolution No. 356, of November 28, 2023, correspond to the sum of the amounts referring to:

• Expenses with water, energy, gas and other services provided by public service concessionaires;
• Rental expenses;
• Communication and data processing expenses;
• Expenditure on the maintenance and conservation of property;
• Epenses of consumables and of small value, or of a useful life of less than one year;
• Remuneration expenses, staff charges and benefits;
• Expenses for non-financial services provided by third parties to the institution;
• Expenses with the contracting of specialized technical services; and
• Travel and transportation expenses.

The following are hereby repealed:

I - Circular Letter No. 3,625, of December 27 2013; and

II - Normative Instruction No. 390, of June 6 2023.

This Normative Instruction enters into force on January 1 2025.

The new procedures for the calculation of the portion of risk-weighted assets (RWA) related to the calculation of the capital required for operational risk through a standardized approach (RWAOPAD) were established through BCB Resolution No. 356, of November 28 2023, which will repeal, as of January 1 2025, Circular No. 3,640, of March 4, 2013, a regulation that until then establishes the procedures for calculating the RWAOPAD portion.

On June 12 2024, the Banco Central do Brasil (BCB) published No. 392 that establishes the Catalogue of Financial Assets – CAF.

The Board of Directors Collegiate of the Central Bank of Brazil, in a meeting held on 12 June 2024, based on article 9 of Law No. 4,595, of December 31 1964, in arts. 22 and 28 of Law No. 12,810, of May 15 2013, and in article 13 of Resolution No. 4,593, of August 28 2017,resolve:

This Resolution establishes the Asset Catalog Financial – CAF, which lists the types of financial assets that are the object of the services registration and centralized depository and establishes rules for standardization, self-regulatory rules, the exercise of these activities in relation to each type of of financial assets. The financial assets mentioned in the caput are those so qualified by the legislation or regulations in force to effect of registration and centralized filing services. CAF does not cover securities, defined in accordance with current legislation.

The CAF must be prepared and updated jointly, in a single document, according to the procedures and deadlines indicated in the terms of this Resolution, by:

I - entities Central Asset Registrars and Depositories authorized financial institutions; and

II - other institutions with requests for authorization in progress at the Central Bank of Brazil to carry out the activities registration or centralized deposit of financial assets.

The CAF shall contain, for each type of financial asset that is part of it, at least the following information:

I - On the Basic characteristics of the financial asset;

II - Regarding the rules applicable to financial assets;

III - Formalization Of the financial asset;

IV - as regards operations, guarantees and collateral linked to the financial asset;

V - Certificates Of the financial asset;

VI - Regarding the Cycle of the life of the financial asset, identification of each stage by means of a flowchart.

CAF's proposal must be forwarded to approval of the Central Bank of Brazil by the institutions jointly and by means of a single document. The proposal referred to in the caput must cover all financial assets for which there is Provision of centralized registration and filing service or convention approved or in the process of being approved by the date of entry into force of this Resolution.

In the process of preparation of CAF's proposal, the deliberations related to each asset should count on the participation of the registrars and the Central depositories authorised to carry out the registration or deposit of the type of financial asset subject to deliberation. Other entities participating in the CAF drafting process that express their formally, before the institutions referred to in the caput and before the BCB, the interest in offering the service of registration or deposit of a certain financial assets may participate in its deliberations. In the case of financial assets in relation to where there is already an approved convention or in the process of approval, the participation of in the deliberations it is restricted to the contracting entities.

The proposal must be sent in two stages:

• the first, within one hundred and twenty days from the date of entry into force of this Resolution, and
• the second, within one hundred and eighty days from the date of act of approval of the first stage by the Central Bank of Brazil

After CAF's approval, the entities may, individually or jointly, forward to the Central Bank of Brazil, for approval, a proposal for the inclusion of new types of assets CAF. Prior to the referral referred to in the caput, the proposal for inclusion should be submitted to the entities for their assessment, which shall have thirty days, from the submission, to formally express their views to the tenderers on the terms of the proposal. After this period has elapsed, proponents are allowed to submit the proposal for inclusion to the Central Bank of the Brazil, which should be accompanied by the manifestations of the other entities, if in a compiled and standardized form.

Changes in the Standards for the registration and centralized deposit of the financial assets that are part of the must be communicated to the Central Bank of Brazil by the date of its entry into force, with forwarding of the relevant information, without the the need for prior authorisation to take effect. The Central Bank of Brazil may determine changes in the CAF, and it is the responsibility of the entities to make such changes in the catalogue within the given period.

The application for authorization for registration, or Centralized deposit of financial asset forwarded after CAF approval must:

• indicate the type of a financial asset listed in the CAF for which authorization is sought; and
• to be in compliance with CAF, including with regard to the requirements of interoperability.

Registrars and depositaries shall, within two years of CAF's act of approval, make the necessary adjustments to its regulations, operational manuals, and in the systems of registration and centralized deposit of financial assets, in order to adapt them to the CAF, regardless of any changes that may be made to the CAF. 

Registrars and depositaries Centers must make available, on their websites, an updated version of the CAF, open to the general public, indicating the types of assets for which it provides registration and deposit services Centralized.

The Department of System Regulation Finance – Denor, the Department of Competition and Market Structure Financial – Decem, the Department of Organization of the Financial System – Deorf and the Department of Monitoring of the Financial System – Desig are authorized to adopt the necessary measures to comply with the provisions of this Resolution.

This Resolution entered into force on July 1 2024.

On June 4 2024, the Comissão de Valores Mobiliários (CVM) became a member of the Steering Committee of the Financial Stability Board.

The Brazilian Securities and Exchange Commission (CVM) has been a member, since May 29 2024, of the Steering Committee Financial Stability Board (FSB).

With this opportunity, CVM reaches a historic position on the international scene. The choice was made by the other member countries of the committee, in recognition of CVM's role and performance in the Capital Markets. Now, the CVM has the three main seats for the regulation of the international Capital Market: IOSCO Board, OECD Bureau and FSB Steering Committee.

Also for the first time, in October 2022, CVM was elected to be part of the extended Bureau of the Corporate Governance Committee at the Organization for Economic Cooperation and Development (OECD). 

The Financial Stability Board (FSB) is the international body responsible for monitoring and making recommendations on the global financial system. It coordinates, at international level, the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability.

In addition, it brings together national financial stability authorities in 24 countries and jurisdictions, international financial institutions, international groups of sector-specific regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach activities with approximately 70 other jurisdictions through its six Regional Advisory Groups.

Representatives from more than 20 countries make up the Steering Committee, which among its responsibilities is to coordinate and conduct reviews of the policy development work of international standard-setting bodies, as well as to monitor and guide the progress of the work in progress. The Chairman of the FSB also leads the committee.

On June 6 2024, the Banco Central do Brasil (BCB) updated its Drex Pilot.

Continuing the development of Drex (Digital Real), the Central Bank approved the BCB Resolution 382. The standard updates the regulation of the pilot project of the Drex Platform.

According to the team responsible for the project, the changes implemented enable, among other improvements, the incorporation of new assets and services to the Pilot platform. Asset-based businesses that are outside the regulatory competence of the Central Bank may be tested in cooperation with their respective regulators.

The DLT infrastructure created for the Drex Pilot proved to be viable for transacting with the assets tested so far. In order to move forward in the development of the project, it is necessary to test the implementation of smart contracts created and managed by third parties participating in the platform.

Smart contracts are programs that run securely on networks with Distributed Ledger Technology (DLT). They will allow, for example, that, in a transaction of purchase and sale of real estate, buyer and seller have more security regarding the transfers of money and the asset in question.

In the second phase of the Pilot, one of the actions to be tested by the ecosystem will be the feasibility of smart contracts to be developed by the project participants. In the previous phase, the development of contracts was restricted to the Central Bank. As a result, this new stage of testing will also allow the maturation of the governance of the provision of third-party services.

Also according to the coordinator of the Drex Initiative, the privacy technological solutions tested so far, despite the evolution over the period, have not demonstrated the necessary maturity to ensure compliance with all legal requirements related to the preservation of privacy and the protection of personal data. During the second phase, the Central Bank will continue to prospect privacy solutions as part of the scope of the pilot.

On June 6 2024, the Comissão de Valores Mobiliários (CVM) published Circular Letter No. 2/2024/CVM/SIN.

Subject of this circular letter is interpretation of provisions of CVM Resolution No. 175.

The purpose of this Circular Letter is to disclose additional interpretations by the Superintendence of Supervision of Institutional Investors ("SIN") on other provisions of the general part of the Resolution, as well as provisions of Annex I. 

Thus, this Circular Letter complements Joint Circular Letter No. 1/2023/CVM/SIN/SSE of April 11, 2023 and Joint Circular Letter No. 2/2023/CVM/SIN/SSE, of September 27 2023. 

For the purpose of better organization of the issues, the clarifications is made through questions and answers that were consolidated from doubts received from the market, and are attached to this Letter. 

It is also informed that other Circular Letters will be released in due course with clarifications on doubts related to the general part and the Normative Annexes of the Resolution, and, as the case may be, by the respective superintendence that is competent for the supervision of the category of funds dealt with therein.

All fees may be charged, alternatively, in the class structure or in the subclass structure. However, it is not possible to charge the same type of fee at both levels (class and subclass) of the same structure, in order to prevent investors from being charged twice.

The new wording does not change the previous interpretation on tHE Maximum Rate– Rate Consolidation Hypothesis, that is, that both hypotheses provided for in the items are exempt from the obligation to consolidate the rates. The conjunction "and", in the context of a negative sentence, indicates that "both of them" are excluded from the obligation provided for in the caput, without it being necessary to comply with both hypotheses simultaneously.

All fees can be rearranged during the life of the fund through a unilateral act as long as it does not imply an increase in the total cost to the final investors.

It is necessary to regulate the provision of guarantees by the funds, for operations of the  ortfolio itself (such as, for example, derivatives), provided that the fund is able to carry out such operations in accordance with the limits and conditions applicable to it due to the provisions of the respective regulation (including annex and appendix) and the regulations in force, according to the classification of the type of fund (multimarket, shares, fixed income, etc.), without the application of the provisions of article 86, first and second paragraphs. It is clarified here that these provisions (art. 86, first and second paragraphs) deal with a different situation.

The control will be carried out by consolidating the equity of all subclasses belonging to the same class to confirm if the shareholders' equity remains above R$ 1 million. In addition, it is confirmed that, as of RCVM 175, the control of shareholders' equity must be carried out by the criterion established in this resolution, that is, by the daily shareholders' equity for all funds, even those still governed by ICVM 555.

The managers must continue to send the information on the funds adapted to CVM Resolution 175 until the end of the adaptation period.

Annex I– Financial Investment Funds (FIFs);

Clarification of the provisions of article 49 of Annex I of RCVM 175, which deals with the performance fee in fixed income funds, on overseas investment, and on obtaining ISIN Prior to the Acquisition of the Asset;

The manager remains responsible for the calculation and calculation of the monthly profile, and the trustee must transmit it to the CVM.

ICVM 555 provided that the sending of the account statement to the shareholders was one of the responsibilities of the administrator, as provided for in article 56.

Differently from what was signaled through Joint Circular Letter No. 1/2023/CVM/SIN/SSE, the CVM has chosen to maintain a dynamic that allows for better organization and traceability of CNPJs. Thus, it is clarified that two attributes will be maintained in the CVMWeb system:

• Funds registered with Monoclass attribute: the use of the same CNPJ will be allowed for shell fund and for the single class Funds registered with Multiclass attribute,
• The use of two distinct CNPJs (1 for shell fund and 1 for 1st class) will be mandatory, and with the creation of new classes, new CNPJs will be created.

It should be noted that this movement may occur by a unilateral act of the administrator, except in cases in which it is expressly provided for in the regulation that the fund is single-class, in which case it will be necessary to call a Meeting. Therefore, the response to item 2 of Circular Letter 01/2023/CVM/SIN/SSE is hereby rectified.

It is allowed to offset the margin positions of a local vehicle that invests in an offshore vehicle of the same manager or, even, if the manager of the local vehicle has influence on the investment decisions of the offshore vehicle, and the manager is responsible for controlling and reporting to the administrator of the investment fund class.

On June 6 2024, the Comissão de Valores Mobiliários's (CVM's) technical area presented guidelines on items of CVM Resolution 175 and the FIF Annex.

Document complements clarifications presented jointly with SSE in 2023.

The Superintendence of Supervision of Institutional Investors (SIN) of the CVM publishes Circular Letter CVM/SIN 2/2024.

The objective is to disseminate additional interpretations by the technical area of the Authority on provisions of the general part of CVM Resolution 175, as well as provisions of Annex I of the regulation.

The document complements joint circular letters SIN/SSE 1/2023 and 2/2023.

The document presents answers divided into 15 topics:

• Collection of fees in class or subclass;
• Maximum Rate – Rate Consolidation Hypothesis;
• Rearrangement of fees over the life of the fund;
• Provision of guarantees by the Funds;
• Monitoring – Minimum Daily PL;
• Subclass ID;
• Registration of corporate acts in a notary's office;
• Operational process for adapting funds to CVM Resolution 175;
• Performance fee in fixed income funds (article 49 of Annex I of CVM Resolution 175);
• Overseas investment;
• Monthly Profile – FIF;
• Account Statement;
• Obtaining an ISIN prior to the acquisition of the asset;
• Dynamics of creation of the CNPJ of funds and classes;
• Margin Compensation in Local and Offshore Vehicle.

The clarification to the market of the operational guidelines that CVM Resolution 175 brings, in line with the application of the other rules of the national legal system, aims to bring legal certainty to the fund industry, which is going through a period of challenges towards the effective listing of the stock of funds.

On June 11 2024, the Comissão de Valores Mobiliários (CVM) published Circular Letter No. 3/2024/CVM/SIN.

The New document complements the guidelines of the CVM's technical area on items of CVM Resolution 175 and the FIF Annex.

Document presents information on informational transparency and payment of performance fees.

The document complements CVM Circular Letter SIN 2/2024, of June 6 2024, and discloses additional interpretations by the technical area of the Authority on provisions of the general part of CVM Resolution 175, as well as provisions of Annex I of the regulation.

This time, the focus is on operationalizing the disclosure of fees within the scope of CVM Resolution 175, regarding funds that are under the competence of the Superintendence of Supervision of Institutional Investors of the Agency.

The letter presents, in the format of questions and answers, clarifications on Informational Transparency and Payment of performance fee to the distributor in retail funds.

The objective of the technical area is to provide the market with effective operational means to meet the necessary disclosure of remuneration, required by the new standard, and which, in a simpler way, means allowing the shareholder to see how much he is effectively paying for each service and to whom.

On June 13 2014, the Brazilian Financial and Capital Markets Association (ANBIMA) sent a request to the Central Bank to amend Resolution 3,919 on the collection of fees for investment products.

ANBIMAs proposal calls for the inclusion of crypto-asset and tokenisation services in the standard.

It is important that these types of investments are included in the resolution to avoid legal uncertainty and improve the transparency for investors regarding the fees charged for the provision of services related to cryptoassets and tokenization.

ANBIMA defines the events that may be charged, considering the different business models of financial institutions and the difficulties of mapping the internal costs of each operation. Among the services are: custody, brokerage, transfer and loan.

The need for rules for charging fees on these types of investments was also pointed out in their response to the Central Bank's public consultation on virtual assets in January this year.

The proposals, which are in line with international best practices, were discussed and approved in their Negotiation Forum, which includes representatives from the treasury of the member institutions.

On June 21 2024, the Brazilian Financial and Capital Markets Association (ANBIMA) issued letters of recommendation to asset managers.

In May, three letters of recommendation were sent to institutions that voluntarily follow our Code of Administration and Management of Third-Party Resources. In these cases, failures were detected in the control routines of investment funds, in view of the managers' responsibility in relation to our codes of good practices. The letters of recommendation contain measures to address potential infractions of low potential for harm and easy reparation committed by institutions that voluntarily follow our self-regulation. 

ATR Gestão de Investimentos and Etrnty Capital Gestora de Recursos accepted the Association's recommendations to remedy the problems identified, committing to implement the analysis process of prior verification of the framework, independently of what is carried out by the fiduciary administrators and adopt periodic framing monitoring controls for all types of funds under management. Both will maintain training for staff and statutory officers on CVM Resolution 175 and applicable ANBIMA codes, focusing on the manager's responsibilities and the new exposure limits for investment funds.

V8 Capital Gestão de Investimentos, in turn, agreed to include in its internal controls all the rules established in the fund regulations, in the regulation and in the ANBIMA classification of the funds, in order to carry out the processes of prior verification of the framework and periodic monitoring of such limits, in addition to generating daily reports with the result of this monitoring. The asset manager also agreed to implement and maintain training for its employees on our self-regulatory rules in the fund industry and Resolution 175.

On June 28 2024, the Comissão de Valores Mobiliários (CVM) advised on new monthly report for real estate investment funds.

The Superintendence of Securitization and Agribusiness (SSE) of the CVM released Circular Letter 04/2024.

The letter provides guidance on the availability, as of July 1 2024, of the new Monthly Report for real estate investment funds (FII) in the Fundos.NET system. 

The document has adjustments to comply with CVM Resolution 200. 

They are the following:

• Inclusion in "Liability Information": item 22 (Provisions for guarantees provided – surety, endorsement, acceptance or other co-obligation).
• Inclusion of the "Additional Information" section: with item 23 (Total value of properties subject to real liens); item 24 (Total value of guarantees provided with operations of the class); and item 25 (Total value of guarantees provided with quotaholders' transactions – article 32, § 3, Normative Annex III).

The technical area also indicates that other adjustments resulting from CVM Resolution 184 have been implemented. 

In the "Asset Information" section, item 10.6 (Debenture Notes) was removed - and consequent renumbering of the following items - in addition to the inclusion of item 10.12 (Commercial Notes).

The SSE reinforces the importance of sending the document to the CVM within the correct deadline. The Monthly Reports, in the new model, must be delivered from September 1 2024.

On June 28 2024, the Brazilian Financial and Capital Markets Association (ANBIMA) sent proposal to the National Council of Justice (CNJ) asks that funds not be mandatorily registered as a legal entity.

They sent to the CNJ an official letter with our understanding of the situation of the funds in relation to CNJ Resolution 455/2022, which deals with the registration of legal entities in the Electronic Judicial Domicile, a platform that concentrates all information and communications of justice processes.

In their view, the funds do not fit into the concept of legal entity brought in the rule, as they do not have legal personality, even if they are holders of rights and obligations. Therefore, they should not be registered in the system.

The main concern was that the funds would be included in the CNJ's compulsory registry, scheduled to take place as of May 31, without a definition of criteria aligned with the peculiarities applicable to the funds.

Considering the functionalities that the Electronic Judicial Domicile presents, they will analyze the topic in our fiduciary management and administration bodies to understand how the inclusion of funds could be done in the most organized and efficient way possible.

On June 26 2024, the Brazilian Financial and Capital Markets Association (ANBIMA) published the Official Letter No. 204/2020/CVM/SIN/DLIP.

Regarding the consultation, presented by the Brazilian Association of Financial and Capital Markets Entities - ANBIMA through the OF. DIR. 011/2020, of 03/03/2020, regarding the association's understanding that the "Real Estate Exchange" operations used by Real Estate Investment Funds (FII) do not have the characteristics of a loan, but rather of a forward purchase and sale, since this instrument requires the assumption of certain real estate risks that would rule out the nature of debt and any similarity to a loan operation.

The consultation defines "Real Estate Exchange" as any and all negotiations that have as their object the exchange of one real estate asset for another, even if one of the contracting parties makes the payment of a complementary installment in cash, in this case, with a tax benefit for a reduction in the calculation basis in the Income Tax.

The letter explains that FIIs participate in development projects through the acquisition of shares of Special Purpose Companies that develop the project, through the acquisition of land for subsequent exchange for a percentage of the sales value of the units sold, or even for residential or commercial units of real estate development, which cannot have their transfer of ownership recognized, with the public deed duly paid in a notary's office.

Thus, it reports that the structure predominantly chosen by the market to enable the Real Estate Exchange consists of the issuance by the buyer, on a pro soluto basis, of a Promissory Note ("NP") for the benefit of the seller, whose discharge in favor of the sale would be recognized by Normative Instruction of the Federal Revenue Service of Brazil No. 107/88 as a real estate exchange.

In view of the above, in the present case, after a systematic analysis of the transaction consulted, we understand that an NP used for the purpose of enabling a Real Estate Exchange, paid in the subsequent transfer of the property, is not to be confused with a debt/loan transaction, and therefore is not prohibited by the regulation.

On June 5 2024, the Banco Central do Brasil (BCB) published Resolution No. 388 establishing the new Sustainable Economy Committee – Echoes of the Central Bank of the Brazil.

Governance, Risks and Controls Committee (GRC) of the Central Bank of Brazil, in the use of its attributions, based on the provisions of article 11, caput, item III, subparagraph "a", and the Article 139, caput, item III, of the Internal Regulations of the Central Bank of Brazil, resolve:

Art. 1º The Economy Committee is hereby constituted Sustainable – Echoes of the Central Bank of Brazil, in accordance with the Regulations attached to this Resolution.

