On 16 December 2021, the European Banking Authority (EBA) published its revised Guidelines on risk-based supervision of credit and financial institutions’ compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. The Guidelines set out the steps supervisors should take to ensure adequate AML/CFT oversight of their sector and support the adoption, by credit and financial institutions, of effective ML/TF risk management policies and procedures.  The EBA decided to update and strengthen these Guidelines in light of the findings from its ongoing work to review competent authorities’ approaches to AML/CFT supervision. These findings suggest that some competent authorities found the implementation of the risk-based approach to AML/CFT supervision challenging.

The revised Guidelines build on the existing 4-step approach to the risk-based AML/CFT supervision and provide additional guidance on ML/TF risk assessments, including the sectoral risk assessment. They also help supervisors choose the most effective tools to meet their supervisory objectives, including in situations when they have identified breaches and weaknesses in institutions’ systems and controls framework and emphasise the importance of cooperation between AML/CFT supervisors and other stakeholders, including prudential supervisors, Financial Intelligence Units (FIUs) and tax authorities. This cooperation can happen, for example, in AML/CFT colleges, which are permanent structures that bring together AML/CFT supervisors to exchange information relating to institutions that operate on a cross-border basis in at least 3 Member States (AML/CFT colleges are further explained in the related factsheets).  

Upon their entry into force, the Guidelines will foster greater convergence of supervisory practices across the EU and, as a result, will contribute to further strengthening Europe’s AML/CFT defences before the new legal framework enters into force.

On 17 December 2021, the European Securities and Markets Authority (ESMA) updated the Q&As on the Central Securities Depositories Regulation (17.12.2021).

The purpose of this document is to promote common supervisory approaches and practices in the application of CSDR. It provides responses to questions posed by the general public, market participants and NCAs in relation to the practical application of CSDR.

The following changes were made to the Q&As:

On Settlement Discipline Questions

Question 6 – Settlement instructions sent by CCPs

(d) How should a CCP sending a settlement instruction stemming from the netting of transactions executed in various trading places populate such a field with the ‘place of trading’?

(d) Subject to the CCP being able to retrieve the original place of trading for each constituent transaction, a CCP’s netted settlement instruction ‘place of trading’ field could be populated with the ‘place of trading’ chosen by the CCP. Please note that, in order to benefit from the penalty rate applicable to financial instruments traded on SME growth markets (as set out in the Annex to the Commission Delegated Regulation (EU) 2017/389), transactions traded on SME growth markets should not be netted with transactions traded in other trading places (see also Settlement Discipline Question 3(d)).

Question 9 – Participants’ settlement efficiency

Which settlement fails should be taken into account when calculating a participant's rate of settlement efficiency in accordance with Article 39(2) of the RTS on settlement discipline?

The settlement fails to be used for this calculation should cover, for each participant, all the participant’s accounts opened/operated by the respective participant in a CSD securities settlement system: the participant’s own accounts and the participant’s client accounts. In addition, for all these accounts of a participant, the calculation should not take into account settlement fails where the settlement fail cannot be attributed to the participant (e.g. when the settlement fail is caused by the participant’s counterparty).

On 21 December 2021, the Association for Financial Markets in Europe (AFME) published Guidance on Cash Penalties under CSDR Settlement Discipline.

In order for a penalty to be applied, the instruction must be settling at an in-scope CSD (i.e. it is listed on ESMA’s CSD Register). This means that internalised settlement instructions will not be in scope for cash penalties, unless the Settlement Internaliser (SI) chooses to independently calculate and apply penalties. 

AFME recommends that settlement agents or custodians inform clients of any settlement instruction which was internalised and not sent to the CSD, and would therefore not be in scope of cash penalties. This can be achieved using the INTS indicator under the STCO qualifier on relevant SWIFT messages. 

In case of cross-CSD settlement, where the “actual place of settlement” is a third-country-based CSD outside the scope of CSDR, no cash penalties will be applied. 

All types of transaction are in scope, although there are exceptional situations where the cash penalty mechanism should not apply: 

a. Corporate actions on stock (identified by ISO code “CORP”) 

b. Settlement instructions involving cash settlement outside the securities settlement system operated by the CSD if, on the respective day, the relevant payment system is closed for settlement 

c. Technical impossibilities at the CSD level that prevent settlement, such as: a failure of the infrastructure components, a cyber-attack, network problems, etc. 

d. In case of ISIN suspension from settlement due to a reconciliation issue under Article 65 (2) and (6) of the RTS on CSD Requirements 

e. In case of ISIN suspension from trading.

On 15 December 2021, the European Union Agency for Cybersecurity (ENISA) published Joint Statement on Log4Shell.

The CSIRTs Network members are continuously updating a list of vulnerable software, which is maintained by the Dutch National Cyber Security Centre. It is important that adequate mitigation measures are applied in a timely manner and that organisations follow the guidance of their national cybersecurity authorities. The latest advisories published by the CSIRTs Network Members can be found in their relevant official communication channels. Organisations may also refer to guidance given by CERT-EU.

On 17 December 2021, the European Commission (EC) reminded that the new rules on whistleblower protection start to apply in the EU.

The new EU-wide rules on whistleblower protection, outlined in the the Whistleblower Protection Directive, enter into application. The new law guarantees a high level of protection for persons who report breaches of EU law. The Directive provides for effective and widely available reporting channels and for robust protection of whistleblowers, working in both public and private sector across the EU. 

The Directive covers many key EU policy areas, from anti-money laundering, data protection, protection of financial interests of the Union, food and product safety to public health, environmental protection and nuclear safety.

The Commission encourages Member States, when transposing the Directive, to extend its scope of application to other areas, to ensure a comprehensive and coherent framework at national level. If Member States fail to fulfill their obligations, the European Commission will not hesitate to take legal steps to enforce compliance with the rules.

On 23 December 2021, the European Central Bank (ECB) published SCoRE - Corporate Actions: Single Collateral Management Rulebook for Europe.

This is the second version of the Single Collateral Management Rulebook for Europe (ScoRE) to incorporate updates stemming from further work conducted by the Collateral Management Harmonisation Task Force’s Asset Servicing Expert Group.

The SCoRE CA Standards cover three distinct areas: 

• processing of corporate actions on securities held in custody (through the chain of (I)CSDs and intermediaries); 
• processing of corporate actions for bilateral collateral management (also involving Eurosystem central banks); 
• processing of corporate actions for triparty collateral management

On 2 December 2021, the Council of the EU published the final text of the  Directive of the European Parliament and of the Council amending Directive 2009/65/EC as regards the use of key information documents by management companies of undertakings for collective investment in transferable securities (UCITS).

• The date of application of the Delegated Regulation requiring to produce a KID is no longer set for 30 June 2022, but it should reflect the need to give those management companies, investment companies, and persons advising on, or selling, units of UCITS, sufficient time to  prepare for the end of the transitional arrangement and thus for the obligation to produce a KID;
• The transitional arrangement of Regulation (EU) No 1286/2014 is amended and is extended until 31 December 2022;
• Retail investors in PRIIPs interested in acquiring units of UCITS would receive, as of 1 January 2023 (and not 1 July 2022), both documents for the same financial product. This also means that for investors other than  retail investors, investment companies and management companies should continue to draw up a ‘key investor information’ in accordance with Directive 2009/65/EC, unless they decide to draw up a ‘key information document’ as set out in Regulation (EU) No 1286/2014, in which case they should not be required by competent authorities to provide the 'key investor information', and only the ‘Key information document’ should then be provided to those investors. 
• Member States shall ensure that competent authorities do not require an investment company or, for any of the common funds it manages, a management company to draw up key investor information as set out in Articles 78 to 82 and Article 94 of this Directive where it draws up, provides, revises and translates a key information document which complies with the requirements for key information documents set out in Regulation (EU) No 1286/2014.
• Member states shall apply those measures from 1 January 2023 (and not 1 July 2022)
• Member States shall communicate to the Commission the text of the main measures of national law which they adopt in the field covered by this Directive

On 17 December 2021, the European Securities and Markets Authority (ESMA) updated the Q&A on the Application of the AIFMD.

Following changes have been added to the Q&A:

Section XI: Scope

* Question 2 : Are managers of undertakings investing in crypto-assets subject to the AIFMD?