Art. 2º BCB Resolution No. 272 is hereby revoked of December 8 2022.

Art. 3º This Resolution shall enter into force on the date of its publication, on June 5 2024. 

This Regulation provides for the Sustainable Economy Committee – Ecos and establishes procedures for its operation. Ecos is a nature committee consultative approach, which aims to coordinate initiatives, projects and activities carried out by the different areas of the Central Bank of Brazil and, where appropriate, discuss and recommend additional actions related to sustainability.

They do not fall within the scope of Ecos' performance the activities assigned to the Social Responsibility Committee, Organizational Environmental and Climate – CRSO.

The appointment of representatives of the areas of Organization of the Financial System and Resolution and Administration, in addition to the CRSO representative, will be at the discretion of the Director of the respective area and, if it occurs, the nominee will be part of the Ecos like the others area representatives.

Communication and provision of Ecos accounts will be coordinated by its secretariat and will be carried out by:

• Disclosure of the minutes of the meetings to the directors of the areas that make up the committee and on the intranet site of the Central Bank of Brazil, in a specific section on the theme; and
• Annual report on the rendering of accounts of its activities and on the progress of sustainability initiatives from the Central Bank to the GRC.

On June 24 2024, the Brazilian Financial and Capital Markets Association (ANBIMA) announced a Market Supervision System (SSM) gains tool for data management of institutions that follow ANBIMA codes.

From now on, institutions that voluntarily follow our codes of good practice will have access to a supervision dashboard, which offers a managerial and comparative view of the institutions' interactions with ANBIMA. The service is available within SSM - Market Supervision System (platform used for the exchange of information between the Association and self-regulatory institutions).

The new tool will facilitate access to information on protocols, fines and letters that are sent to institutions, allowing a dynamic management of this process, identifying possible opportunities for improvement and comparing its performance with market peers. The entire development of the solution was done in-house, combining efforts and knowledge of the business and technology areas and the relationship with the institutions itself.

The dashboard presents indicators regarding the status of the protocols sent to the institution, thus facilitating the management of this process. Access is free to all SSM users, regardless of profile, and respects data governance and segregation, so that each institution will be able to see only its own information in a granular way. Regarding the other participants, it will be possible to analyze some clustered information, without identifying the names, for comparison purposes.

It is possible to compare, for example, the number of fines and letters that the institution received in a period against other companies without identifying them and with the market average. At the same time, there are indicators of compliance of the protocols, that is, institutions can verify whether they are responding on time to supervision demands and filter the information by codes, origins, and topics to understand which areas generated the most demands or questions in the last 12 months.

The new service responds to a request from the market itself and brings a counterpart to the institutions that provide a lot of information to ANBIMA. 

The tool is an initiative for innovation and the use of data and technology (analytics), which is aligned with the priorities of ANBIMA and IOSCO (International Organization of Securities Commissions).

On June 10 2024, the Commission nationale de l'informatique et des libertés (CNIL) published a consultation and survey on the development of AI systems.

The CNIL is publishing a second series of practical fact sheets and a questionnaire dedicated to supervising the development of artificial intelligence systems. These new tools aim to help professionals reconcile innovation and respect for people's rights. They are subject to public consultation until September 1 2024.

As a continuation of this work and in order to provide additional answers to the questions shared by professionals, the CNIL is opening a new public consultation on the following 7 sheets:

• Legal basis for legitimate interest and development of AI systems
• Legitimate interest: focus on the distribution of open source models (open source)
• Legitimate interest: focus on web scraping
• Inform the people concerned
• Respect and facilitate the exercise of the rights of the persons concerned
• Annotate the data
• Ensuring the security of the development of an AI system

As part of this consultation, the CNIL is also publishing a questionnaire on the application of the GDPR to AI models.

Version française

Le 10 juin 2024, la Commission nationale de l'informatique et des libertés (CNIL) a publié une consultation et une enquête sur l'évolution des systèmes d'IA.

La CNIL publie une deuxième série de fiches pratiques et un questionnaire dédiés à l'encadrement du développement des systèmes d'intelligence artificielle. Ces nouveaux outils visent à aider les professionnels à concilier innovation et respect des droits des personnes. Ils sont soumis à consultation publique jusqu’au 1er septembre 2024.

Dans la continuité de ces travaux et afin d'apporter des réponses complémentaires aux questions partagées par les professionnels, la CNIL ouvre une nouvelle consultation publique sur les 7 fiches suivantes :

• Base juridique pour l'intérêt légitime et le développement de systèmes d'IA
• Intérêt légitime : focus sur la diffusion de modèles open source (open source)
• Intérêt légitime : focus sur le web scraping
• Informer les personnes concernées
• Respecter et faciliter l'exercice des droits des personnes concernées
• Annoter les données
• Assurer la sécurité du développement d'un système d'IA

Dans le cadre de cette consultation, la CNIL publie également un questionnaire sur l'application du RGPD aux modèles d'IA.

On June 21 2024, the Autorité des marchés financiers (AMF) invited market players to take part in the work initiated by the European Commission on AI challenges for financial services.

In order to gather the views of financial market participants deploying or using artificial intelligence (AI) systems, the European Commission is launching two initiatives aimed at assessing market developments and risks linked to AI and preparing the future implementation of the AI ??Act in the financial sector. 

• Organization of practical workshops on AI: This consultation is open until September 13 2024.
• Public consultation on the use of AI in the financial sector: These workshops will take place online, between September and December 2024. Interested stakeholders can apply until July 26, 2024 by completing the form. In this context, the AMF will participate in the organization of workshops in the second half of 2024.

Version française

Le 21 juin 2024, l'Autorité des marchés financiers (AMF) a invité les acteurs du marché à participer aux travaux initiés par la Commission européenne sur les enjeux de l'IA pour les services financiers.

Afin de recueillir l'avis des acteurs des marchés financiers déployant ou utilisant des systèmes d'intelligence artificielle (IA), la Commission européenne lance deux initiatives visant à évaluer les évolutions du marché et les risques liés à l'IA et à préparer la future mise en œuvre de la loi sur l'IA dans le secteur financier.

• Organisation d'ateliers pratiques sur l'IA : Cette consultation est ouverte jusqu'au 13 septembre 2024.
• Consultation publique sur l'utilisation de l'IA dans le secteur financier : Ces ateliers se dérouleront en ligne, entre septembre et décembre 2024. Les acteurs intéressés peuvent postuler jusqu'au 26 juillet 2024 en remplissant le formulaire. Dans ce cadre, l’AMF participera à l’organisation d’ateliers au second semestre 2024.

On June 5 2024, the Autorité des marchés financiers (AMF) published crypto-assets black list.

On the occasion of its update, the AMF completes and reorganizes the list of websites offering, illegally in France, services on digital assets and fundraising by issuing tokens (ICO) in a dedicated blacklist. This “crypto-asset” blacklist includes all sites not authorized by the AMF as well as new sites identified.

Today, to offer in France the services of custody of digital assets (more commonly called crypto-assets), purchase/sale of digital assets against legal tender currencies, exchange of digital assets against other digital assets or operating a digital asset trading platform, you must be registered with the AMF.

Furthermore, only companies that have obtained approval from the AMF for a public offering of tokens (Initial Coin Offering) can approach investors in the context of the issuance of these tokens.

On its online site, the AMF lists websites which illegally offer such services in France or which illegally approach investors to offer them tokens, without having obtained a visa from the AMF. It has just added nine new sites:

• www.zoomex.com
• trade-pro.io
• the-bitcoin-bank.com
• krawl-offers.com/bitcoin-bank-alt
• www.mexc.com
• www.coinex.com
• biticodes.com
• zenithexchange.ltd
• sparkgenesisai.com

With the aim of strengthening the readability of its prevention and alert action, the AMF has decided to create a new blacklist, specifically dedicated to these unauthorized sites present in the crypto-assets segment. Investors, like professionals, will now be able to download only the list of unauthorized sites related to this theme, without having to consult the table of alerts as a whole.

This new list completes the AMF's arsenal of blacklists, which also includes a specific list of unauthorized sites offering derivative products on crypto-assets.

The list of all sites not authorized to offer services on digital assets or ICOs is available on the AMF website (section: Savers Space ? Protect your savings ? Blacklists and warnings) and on the Insurance Bank Savings Info Service website – ABEIS (section: Scam prevention ? Blacklists and alerts from authorities).

In order to ensure that the entity offering digital asset services is authorized to operate in France, the white list of digital asset service providers is accessible on the AMF website.

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Le 5 juin 2024, l’Autorité des marchés financiers (AMF) a publié la liste noire des crypto-actifs.

A l'occasion de sa mise à jour, l'AMF complète et réorganise la liste des sites Internet proposant, illégalement en France, des services sur les actifs numériques et la collecte de fonds par émission de tokens (ICO) dans une liste noire dédiée. Cette liste noire des « crypto-actifs » regroupe tous les sites non agréés par l’AMF ainsi que les nouveaux sites identifiés.

Aujourd'hui, pour proposer en France des services de conservation d'actifs numériques (plus communément appelés crypto-actifs), d'achat/vente d'actifs numériques contre des monnaies ayant cours légal, d'échange d'actifs numériques contre d'autres actifs numériques ou d'exploitation d'une plateforme de trading d'actifs numériques, vous doit être enregistrée auprès de l'AMF.

Par ailleurs, seules les sociétés ayant obtenu l'agrément de l'AMF pour une offre publique de tokens (Initial Coin Offer) peuvent démarcher des investisseurs dans le cadre de l'émission de ces tokens.

Sur son site en ligne, l'AMF répertorie les sites Internet qui proposent illégalement de tels services en France ou qui démarchent illégalement des investisseurs pour leur proposer des tokens, sans avoir obtenu de visa de l'AMF. Elle vient d'ajouter neuf nouveaux sites :

• www.zoomex.com
• trade-pro.io
• the-bitcoin-bank.com
• krwl-offers.com/bitcoin-bank-alt
• www.mexc.com
• www.coinex.com
• biticodes.com
• zenithexchange.ltd
• sparkgenesisai.com

Dans le but de renforcer la lisibilité de son action de prévention et d’alerte, l’AMF a décidé de créer une nouvelle liste noire, spécifiquement dédiée à ces sites non autorisés présents dans le segment des crypto-actifs. Les investisseurs, comme les professionnels, pourront désormais télécharger uniquement la liste des sites non autorisés liés à cette thématique, sans avoir à consulter le tableau des alertes dans son ensemble.

Cette nouvelle liste complète l'arsenal de listes noires de l'AMF, qui comprend également une liste spécifique de sites non autorisés proposant des produits dérivés sur crypto-actifs.

La liste de tous les sites non autorisés à proposer des services sur actifs numériques ou ICO est disponible sur le site de l'AMF (rubrique : Espace Épargnants ? Protéger votre épargne ? Listes noires et avertissements) et sur le site Internet Insurance Bank Savings Info Service – ABEIS (rubrique : Arnaque prévention ? Listes noires et alertes des autorités).

Afin de garantir que l'entité proposant des services sur actifs numériques est autorisée à opérer en France, la liste blanche des prestataires de services sur actifs numériques est accessible sur le site de l'AMF.

On June 12 2024, the Commission nationale de l'informatique et des libertés (CNIL) published its recommendations on data sharing and reuse under the open data framework.

To try to respond, in a practical manner, to the needs of all the stakeholders concerned by the processing in question, the CNIL has adopted a double set of sheets for the disseminators of open data and the reusers of data published on the Internet. These include recommendations and concrete examples allowing them to know their obligations by answering the structuring “IT and freedoms” questions.

These sheets should help these actors to:

• identify the responsibilities of the different organizations likely to be involved in the processing;
• determine the lawfulness of the processing;
• know the scope of their obligations in terms of informing the people concerned;
• take into account people's rights;
• guarantee the relevance and proportionality of the data processed, their accuracy and their security. 

The “use case” sheets could be completed on new themes.

Furthermore, the CNIL will continue its work on data sharing in the coming months. It will thus focus on scenarios of circulation of data to specifically authorized third parties, whether or not appearing on a restrictive list, as encouraged by French and European law (provisions of the code of relations between the public and the administration, of Data Governance Act, Data Act, etc.).

Version française

Le 12 juin 2024, la Commission nationale de l'informatique et des libertés (CNIL) a publié ses recommandations sur le partage et la réutilisation des données dans le cadre de l'open data.

Pour tenter de répondre, de manière concrète, aux besoins de tous les acteurs concernés par le traitement en question, la CNIL a adopté un double jeu de fiches à destination des diffuseurs de données ouvertes et des réutilisateurs de données publiées sur Internet. Ceux-ci comprennent des recommandations et des exemples concrets leur permettant de connaître leurs obligations en répondant aux questions structurantes « Informatique et libertés ».

Ces fiches doivent aider ces acteurs à :

• identifier les responsabilités des différents organismes susceptibles d'être impliqués dans le traitement ;
• déterminer la licéité du traitement ;
• connaître l'étendue de leurs obligations en matière d'information des personnes concernées ;
• prendre en compte les droits des personnes ;
• garantir la pertinence et la proportionnalité des données traitées, leur exactitude et leur sécurité.

Les fiches « cas d’usage » pourraient être complétées sur de nouvelles thématiques.

Par ailleurs, la CNIL poursuivra ses travaux sur le partage de données dans les prochains mois. Elle s'intéressera ainsi à des scénarios de circulation de données vers des tiers spécifiquement autorisés, figurant ou non sur une liste restrictive, comme le encourage le droit français et européen (dispositions du code des relations entre les publics et l'administration, de la loi sur la gouvernance des données, loi sur les données, etc.).

On June 5 2024, the Autorité des marchés financiers (AMF) published a recommendation on the implementation of a differentiated portfolio transparency regime for actively managed ETFs.

Following on from the provisions allowing the creation of active ETFs in France, the AMF specifies the conditions under which portfolio management companies which manage such funds can implement a policy of differentiated transparency of portfolios depending on the nature of market participants.

While the European framework already allowed the listing of active ETFs (funds admitted to trading on a regulated market and whose portfolio is actively managed), the French framework only provided for the listing of "index" funds, which aim to reproduce the performance of an index, and “algorithmic” funds, which aim to replicate the result of an algorithm. The Decree No. 2024-151 and the Decree of March 27 2024 aim to allow the creation and listing of active ETFs in France.

In order for market makers to be able to display competitive quotes in all circumstances, they must know as precisely as possible the composition of the basket of assets making up the ETF. This information is generally made available to market makers and authorized participants daily by the ETF management company before the opening of the European markets in the form of a “PCF” file (Portfolio Composition File) and published at the same time. , or a day late, on its website.

Active ETF managers implement an investment strategy that includes an element of judgment, for example based on fundamental or quantitative research, which provides added value compared to a passive ETF. However, daily and exhaustive provision of the portfolio of an active ETF would potentially allow other players to replicate the strategy, which could constitute a major obstacle to the development of the active ETF offering for investors.

The AMF is therefore publishing a recommendation for management companies managing active ETFs so that they can differentiate access to the exact composition of portfolios between market participants who need it to effectively manage the liquidity of the portfolios. primary and secondary markets and all other market participants. This recommendation takes the form of six main principles that management companies should respect in order to ensure that such differentiation ultimately benefits end investors without allowing market participants benefiting from more frequent transparency to benefit from it. unduly, in compliance with the objectives of AMF position DOC-2004-07 on “market timing” and “late trading”.

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Le 5 juin 2024, l'Autorité des marchés financiers (AMF) a publié une recommandation relative à la mise en place d'un régime différencié de transparence des portefeuilles pour les ETF à gestion active.

Dans le prolongement des dispositions permettant la création d'ETF actifs en France, l'AMF précise les conditions dans lesquelles les sociétés de gestion de portefeuille qui gèrent de tels fonds peuvent mettre en œuvre une politique de transparence différenciée des portefeuilles selon la nature des acteurs du marché.

Alors que le cadre européen permettait déjà la cotation des ETF actifs (fonds admis aux négociations sur un marché réglementé et dont le portefeuille est géré activement), le cadre français prévoyait uniquement la cotation des fonds « indiciels », qui visent à reproduire la performance d'un indiciels, et les fonds « algorithmiques », qui visent à répliquer le résultat d’un algorithme. Le décret n° 2024-151 et le décret du 27 mars 2024 visent à permettre la création et la cotation d'ETF actifs en France.

Pour que les teneurs de marché puissent afficher des cotations compétitives en toutes circonstances, ils doivent connaître le plus précisément possible la composition du panier d'actifs composant l'ETF. Ces informations sont généralement mises quotidiennement à la disposition des teneurs de marché et des participants autorisés par la société de gestion d'ETF avant l'ouverture des marchés européens sous la forme d'un fichier « PCF » (Portfolio Composition File) et publiées simultanément. , ou avec un jour de retard, sur son site Internet.

Les gestionnaires d'ETF actifs mettent en œuvre une stratégie d'investissement qui inclut une part de jugement, basée par exemple sur une recherche fondamentale ou quantitative, ce qui apporte une valeur ajoutée par rapport à un ETF passif. Cependant, une mise à disposition quotidienne et exhaustive du portefeuille d'un ETF actif permettrait potentiellement à d'autres acteurs de répliquer la stratégie, ce qui pourrait constituer un frein majeur au développement de l'offre d'ETF actifs auprès des investisseurs.

L'AMF publie donc une recommandation à destination des sociétés de gestion gérant des ETF actifs afin qu'elles puissent différencier l'accès à la composition exacte des portefeuilles entre les acteurs de marché qui en ont besoin pour gérer efficacement la liquidité des portefeuilles. les marchés primaires et secondaires et tous les autres acteurs du marché. Cette recommandation se décline en six grands principes que les sociétés de gestion doivent respecter afin de garantir qu'une telle différenciation profite in fine aux investisseurs finaux sans permettre aux acteurs de marché bénéficiant d'une transparence plus fréquente d'en bénéficier. indûment, conformément aux objectifs de la position AMF DOC-2004-07 relative au « market timing » et au « late trading ».

On June 25 2024, the Autorité des marchés financiers (AMF) published a report on SPOT controls relating to financial management delegations within portfolio management companies.

For the period from January 1, 2020 to June 30, 2023, the AMF carried out a series of short thematic inspections (known as SPOT for Supervision of operational and thematic practices) with 5 management companies belonging to international groups. In each case, the delegations given or received were almost exclusively internal to their group.

During its inspections, the AMF examined:

• the organization and means implemented for monitoring delegations: management companies must, in fact, have sufficient internal expertise and resources to enable them to effectively monitor delegations. The issue is all the more important in international groups as the existence of specialized centers responds to a logic of rationalization of resources;
• the process of selecting the entities to which financial management is entrusted: this selection must be the subject of a formalized process even in the absence of competition between several candidates;
• delegation agreements: this is the written agreement between the management company which delegates financial management and the establishment to which is entrusted with carrying out this management. The agreement defines the rights and obligations of each person, in particular the right of the management company to give instructions or its ability to withdraw the delegation;
• monitoring of financial management delegations: the management company must monitor the service provided and regularly evaluate its quality. This evaluation is essential: it allows the confirmation or questioning, over time, of the choice of service provider to whom management is entrusted and the continuous improvement of the service provided;
• management of conflicts of interest: situations of conflicts of interest may arise due to delegation. The management company which delegates financial management must therefore define and implement appropriate supervisory measures and ensure that the establishment to which it entrusts management does the same;
• the risk control and internal control system.

In its summary document, the AMF reviews the regulations, presents its findings and highlights the good and bad practices observed.

Among the good practices, the regulator noted:

• the application to UCITS of the provisions on delegation provided for in the framework of the regulations on alternative investment funds (AIFM) and the application to the delegation of UCITS, AIFs and mandates of the provisions on outsourcing provided for in the regulations on markets in financial instruments (MIF2) and the general regulation of the AMF;
• recording in a service provider monitoring table a rating of the different aspects of the service provided (quality of reports received, frequency of ratio overruns observed and responsiveness to remedy them, risk-return ratio, etc.);
• the request made to the future service provider, during the selection process, to communicate its policy on conflicts of interest and to update it regularly.

Among the bad practices observed, the AMF highlights:

• the absence of justification, on the basis of supporting documents, for carrying out checks on the service provided by the service provider;
• an evaluation of the quality of the service limited to the sole examination of the performance of the delegated portfolios;
• the lack of consideration in the risk mapping of the various operational risks arising from the delegation of financial management.

Version française

Le 25 juin 2024, l'Autorité des marchés financiers (AMF) a publié un rapport sur les contrôles SPOT relatifs aux délégations de gestion financière au sein des sociétés de gestion de portefeuille.

Pour la période du 1er janvier 2020 au 30 juin 2023, l'AMF a procédé à une série d'inspections thématiques courtes (dites SPOT pour Supervision des Pratiques Opérationnelles et Thématiques) auprès de 5 sociétés de gestion appartenant à des groupes internationaux. Dans chaque cas, les délégations données ou reçues étaient presque exclusivement internes à leur groupe.

Lors de ses contrôles, l’AMF a examiné :

• l'organisation et les moyens mis en œuvre pour le suivi des délégations : les sociétés de gestion doivent en effet disposer d'une expertise et de ressources internes suffisantes pour leur permettre d'effectuer un suivi efficace des délégations. L'enjeu est d'autant plus important dans les groupes internationaux que l'existence de centres spécialisés répond à une logique de rationalisation des moyens ;
• le processus de sélection des entités auxquelles est confiée la gestion financière : cette sélection doit faire l'objet d'un processus formalisé même en l'absence de concurrence entre plusieurs candidats ;
• les conventions de délégation : il s'agit de la convention écrite entre la société de gestion qui délègue la gestion financière et l'établissement à qui est confiée l'exécution de cette gestion. La convention définit les droits et obligations de chacun, notamment le droit de la société de gestion de donner des instructions ou sa faculté de retirer la délégation ;
• suivi des délégations de gestion financière : la société de gestion doit contrôler le service rendu et évaluer régulièrement sa qualité. Cette évaluation est essentielle : elle permet de confirmer ou de remettre en question, dans la durée, le choix du prestataire à qui la gestion est confiée et l'amélioration continue du service rendu ;
• gestion des conflits d'intérêts : des situations de conflits d'intérêts peuvent survenir du fait de la délégation. La société de gestion qui délègue la gestion financière doit donc définir et mettre en œuvre des mesures de contrôle appropriées et s'assurer que l'établissement à qui elle confie la gestion fait de même ;
• le dispositif de maîtrise des risques et de contrôle interne.

Dans son document de synthèse, l'AMF passe en revue la réglementation, présente ses conclusions et met en avant les bonnes et mauvaises pratiques constatées.

Parmi les bonnes pratiques, le régulateur a noté :

• l'application aux OPCVM des dispositions en matière de délégation prévues dans le cadre de la réglementation sur les fonds d'investissement alternatifs (AIFM) et l'application à la délégation d'OPCVM, de FIA ??et de mandats des dispositions en matière d'externalisation prévues par la réglementation des marchés en les instruments financiers (MIF2) et le règlement général de l'AMF ;
• enregistrer dans un tableau de suivi des prestataires une notation des différents aspects de la prestation fournie (qualité des reportings reçus, fréquence des dépassements de ratio constatés et réactivité pour y remédier, rapport risque-rendement, etc.) ;
• la demande faite au futur prestataire, lors du processus de sélection, de communiquer sa politique en matière de conflits d'intérêts et de la mettre à jour régulièrement.

Parmi les mauvaises pratiques constatées, l’AMF souligne :

• l'absence de justification, sur la base de justificatifs, de la réalisation de contrôles sur la prestation fournie par le prestataire ;
• une évaluation de la qualité du service limitée au seul examen de la performance des portefeuilles délégués ;
• le manque de prise en compte dans la cartographie des différents risques opérationnels issus de la délégation de gestion financière.

On June 4 2024, the AMF complied with ESMA guidelines on updating crisis scenario parameters, provided for in Article 28 of the Money Market Funds Regulation, for 2024.

The AMF updates its position DOC-2018-05 to reference ESMA's guidelines on updating stress simulation scenarios in accordance with Article 28 of the monetary funds regulation.

In accordance with Article 28 of Regulation (EU) 2017/1131 on money market funds (MMF Regulation), the manager of a money market fund is required to assess the impact of stress test scenarios on the fund.

Under Article 37 of the MMF Regulation, the results of stress tests of a monetary fund are transmitted to its competent authority in a report on a quarterly basis if the fund's assets exceed 100 million euros.

Reporting must be done annually for other money market funds. The competent authority then transmits this reporting to ESMA.

The ESMA guidelines published in 2019 define the common reference parameters corresponding to different crisis scenarios. In accordance with Article 28 (7) of the Money Market Funds Regulation, these guidelines are updated at least once a year to take into account the latest market developments.

In this context, ESMA published on March 6, 2024 the official translations of its new guidelines relating to updating crisis simulation parameters. These parameter updates reflect prevailing market conditions when they are calibrated at the end of 2023.

This is the fourth reassessment of the parameters to be taken into account for stress test simulation exercises since the entry into force of MMFR reporting in 2020. This notably provides for a modification of the liquidity stress test scenario assets by requiring the integration of a haircut factor reflecting the cost of asset liquidity in the event of redemption, considering a disinvestment of all lines in the portfolio on a pro rata basis.

As part of the “apply or explain” procedure, these guidelines apply within two months from this date, i.e. May 6, 2024. MMF reporting is communicated on a quarterly basis for MMFs. assets exceeding 100 million euros, money market fund managers will therefore use the updated crisis scenario parameters from June 30 2024.

The AMF draws the attention of managers to the importance of updating these parameters on transmissions due from June 30 2024. Players having anticipated the updating of parameters in transmissions due before this date must correct them and resend them with the old settings.

Version française

Le 4 juin 2024, l'AMF s'est conformée aux orientations de l'ESMA relatives à l'actualisation des paramètres des scénarios de crise, prévues à l'article 28 du Règlement sur les fonds monétaires, pour 2024.

L'AMF met à jour sa position DOC-2018-05 pour faire référence aux orientations de l'ESMA relatives à l'actualisation des scénarios de simulation de stress conformément à l'article 28 du règlement des fonds monétaires.

Conformément à l’article 28 du Règlement (UE) 2017/1131 relatif aux fonds monétaires (Règlement MMF), le gestionnaire d’un fonds monétaire est tenu d’évaluer l’impact des scénarios de stress tests sur le fonds.

En vertu de l'article 37 du règlement MMF, les résultats des stress tests d'un fonds monétaire sont transmis à son autorité compétente dans un rapport trimestriel si l'actif du fonds dépasse 100 millions d'euros.

Le reporting doit être effectué annuellement pour les autres fonds du marché monétaire. L’autorité compétente transmet ensuite ce reporting à l’ESMA.

Les orientations de l’ESMA publiées en 2019 définissent les paramètres de référence communs correspondant aux différents scénarios de crise. Conformément à l'article 28 (7) du Règlement Fonds Monétaires, ces orientations sont mises à jour au moins une fois par an pour tenir compte des dernières évolutions du marché.

Dans ce contexte, l’ESMA a publié le 6 mars 2024 les traductions officielles de ses nouvelles lignes directrices relatives à la mise à jour des paramètres de simulation de crise. Ces mises à jour de paramètres reflètent les conditions de marché en vigueur lors de leur calibrage fin 2023.

Il s'agit de la quatrième réévaluation des paramètres à prendre en compte pour les exercices de simulation de stress tests depuis l'entrée en vigueur du reporting MMFR en 2020. Celle-ci prévoit notamment une modification du scénario de stress test de liquidité des actifs en exigeant l'intégration d'un facteur de décote. reflétant le coût de liquidité des actifs en cas de rachat, en considérant un désinvestissement de toutes les lignes du portefeuille au prorata.

Dans le cadre de la procédure « appliquer ou expliquer », ces orientations s’appliquent dans un délai de deux mois à compter de cette date, soit le 6 mai 2024. Le reporting des fonds monétaires est communiqué trimestriellement pour les fonds monétaires. d’actifs supérieurs à 100 millions d’euros, les gestionnaires d’OPCVM monétaires utiliseront donc les paramètres du scénario de crise actualisés à partir du 30 juin 2024.

L'AMF attire l'attention des gestionnaires sur l'importance de la mise à jour de ces paramètres sur les transmissions dues à partir du 30 juin 2024. Les joueurs ayant anticipé la mise à jour des paramètres des transmissions dues avant cette date doivent les corriger et les renvoyer avec les anciens réglages.

On June 21 2024, the Autorité des marchés financiers (AMF) invited regulated entities to complete the ESMA MiCA survey.

The European regulation of May 31, 2023 on crypto-asset markets (MiCA) will come into force on December 30, 2024. In this context, the AMF wishes to question the players it already regulates to find out their intentions with regard to the new regime. future.

Pursuant to the MICA regulation, the provision of crypto-asset services will require authorization as a crypto-asset service provider. However, for financial entities authorized to provide services and activities on financial instruments, the regulation provides for the possibility of providing equivalent services on crypto-assets subject to notifying their national authority. This is the case, for example, for investment service providers, including portfolio management companies authorized under the UCITS Directive or under the AIFM Directive.

In order to understand to what extent these entities plan to notify national authorities of their intention to provide MiCA services, ESMA has developed a questionnaire, to be completed by July 26 2024. The AMF strongly encourages the entities concerned to complete it.

If they carry out the activity of advising on financial investments or advising on digital assets without being a CIF, the entities must obtain authorization to provide or continue to provide services on crypto-assets, in particular the advisory service on digital assets. They are invited to express their intention (without this constituting a firm commitment) to request approval to provide one or more services on crypto-assets by return email, indicating which service(s) on crypto - assets they plan to provide, to the following email address by July 26: mica-conseil@amf-france.org

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Le 21 juin 2024, l'Autorité des marchés financiers (AMF) a invité les entités réglementées à répondre à l'enquête ESMA MiCA.

Le règlement européen du 31 mai 2023 sur les marchés de crypto-actifs (MiCA) entrera en vigueur le 30 décembre 2024. Dans ce contexte, l'AMF souhaite interroger les acteurs qu'elle régule déjà pour connaître leurs intentions à l'égard du nouveau régime. avenir.

Conformément au règlement MICA, la fourniture de services sur crypto-actifs nécessitera une autorisation en tant que prestataire de services sur crypto-actifs. Toutefois, pour les entités financières autorisées à fournir des services et des activités sur instruments financiers, le règlement prévoit la possibilité de fournir des services équivalents sur crypto-actifs sous réserve d’en informer leur autorité nationale. C'est le cas par exemple des prestataires de services d'investissement, notamment des sociétés de gestion de portefeuille agréées au titre de la directive OPCVM ou de la directive AIFM.

Afin de comprendre dans quelle mesure ces entités envisagent de notifier aux autorités nationales leur intention de fournir des services MiCA, l'ESMA a élaboré un questionnaire, à remplir d'ici le 26 juillet 2024. L'AMF encourage vivement les entités concernées à le remplir.

Si elles exercent l’activité de conseil en investissements financiers ou de conseil en actifs numériques sans être un CIF, les entités doivent obtenir un agrément pour fournir ou continuer à fournir des services sur crypto-actifs, notamment le service de conseil en actifs numériques. Ils sont invités à exprimer leur intention (sans que cela constitue un engagement ferme) de demander l'agrément pour fournir un ou plusieurs services sur crypto-actifs par retour d'email, en indiquant quel(s) service(s) sur crypto-actifs ils envisagent de fournir, à l'adresse suivante : adresse email avant le 26 juillet : mica-conseil@amf-france.org

On June 20 2024, the Association Française de Gestion (AFG)  published an information sheet on SFDR principal adverse impact.

The document provides more information on:

• the definition of double materiality and PAI
• the key concepts and deliverables 
• the organization and procedures
• the points of interest

Each of these sections are meant to help companies produce their PAI reporting. It will give pointers on how to consider PAI within their organisation, how to fill the forms and how to submit.

Version française

Le 20 juin 2024, l'Association Française de Gestion (AFG) a publié une fiche d'information sur les principaux impacts défavorables du SFDR.

Le document fournit plus d’informations sur :

• la définition de la double matérialité et du PAI
• les concepts clés et les livrables
• l'organisation et les procédures
• les points d'intérêt

Chacune de ces sections est destinée à aider les entreprises à produire leur reporting PAI. Il donnera des indications sur la manière d'envisager le PAI au sein de leur organisation, comment remplir les formulaires et comment les soumettre.

On June 20 2024, the Association Française de Gestion (AFG) reminded of the entry into force of the four sustainability objectives under Taxonomy and its impact on the 29LEC reporting 2024.

The delegated regulations on climate and environmental objectives which complement the European Taxonomy were published in the Official Journal of the European Union on November 22 2023 and have been applicable since January 1 2024.

As a reminder, there are two levels of application of the Taxonomy:

1. At entity level (Delegated Regulation on Article 8 of the Taxonomy):

Companies subject to the Taxonomy Regulation are those subject to the thresholds and schedule of the CSRD. Note that AMCs which do not wait for the thresholds but which are subsidiaries of a group whose parent company is subject to the CSRD will have to provide information concerning the taxonomy for the reporting of the parent company.

The timetable for the entry into force of the new Taxonomy objectives is progressive and as follows:

• From January 1, 2024: non-financial and financial companies subject to the Taxonomy Regulation will have to publish the % of eligibility for these new objectives;
• From January 1, 2025: non-financial companies subject to the Taxonomy Regulation will have to publish the % alignment with these new objectives;
• From January 1, 2026: financial companies subject to the Taxonomy Regulation will have to publish the % alignment with these new objectives.

2. At the product level (via the SFDR Delegated Regulation):

The SFDR Delegated Regulation does not put forward a progressive timetable and the AMCs must directly report “alignment” to the Taxonomy in the templates (no possibility of deferring eligibility). From January 1, 2024, SGPs must therefore integrate the alignment of these 4 new objectives into the templates.

As previously indicated, issuers will only publish their alignment from 2025, so the underlying data on these 4 other objectives may be limited or even unavailable. As in the past when the climate objectives of the taxonomy came into force, the SGPs have the possibility of using estimates (in line with the consolidated Q&A published by ESMA, in particular p. 43, Q10 and Q11 p.55).

It is possible to estimate alignment with the taxonomy for issuers not subject to Entity Taxonomy reporting if the activities of this issuer are listed in the Taxonomy delegated act.

It is not possible to estimate the alignment with the taxonomy of an issuer whose activities are not listed in the Taxonomy delegated act.

In the first case above (i.e. company which does not publish a taxonomy alignment but whose activity is listed in the taxonomy), it is therefore possible to estimate the alignment (ideally on the basis of data published by the 'issuer) and this estimate can be integrated into the numerator of the alignment ratio.

In the second case (i.e. company whose activity is not listed in the taxonomy), it is not possible to estimate the alignment. Also, the company cannot be taken into account in the numerator (i.e. count it as “0”) but must be included in the denominator.

Please note that the % of alignment with the taxonomy highlighted in the pre-contractual information is a “minimum” and that it is therefore possible to only integrate climate objectives into this % as a “minimum”. the other environmental objectives increasing the effective percentage.

The Directorate General of the Treasury recalled in question 19 in its FAQ published in April 2024 that “the information on the taxonomy requested by article 29 LEC follows identically the timetable for application of the taxonomy”.

Also, this implies that, in the 2024 reporting, management companies make a distinction between:

• Taxonomy alignment regarding climate objectives;
• Eligibility for the taxonomy for the 4 other environmental objectives of the taxonomy.

Version française

Le 20 juin 2024, l'Association Française de Gestion (AFG) a rappelé l'entrée en vigueur des quatre objectifs de développement durable au titre de la Taxonomie et son impact sur le reporting 29LEC 2024.

Les règlements délégués sur les objectifs climatiques et environnementaux qui complètent la taxonomie européenne ont été publiés au Journal officiel de l'Union européenne le 22 novembre 2023 et sont applicables depuis le 1er janvier 2024.

Pour rappel, il existe deux niveaux d'application de la Taxonomie :

1. Au niveau de l’entité (Règlement Délégué relatif à l’Article 8 de la Taxonomie) :

Les sociétés soumises au Règlement Taxonomie sont celles soumises aux seuils et au barème du CSRD. A noter que les SGP qui n'attendent pas les seuils mais qui sont filiales d'un groupe dont la société mère est soumise au CSRD devront fournir des informations concernant la taxonomie pour le reporting de la société mère.

Le calendrier d’entrée en vigueur des nouveaux objectifs de Taxonomie est progressif et est le suivant :

• A partir du 1er janvier 2024 : les sociétés non financières et financières soumises au Règlement Taxonomie devront publier le % d'éligibilité à ces nouveaux objectifs ;
• A partir du 1er janvier 2025 : les sociétés non financières soumises au Règlement Taxonomie devront publier le % d'alignement avec ces nouveaux objectifs ;
• A partir du 1er janvier 2026 : les sociétés financières soumises au Règlement Taxonomie devront publier le % d'alignement avec ces nouveaux objectifs.

2. Au niveau du produit (via le Règlement Délégué SFDR) :

Le Règlement Délégué SFDR ne propose pas de calendrier progressif et les SGP doivent directement déclarer « l’alignement » à la Taxonomie dans les modèles (pas de possibilité de différer l’éligibilité). A compter du 1er janvier 2024, les SGP devront donc intégrer l'alignement de ces 4 nouveaux objectifs dans les gabarits.

Comme indiqué précédemment, les émetteurs ne publieront leur alignement qu’à partir de 2025, les données sous-jacentes à ces 4 autres objectifs pourraient donc être limitées, voire indisponibles. Comme par le passé lors de l’entrée en vigueur des objectifs climatiques de la taxonomie, les SGP ont la possibilité de recourir à des estimations (en ligne avec les Q&A consolidées publiées par l’ESMA, notamment p. 43, Q10 et Q11 p.55).

Il est possible d’estimer l’alignement avec la taxonomie pour les émetteurs non soumis au reporting Entity Taxonomy si les activités de cet émetteur sont répertoriées dans l’acte délégué Taxonomie.

Il n'est pas possible d'estimer l'alignement avec la taxonomie d'un émetteur dont les activités ne sont pas répertoriées dans l'acte délégué Taxonomie.

Dans le premier cas ci-dessus (c'est-à-dire entreprise qui ne publie pas d'alignement de taxonomie mais dont l'activité est répertoriée dans la taxonomie), il est donc possible d'estimer l'alignement (idéalement sur la base des données publiées par l'émetteur) et cette estimation peut être intégré au numérateur du rapport d’alignement.

Dans le deuxième cas (c’est-à-dire entreprise dont l’activité n’est pas répertoriée dans la taxonomie), il n’est pas possible d’estimer l’alignement. De plus, l’entreprise ne peut pas être prise en compte au numérateur (c’est-à-dire la compter comme « 0 ») mais doit être incluse dans le dénominateur.

Veuillez noter que le % d'alignement avec la taxonomie mis en avant dans les informations précontractuelles est un « minimum » et qu'il est donc possible de n'intégrer des objectifs climatiques dans ce % qu'à titre de « minimum ». les autres objectifs environnementaux augmentant le pourcentage effectif.

La Direction générale du Trésor a rappelé à la question 19 dans sa FAQ publiée en avril 2024 que « les informations sur la taxonomie demandées par l'article 29 LEC suivent à l'identique le calendrier d'application de la taxonomie ».

Aussi, cela implique que, dans le reporting 2024, les sociétés de gestion distinguent :

• Alignement de la taxonomie concernant les objectifs climatiques ;
• Eligibilité à la taxonomie pour les 4 autres objectifs environnementaux de la taxonomie."

On June 12 2024, the Federal Financial Supervisory Authority (BaFin) published a Note on Chapter 1 of the Interpretation and Application Notes on the Money Laundering Act.

Section 1.2 of the Interpretation and Application Notes on the Money Laundering Act - Special Part for Credit Institutions provides that when depositing cash over EUR 10,000 within an existing business relationship, the origin of the funds must always be verified by means of meaningful evidence.

In the case of certain customer groups for which higher cash transactions are regularly part of the business model (e.g., retailers who deposit their daily cash register at ATMs in the evening), this principle can be deviated from, provided that the cash transactions are regularly checked for plausibility in a risk-oriented manner.

This customer group also includes public administrations, such as customs, the prison authorities, the tax authorities or the court cashiers. If employees deposit cash into the accounts of their public-law employers, they are often unable to provide any information about the original origin of the cash. These can be, for example, confiscated funds, payments to avert the execution of an arrest warrant or customs duties collected. If the receipt of cash is a statutory task of the employer, the presentation of the service ID of the person making the payment is sufficient to verify the plausibility of the origin of the funds.

It is expressly pointed out that the Money Laundering Act does not require that employees be identified when making payments within an existing business relationship. However, the eligibility for the deposit must be checked. This proof can be provided, for example, by presenting a cash deposit card or the official ID card.

On June 14 2024, the German Investment Fund and Asset Managers Association (BVI) published a statement on the discussion draft for a law to promote investments by funds in renewable energies and infrastructure.

The present discussion draft for a law to promote investments by funds in renewable energies and infrastructure is intended to implement one of the protocol declarations of the Finance Committee of the Bundestag on the Future Financing Act. The coalition parliamentary groups had agreed to take a holistic approach to measures for investment funds in renewable energy plants and to create regulations for the direct investment of investment funds in renewable energy plants or ground-mounted plants. To this end, both supervisory measures in the KAGB and accompanying tax regulations are to be adapted.

The BVI welcomes the fact that the Federal Ministry of Finance (BMF) has involved all affected stakeholders in the consultation process at an early stage. In BVI's view, the draft is a balanced solution that creates legal certainty for long-term private investments, especially in German infrastructure, while taking into account the interests of both the energy industry and the fund industry in equal measure. In order to achieve the political goals of the transformation and mobilise private capital, legal certainty is a central prerequisite – this is largely achieved with the discussion draft.

In addition, this draft is also a step towards a capital markets union, as it reduces the regulatory and tax disadvantages of the German financial market location compared to other countries within the EU, thus ensuring a level playing field and is thus an important step towards harmonising the European capital market.

On June 27 2024, the Federal Financial Supervisory Authority (BaFin) updated its notice on the MVP Portal and the German Capital Investment Code (KAGB).