Answer 2 : It is important to assess on a case-by-case basis whether the relevant undertaking meets the definition of an ‘AIF’ as legally defined in Article 4(1)(a) of the AIFMD. In this context, market participants and NCAs should pay attention to the guidance provided in the ESMA Guidelines on key concepts of the AIFMD (ESMA/2013/611).

Collective investment undertakings raising capital from a number of investors to invest in crypto-assets in accordance with a defined investment policy for the benefit of those investors will qualify as ‘AIF’ in accordance with Article 4(1)(a) of the AIFMD. As the AIFMD does not provide for a list of eligible or non-eligible assets, AIFs may in principle invest in any traditional or alternative assets as long as the AIFM can ensure compliance with the AIFMD. However, more specific investment and risk diversification requirements for AIFs investing in cryptoassets as well as limitations regarding the target investors of such AIFs may exist at national level.

In this context, ESMA reminds market participants and investors of the high risks involved in investments in crypto-assets as previously stated in the joint ESMA, EBA and EIOPA warning from February 2018 (ESMA50-164-1284). Market participants and investors should therefore be alert to the high risks of buying and/or holding these assets, including the possibility of losing all their money.

On 17 December 2021, the European Securities and Markets Authority (ESMA) updated the Q&A on the application of the UCITS Directive.

The update concerns the following:

Issuer concentration

Question 5c: Article 54 of Directive 2009/65/EC permits competent authorities to authorise UCITS to invest up to 100% of their assets in transferable securities issued by certain issuers e.g. sovereigns. Do the six different issues mentioned in Article 54(1), third subparagraph of the UCITS Directive refer to any kinds of issues of transferable securities and money market instruments or must they be guaranteed by a Member State, one or more of its local authorities, a third country or a public international body to which one or more Member States belong? If the UCITS holds more than six different issues, must all of these issues comply with the 30 % limit?

Answer 5c: Pursuant to article 54(1) of the UCITS Directive, UCITS cannot invest up to 100% of their assets in transferable securities or money markets instruments that are not issued nor guaranteed by a Member State, one or more of its local authorities, a third country or a public international body to which one or more Member States belong. In addition, Article 54(1) of the UCITS Directive unambiguously provides that if a UCITS holds more than six issues in transferable securities and money market instruments issued or guaranteed by a Member State, one or more of its local authorities, a third country or a public international body to which one or more Member States belong, all the issues should respect the 30% limit (i.e. even if the UCITS holds more than 6 issues).

Question 5d: Where a UCITS has a hedged share class in a different currency, should unrealised FX profits and losses be counted towards the NAV of the hedged share class and accordingly be taken into account when calculating the counterparty risk limit of Article 52(1) of the UCITS Directive?

Answer 5d: FX forward are OTC instruments. This means that when UCITS invest in this type of instruments for currency hedging purposes in a share class they should comply with the counterparty risks limits laid down in Article 52(1) of the UCITS Directive in respect to the NAV of the share class as provided in paragraph 26a of the ESMA’s Opinion on share classes. Therefore, unrealised FX profits and losses should be counted towards the NAV of the hedged share class of the UCITS and taken into account when calculating the counterparty risk limits of Article 52(1) of the UCITS Directive in respect to the NAV of the hedged share class. 

Section IV – Notification of UCITS and UCITS management companies; exchange of information between competent authorities

Question 8: Advance notice for the marketing of new share classes of UCITS notified for cross-border marketing

Question: According to Article 93(8) of the UCITS Directive, in the event of a change to the information in the notification letter submitted in accordance with paragraph 1 of Article 93, or a change regarding share classes to be marketed, the UCITS shall give written notice thereof to the competent authorities of both the UCITS home Member State and the UCITS host Member State at least one month before implementing that change. If a UCITS intends to market a new share class in a host Member State where it has already been notified for marketing, should the UCITS give written notice to the competent authorities of the UCITS home and host Member States, at least one month before the marketing of the new share class starts?

Answer: Yes, if a UCITS intends to market a new share class in a Member State where it has already been notified for marketing, the UCITS should give written notice to the competent authorities of both the UCITS home and host Member State, at least one month before the marketing of the new share class starts.

On 20 December 2021, three texts were published in the EU Official Journal to officialise the extension of the UCITS PRIIPS KID transitional arrangements to 31 December 2022.