Via the MVP Portal, capital management companies directly supervised by BaFin have the option of submitting certain personal notifications electronically in accordance with the KAGB.

The forms for the capital management companies subject to the reporting obligation can be found in the specialist procedure for personal advertisements: KAGB/ Forms for companies. The natural persons affected by these notifications have various forms at their disposal in the specialist procedure.

On June 21 2024, the Deutsche Bundesbank updated its fact sheet on compliance with financial sanctions.

It is a guide for financial companies to comply with financial sanctions as of June 2024. The goal of this guide is to provide persons and companies in the financial sector with guidance to adhering to financial sanctions that apply in Germany.

The guide details:

• Financial and capital market related prohibitions
• Restrictions on payment transactions
• Prohibitions and reservations on the provision of financial aid and funds including insurance and investment bans
• Sanctions related to cryptocurrencies
• Sanctions about insurance
• Reporting obligations
• The general responsibilities of BAFA and Bundesbank.

The document provides a detailed review of individual measures, responsibilities, and exemplary procedures for adhering to financial sanctions. It also specifies special requirements for financial institutions, including insurance companies and reinsurance companies.

Restrictions in the area of capital and payment transactions exist, among other things, in connection with (financial) sanctions (including the sanctions regime to prevent the financing of terrorism and proliferation). The basis for the sanctions applicable in Germany are the following decisions:

• the United Nations Security Council (UN),
• the Council of the European Union (EU), 
• the domestic authorities (individual intervention by the Federal Ministry for Economic Affairs and Energy on the basis of Section 6 Paragraph 1 in conjunction with Section 4 Paragraphs 1 and 2 of the Foreign Trade Act). 

The document provides detailed guidance on the compliance requirements for adhering to financial sanctions in the financial sector. They include:

• A clear definition and coordination of processes and their related tasks, competencies, controls, responsibilities, escalation levels in case of suspicious case processing, and communication channels.
• Every business area of a financial institution/company must ensure compliance with the guidelines contained in the manuals and work instructions. This includes conducting adequate control of business processes.
• Compliance function and reporting: The Compliance function should work towards the implementation of effective procedures for compliance and control. Compliance officers should regularly report to the management specifically regarding the implementation of basic legal regulations.
• Internal audit: Activities and processes of the company towards compliance with financial sanctions should be audited at reasonable intervals.
• Documentation: All compliance actions and their outcomes related to financial sanctions should be appropriately documented.
• IT Systems: The institutions need to implement efficient IT systems for carrying out required functions including regular reporting related to financial sanctions.
• Outsourcing policy: In case of outsourcing of any compliance-related process, it is the Institute/company's responsibility to ensure that the outsourced company adheres to the same level of compliance standards.
• Regular updates: The instructions and manuals need to be updated timely with any changes in activities and processes.

New issues addressed compared to the July 2021 fact sheet:

• The leaflet includes the duties of the Central Office for Sanctions Enforcement (ZfS), as outlined by the 2nd Sanctions Enforcement Act:  The Central Office for Sanctions Enforcement (ZfS) is responsible for ensuring the domestic enforcement of the economic sanctions decided by the Council of the European Union in the area of the Common Foreign and Security Policy. In this context, it is responsible, among other things, for monitoring compliance with the disposal restrictions and prohibitions on making assets available, unless the Deutsche Bundesbank or the Federal Office for Economic Affairs and Export Control (BAFA) are responsible under the Foreign Trade and Payments Act (AWG).
• It provides an overview of financial and capital market-related restrictions that go beyond disposal and provision prohibitions.
• It uses examples from EU regulations to demonstrate these restrictions.
• It includes detailed discussions on prohibitions related to the provision of financial assistance, including insurance and investments, as well as sanctions associated with crypto assets and insurance.
• Compliance requirements for financial sanctions have been expanded and split into a general part for all businesses in the financial sector, and specific sections for financial institutions and (re)insurance companies.
• The general section talks about detection of individuals indirectly affected by sanctions, avoiding sanction breaches, dealing with new and existing clients, and delisting.
• The specific section for financial institutions focuses on setting up suitable customer- or account-related blocks, including crypto-asset transfers, and dealing with 'real-time' transfers.
• The specific section for (re)insurance companies now includes information on insurance premiums, benefit payouts, and duties related to new and existing insurance contracts.

Violations of financial sanctions legal acts can be punished as an administrative offence and in certain cases as a criminal offence under Sections 18 and 19 of the Foreign Trade Act (AWG) and Section 82 of the Foreign Trade Ordinance (AWV). In civil law, transactions that violate prohibitions under financial sanctions law can also be void under Section 134 of the German Civil Code (BGB). 

According to the Foreign Trade Act and the relevant EU Council regulations, the Deutsche Bundesbank is responsible for implementing EU sanctions in Germany, insofar as these concern “funds” in the sense of sanctions law. In sanctions law, the term “funds” refers not only to cash and book money, but generally includes “financial assets and benefits of any kind” such as checks, monetary claims, bills of exchange, publicly and privately traded securities and debt instruments including stocks and shares, warrants, mortgage bonds, derivatives, as well as interest income, dividends, loans, guarantees, letters of credit and documents for securitizing fund shares, etc.

On June 27 2024, the Hong Kong Monetary Authority (HKMA) published a press release on collaboration with Banque de France (BDF) unlocking new wholesale central bank digital currency (CBDC) cross-border opportunities.

The BDF and the HKMA have been maintaining a close partnership in promoting financial innovation. The latest collaboration is the HKMA’s participation in Wave 2 of the European Central Bank (ECB)’s Eurosystem exploratory work, marking an important milestone as a major central banking institution outside the Eurosystem participating in the initiative.  The two central banking institutions recently entered into a Memorandum of Understanding (MoU), which signified a step forward in bilateral cooperation to foster innovation in wholesale CBDC and tokenisation market.

The two central banking institutions will delve into the study of interoperability between their wholesale CBDC infrastructure, i.e. the BDF’s DL3S and the HKMA’s Project Ensemble Sandbox, with the main focus on real-time cross-border and cross-currency payments.  The cross-border experiment aims to explore how to optimise settlement efficiency of cross-border transactions, and facilitate interoperability between financial market infrastructures in different jurisdictions.

Under the MoU, the BDF and the HKMA agree to strengthen communication and collaboration, as well as to lay the foundations for further efforts on tokenisation and new technologies.

On June 14 2024, the Securities and Futures Commission (SFC) published a press release welcoming progress on implementation of Mainland-Hong Kong Mutual Recognition of Funds (MRF) enhancements.

The draft proposals in the China Securities Regulatory Commission’s (CSRC’s) consultation paper include relaxing the sales restrictions for recognised Hong Kong funds in the Mainland and allowing the delegation of investment management functions of recognised Hong Kong funds to overseas asset management companies within the same group. Based on the principle of reciprocity, the SFC will also relax the relevant restrictions on recognised Mainland funds accordingly.

Enhancing the MRF scheme is one of the five measures announced earlier by the CSRC on the Mainland’s capital market cooperation with Hong Kong.

On June 28 2024, the Securities and Futures Commission (SFC) published a circular to issuers of SFC-authorised investment-linked assurance schemes on streamlined for vetting and approving revised marketing materials.

The SFC informs issuers of SFC-authorised investment-linked assurance schemes (ILAS) of enhancements to its streamlined approach for vetting and approving revised marketing materials of SFC-authorised ILAS under the Code on Investment-Linked Assurance Schemes (ILAS Code) with immediate effect.

The SFC regularly reviews and seeks to improve its processes wherever practicable without compromising investor protection. To promote better efficiency and adopt a more risk-based approach, the SFC has enhanced the existing streamlined measures to cover all immaterial changes to those ILAS marketing materials already authorised by the SFC (Authorised Marketing Materials).

With immediate effect, further authorisation from the SFC is no longer required for immaterial changes to the Authorised Marketing Materials, provided that all of the following overriding principles and requirements (Overriding Requirements) are satisfied:

• the changes do not amount to any material changes to the Authorised Marketing Materials;
• the contents and format of the revised marketing materials remain fundamentally the same as the version previously authorised by the SFC;
• the revised marketing materials present a balanced picture of the ILAS with adequate risk disclosures; and
• the updated contents are consistent with the disclosure in the ILAS offering documents or contents of notices to policyholders previously authorised by or filed with the SFC.

Material changes, ie, changes to the Authorised Marketing Materials which do not satisfy the Overriding Requirements, will still be subject to the SFC’s prior authorisation before their publication.

This circular is effective as of June 28 2024. It is also applicable to outstanding applications of immaterial changes to Authorised Marketing Material made before the effective date but authorisation has not been granted. For the avoidance of doubt, the enhanced streamlined approach will not apply to new marketing materials which have not been authorised by the SFC.

On June 14 2024, the Central Bank of Ireland (CBI) reminded of the new and updated Guidance and Forms on MiFID Investment Firm authorisation and voluntary revocation processes.

On May 1 2024, the CBI published three Guidance Notes on the MiFID Investment Firm authorisation process. These include two new guidance documents on the pre-formal application stages of the process - the Preliminary Meeting and the Key Facts Document stages of the authorisation process. 

The MiFID Investment Firm Authorisation Application Form was updated to reflect changes in regulatory references and legislation and the existing guidance note on completing an application form for authorisation was revised to provide greater clarity on the content required. All of these documents can be found on the CBI’s webpage for MiFID Investment Firms – Authorisation Process.

An application form was created for MiFID Investment Firms who wish to seek a voluntary revocation of license - “Application Form for Withdrawal (Voluntary Revocation) of Authorisation of a MiFID Investment Firm”. An accompanying Guidance Note was also published. These can also be found on the CBI’s webpage.

On June 27 2024, the Senato della Repubblica published provisions and delegation to the Government regarding artificial intelligence.

This bill aims to strike a balance between opportunities and risks, providing for rules of principle and sector provisions which, on the one hand, promote the use of new technologies to improve the living conditions of citizens and social cohesion and, on the other hand, provide solutions for risk management based on an anthropocentric vision.

From this perspective, the bill illustrated here does not overlap with the forthcoming European regulation on artificial intelligence ("AI ACT", approved last March 13 by the European Parliament), but accompanies the regulatory framework in those spaces specific to domestic law, taking into account that the regulation is based on an architecture of risks associated with the use of artificial intelligence (AI) (unacceptable, high, limited and minimal) for which the greater the risk, the greater the responsibilities and prohibitions for those who develop or use artificial intelligence systems.

As with the regulation, this bill also aims to protect fundamental rights, democracy, the rule of law and environmental sustainability based on possible risks and level of impact, while promoting innovation for the well-being of citizens

The outline of the bill consists of six chapters containing twenty-six articles.

To facilitate reading the bill and understand its rationale, this explanatory report is divided into thematic areas of intervention. It is made up of six parts, corresponding to the subdivision into chapters, dedicated, respectively, to the basic legislation (part one), to sector provisions (part two), to governance, to national authorities and to promotion actions (part three), to the protection of copyright (part four), to criminal sanctions (part five) and to financial provisions (part six).

The purpose of this bill is to place human self-determination at the center of every activity concerning the development and use of artificial intelligence systems and models.

Article 1 concerns the "Purposes and scope" of the bill; this provision clarifies the dual approach that characterizes the bill:

• On the one hand, the promotion of a correct, transparent and responsible use of artificial intelligence, in an anthropocentric dimension, to fully seize the enormous opportunities (art. 1, paragraph 1, second sentence);
• On the other, the necessary supervision of potential economic and social risks and the impact on fundamental rights, with the instruments specific to national law (art. 1, paragraph 1, third sentence).

The second part on sectoral provisions, includes rules for the use of AI, inter alia, for white-collar professions e.g., Ai should support white-collar professions, but shuld not replace human intellectual work.

The interest in fair and correct algorithmic treatment is achieved by establishing that the research, experimentation, development, adoption and application of artificial intelligence systems takes place in compliance with the fundamental rights and freedoms of the person as recognized by Italian and European law, as well as in compliance with the principles of transparency, proportionality, security, protection of personal data, confidentiality, accuracy, non-discrimination, gender equality and sustainability.

On June 24 2024, the Presidency of the Council of Ministers approved a legislative decree that provides for the adaptation of national legislation to the provisions on markets in crypto-assets (MiCA).

The Council of Ministers, on the proposal of the Minister for European Affairs, the South, Cohesion Policies and the PNRR Raffaele Fitto and the Minister of Economy and Finance Giancarlo Giorgetti, has approved, in preliminary examination, a legislative decree that provides for the adaptation of national legislation to the provisions of Regulation (EU) 2023/1114 of the European Parliament and of the Council, of May 31 2023 on markets in crypto-assets and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (MiCAR).

The decree identifies the Bank of Italy and the National Commission for Companies and the Stock Exchange (CONSOB) as the competent authorities to exercise the authorizing powers (for the purposes of issuance, public offering and application for admission to trading of tokens, as well as crypto-asset service providers), supervision, investigation and sanctioning, provided for by the regulation.

In addition, the minimum harmonisation rules applicable to all crypto-asset operators and the special rules applicable to individual categories of operators are laid down, the sanctioning regime and coordination provisions.

Considering the existing rules associated with Virtual Asset Service Providers (VASPs), Italy's government has chosen to curtail the interim period established by the MiCAR. Additionally, it has decided not to implement a fast-track authorization process for VASPs that are registered in the Register of Virtual Currency Operators.

VASPs officially included in the Register of Virtual Currency Operators by December 27, 2024, and which apply for approval to operate either in Italy or in another EU member state by June 30, 2025, can continue their operations in Italy based on the regulations that were in place prior to MiCAR becoming effective.

The interim phase will remain operative until December 30, 2025. The period will conclude either when approval is granted or denied, based on whichever event occurs earlier.

On June 28 2024, the Jersey Financial Services Commission (JFSC) announced countries and territories in anti-money laundering, combating the financing of terrorism & countering proliferation financing (AML/ CFT/ CPF) Handbook appendices are updated.

They have made amendments to appendix D1 and appendix D2 of the AML/CFT/CPF Handbook, in response to the latest Financial Action Task Force (FATF) statements.

Effective immediately, countries and territories listed under Sources 1 and 2 of appendix D2 should be treated as not compliant with FATF Recommendations for the purpose of Article 17A of the Money Laundering Order.

Countries added to source 2 are the following:

• Monaco;
• Venezuela.

Countries removed from source 2 are the following:

• Jamaica;
• Turkey.

Next steps are the following:

• Revision of policies, procedures, and existing customer relationships to assess the impact of these updates on your business;
• Take care when considering placing reliance on an obliged person based in one of these countries and territories;
• Possible to be required to undertake additional actions to mitigate the risk;
• Discussion of any concerns with supervisor.

On June 5 2024, the Luxembourg Capital Markets Association (LuxCMA) published a guidance note on best practices for share capital accounts minimum KYC approach.

The purpose of this paper is to outline best practices for the preparation of documentation for the opening of a share capital account for an FVC in Luxembourg and to propose a minimum KYC list of documents to streamline the process without compromising regulatory compliance.

The non-exhaustive list below is a guide to the minimum KYC documentation that needs to be prepared. It also may be required to open a bank account for an FVC for the purpose of the incorporation:

• Draft of the Articles of Association of the FVC.
• Draft of the Articles of Association or equivalent of the foreign Foundation or Trust if  available.
• Identification of the beneficial owner(s) (""BOs"")
• A list of the SMO(s) of the Luxembourg FVC with specimen signatures.
• A copy of valid identification documents and proof of residential address of the SMO(s) of  the Luxembourg structure and/or persons purporting to act on behalf of the FVC.
• Source of Funds (“SOF”)

Version française

Le 5 juin 2024, l'Association luxembourgeoise des marchés de capitaux (LuxCMA) a publié une note d'orientation sur les meilleures pratiques pour l'approche KYC minimale des comptes de capital social.

L'objectif de ce document est de décrire les meilleures pratiques pour la préparation de la documentation pour l'ouverture d'un compte de capital social pour une FVC au Luxembourg et de proposer une liste minimale de documents KYC pour rationaliser le processus sans compromettre la conformité réglementaire.

La liste non exhaustive ci-dessous est un guide de la documentation KYC minimale qui doit être préparée. Il peut également être nécessaire d'ouvrir un compte bancaire pour une FVC aux fins de la constitution :

• Projet des statuts de la FVC.
• Projet des statuts ou équivalent de la fondation ou du trust étranger si disponible.
• Identification du ou des bénéficiaires effectifs (« BO »)
• Une liste du ou des SMO de la FVC luxembourgeoise avec spécimens de signature.
• Une copie des documents d'identification valides et un justificatif d'adresse résidentielle du ou des SMO de la structure luxembourgeoise et/ou des personnes prétendant agir au nom de la FVC.
• Source des fonds (« SOF »)

On June 19 2024, the Commission de Surveillance du secteur financier (CSSF) published a press release on new AML/CFT Regulation, the sixth AML/CFT Directive and the future EU AML/CFT supervisor.

AMLR will apply from 10 July 2027. AMLD6 entered into force on July 9 2024. Member States have three years to transpose the AMLD6 in their national legislation.

The AMLR will particularly provide for EU-wide rules on (i) the scope of obliged entities, (ii) internal policies, controls and procedures of obliged entities, (iii) customer due diligence, (iv) beneficial ownership transparency, (v) reporting obligations, (vi) record-retention and (vii) measures to mitigate risks deriving from anonymous instruments.

The AMLR brings forth the following changes to the AML/CFT regulatory framework:

• Broadening of scope of obliged entities
• Enhanced due diligence obligations (‘EDD’)
• Limit and controls on cash payments
• Customer due diligence measures
• Updated definition of Beneficial Ownership
• Rules Central registers of beneficial ownership information (‘Central Registers’)
• Centralised automated mechanisms
• The future EU AML/CFT supervisor through the AMLA

Version française

Le 19 juin 2024, la Commission de Surveillance du secteur financier (CSSF) a publié un communiqué de presse sur le nouveau règlement LBC/FT, la sixième directive LBC/FT et le futur superviseur européen LBC/FT.

L'AMLR entrera en vigueur le vingtième jour suivant sa publication et sera applicable à partir du 10 juillet 2027. L'AMLD6 a été publiée le 19 juin 2024 et entrera en vigueur le vingtième jour suivant celui de sa publication. Les États membres disposent de trois ans à compter de son entrée en vigueur pour transposer la AMLD6 dans leur législation nationale.

L'AMLR prévoira en particulier des règles à l'échelle de l'UE sur (i) le champ d'application des entités assujetties, (ii) les politiques, contrôles et procédures internes des entités assujetties, (iii) la diligence raisonnable à l'égard de la clientèle, (iv) la transparence des bénéficiaires effectifs, (v) obligations de déclaration, (vi) conservation des dossiers et (vii) mesures visant à atténuer les risques découlant des instruments anonymes.

La LBC apporte les changements suivants au cadre réglementaire de LBC/FT :

• Élargissement du champ d'application des entités assujetties
• Obligations de diligence raisonnable renforcées («EDD»)
• Limite et contrôles sur les paiements en espèces
• Mesures de due diligence client
• Définition mise à jour de la propriété effective
• Règles Registres centraux d'informations sur les bénéficiaires effectifs (« Registres centraux »)
• Mécanismes automatisés centralisés
• Le futur superviseur LAB/CFT de l'UE à travers la LBA"

On June 19 2024, the Commission de Surveillance du secteur financier (CSSF) published a press release on a new eDesk procedure in relation to an artificial intelligence survey.

This development is part of a joint initiative with BCL (Banque centrale du Luxembourg), the CSSF launches a survey regarding the usage of artificial intelligence adressed to banks, investment firms, payment institutions, e-money institutions and authorised investment funds managers.

The questionnaire has to be submitted via one of the following means by August 7 2024 at the latest:

• a form available in the dedicated eDesk procedure “Specific Enquiries”,
• an API solution (S3 protocol), allowing for automation.

A user guide providing details on how to fill in and submit the report is available in the dedicated eDesk procedure.

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Le 19 juin 2024, la Commission de Surveillance du secteur financier (CSSF) a publié un communiqué sur une nouvelle procédure eDesk relative à une enquête d'intelligence artificielle.

Ce développement s'inscrit dans le cadre d'une initiative conjointe avec la BCL (Banque centrale du Luxembourg), la CSSF lance une enquête sur l'usage de l'intelligence artificielle à destination des banques, des entreprises d'investissement, des établissements de paiement, des établissements de monnaie électronique et des gestionnaires de fonds d'investissement agréés.

Le questionnaire doit être soumis via l’un des moyens suivants au plus tard le 7 août 2024 :

• un formulaire disponible dans la procédure eDesk dédiée « Demandes Spécifiques »,
• une solution API (protocole S3), permettant l'automatisation.

Un guide d'utilisation précisant comment remplir et soumettre le rapport est disponible dans la procédure eDesk dédiée.

On June 27 2024, the Commission de Surveillance du secteur financier (CSSF) published the Circular CSSF 24/858 on the application of the Guidelines of the European Banking Authority on benchmarking of diversity practices, including diversity policies and gender pay gap.

The Guidelines specify the information to be provided every three years by a representative sample of relevant institutions on diversity practices, including on diversity policies and gender pay gap at the level of the management body (“diversity benchmarking”). 

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

The Guidelines apply as from June 27 2024.

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Le 27 juin 2024, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire CSSF 24/858 relative à l'application des lignes directrices de l'Autorité bancaire européenne sur l'analyse comparative des pratiques en matière de diversité, y compris les politiques de diversité et l'écart salarial entre hommes et femmes.

Les lignes directrices précisent les informations qui doivent être fournies tous les trois ans par un échantillon représentatif d’institutions concernées sur les pratiques en matière de diversité, y compris sur les politiques de diversité et l’écart salarial entre hommes et femmes au niveau de l’organe de direction (« analyse comparative de la diversité »).

Les lignes directrices précisent également comment la CSSF collectera les données d’analyse comparative de la diversité auprès des institutions concernées et comment la CSSF soumettra les données à l’ABE.

Les Lignes directrices s’appliquent à compter du 27 juin 2024.

On June 13 2024, the Commission de Surveillance du secteur financier (CSSF) published a reminder regarding the communication means applicable for AIFM reporting from July 1 2024.

The CSSF press release published on September 22 2023 enabled the alternative investment fund managers to transmit their AIFM reporting directly to the CSSF either via an API interface (S3 technology) – from November 2 2023 – or via the dedicated eDesk approach – from January 31 2024, free of charge. It also announced that the transmission of this reporting via external transmission channels would cease on June 30 2024.

As a reminder, from July 1 2024:

• Only the API (S3) channel or the eDesk procedure will be authorised for the submission of AIFM reporting
• Any AIFM report submitted using the old transmission method (external channels) will not be processed by the CSSF

The user guide details the two transmission methods for AIFM reporting.

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Le 13 juin 2024, la Commission de Surveillance du secteur financier (CSSF) a publié un rappel concernant les moyens de communication applicables pour le reporting AIFM à compter du 1er juillet 2024.

Le communiqué de presse de la CSSF publié le 22 septembre 2023 a permis aux gestionnaires de fonds d'investissement alternatifs de transmettre leur reporting AIFM directement à la CSSF soit via une interface API (technologie S3) – à partir du 2 novembre 2023 – soit via l'approche dédiée eDesk – à partir du 31 janvier 2024. , gratuit. Elle a également annoncé que la transmission de ces reportings via des canaux de transmission externes cesserait le 30 juin 2024.

Pour rappel, à partir du 1er juillet 2024 :

• Seul le canal API (S3) ou la procédure eDesk sera autorisé pour la soumission du reporting AIFM
• Tout rapport AIFM soumis selon l'ancien mode de transmission (canaux externes) ne sera pas traité par la CSSF

Le guide utilisateur détaille les deux modes de transmission du reporting AIFM.

On June 20 2024, the Commission de Surveillance du secteur financier (CSSF) updated its FAQ by providing clarifications for UCITS in relation to shortened settlement cycle in the United States.

They updated the FAQ regarding Circular CSSF 02/77 on NAV calculation error by making modifications to the Question 4 which became Q4.b and adding Q4.a.

Question 4a: What are the elements that UCITS have to consider from an investment compliance perspective in the context of the US T+1 move? 

UCITS should in their activities, including in case of subscriptions / redemptions and related securities purchase/sales transactions, take the appropriate measures to ensure their ongoing compliance with the applicable investment restrictions. Compliance checks on a pre-trade basis should consider settlement cycles so as to avoid non-compliance with applicable investment restrictions.

UCITS can avail themselves of measures/tools for managing these timing gaps. Subject to a feasibility/impact assessment to be led by the UCITS and the consideration of investors’ interests, these measures/tools include, for instance, the following:

• A shortening of the settlement cycle of the UCITS dealings in order to ensure a better alignment with the settlement cycle(s) applicable to the securities transactions operated by the UCITS. 
• The operation of cash management solutions such as so-called “cash sweep” programs. 
• The diversification of bank relationships by opening an additional bank account for the UCITS with another counterparty.
• Temporary borrowings, limited to 10% in accordance with Article 50 of the 2010 Law, may permit, under certain circumstances and when deemed in the best interest of investors, to bridge the timing gap between incoming payments from subscriptions (e.g. on T+3 for UCITS operating such a settlement cycle) and outgoing payments for related securities purchases (e.g. on T+1 for securities dealt on US markets).
• The use of extended settlement periods, when possible and in the best interest of investors, that broker-dealers can offer to IFMs / portfolio managers under certain conditions.

UCITS should also consider the timing of the investments of the incoming payments from subscriptions in securities markets, considering elements such as for example the settlement cycles, the subscription amounts, investment compliance (notably also temporary borrowing limit), borrowing costs, dilution effects.

CSSF also updated their FAQ concerning the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment by modifying question 1.14 - Pursuant to Article 41(2) b) of the Law of 2010, a UCITS may hold ancillary liquid assets. What is meant by ancillary liquid assets?

Ancillary liquid assets should be limited to bank deposits at sight, such as cash held in current accounts with a bank accessible at any time, in order to cover current or exceptional payments, or for the time necessary to reinvest in eligible assets or for a period of time strictly necessary in case of unfavourable market conditions. The holding of such ancillary liquid assets is limited to 20% of the net assets of a UCITS. 

The above mentioned 20% limit shall only be temporarily breached for a period of time strictly necessary when, because of exceptionally unfavourable market conditions or other exceptional circumstances, such breach is justified having regard to the interests of the investors.

Ancillary liquid assets may also include highly liquid assets such as deposits with a credit institution, money market instruments and money market funds. For the avoidance of doubt a feeder UCITS may hold up to 15% of its assets in ancillary liquid assets.

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Le 20 juin 2024, la Commission de Surveillance du secteur financier (CSSF) a mis à jour sa FAQ en apportant des précisions pour les OPCVM concernant le cycle de règlement raccourci aux Etats-Unis.

Ils ont mis à jour la FAQ concernant la circulaire CSSF 02/77 sur l'erreur de calcul de la VNI en apportant des modifications à la Question 4 devenue Q4.b et en ajoutant Q4.a.

Question 4a : Quels sont les éléments que les OPCVM doivent prendre en compte du point de vue de la conformité des investissements dans le contexte du mouvement américain T+1 ?

Les OPCVM devraient, dans leurs activités, y compris en cas de souscriptions/rachats et d'opérations d'achat/vente de titres associées, prendre les mesures appropriées pour garantir leur conformité continue avec les restrictions d'investissement applicables. Les contrôles de conformité préalables aux transactions devraient tenir compte des cycles de règlement afin d'éviter le non-respect des restrictions d'investissement applicables.

Les OPCVM peuvent disposer de mesures/outils pour gérer ces décalages temporels. Sous réserve d’une étude de faisabilité/impact à mener par l’OPCVM et de la prise en compte des intérêts des investisseurs, ces mesures/outils comprennent par exemple les éléments suivants :

• Un raccourcissement du cycle de règlement des opérations sur titres des OPCVM afin d'assurer un meilleur alignement avec le(s) cycle(s) de règlement applicables aux opérations sur titres opérées par l'OPCVM.
• L'exploitation de solutions de gestion de trésorerie telles que les programmes dits de « cash scanning ».
• La diversification des relations bancaires par l'ouverture d'un compte bancaire supplémentaire pour l'OPCVM auprès d'une autre contrepartie.
• Les emprunts temporaires, limités à 10% conformément à l'article 50 de la loi 2010, peuvent permettre, dans certaines circonstances et lorsque cela est jugé dans le meilleur intérêt des investisseurs, de combler l'écart temporel entre les flux entrants et les paiements issus des souscriptions (par exemple à T+3 pour les OPCVM opérant un tel cycle de règlement) et les décaissements des achats de titres associés (par exemple à T+1 pour les titres négociés sur les marchés américains).
• Le recours à des délais de règlement allongés, lorsque cela est possible et dans le meilleur intérêt des investisseurs, que les courtiers-négociants peuvent proposer aux GFI/gestionnaires de portefeuille sous certaines conditions.

Les OPCVM devraient également tenir compte du calendrier d'investissement des paiements entrants provenant des souscriptions sur les marchés de valeurs mobilières, en tenant compte d'éléments tels que par exemple les cycles de règlement, les montants de souscription, la conformité des investissements (notamment également la limite temporaire d'emprunt), les coûts d'emprunt et les effets de dilution.

La CSSF a également mis à jour sa FAQ concernant la loi luxembourgeoise du 17 décembre 2010 relative aux organismes de placement collectif en modifiant la question 1.14 - Conformément à l'article 41(2) b) de la loi de 2010, un OPCVM peut détenir à titre accessoire des liquidités. Qu’entend-on par liquidités accessoires ?

Les liquidités accessoires devraient être limitées aux dépôts bancaires à vue, tels que les espèces détenues sur des comptes courants auprès d'une banque accessibles à tout moment, afin de couvrir des paiements courants ou exceptionnels, ou pendant la durée nécessaire au réinvestissement dans des actifs éligibles ou pendant une période du temps strictement nécessaire en cas de conditions de marché défavorables. La détention de ces liquidités à titre accessoire est limitée à 20 % de l'actif net d'un OPCVM.

La limite de 20 % mentionnée ci-dessus ne sera temporairement dépassée que pendant une période strictement nécessaire lorsque, en raison de conditions de marché exceptionnellement défavorables ou d'autres circonstances exceptionnelles, une telle violation est justifiée au regard des intérêts des investisseurs.

Les actifs liquides auxiliaires peuvent également comprendre des actifs très liquides tels que des dépôts auprès d’un établissement de crédit, des instruments du marché monétaire et des fonds du marché monétaire. Afin d’éviter toute ambiguïté, un OPCVM nourricier peut détenir jusqu’à 15 % de ses actifs en liquidités accessoires.

On June 25 2024, the Commission de Surveillance du secteur financier (CSSF) published new notification templates for cross-border activities.

On March 25 2024, the European Commission published a set of new Regulatory Technical Standards (RTS or Commission Delegated Regulations (EU) 2024/911 and 2024/912) and Implementing Technical Standards (ITS or Commission Implementing Regulations (EU) 2024/910 and 2024/913) related to the notification of cross-border activities of Alternative Investment Fund Managers (AIFMs), management companies and Undertakings for Collective Investment in Transferable Securities (UCITS).

Following this publication, the CSSF would like to inform the supervised entities concerned that, as from July 14 2024, new templates of notification letters will have to be used for the notification of their management and marketing cross-border activities within the European Economic Area (EEA). The new templates are available on the CSSF website on the following pages: AIFM page and management company page.

It should be noted that, in addition to the main notification letter for management activities, ESMA has issued a specific template for the notification of persons responsible for a branch. This template has to be attached to the notifications concerning the establishment of a branch and the modification of a branch, if applicable.

Initially, the process of transmission of notifications related to management activities to the CSSF will remain unchanged. The entities concerned must send the relevant notification forms and their annexes via email to the relevant address indicated on the CSSF website on the following pages: AIFM page and management company page. Subsequently, a dedicated eDesk module will be implemented. More details will be provided in due course.

It should be noted that the new templates will no longer allow an investment fund manager to notify management activities under both the UCITS Directive and the AIFMD  by using one template. Separate UCITS and AIFMD notifications will have to be prepared.

Finally, the CSSF attestations (AIFM and / or UCITS) will no longer have to be requested by the entities and added to the notification packages as part of the cross-border marketing and management activities, as they will be generated and added directly by the CSSF to the notification packages.

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Le 25 juin 2024, la Commission de Surveillance du secteur financier (CSSF) a publié de nouveaux modèles de notification pour les activités transfrontalières.

Le 25 mars 2024, la Commission européenne a publié un ensemble de nouvelles normes techniques de réglementation (RTS ou règlements délégués de la Commission (UE) 2024/911 et 2024/912) et de nouvelles normes techniques d'exécution (ITS ou règlements d'exécution de la Commission (UE) 2024/910 et 2024/913) relative à la notification des activités transfrontalières des gestionnaires de fonds d'investissement alternatifs (AIFM), des sociétés de gestion et des organismes de placement collectif en valeurs mobilières (OPCVM).

Suite à cette publication, la CSSF souhaite informer les entités surveillées concernées qu'à compter du 14 juillet 2024, de nouveaux modèles de lettres de notification devront être utilisés pour la notification de leurs activités transfrontalières de gestion et de commercialisation au sein de l'Espace Économique Européen ( EEE). Les nouveaux modèles sont disponibles sur le site internet de la CSSF aux pages suivantes : page AIFM et page société de gestion.

Il est à noter qu'en complément de la lettre de notification principale pour les activités de gestion, l'ESMA a publié un modèle spécifique pour la notification des responsables de succursale. Ce modèle est à joindre aux notifications concernant la création d'une succursale et la modification d'une succursale, le cas échéant.

Dans un premier temps, le processus de transmission des notifications liées aux activités de gestion à la CSSF restera inchangé. Les entités concernées doivent envoyer les formulaires de notification concernés et leurs annexes par courrier électronique à l'adresse appropriée indiquée sur le site internet de la CSSF aux pages suivantes : page AIFM et page société de gestion. Par la suite, un module eDesk dédié sera implémenté. Plus de détails seront fournis en temps utile.

Il convient de noter que les nouveaux modèles ne permettront plus à un gestionnaire de fonds d'investissement de notifier ses activités de gestion au titre à la fois de la directive OPCVM et de la directive AIFM en utilisant un seul modèle. Des notifications distinctes pour les OPCVM et les AIFM devront être préparées.

Enfin, les attestations CSSF (AIFM et/ou UCITS) ne devront plus être demandées par les entités et ajoutées aux dossiers de notification dans le cadre des activités de commercialisation et de gestion transfrontalières, puisqu'elles seront générées et ajoutées directement par les CSSF aux packages de notification.

On June 26 2024, the Luxembourg Stock Exchange (LuxSE) published the revision of the LuxRI Fund Index on July 1 2024.

In accordance with the rules governing the LuxRI Fund index, the executive committee of the Luxembourg Stock Exchange has decided to rebalance the LuxRI Fund index (base 1,000 as at 2013).

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Le 26 juin 2024, la Bourse de Luxembourg (LuxSE) a publié la révision de l'indice LuxRI Fund au 1er juillet 2024.

Conformément aux règles régissant l'indice LuxRI Fund, le comité exécutif de la Bourse de Luxembourg a décidé de rééquilibrer l'indice LuxRI Fund (base 1.000 en 2013).

On June 26 2024, the Luxembourg Stock Exchange (LuxSE) published about the interim revision of the LuxX Index on July 1 2024.

In accordance with the rules governing the LuxX index, the executive committee of the Luxembourg Stock Exchange has decided to rebalance the LuxX index (base 1,000 as at 1999).

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Le 26 juin 2024, la Bourse de Luxembourg (LuxSE) a publié la révision intermédiaire de l'indice LuxX au 1er juillet 2024.

Conformément aux règles régissant l'indice LuxX, le comité exécutif de la Bourse de Luxembourg a décidé de rééquilibrer l'indice LuxX (base 1.000 en 1999).

On June 28 2024, the Commission de Surveillance du secteur financier (CSSF) published a press release on final report on ESMA Common Supervisory Action on the application of MiFID II disclosure rules with regard to marketing communications and advertisements of financial products.

ESMA informed in that context that the overall level of compliance with the applicable rules in the field of marketing communications and advertisements of financial products was satisfactory for most investment firms as well as credit institutions, but that the exercise also showed shortcomings in some areas and the need for improvements in certain key areas.

While the overall analysis of compliance for the investment firms as well as credit institutions in Luxembourg submitted to this CSA is mostly consistent with the conclusions of ESMA’s Final Report, the CSSF requires market participants to comply with ESMA’s recommendations and to take, if applicable, the necessary corrective measures in accordance with applicable regulatory requirements.

The CSSF is currently engaging on a bilateral basis with some entities in relation to the observations made in the context of the CSA exercise, thereby asking these entities to implement the necessary corrective measures for the observed shortcomings.

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Le 28 juin 2024, la Commission de Surveillance du secteur financier (CSSF) a publié un communiqué de presse sur le rapport final sur l'action de surveillance commune de l'ESMA sur l'application des règles de divulgation de MiFID II en ce qui concerne les communications marketing et la publicité des produits financiers.

L'ESMA a indiqué dans ce contexte que le niveau global de conformité aux règles applicables dans le domaine des communications marketing et de la publicité des produits financiers était satisfaisant pour la plupart des entreprises d'investissement ainsi que des établissements de crédit, mais que l'exercice a également montré des lacunes dans certains domaines et nécessité d’améliorations dans certains domaines clés.

Même si l'analyse globale de la conformité des entreprises d'investissement ainsi que des établissements de crédit au Luxembourg soumise au présent CSA est pour l'essentiel cohérente avec les conclusions du rapport final de l'ESMA, la CSSF demande aux acteurs du marché de se conformer aux recommandations de l'ESMA et de prendre, le cas échéant, les mesures correctives nécessaires conformément aux exigences réglementaires applicables.

La CSSF engage actuellement un dialogue bilatéral avec certaines entités au sujet des observations formulées dans le cadre de l’exercice CSA, demandant ainsi à ces entités de mettre en œuvre les mesures correctrices nécessaires aux manquements constatés.

On June 13 2024, the Chambre des députés - Luxembourg adopted the bill 8291 transposing DORA in first constitutional vote.

This draft bill aims to transpose into Luxembourg law DORA and the directive (EU) 2022/2556 as regards digital operational resilience for the financial sector which complements it. The goal is to harmonise the ICT security framework for the financial sector to remedy gaps and inconsistencies.

Entities are expected to use appropriate and proportionate systems, including including information and communication technology systems (hereinafter “ICT”) established and managed as well as appropriate and proportionate resources and procedures.

Entities must have emergency and continuation policies and plans adequate business continuity, including business continuity policies and plans. and ICT response and recovery plans for the technologies they use for communicating information. They must establish, manage and test these plans so that they can continue their activities in the event of serious disruption and limit the losses suffered to following such a disruption. They also must have emergency and continuation policies and plans adequate business continuity, including business continuity policies and plans. and ICT response and recovery plans for the technologies they use for communicating information. Lastly, they must establish, manage and test these plans so that they can continue their activities in the event of serious disruption and limit the losses suffered to following such a disturbance.

Non compliance with the Bill can expose an entity to the following:

• An injunction ordering the entity or person to cease their non-compliance.
• The temporary or permanent stop to practices in breach of the Bill.
• A fine of up to 5 Million euros for natural persons and 5 Million euros or up to 10% of global annual profits for legal persons.
• A public declaration of the breach naming the person.
• A fine of 250 to 250.000 euros for impeding an investigation or continuing a breach after an injunction.

The Bill will come into force on January 17 2025.

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Le 13 juin 2024, la Chambre des députés - Luxembourg Chambre des députés - Luxembourg a adopté le projet de loi 8291 transposant DORA lors du premier vote constitutionnel.

Ce projet de loi vise à transposer dans la loi luxembourgeoise DORA et la directive (UE) 2022/2556 en matière de résilience opérationnelle numérique du secteur financier qui la complète. L’objectif est d’harmoniser le cadre de sécurité des TIC pour le secteur financier afin de remédier aux lacunes et aux incohérences.

Les entités sont censées utiliser des systèmes appropriés et proportionnés, y compris des systèmes de technologies de l’information et de la communication (ci-après « TIC ») établis et gérés ainsi que des ressources et procédures appropriées et proportionnées.

Les entités doivent disposer de politiques et de plans d’urgence et de continuité adéquats pour la continuité des activités, y compris des politiques et des plans de continuité des activités. et des plans de réponse et de rétablissement des TIC pour les technologies qu'ils utilisent pour communiquer l'information. Ils doivent établir, gérer et tester ces plans afin de pouvoir poursuivre leurs activités en cas de perturbation grave et limiter les pertes subies à la suite d'une telle perturbation. Ils doivent également disposer de politiques et de plans d'urgence et de continuité adéquats pour la continuité des activités, y compris des politiques et des plans de continuité des activités. et des plans de réponse et de rétablissement des TIC pour les technologies qu'ils utilisent pour communiquer l'information. Ils doivent enfin établir, gérer et tester ces plans afin de pouvoir poursuivre leurs activités en cas de perturbation grave et limiter les pertes subies à la suite d'une telle perturbation.

Le non-respect du projet de loi peut exposer une entité aux éléments suivants :

• Une injonction ordonnant à l'entité ou à la personne de mettre fin à son non-respect.
• L'arrêt temporaire ou définitif des pratiques contraires au Projet de loi.
• Une amende pouvant aller jusqu'à 5 Millions d'euros pour les personnes physiques et 5 Millions d'euros ou jusqu'à 10% des bénéfices annuels globaux pour les personnes morales.
• Une déclaration publique du manquement nominant la personne.
• Une amende de 250 à 250.000 euros pour entrave à une enquête ou poursuite d'un manquement après une injonction.

Le projet de loi entrera en vigueur le 17 janvier 2025.

On June 24 2024, the Commission de Surveillance du secteur financier (CSSF) invited financial entities considering an Article 60 notification to fill ESMA questionnaire on MiCA.

Financial entities covered by Article 60 of MiCA (Market in Crypto Assets Regulation) will have the option to provide crypto-asset services in the Union equivalent to the services and activities for which they are authorised under relevant EU law. A questionnaire is published in order to understand to what extent firms with a relevant authorisation are planning to notify MiCA services.

If you are an entity covered by Article 60 of MiCA (i.e., credit institution, central securities depository, investment firm, electronic money institution, UCITS management company or an alternative investment fund manager, market operator) and you are considering to provide crypto-related services with reference to the MiCA notification procedure of the aforementioned article, you are kindly requested to fill out a questionnaire regarding your plans under MiCA.

Entities are requested to submit their answers by July 26 2024.

Please note that:

• The questionnaire takes between 15 and 30 minutes to complete (16 questions in total);
• If you answer “no” to question 5 (are you considering to provide crypto-related services, with reference to the MiCA notification procedure), you are not required to complete the other questions;
• Entities which are not covered by Article 60 of MiCA or which do not consider providing crypto-related services with reference to the MiCA notification procedure are not requested to fill in the questionnaire.
• Entities that consider providing crypto-related services but which are not covered by the notification procedure of Article 60 of MiCA are invited to contact the CSSF by referring to the instructions contained in the communiqué published by the CSSF in order to initiate a preliminary dialogue."

Version française

Le 24 juin 2024, la Commission de Surveillance du secteur financier (CSSF) a invité les entités financières envisageant une notification au titre de l'article 60 à remplir le questionnaire de l'ESMA sur MiCA.

Les entités financières couvertes par l’article 60 du MiCA (Market in Crypto Assets Règlement) auront la possibilité de fournir dans l’Union des services sur crypto-actifs équivalents aux services et activités pour lesquels elles sont autorisées en vertu du droit applicable de l’UE. Un questionnaire est publié afin de comprendre dans quelle mesure les entreprises disposant d'une autorisation appropriée envisagent de notifier les services MiCA.

Si vous êtes une entité couverte par l'article 60 du MiCA (à savoir un établissement de crédit, un dépositaire central de titres, une entreprise d'investissement, un établissement de monnaie électronique, une société de gestion d'OPCVM ou un gestionnaire de fonds d'investissement alternatifs, un opérateur de marché) et que vous envisagez de fournir des services liés à la cryptographie en référence à la procédure de notification MiCA de l'article susmentionné, vous êtes priés de remplir un questionnaire concernant vos projets dans le cadre de MiCA.

Les entités sont priées de soumettre leurs réponses avant le 26 juillet 2024.

Veuillez noter que :

• Le questionnaire prend entre 15 et 30 minutes à compléter (16 questions au total).
• Si vous répondez « non » à la question 5 (envisagez-vous de fournir des services liés à la cryptographie, en référence à la procédure de notification MiCA), vous n'êtes pas tenu de répondre aux autres questions.
• Les entités qui ne sont pas couvertes par l'article 60 de la MiCA ou qui n'envisagent pas de fournir des services liés à la cryptographie en référence à la procédure de notification de la MiCA ne sont pas invitées à remplir le questionnaire.
• Les entités qui envisagent de fournir des services liés à la cryptographie mais qui ne sont pas couvertes par la procédure de notification de l'article 60 du MiCA sont invitées à contacter la CSSF en se référant aux instructions contenues dans le communiqué publié par la CSSF afin d'engager un dialogue préliminaire.

On June 26 2024, the Luxembourg Sustainable Finance Initiative (LSFI) published a report on the complexity of ESG (environmental, social and governance) data in the financial sector.

The report highlights several critical issues facing financial institutions when dealing with ESG data:

• Data reliability: The reliability of ESG data remains a key concern, as inconsistencies and inaccuracies can lead to flawed investment decisions.
• Lack of global standards: The lack of universally accepted standards for ESG data makes it difficult to compare and aggregate information across different markets and jurisdictions.
• Transparency: Ensuring transparency of ESG data sources and methodologies is essential to maintaining trust and credibility in ESG reporting.
• Cost: The high costs associated with acquiring and managing ESG data can be a barrier, particularly for smaller institutions.
• Regulatory complexity: Navigating the complex and rapidly changing regulatory landscape around ESG reporting poses additional challenges for financial institutions.

To meet the ESG Data challenges, the LSFI working group has developed a set of best practices tailored to different asset classes, including private assets, listed assets, debt and indirect investments. 

Here are the main recommendations:

• Early engagement and integration: Finance professionals should engage with their portfolio companies at the due diligence stage to integrate ESG data requirements into contractual agreements. This proactive approach can improve the availability and accessibility of relevant data.
• Internal frameworks: It is essential to establish strong internal frameworks within financial institutions to assess and manage ESG data. This includes developing transparent methodologies for data assessment and ensuring consistent disclosure practices.
• Third-party assurance: Financial institutions are encouraged to seek third-party assurance of ESG data to validate its accuracy and reliability. This is essential to maintain data integrity and meet reporting obligations.
• Use of established standards: The use of established standards, such as the UNPRI Factor Map and the ESG Data - Convergence Initiative models, can promote consistency and comparability across different data sets.
• Technology investments: Investing in state-of-the-art technology and implementing accurate data architectures can improve data management and decision-making, and ensure compliance with evolving regulatory requirements.

The report includes a number of practical tools to help finance professionals address ESG data challenges:

• Questionnaire for data providers: A detailed questionnaire designed to help finance professionals assess the quality, reliability and transparency of ESG data provided by third parties. See the questionnaire
• Policy recommendations: Specific recommendations for policy makers to support the standardisation and regulation of ESG data, facilitating a more consistent and reliable reporting environment.
• Best practice documentation: A comprehensive document describing best practice for each asset class, providing useful information for finance professionals to improve their ESG data management processes.

Version française

Le 26 juin 2024, la Luxembourg Sustainable Finance Initiative (LSFI) a publié un rapport sur la complexité des données ESG (environnementales, sociales et de gouvernance) dans le secteur financier.

Le rapport met en évidence plusieurs problèmes critiques auxquels sont confrontées les institutions financières lorsqu’elles traitent des données ESG :

• Fiabilité des données : La fiabilité des données ESG reste une préoccupation majeure, car les incohérences et les inexactitudes peuvent conduire à des décisions d'investissement erronées.
• Absence de normes mondiales : l'absence de normes universellement acceptées pour les données ESG rend difficile la comparaison et l'agrégation des informations entre différents marchés et juridictions.
• Transparence : Assurer la transparence des sources de données et des méthodologies ESG est essentiel pour maintenir la confiance et la crédibilité dans le reporting ESG.
• Coût : Les coûts élevés associés à l'acquisition et à la gestion des données ESG peuvent constituer un obstacle, en particulier pour les petites institutions.
• Complexité réglementaire : naviguer dans le paysage réglementaire complexe et en évolution rapide autour du reporting ESG pose des défis supplémentaires aux institutions financières.

Pour répondre aux enjeux des données ESG, le groupe de travail LSFI a développé un ensemble de bonnes pratiques adaptées aux différentes classes d'actifs, notamment les actifs privés, les actifs cotés, la dette et les investissements indirects.

Voici les principales recommandations :

• Engagement et intégration précoces : les professionnels de la finance doivent collaborer avec les sociétés de leur portefeuille au stade de la diligence raisonnable pour intégrer les exigences en matière de données ESG dans les accords contractuels. Cette approche proactive peut améliorer la disponibilité et l’accessibilité des données pertinentes.
• Cadres internes : Il est essentiel d'établir des cadres internes solides au sein des institutions financières pour évaluer et gérer les données ESG. Cela comprend le développement de méthodologies transparentes pour l’évaluation des données et la garantie de pratiques de divulgation cohérentes.
• Assurance par un tiers : les institutions financières sont encouragées à rechercher une assurance par un tiers pour les données ESG afin de valider leur exactitude et leur fiabilité. Ceci est essentiel pour maintenir l’intégrité des données et respecter les obligations de reporting.
• Utilisation de normes établies : l'utilisation de normes établies, telles que la cartographie factorielle de l'UNPRI et les modèles ESG Data - Convergence Initiative, peut promouvoir la cohérence et la comparabilité entre différents ensembles de données.
• Investissements technologiques : investir dans une technologie de pointe et mettre en œuvre des architectures de données précises peuvent améliorer la gestion des données et la prise de décision, et garantir la conformité aux exigences réglementaires en constante évolution.

Le rapport comprend un certain nombre d’outils pratiques pour aider les professionnels de la finance à relever les défis liés aux données ESG :

• Questionnaire destiné aux fournisseurs de données : Un questionnaire détaillé conçu pour aider les professionnels de la finance à évaluer la qualité, la fiabilité et la transparence des données ESG fournies par des tiers. Voir le questionnaire
• Recommandations politiques : recommandations spécifiques destinées aux décideurs politiques pour soutenir la normalisation et la réglementation des données ESG, facilitant ainsi un environnement de reporting plus cohérent et plus fiable.
• Documentation sur les meilleures pratiques : un document complet décrivant les meilleures pratiques pour chaque classe d'actifs, fournissant des informations utiles aux professionnels de la finance pour améliorer leurs processus de gestion des données ESG.

On June 25 2024, the Bank Negara Malaysia (BNM) published a Policy Document on Operational Procedures for Securities Services.

Two systems are involved in Debt Securities processing, namely FAST and RENTAS. In addition, eSSDS, which is a part of RENTAS, is used for the computation of corporate actions involving Debt Securities and issuance of retail bonds.

These Operational Procedures apply to all RENTAS Debt Securities approved by the Securities Commission of Malaysia, Debt Securities issued by Bank Negara Malaysia (BNM) and the Government of Malaysia, and other approved Debt Securities or money market instruments which are denominated in Ringgit Malaysia (RM) or any other foreign currency. Securities deposited with Bank Negara Malaysia (BNM) under the Cross-Border Securities Custody Services (CSCS) are excluded from the scope of these Operational Procedures.

These Operational Procedures are intended to equip Participants with an effective operating knowledge of the entire process from origination until the final maturity of Debt Securities. It will cover New Issuances, Allotment, Reopening, Coupon / Interest / Dividend / Profit Payment, Redemption and Settlement of Debt Securities via FAST, eSSDS and RENTAS.

Debt Securities created in FAST are automatically interfaced to eSSDS and subsequently to RENTAS for Settlement purposes.

These Operational Procedures came into effect on July 1 2024.

On June 25 2024, the Bank Negara Malaysia (BNM) published a Policy Document in Operational Procedures for Foreign Currency Settlement in the Real Time Electronic Transfer of Funds and Securities System (RENTAS).

The Operational Procedures provides information and procedures that are applicable to Participants using the RENTAS for Foreign Currency Settlement for interbank fund transfers, clearing houses’ transactions and securities trades and corporate actions.

These Operational Procedures are intended to equip Participants with an operating knowledge of Foreign Currency Settlement in RENTAS and serve as a basis for Participants to develop comprehensive internal procedures.

These Operational Procedures came into effect on July 1 2024.

Participants may initiate payment and securities transactions using the Participant Terminals. Of the 3 types of Participant Terminals, Participants shall use the RENTAS Bank Gateway (RBG) or the SWIFT Access as their primary means of initiating and processing RENTAS transactions. 

RENTAS iLINK is a contingency access channel in the event that RBG or SWIFT Access fails. The Participant Terminals transmit the transactions to the RENTAS Host where the transactions are processed by simultaneously debiting the paying Participant and crediting the receiving Participant’s Foreign Currency Settlement Account maintained with BNM or the Participant’s Foreign Currency Settlement Accounts maintained with designated Onshore Settlement Institutions (OSI). Upon completion of funds transfer transactions, RENTAS Host will send completion advices to the paying Participants, while the receiving Participants will receive confirmation advices.

The RENTAS Host will process all transactions on an online and real time basis. Participants may also perform online queries on the status of their transactions and account balances via RENTAS iLINK.

The RENTAS Host consists of the following major modules:

• Inter-bank Funds Transfer System (IFTS);
• MYR Settlement Account System (MYR SAS);
• Foreign Currency Transfer Settlement Account System (MCT SAS);
• Scripless Securities Depository and Settlement System (SSDS);
• Payment vs Payment (PvP) Link to USD CHATS;
• RENTAS Euroclear Link.

In June 2024, the Securities Commission Malaysia (SC Malaysia) published a Practical Guide on Venture Capital and Private Equity in Malaysia.

The aim of this guide is to provide an overview of venture capital (VC) and private equity (PE) fund management practices in Malaysia. Contents in this guide is intended to help prospective fund managers, investors and service providers to better navigate the Malaysian landscape and covers matters on regulations, fund structuring, marketing and tax considerations applicable to VC and PE fund operations. 

This guide is structured in 6 Parts:

• Regulations and registration of VC and PE firms: An overview of capital market regulations and relevant rules applicable to VC and PE firms in Malaysia;
• Fund structuring: Available legal vehicles in Malaysia and structuring considerations for VC and PE funds domiciled in Malaysia;
• Foreign Exchange Policy: Information on applicable foreign exchange policy administered by BNM that may be applicable to investors and, VC or PE funds in Malaysia;
• Tax matters: Information on taxation of VC and PE funds in Malaysia;
• Fund Management Operations: A summary of various services and parties involved in VC and PE fund management operations;
• Fund Marketing: Considerations, practice and process of marketing of VC and PE funds.

This guide is not a regulatory document and should not be taken as legal advice, but instead intended to provide information on relevant rules, policies and practices of the Malaysian VC and PE industry.

On June 24 2024, the Bank Negara Malaysia (BNM) published a Climate Risk Stress Testing Methodology Paper.

Climate change and its impact on the environment and economic agents may pose material risks to the safety and soundness of financial institutions, giving rise to broader implications to the economy and financial system. Recognising the risk from climate change to the financial system in Malaysia, financial institutions are required to conduct climate risk stress testing to assess potential vulnerabilities to various climate scenarios. 

The 2024 Climate Risk Stress Test (CRST) exercise is primarily intended to facilitate financial institutions’ learning and capacity building in addressing risks from climate change. Financial institutions must aim to gain vital hands-on experience in measuring the impact of climate-related risks on their assets, insurance/takaful liabilities and business operations through the 2024 CRST exercise. Although current risk measurement approaches may not yet be sufficiently comprehensive and accurate to produce robust estimates of climate-related risks impact, the 2024 CRST exercise will provide financial institutions an opportunity to refine their existing risk management strategy and explore new stress testing approaches that are relevant for assessing climate-related risks.

More specifically, the 2024 CRST exercise aims to enhance financial institutions’ capabilities in the following areas: 

• Improve understanding and appreciation among board, senior management, and staff of financial institutions on how the business and operations of the financial institutions could be impacted by climate-related risks; 
• Explore novel approaches that could lead to better identification and measurement of financial institutions’ exposures at risk to climate change; and 
• Identify current gaps, specifically those related to data, measurement, methodology, technology, and capabilities, as well as potential solutions to these challenges. 

In carrying out the 2024 CRST exercise, financial institutions are strongly encouraged to collaborate with one another to share experiences, build capacity, and collectively address relevant challenges, for example, sharing of climate-related data that may not be widely available. Financial institutions may leverage on existing industry platforms such as the Joint Committee on Climate Change (JC3) for this purpose.

Given the uncertainty surrounding future climate pathways and evolving approaches for identifying and measuring climate-related risks, the Bank expects the climate risk stress test to become a recurring exercise moving forward. Therefore, financial institutions are expected to continue investing in and improving on the foundations that they have built in preparation for the 2024 CRST exercise.

Financial institutions must ensure that the participation and coverage for the 2024 CRST exercise is as wide as possible considering the fact that all parts of the financial system could be affected by climate change in diverse and distinct ways.

In running the 2024 CRST exercise, financial institutions shall observe the governance process as stipulated in the policy documents on Stress Testing for licensed banks, licensed insurers and takaful operators, respectively.

The Bank does not intend to use the quantitative outcome of the 2024 CRST exercise to calibrate institution-specific capital requirements for climate-related risks.

This methodology paper must be read together with other relevant legal instruments, policy documents, guidelines, circulars, etc. that have been issued by the Bank, in particular:

• Climate Change and Principle-based Taxonomy (CCPT) issued on April 30 2021;
• Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) issued on November 1 2019;
• Stress Testing (for insurers and takaful operators) issued on June 30 2016; 
• Stress Testing (for banking institutions) issued on June 15 2017; and 
• Climate Risk Management and Scenario Analysis (CRMSA) issued on November 30 2022.

Financial institutions must ensure that the participation and coverage for the 2024 CRST exercise is as wide as possible considering the fact that all parts of the financial system could be affected by climate change in diverse and distinct ways.

Financial institutions are required to participate in the 2024 CRST exercise and observe the requirements set out in this methodology paper at the entity level.

To ensure that the 2024 CRST exercise can adequately capture these risks, financial institutions must consider the time horizon for the long-term climate scenarios that will span over a 27-year period from December 2023 (as the starting position) until 2050. Financial institution shall report to the Bank the projected impact of the CRST on an annual basis from 2024 until 2029, followed by a 5-year interval throughout the rest of the stress horizon. Financial institutions are required to submit to the Bank the following: 

• The first projection reporting point is on December 31 2024; 
• An annual recurring projection report at the end-of calendar years 2025, 2026, 2027, 2028 and 2029; and 
• Subsequent projection reporting at the end of calendar years 2030, 2035, 2040, 2045 and 2050, respectively.

The FAQs are intended to provide clarification to financial institutions on common queries in relation to the released methodology paper on “Climate Risk Stress Testing” dated February 29 2024. Some of the questions were the following:

• Does completing the CRST meet the Climate Risk Management and Scenario Analysis policy document (CRMSA PD) requirements on scenario analysis and can the CRMSA deadline be extended to match the 2025 CRST deadline?
• How can financial institutions distinguish between climate scenario analysis and climate stress testing, which can be defined differently in terms of risk severity (implication vs resilience)? BNM CRST MP's Feedback Statement Item 3 states that the CRST exercise can be utilised to support strategies and risk management actions required by principle 12 of the Climate Risk Management and Scenario Analysis policy document (CRMSA PD). This strategy is only acceptable for the inaugural CRST exercise. Is this to be differentiated moving forward?
• How should financial institutions’ credit assessment incorporate the Climate Change and Principle-based Taxonomy (CCPT) assessment into the counterparty-level assessment?
• Should financial institutions factor in the severity (i.e., depth of flood) of the flood events in the assessment?

The Bank received feedback from 83 financial institutions and 8 other stakeholders such as non-financial corporates. Respondents were generally supportive of the CRST, its objectives and overall approach. They suggested for the Bank to reconsider certain parameters of the CRST including the need for greater variation in the climate scenarios selected, a reduction in the minimum number of counterparty-level analysis conducted, and greater sharing of relevant climate and macro-financial data that are calibrated to Malaysia. In addition, respondents also highlighted anticipated challenges faced by financial institutions in preparing for the climate risk stress testing and requested for the Bank to consider a more measured timeline for complying with the CRST.

On June 14 2024, the Bank Negara Malaysia (BNM) published a Policy Document on Capital Adequacy Framework.

Regulatory capital requirements seek to ensure that risk exposures of a financial institution are backed by an adequate amount of high-quality capital which absorbs losses on a going concern basis. This ensures the continuing ability of a financial institution to meet its obligations as they fall due while also maintaining the confidence of customers, depositors, creditors and other stakeholders in their dealings with the financial institution. Capital requirements also seek to further protect depositors and other senior creditors in a gone concern situation by promoting an additional cushion of assets that may be used to meet claims in liquidation.

The Capital Adequacy Framework sets out the approach for computing regulatory capital adequacy ratios, as well as the levels of those ratios at which a financial institution is required to operate. The framework has been developed based on internationally-agreed standards on capital adequacy promulgated by the Basel Committee on Banking Supervision (BCBS).

This policy document sets out the general requirements concerning regulatory capital adequacy, and the components of eligible regulatory capital. It shall be read together with the relevant prevailing policy documents on capital adequacy framework issued by the Bank in relation to risk-weighted assets which details out the requirements for computing risk-weighted assets and other relevant legal instruments and policy documents that have been issued by the Bank.

A financial institution shall hold and maintain, at all times, the following minimum capital adequacy ratios: CET1 Capital Ratio of 4.5%, Tier 1 Capital Ratio 6.0% and Total Capital Ratio 8.0%.

This policy document came into effect on June 14 2024.

On June 14 2024, the BNM also published a Policy Document on Operational Risk and Feedback Statement on it.

This policy document sets out the standards and guidance for the calculation of a financial institution’s operational risk-weighted assets under the Capital Adequacy Framework and Capital Adequacy Framework for Islamic Banks. These requirements are broadly in line with the Basel III standards set by the BCBS and the capital standards issued by the Islamic Financial Services Board (IFSB), and have been modified accordingly where applicable. 

This policy document must be read together with the policy documents as set out in paragraph 1.2, and other relevant legal instruments, policy documents and guidelines that have been issued by the Bank, including any amendments or reissuance thereafter, including Operational Risk Reporting (ORR) issued on November 1 2023.

This policy document supersedes Part C of the Capital Adequacy Framework (Basel II – Risk-Weighted Assets) and Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets) issued on 3 May 2019.

This policy document will come into effect on January 1 2025.

On June 14 2024, the BNM also published a Policy Document on Exposures to Central Counterparties and Feedback Statement on it.

CCP refers to an entity whose business includes the provision of clearing facilities which interposes itself between counterparties for contracts traded in one or more financial markets, becomes the buyer to every seller and the seller to every buyer and thereby ensuring the future performance of open contracts. A CCP becomes a counterparty to trade with market participants through a novation, an open offer system, or other legally binding arrangements.

A financial institution shall be responsible in determining whether a CCP is a QCCP (Qualifying central counterparty) based on the following criteria: 

• The CCP is an entity that is authorised by an appropriate authority in its jurisdiction to operate as a CCP (including an authorisation granted by way of confirming an exemption); 
• The CCP is based in a jurisdiction where it is subject to prudential supervision of a CCP regulator that applies domestic rules and regulations to the CCP that are consistent with the Principles for Financial Market Infrastructures (PFMI) issued by the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions on an ongoing basis; and 
• The CCP permits the financial institution to calculate the capital requirements for their default fund exposures.

As part of the global financial reforms since 2009, central clearing has become an important mechanism to manage counterparty credit risk through its robust margining requirements and loss sharing framework. Financial institutions are also increasingly involved in derivatives transactions that are centrally cleared. 

This policy document is part of the Capital Adequacy Framework and Capital Adequacy Framework for Islamic Banks. It sets out the requirements to manage the risks arising from financial institutions’ exposures to central counterparties in their capacity as a clearing member or as a client of a clearing member.

This policy document will come into effect on January 1 2025.

On June 14 2024, the BNM also published a Policy Document on Standardised Approach for Credit Risk and Feedback Statement on it.

This policy document sets out the standards and guidance for computing capital requirements for credit risk according to the Standardised Approach. The standards and guidance in this document are based on the BCBS Basel framework 1 and the IFSB standard 2 with the objective of promoting the safety and soundness of FIs. Where necessary and appropriate, the requirements from the BCBS Basel framework and IFSB standard have been modified to take into account the unique characteristics of the Malaysian economy and financial system.

This policy document supersedes Part B.2 of the policy document on Capital Adequacy Framework (Basel II – Risk-Weighted Assets) and policy document on Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets) issued on December 18 2023.

For purposes of computing the capital requirements, an FI shall refer to an exposure as an asset or contingent asset under the applicable Financial Reporting Standards, net of specific provisions (including partial write-offs). Under the MFRS 9, specific provisions 4 refer to loss allowance measured at an amount equal to lifetime expected credit losses for credit-impaired exposures, while general provisions 4 refer to:

• Loss allowance measured at an amount equal to 12-month and lifetime expected credit losses; and 
• Regulatory reserves, to the extent that they are ascribed to non-credit-impaired exposures.

This policy document comes into effect on July 1 2026.

On June 5 2024, the Autoriteit Financiële Markten (AFM) amended the Wwft/SW Guidelines for the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) and the Sanctions Act 1977 (Sw). The update is prompted by research findings, the increased focus on Sanctions Regulations and a further explanation of the risk-based approach.

Findings from investigations by the AFM, such as the thematic investigation into Ultimate Beneficial Owners (UBOs), prompted an update of the Wwft/SW Guidelines. The thematic review into the identification and verification of UBOs was conducted by the AFM in 2023/2024. The identification and verification of the UBO is an important part of preventing money laundering and terrorist financing. One finding of the thematic review is that institutions could pay more attention to substantiating the identification and verification of the (pseudo-)UBO and its recording. That is why the Wwft/SW Guidelines elaborate on reasonable measures to identify and verify UBOs, and how to record them.

Furthermore, the Wwft/SW Guidelines have been supplemented in parts of the Sanctions Act in response to the increased attention paid to the Sanctions Regulations, questions from various market parties and investigations by the AFM into compliance with the Sanctions Act.

In addition, the risk-based approach to preventing money laundering and terrorist financing is a topic of discussion. The risk-based approach means that the intensity of measures to prevent money laundering and terrorist financing must be appropriate to the risks. To this end, a risk assessment is important, which forms the basis for determining appropriate policies and measures. The amended AML/SW Guidelines explain the risk-based approach in more detail, including the making of risk assessments, the recording of the risk-based approach in policy, and what the risk-based approach means for customer due diligence, for example in identification and verification, Politically Exposed Persons (PEPs) and continuous monitoring. The Wwft/SW Guidelines have also been updated in other areas.

From the end of 2024, the crypto-asset service providers (CASPs) will also fall under the AML and SW supervision of the AFM. At the end of 2024, the AFM will publish a supplement to the Wwft/SW Guidelines for these parties.

The Scientific Research and Data Centre (WODC) has published the new national risk assessments (NRAs) in the field of money laundering and terrorist financing. The aim of the NRAs is to identify the biggest risks in the area of money laundering and terrorist financing and to better prioritise these risks. This involves looking at EU regulations and recommendations from the Financial Action Task Force (FATF). It is important that the industry takes note of the NRAs and incorporates their findings into the policies, procedures and measures to mitigate and effectively manage the risks that have been identified.

Also of interest is the updated version of the General Guidelines on Wwft of the Ministries of Finance and Justice and Security. These Guidelines have been revised due to constantly evolving laws and regulations. In addition, this updated Guideline provides further clarification on the importance of risk selection of AML institutions on non-discriminatory grounds.

On June 19 2024, De Nederlandsche Bank (DNB) published a press release foreseeing limited liquidity risks in Euro LDI funds.

A characteristic feature of Dutch pension funds is the long-term nature of their liabilities, consisting of pension benefits. Market interest rates determine how much pension funds must set aside to be able to pay future pension benefits. To manage this interest rate risk, Dutch pension funds can use LDI funds. These funds mainly invest in long-term government bonds and long-term interest rate swaps, typically receiving a fixed rate and paying a variable rate with the obligation to exchange collateral. Small pension funds in particular hedge their interest rate risk by investing in LDI funds. Some Dutch life insurers also invest in these funds.

A sudden rise in UK government bond yields in September 2022 resulted in significant losses and margin calls for Sterling LDI funds. The forced sale of UK government bonds by these funds resulted in a negative spiral, with UK government bonds falling further in value and funds facing even greater losses and margin calls. This negative spiral was partly caused by the sizeable market share of Sterling LDI funds in the UK government bond market. For instance, the market share of Sterling LDI funds managed from Ireland in the UK government bond market was estimated to be 10% in August 2022.Eventually, the Bank of England had to intervene. Following these events, several authorities have taken measures to ensure the resilience of Sterling LDI funds. 

LDI funds use interest rate derivatives to increase interest rate sensitivity, which means that they use leverage to a significant extent. As a result of this derivatives exposure, Euro LDI funds face liquidity risks due to the risk of significant margin calls when interest rates rise. Unlike LDI funds in the UK, Euro LDI funds managed from the Netherlands make little or no use of the repo market to borrow money and increase their exposure to European government bonds.

LDI funds' liquidity buffers include cash and cash equivalents, positions in money market funds and short-term government bonds. Relative to the interest rate sensitivity of LDI funds, their buffers are larger than those of Dutch pension funds. This suggests that liquidity risks in LDI funds are smaller than in Dutch pension funds. An important note is that there are differences across LDI funds, which means that for some of them, liquid assets may be depleted in case of smaller interest rate shocks.

The size of Euro LDI funds managed from the Netherlands is small, with a total net asset value of €15 billion as at December 2023. Euro LDI funds hold only an estimated 0.06% of the European government bond market. The allocation to government bonds consists mainly of Dutch, German and French government bonds. Therefore, any forced sale of government bonds by these LDI funds is unlikely to be disruptive to European sovereign bond markets.

On June 27 2024, the Autoriteit Financiële Markten (AFM) posted a DORA update on management, classification and reporting of ICT-related incidents.

In order to limit the effects of ICT-related incidents, it is important that they are adequately detected and handled. This requires a robust management process, consistent classification and registration, and reporting to the regulator. This contributes to greater digital resilience of companies.

This DORA update takes a closer look at the management of ICT incidents, classification and registration of ICT incidents and the reporting of serious ICT incidents and significant cyber threats.

The requirements applicable to ICT-related incidents are set out in the Regulation in Chapter III (Articles 17-23). In addition, some of the requirements are further elaborated in the RTS for Articles 15, 18(3), 20(a) and the ITS for Articles 20(b).

Companies have until January 2025 to comply with the regulations. After that, DORA will officially apply and the AFM and DNB will supervise the regulation. Incidentally, some of the companies are already subject to DORA-related requirements from existing laws and regulations.

On June 12 2024, the Comisión Nacional del Mercado de Valores (CNMV) published questions and answers (Q&A) on the use of distributed ledger technologies (DLT) in the representation of financial instruments.

The document has the aim of clarifying the main doubts raised by the possibility of using systems based on distributed ledger technologies as a form of representation of financial instruments. Until the entry into force of Law 6/2023, of March 17, on Securities Markets and Investment Services, financial instruments could only be represented by securities or book entries. After the revision of the regulations, these can also be represented by DLT. 

Representation using distributed ledger technologies is the characteristic form of cryptoassets. Not all cryptoassets are considered financial instruments, as this will depend on their specific characteristics. Those cryptoassets that by their nature can be classified as financial instruments will be regulated under the regulations of the securities markets based on the criterion of technological neutrality. This form of representation can bring advantages in the issuance, trading and settlement of financial instruments, but the necessary measures should also be incorporated to ensure investor protection and the integrity of market infrastructures. 

Thus, to ensure this protection, the participation of a financial firm authorised to provide investment services (ERIR), which includes custody among its authorised activities, will be necessary to assume responsibility for the proper functioning of the register. The document details the different functionalities and responsibilities of this entity.

On the other hand, within the scope of the future entry into application of the European Regulation on cryptoassets MICA, the CNMV has incorporated a form on its website that aims to collect information on entities that are considering carrying out some of the activities included in the MICA Regulation and, consequently, carry out the corresponding authorisation process. This form is aimed at entities that are not currently supervised by the CNMV or registered in the Bank of Spain's register of providers of virtual currency exchange services for fiat currency and custody of electronic wallets."

On July 1 2024, the Comisión Nacional del Mercado de Valores (CNMV) adopted the updated technical guide on audit committees of public interest entities.

This version updates the text from 2017. At that time, the treatment of information on sustainability and its associated risks were not addressed, which are now incorporated into the new text given the regulations that have come into force since then.

The new text thus adapts to the current regulatory reality and what is already the practice of companies derived from it. Specifically, audit committees must expand and develop their control mechanisms on these matters, in particular, on the transparency with which they must address information on sustainability.

In the final text approved now, the main new features included with respect to the 2017 guide would be the following:

- Change of terminology:

The terminology is adapted to Directive 2022/2464 and the term "sustainability information" is used to refer to environmental, social and governance (ESG) information and the term "non-financial information" is left as a more general term , which would include management information, corporate governance, director remuneration, or risk control and management systems.

This name would also include, in a broad sense, information on sustainability. Likewise, the reference to corporate social responsibility has been replaced by the broader and more appropriate term sustainability.

Along the same lines, the term “non-financial risks” is used in a broad sense, which would expressly include risks related to sustainability and other additional risks, such as, for example, legal, reputational, fiscal, and those derived from competition. or consumer preference, or cybersecurity.

- Clarification of the roles of the audit committee and, where applicable, the audit committee sustainability:

An attempt is made to clarify the roles of the audit committee and the eventual sustainability committees that, where appropriate, are decided to be established. It also highlights the relevance of adequate coordination between them, in a similar way to how this facet is also treated in relation to risk commission, both in the Guide itself and in the Good Governance Code of listed companies.

- Independent verification service provider:

The practices recommended by the Guide in relation to the auditor are extended to the verifier of sustainability information, with the necessary clarifications and adaptations.

- Knowledge:

The Technical Guide considers it desirable that the members of the audit committee, as a whole, gather the necessary knowledge in accounting, auditing, financial, internal control, risk and business management aspects. As a novelty, it is included that it is also considered advisable that they have knowledge related to sustainability.

- Training:

Topics related to sustainability are included, among those that are recommended to be part of the periodic training plan for members of the audit committee.

During the preparation of this Guide, the Law by which the CSRD, the European Directive on the presentation of sustainability information by companies, will be transposed into the Spanish legal system has not yet been approved . However, in the preparation of the Guide, the provisions of the aforementioned Directive, already in force, have been taken into account, as well as, on certain occasions, the draft law that regulates the corporate reporting framework on environmental, social and governance issues, aspects in which the legal text is not expected to undergo significant modifications.

In any case, once the law that transposes the CSRD is approved and published, the convenience and opportunity of including any changes or technical adjustments in the Guide will be analyzed.

On June 6 2024, the Comisión Nacional del Mercado de Valores (CNMV) published a press release on review of application of best execution obligations by investment firms in client transactions.

The CNMV has carried out supervisory actions on compliance with the best execution obligations, regarding a sample of firms providing execution services to clients on equity instruments.

Markets in Financial Instruments Directive (MiFID II) states that firms must take all sufficient steps to obtain the best possible results for their clients when executing their orders, taking into account execution price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order. Nevertheless, where there is a specific instruction from the client the firm shall execute the order following the specific instruction.

While performing the review, CNMV has found several incidents regarding compliance with the aforementioned regulation, which have been informed to firms for their correction. The main ones were as follows:

• Firms do not always perform a comparison of the intermediaries and execution venues selected to execute client orders, particularly regarding costs, or cannot demonstrate it.
• Some firms fail to perform an appropriate execution quality assessment in terms of price.
• Regarding portfolio management services, some firms have not always taken into account that they must perform a best execution analysis that is specific and independent from that carried out for the services of execution or reception and transmission of orders. This analysis must include a comparison of all the execution and transmission costs of the selected intermediary, particularly when it also provides portfolio management services. Firms must be able to demonstrate the result of this comparison.
• It was also found that some firms could not prove the performance of an assessment, on a regular basis, of their order execution policy.

MiFID II states that, when an investment firm executes an order on behalf of a retail client, the best possible result shall be determined in terms of total consideration, representing the price of the financial instrument and the costs related to execution, which shall include all expenses incurred by the client which are directly relating to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.

For the purposes of delivering the best possible result, all fees and costs deriving from the execution of the order in each execution venue suitable for it, must be taken into account. Even though the regulation do not forbid firms to select a single execution venue or financial intermediary, in such cases, firms must justify that this selection allows them to obtain the best possible result for their clients on a consistent basis. 

Finally, firms must monitor the effectiveness of their order execution arrangements and execution policy in order to identify and, where appropriate, correct any deficiencies. In particular, they shall assess, on a regular basis, whether the execution venues and financial intermediaries included in the order execution policy provide the best possible result for the client or whether they need to make changes to their execution arrangements.

The CNMV review has been carried out to assess the procedures applied by:

• a representative sample of firms that provided reception and transmission or execution of orders from clients services in 2022 (26 firms); and
• a representative sample of firms that provided portfolio management services in 2022 (10 firms).

On June 7 2024, the Eidgenössische Finanzmarktaufsicht (FINMA) published a guidance on cyber risks.

FINMA has consistently identified cyber risks as one of the main risks facing the Swiss financial centre for several years now (see Risk monitor). In guidance, FINMA is now providing information on the findings from its supervisory activities in the area of cyber risks and drawing attention to shortcomings it has identified repeatedly. FINMA is also providing further details on the requirements for reporting cyber attacks and conducting scenario-based cyber exercises.

In 2022 and 2023, more than half of the reported cyber attacks involved outsourced services. FINMA also very frequently identifies weaknesses in this area as part of its supervisory activities with regard to cyber risks. In addition to outsourcing, there is a recurring focus on other topics, such as governance in dealing with cyber risks.

Furthermore, FINMA has introduced additional cyber-specific supervisory tools in recent years, such as red teaming and tabletop exercises with the supervised institutions. Red teaming exercises involve security experts taking on the role of an attacker and attempting to breach a company’s cyber security defences by replicating the attack methods of a malicious hacker. In tabletop exercises, a scenario is simulated and played out on paper. The identified risks are continuously analysed, evaluated and summarised in a heat map.

Supervised institutions are obliged to report cyber attacks to FINMA. FINMA also carried out more than a dozen cyber-specific on-site supervisory reviews last year. The reports received from the supervised institutions or audit firms and FINMA’s own cyber-specific on-site supervisory reviews enable FINMA to assess the quality of the supervised institutions’ cyber defences in depth and, if necessary, to take institution-specific measures at an early stage. 

Version française

Le 7 juin 2024, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié une orientation sur les cyber-risques.

Depuis plusieurs années, la FINMA considère les cyber-risques comme l'un des principaux risques auxquels est confrontée la place financière suisse (voir Moniteur des risques). Dans ses orientations, la FINMA informe désormais sur les résultats de ses activités de surveillance dans le domaine des cyber-risques et attire l'attention sur les lacunes qu'elle a constatées à plusieurs reprises. La FINMA fournit également de plus amples informations sur les exigences en matière de déclaration des cyberattaques et de réalisation d'exercices cyber basés sur des scénarios.

En 2022 et 2023, plus de la moitié des cyberattaques signalées concernaient des services externalisés. Dans le cadre de ses activités de surveillance des cyberrisques, la FINMA détecte également très fréquemment des faiblesses dans ce domaine. Outre l’externalisation, l’accent est régulièrement mis sur d’autres sujets, tels que la gouvernance dans la gestion des cyber-risques.

En outre, la FINMA a introduit ces dernières années d'autres outils de surveillance spécifiques à la cybersécurité, tels que des équipes rouges et des exercices de simulation avec les assujettis. Les exercices de red teaming impliquent des experts en sécurité qui jouent le rôle d’un attaquant et tentent de violer les défenses de cybersécurité d’une entreprise en reproduisant les méthodes d’attaque d’un pirate informatique malveillant. Dans les exercices sur table, un scénario est simulé et joué sur papier. Les risques identifiés sont analysés, évalués et résumés en permanence dans une carte thermique.

Les établissements assujettis sont tenus de déclarer les cyberattaques à la FINMA. L’année dernière, la FINMA a également procédé à plus d’une douzaine de contrôles sur place spécifiques à la cybersécurité. Les rapports reçus des établissements assujettis ou des sociétés de révision ainsi que les examens de surveillance sur place spécifiques à la cybersécurité de la FINMA permettent à la FINMA d'évaluer de manière approfondie la qualité de la cyberdéfense des établissements assujettis et, si nécessaire, de prendre à temps des mesures spécifiques.

On June 27 2024, the Eidgenössische Finanzmarktaufsicht (FINMA) announced that  Switzerland and the United States have agreed on the reciprocal exchange of financial data.

The Foreign Account Tax Compliance Act (FATCA) is a US regulation, which has been valid for all countries since January 1 2014. It requires foreign financial institutions to report information about U.S. accounts to the U.S. tax authorities or to collect tax.

Switzerland is currently implementing the FATCA agreement according to Model 2. This means that Swiss financial institutions must pass on the data of US customers directly to the US tax authorities with their consent. To obtain the data of customers who have refused to give consent, the United States must go through the ordinary administrative assistance procedure. On the other hand, Switzerland does not receive any information on accounts held in the United States.

In October 2014, the Federal Council decided to introduce the automatic exchange of information. He then instructed the Federal Department of Finance to start negotiations with the United States with a view to switching from model 2 to model 1. The latter provides that the tax authorities of the two countries concerned exchange information on financial accounts reciprocally. After the change in model, Switzerland will therefore in turn receive data on accounts held in the United States. Swiss financial institutions will no longer provide the required information to the US authorities, but to the Federal Tax Administration (FTA), which will forward it to the US tax authorities.

The implementation of the FATCA agreement requires a change in national law. In Switzerland, this is the responsibility of the Federal Chambers. The current timetable provides that the model change will come into effect on January 1, 2027.

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Le 27 juin 2024, l'Eidgenössische Finanzmarktaufsicht (FINMA) a annoncé que la Suisse et les États-Unis étaient convenus d'un échange réciproque de données financières.

Le Foreign Account Tax Compliance Act (FATCA) est une réglementation américaine valable dans tous les pays depuis le 1er janvier 2014. Elle oblige les institutions financières étrangères à communiquer des informations sur les comptes américains aux autorités fiscales américaines ou à percevoir des impôts.

La Suisse met actuellement en œuvre l'accord FATCA selon le modèle 2. Cela signifie que les institutions financières suisses doivent transmettre les données des clients américains directement aux autorités fiscales américaines avec leur consentement. Pour obtenir les données des clients ayant refusé de donner leur consentement, les États-Unis doivent passer par la procédure ordinaire d’assistance administrative. En revanche, la Suisse ne reçoit aucune information sur les comptes détenus aux Etats-Unis.

En octobre 2014, le Conseil fédéral a décidé d'introduire l'échange automatique d'informations. Il a ensuite chargé le Département fédéral des Finances d'entamer des négociations avec les Etats-Unis en vue de passer du modèle 2 au modèle 1. Ce dernier prévoit que les autorités fiscales des deux pays concernés échangent réciproquement des informations sur les comptes financiers. Après le changement de modèle, la Suisse recevra donc à son tour des données sur les comptes détenus aux Etats-Unis. Les institutions financières suisses ne fourniront plus les informations requises aux autorités américaines, mais à l'Administration fédérale des contributions (AFC), qui les transmettra au fisc américain.

La mise en œuvre de l’accord FATCA nécessite une modification de la législation nationale. En Suisse, cette responsabilité relève des Chambres fédérales. Le calendrier actuel prévoit que le changement de modèle entrera en vigueur le 1er janvier 2027.

On June 19 2024, the Swiss Federal Council published a consultation on amending the Financial Market Infrastructure Act (FinMIA).

The FinMIA governs the organisation and operation of financial market infrastructures, such as exchanges and other trading venues, payment systems or central counterparties. It also subjects participants in securities and derivatives trading to specific rules of conduct, including the obligation to prevent market abuse (insider dealing and market manipulation). Even before the law came into force in 2016, the Federal Council had announced a general review of the law within five years.

In September 2022, the Federal Council took note of an evaluation report by the Federal Department of Finance (FDF). In its report, the FDF concluded that the FMIA had generally demonstrated its effectiveness since its entry into force. In some areas, however, the FDF has found that the law needs to be adapted in response to technological developments and changes in international standards and relevant foreign regulations. On this basis, the Federal Council instructed the FDF to prepare a draft amendment to the law in order to address the identified action needs and to submit it to the FDF for consultation. This project is also an opportunity to simplify certain provisions and remove current legal uncertainties.

Its main elements are as follows:

Financial market infrastructures: Targeted amendments aim to prevent the failure of systemically important financial market infrastructures. The failure of such a financial market infrastructure as a central counterparty could seriously jeopardise the stability of the global financial system and ultimately the reputation and competitiveness of the Swiss financial centre. In this regard, it is planned in particular to strengthen capital requirements, improve the regulations applicable to liquidation and clarify the requirements for payment systems.

Derivatives trading: Foreign supervisors will have easier access to Swiss trade repositories, which will make it possible to better identify global risks to the stability of the derivatives market. In addition, small companies active in a sector other than the financial sector, namely small non-financial counterparties, will be able to benefit from additional relief.

Market abuse: Targeted measures will improve the prevention, identification and punishment of insider dealing and market manipulation. It is important to have a robust system in place against market abuse to ensure that the Swiss financial centre has the confidence of market participants and enjoys a good international reputation. In particular, the broad outlines of issuer obligations that are important to ensure market integrity will now be enshrined in law. These obligations are currently included in the regulation of stock exchanges. In addition, FINMA will monitor market abuse on all trading venues.

Version française

Le 19 juin 2024, le Conseil fédéral a publié une consultation sur la modification de la loi sur l'infrastructure des marchés financiers (LinMIA).

La FinMIA régit l'organisation et le fonctionnement des infrastructures des marchés financiers, telles que les bourses et autres plates-formes de négociation, les systèmes de paiement ou les contreparties centrales. Elle soumet également les participants au négoce de valeurs mobilières et de produits dérivés à des règles de conduite spécifiques, parmi lesquelles l'obligation de prévenir les abus de marché (opérations d'initiés et manipulations de marché). Avant même l’entrée en vigueur de la loi en 2016, le Conseil fédéral avait annoncé une révision générale de la loi d’ici cinq ans.

En septembre 2022, le Conseil fédéral a pris connaissance d'un rapport d'évaluation du Département fédéral des finances (DFF). Dans son rapport, le DFF concluait que la LIMF avait globalement démontré son efficacité depuis son entrée en vigueur. Dans certains domaines, le DFF estime cependant que le droit doit être adapté aux évolutions technologiques et aux changements des normes internationales et des réglementations étrangères pertinentes. Sur cette base, le Conseil fédéral a chargé le DFF d'élaborer un projet de modification de la loi afin de répondre aux besoins d'action identifiés et de le soumettre au DFF pour consultation. Ce projet est également l'occasion de simplifier certaines dispositions et de lever les incertitudes juridiques actuelles.

Ses principaux éléments sont les suivants :

Infrastructures des marchés financiers : des modifications ciblées visent à prévenir la défaillance d’infrastructures des marchés financiers d’importance systémique. La défaillance d’une telle infrastructure des marchés financiers en tant que contrepartie centrale pourrait sérieusement compromettre la stabilité du système financier mondial et, en fin de compte, la réputation et la compétitivité de la place financière suisse. A cet égard, il est prévu notamment de renforcer les exigences en matière de capital, d'améliorer la réglementation applicable en matière de liquidation et de clarifier les exigences en matière de systèmes de paiement.

Négoce de produits dérivés: les autorités de surveillance étrangères auront plus facilement accès aux référentiels centraux suisses, ce qui permettra de mieux identifier les risques mondiaux pesant sur la stabilité du marché des produits dérivés. Par ailleurs, les petites entreprises actives dans un secteur autre que le secteur financier, à savoir les petites contreparties non financières, pourront bénéficier d'allègements supplémentaires.

Abus de marché : des mesures ciblées amélioreront la prévention, l’identification et la sanction des délits d’initiés et des manipulations de marché. Il est important de disposer d'un système solide contre les abus de marché afin de garantir que la place financière suisse jouisse de la confiance des acteurs du marché et d'une bonne réputation internationale. En particulier, les grandes lignes des obligations des émetteurs qui sont importantes pour garantir l’intégrité du marché seront désormais inscrites dans la loi. Ces obligations sont actuellement inscrites dans la régulation des bourses. La FINMA surveillera en outre les abus de marché sur toutes les places de négoce.

On June 12 2024, the Eidgenössische Finanzmarktaufsicht (FINMA) published a guidance on operational risk management by fund management companies and managers of collective assets.

In its ongoing supervision, FINMA has determined that operational risks at supervised institutions are increasing due to digitalisation. At the same time, FINMA has increasingly noticed weaknesses in operational risk management by fund management companies and managers of collective assets. 

Against this background, FINMA is issuing guidance to make fund management companies and managers of collective assets aware of the importance of appropriate operational risk management. In this guidance, it lists the general principles of appropriate risk management, which also apply to the management of operational risks. FINMA also describes measures to ensure appropriate management of risks in the areas of information and communication technology, data, cyber, business continuity, legal and compliance as well as outsourcing.

Version française

Le 12 juin 2024, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié des lignes directrices sur la gestion des risques opérationnels par les directions de fonds et les gestionnaires de fortune collective.

Dans le cadre de sa surveillance continue, la FINMA a constaté que les risques opérationnels au sein des assujettis augmentent en raison de la numérisation. Parallèlement, la FINMA constate de plus en plus de faiblesses dans la gestion des risques opérationnels par les directions de fonds et les gestionnaires de fortune collective.

Dans ce contexte, la FINMA publie des orientations visant à sensibiliser les directions de fonds et les gestionnaires de fortune collective à l'importance d'une gestion appropriée des risques opérationnels. Dans ce guide, elle énumère les principes généraux d’une gestion appropriée des risques, qui s’appliquent également à la gestion des risques opérationnels. La FINMA décrit également des mesures visant à assurer une gestion appropriée des risques dans les domaines des technologies de l'information et de la communication, des données, du cyber, de la continuité des activités, du droit et de la conformité ainsi que de l'externalisation.

On June 19 2024, the Swiss Federal Council evaluated the the financial sector's progress in preventing greenwashing.

In December 2022, the Federal Council published its position on the prevention of greenwashing in the financial sector. Greenwashing is when customers are misled about the sustainability of financial products and services. In October 2023, after discussions with the authorities, umbrella associations and non-governmental organisations concerned, the Federal Department of Finance (FDF) informed the members of the government that it would submit a draft ordinance to implement the Federal Council's position to them by the end of August 2024. However, he indicated that he would forego regulatory work if the financial sector presented self-regulation that effectively implemented this position. Since then, the FDF has started regulatory work and consulted interested parties.

The Federal Council has now taken note of the newly developed self-regulations adopted by the Swiss Bankers Association, the Asset Management Association Switzerland and the Swiss Insurance Association. These self-regulations will be published and will enter into force shortly, with transitional deadlines for their implementation being provided for until January 1 2027. They set out various aspects of the Federal Council's position, in particular with regard to the definition of sustainable investment targets, the description of the sustainability approaches applied, the obligation to report in this area and the verification of implementation by an independent third party. There are still some open questions regarding the requirements of self-regulation being considered fulfilled in the event of the application of European law, the permissible reference framework for sustainability objectives and implementation.

In view of these latest developments, as well as the ongoing work of the European Union to amend the Sustainability Reporting Regulation in the financial services sector (Regulation [EU] 2019/2088) and the considerable importance of the European market for the Swiss financial centre, the Federal Council is refraining from drawing up a state regulation for the prevention of greenwashing in the financial sector for the time being. However, it instructs the FDF to reassess the need to take measures to fully implement its position as soon as the European Union has published any amendments to Regulation (EU) 2019/2088, but until the end of 2027 at the latest.

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Le 19 juin 2024, le Conseil fédéral suisse a évalué les progrès du secteur financier dans la prévention du greenwashing.

En décembre 2022, le Conseil fédéral a publié sa position sur la prévention du greenwashing dans le secteur financier. L’écoblanchiment survient lorsque les clients sont induits en erreur sur la durabilité des produits et services financiers. En octobre 2023, après avoir discuté avec les autorités, les associations faîtières et les organisations non gouvernementales concernées, le Département fédéral des finances (DFF) a informé les membres du gouvernement qu'il leur soumettrait un projet d'ordonnance visant à mettre en œuvre la position du Conseil fédéral d'ici le fin août 2024. Il a toutefois indiqué qu’il renoncerait au travail de réglementation si le secteur financier présentait une autorégulation mettant effectivement en œuvre cette position. Depuis, le DFF a entamé des travaux de réglementation et consulté les parties intéressées.

Le Conseil fédéral a pris note des nouvelles autoréglementations adoptées par l'Association suisse des banquiers, l'Association suisse des gestionnaires de fortune et l'Association Suisse d'Assurances. Ces autoréglementations seront publiées et entreront en vigueur prochainement, des délais transitoires pour leur mise en œuvre étant prévus jusqu'au 1er janvier 2027. Elles reprennent différents aspects de la position du Conseil fédéral, notamment en ce qui concerne la définition d'objectifs d'investissement durable. , la description des démarches de durabilité appliquées, l'obligation de reporting dans ce domaine et la vérification de la mise en œuvre par un tiers indépendant. Certaines questions restent ouvertes concernant les exigences d'autorégulation considérées comme remplies en cas d'application du droit européen, le cadre de référence autorisé pour les objectifs de durabilité et la mise en œuvre.

Compte tenu de ces derniers développements, ainsi que des travaux en cours de l'Union européenne visant à modifier le règlement sur le reporting durable dans le secteur des services financiers (règlement [UE] 2019/2088) et de l'importance considérable du marché européen pour la place financière suisse , le Conseil fédéral s'abstient pour l'instant d'élaborer un règlement national visant à prévenir le greenwashing dans le secteur financier. Il charge toutefois le DFF de réévaluer la nécessité de prendre des mesures pour mettre pleinement en œuvre sa position dès que l'Union européenne aura publié d'éventuelles modifications du règlement (UE) 2019/2088, mais au plus tard fin 2027.

On June 3 2024, the Financial Conduct Authority (FCA) published a notice of first decision on Article 21(3) of the Benchmarks Regulation (BMR).

FCA has decided to compel ICE Benchmark Administration Limited (IBA) to continue publishing the following LIBOR versions:

• 1-month US Dollar LIBOR,
• 3-month US Dollar LIBOR, and
• 6-month US Dollar LIBOR.

The compulsion period shall be for 3 months starting immediately after the publication of the US Dollar LIBOR Versions on June 28 2024 is concluded and ending immediately after the final publication on September 30 2024.

The LIBOR panel banks ceased contributing input data in respect of the US Dollar LIBOR Versions after June 30 2023. IBA notified the FCA that it intended to cease providing the US Dollar LIBOR Versions after June 30 2023 unless the FCA was to exercise its powers to require IBA to continue to publish the US Dollar LIBOR Versions on a “synthetic” basis. The FCA subsequently required IBA to continue publication of the US Dollar LIBOR Versions, under a changed, “synthetic” methodology, which was no longer representative, for an additional year after June 30 2023 (Initial Compulsion). Upon review, the FCA is able to extend this period of compulsion by up to 12 months, where necessary.

On June 20 2024, the Financial Conduct Authority (FCA) published a research note on digital engagement practices.

Trading apps, platforms that allow users to buy and sell investment products predominantly via applications on their phones, have dramatically transformed the retail investment arena. They have granted consumers much wider access to a variety of products, from fractional shares to riskier assets like cryptoassets and ‘contract for differences’ (CFDs). They have also packaged this functionality in an interactive interface that, alongside more widespread advertising, has appealed to a wider customer base. In the first four months of 2021 alone, four trading app firms reported 1.15 million new accounts in the UK - nearly double that of all other retail investment platforms combined. In the three years since, these same four firms have opened a further 2.47 million new accounts in the UK. Many of these new users are younger and possess less investing experience than the average investor.

While these platforms have increased market participation, the FCA and other global regulators  have raised concerns regarding the design features used by some trading apps and the impact they may have on investor behaviour. Many features are now referred to under the collective term, digital engagement practices (DEPs) – “design elements or features designed to engage retail investors on digital platforms. This is a definition which subsumes the concept of gamification – “the use of game design elements in non-game contexts”.

The concerns are that these DEPs, if successful in increasing user engagement on trading apps, might encourage increased trading frequency and risk taking in a manner inconsistent with the investment objectives of users. The concern about trading frequency is based on research that has demonstrated that trading more - and so incurring more fees and being more likely to succumb to behavioural biases (like selling winning investments whilst holding losing investments) – leads to poorer financial returns.

Since trading more or increasing risk-taking has the potential to lead to poor consumer outcomes, especially if consumers are unaware of or are unintentionally changing their investment behaviour as a result of DEPs, this may be of relevance to firms in light of their obligations under the FCA’s Consumer Duty. The Consumer Duty - which came into force in the UK on July 31 2023 for on-sale products and services - consists of a set of outcomes-focused rules which compel firms to act to deliver good outcomes for retail customers. It requires firms to act in good faith, avoid causing foreseeable harm and enable and support retail customers to pursue their financial objectives. Of particular relevance to this work is the expectation under the Duty that firms avoid “designing features which exploit the behavioural biases of consumers".

On June 3 2024, the United Kingdom published the Digital Markets, Competition and Consumers Act 2024.

Chapter 1 of the Act confers functions on the Competition and Markets Authority (CMA) in relation to the regulation of competition in digital markets, and makes related provision.

Chapter 2 makes provision about the designation of undertakings as having strategic market status in respect of a digital activity.

Chapter 3 provides for the CMA to be able to impose conduct requirements on a designated undertaking.

Chapter 4 provides for the CMA to take steps to promote competition where it considers that activities of a designated undertaking are having an adverse effect on competition.

Chapter 5 makes provision about a duty to report certain possible mergers involving a designated undertaking.

Chapter 6 makes provision about investigatory powers and compliance reports in relation to a designated undertaking.

Chapter 7 makes provision about enforcement and appeals in relation to functions of the CMA under this Part.

Chapter 8 makes provision about administration and other matters in relation to functions of the CMA under this Part.

The Digital Markets, Competition and Consumers Bill will create a regime to empower the CMA to regulate and increase competition in digital markets.

The bill also updates powers to enforce competition law and resolve consumer disputes, and protects consumers from unfair commercial, subscription, prepayment and saving schemes.

Effective cross-economy competition and strong consumer protection are critical features of well-functioning markets. Competition stimulates innovation across the economy and helps to drive productivity growth, ultimately raising living standards. Strong consumer rights play an essential part in fair, free and competitive markets by providing consumers with the information and confidence to choose how and where to spend their money.

However, recent evidence suggests that UK competition and consumer law is failing to keep pace with market developments. Overall levels of competition may have declined since the legislative framework was last overhauled in 1998, and further since the 2008 financial crisis.

On June 5 2024, the Financial Conduct Authority (FCA) published a speech on international regulatory developments affecting investment management.

Thes speech is delivered by Nikhil Rathi, FCA Chief Executive.

UK asset management – the second largest asset management centre in the world, responsible for £11 trillion of mainstream assets, roughly half of which is managed for overseas clients – is a global success story for the UK. It is undoubtedly a sector where the UK holds a comparative advantage.

It is one that, in addition to the 46,000 direct jobs and 80,000 indirect roles it sustains, holds the key to 75% of UK's wealth in retirement, and the liquidity on which investment in the real economy so often relies. Many of these jobs are located across the UK, with more than 13,000 of them in Scotland, where nearly 1 in every 5 pounds (16%) of UK Assets Under Management is managed.

Through the FCA's domestic initiatives, such as the Digital Securities Sandbox and the FCA's project work on fund tokenisation, the FCA has been working to support firms as they innovate with the tokenisation of financial assets and Distributed Ledger Technology (DLT).

The FCA has undertaken work, for example, to identify whether there are any significant regulatory barriers to the adoption of fund tokenisation models, based on use cases the FCA is seeing in the UK market. Here the FCA has been working closely with the technology working group, where the Investment Association (IA) is leading the work. Through those experiences, the FCA has concluded that to fully reap the rewards that tokenisation offers of efficiency, liquidity, and accessibility, the FCA needs globally connected networks to support globally connected firms.

The FCA is participating in Project Guardian, in partnership with the Monetary Authority of Singapore (MAS), Japan’s FSA and the Swiss Regulator FINMA. This is a collaborative initiative with the financial services industry on asset and fund tokenisation. As well as sharing knowledge the FCA is jointly examining the benefits, regulatory challenges and commercial use cases of asset and fund tokenisation.

The FCA has been closely engaging with firms to understand their tokenisation use cases and identify regulatory barriers to adoption. The FCA stands ready to test a number of these use cases in the FCA's regulatory sandboxes.

Advanced analytics of massive data sets guide investment decisions, assess risks, and mark portfolio managers’ school reports.

The FCA has welcomed the increased engagement from Big Tech and data service providers. The speech also discusses artificial intelligence in which the FCA Chair sets out a series of questions. This includes that whilst the FCA is a technology neutral regulator, it still has an objective to ensure market integrity. With that in mind, how can the FCA guard that in a stampede to maximise profits, the use of the most advanced AI in trading does not lead to market manipulation?

One of the top concerns was the FCA's authorisations times, and the FCA has sped these up significantly. Between January and March this year, 98.1% of authorisation applications were determined within the statutory deadline. The FCA has started to introduce automated forms which will make the process even more efficient.

The FCA also recognises that a few years ago a significant concern for the industry was the size of the Financial Services Compensation Scheme (FSCS) levy and the FCA set itself a goal of reducing it over time.

The FCA wanted to take steps to make sure that the 'polluter pays' principle applied – so that the cost was distributed in a fair way. And this was achieved by prevention, by deploying more assertive supervisory action, a more robust yet efficient authorisations gateway as well as through the FCA's aim to make the 'polluter pay', with a more proactive approach to redress where there has been the risk of significant harm.

On June 14 2024, the Bank for International Settlements (BIS) published results of the 2023 BIS survey on central bank digital currencies (CBDC) and crypto.

Ninety-four percent of surveyed central banks are exploring a CBDC. The survey suggests that central banks are proceeding at their own speed, taking diverse approaches and considering different design features. Over the course of 2023, there has been a sharp uptick in experiments and pilots with wholesale CBDCs – mainly in advanced economies (AEs), but various emerging market and developing economies (EMDE) also stepped up their wholesale CBDC work. 

Overall, the likelihood that central banks will issue a wholesale CBDC within the next six years now exceeds the likelihood that they will issue a retail CBDC. Central banks further enhanced their engagement with stakeholders to inform CBDC design. Many CBDC features are still undecided. 

Yet, interoperability and programmability are often considered for wholesale CBDCs. For retail CBDCs, more than half of central banks are considering holding limits, interoperability, offline options and zero remuneration. Differences exist between AEs and EMDEs, for example with respect to the potential use of a distributed ledger and transaction limits. On crypto, the survey indicates that, to date, stablecoins are rarely used for payments outside the crypto ecosystem. Moreover, about two out of three responding jurisdictions have or are working on a framework to regulate stablecoins and other cryptoassets.

On June 27 2024, the International Swaps and Derivatives Association (ISDA) published a framework to prepare for close out of derivatives contracts.

ISDA has published a new interactive digital framework that market participants can use to help prepare for potential terminations of collateralized derivatives contracts.

Launch of the ISDA Close-out Framework is in response to the March 2023 failure of Signature Bank and SVB in the US, which highlighted the complexities of potentially terminating over-the-counter derivatives trading relationships following various post-crisis regulatory reforms. Specifically, in-scope entities are now required to post margin for non-cleared derivatives transactions, while various jurisdictions have introduced mandatory stays on termination rights and remedies as part of bank resolution regimes.

The ISDA Close-out Framework is intended to be used as a preparatory resource to help firms coordinate internal business functions and stakeholders and internal and external legal, operational, risk management, infrastructure and other relevant service providers to ensure they are adequately prepared for any potential future stress events.

The framework includes high-level analysis of the default mechanics and collateral enforcement provisions in ISDA documentation, along with additional commentary on bank resolution legislation in the US and Europe.