1. Regulation (EU) 2021/2259 of the European Parliament and of the Council of 15 December 2021 amending the PRIIPs Regulation 

On 7 September 2021, the Commission adopted a Delegated Regulation amending the regulatory technical standards laid down in Delegated Regulation (EU) 2017/653 as regards the underpinning methodology and presentation of performance scenarios, the presentation of costs and the methodology for the calculation of summary cost indicators, the presentation and content of information on past performance and the presentation of costs by PRIIPs offering a range of options for investment and alignment of the transitional arrangement for PRIIP manufacturers offering units of funds referred to in Article 32 of Regulation (EU) No 1286/2014 as underlying investment options with the prolonged transitional arrangement laid down in that Article. The date of application of that Delegated Regulation is 1 July 2022, but it is important to reflect the need to give management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS sufficient time to prepare for the end of the transitional arrangement and thus for the obligation to draw up a KID.

In order to ensure that the need for sufficient time to prepare for the obligation to produce a KID is met, it is necessary to extend the transitional arrangement until 31 December 2022.

Regulation (EU) No 1286/2014 is therefore amended accordingly. 

In Article 32(1) of Regulation (EU) No 1286/2014, the date ‘31 December 2021’ is replaced by ‘31 December 2022’.

2. Directive (EU) 2021/2261 of the European Parliament and of the Council of 15 December 2021 amending the UCITS Directive as regards the use of key information documents by management companies of undertakings for collective investment in transferable securities (UCITS) 

In Directive 2009/65/EC, the following article is inserted:

Article 82a

1. Member States shall ensure that, where an investment company or, for any of the common funds it manages, a management company draws up, provides, revises and translates a key information document which complies with the requirements for key information documents laid down in Regulation (EU) No 1286/2014 of the European Parliament and of the Council, competent authorities consider that key information document to satisfy the requirements applicable to key investor information set out in Articles 78 to 82 and Article 94 of this Directive.

2. Member States shall ensure that competent authorities do not require an investment company or, for any of the common funds it manages, a management company to draw up key investor information in accordance with Articles 78 to 82 and Article 94 of this Directive where it draws up, provides, revises and translates a key information document which complies with the requirements for key information documents set out in Regulation (EU) No 1286/2014.`

By 30 June 2022, Member States shall adopt and publish the measures necessary to comply with this Directive. They shall immediately inform the Commission thereof.

They shall apply those measures from 1 January 2023.

When Member States adopt those measures, they shall contain a reference to this Directive or shall be accompanied by such a reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.

Member States shall communicate to the Commission the text of the main measures of national law which they adopt in the field covered by this Directive.

3. Commission Delegated Regulation (EU) 2021/2268 of 6 September 2021 amending the regulatory technical standards laid down in Commission Delegated Regulation (EU) 2017/653 as regards the underpinning methodology and presentation of performance scenarios, the presentation of costs and the methodology for the calculation of summary cost indicators, the presentation and content of information on past performance and the presentation of costs by packaged retail and insurance-based investment products (PRIIPs) offering a range of options for investment and alignment of the transitional arrangement for PRIIP manufacturers offering units of funds referred to in Article 32 of Regulation (EU) No 1286/2014 of the European Parliament and of the Council as underlying investment options with the prolonged transitional arrangement laid down in that Article 

Pursuant to Article 32(1) of Regulation (EU) No 1286/2014, management companies, investment companies and persons advising on, or selling, units of UCITS are exempt from the obligations under that Regulation until 31 December 2021. When a Member State applies rules on the format and content of the key information document, as laid down in Articles 78 to 81 of Directive 2009/65/EC of the European Parliament and of the Council, to non-UCITS funds offered to retail investors, the exemption laid down in Article 32(1) of Regulation (EU) No 1286/2014 applies to management companies, investment companies and persons advising on, or selling, units of such funds to retail investors. To provide those funds with a consistent transitional legal regime, Article 14(2) of Delegated Regulation 2017/653 which, in accordance with Article 18 of that Delegated Regulation applies until 31 December 2021, allows manufacturers of packaged retail and insurance-based investment products (‘PRIIP manufacturers’) to continue using such documents drawn up in accordance with Articles 78 to 81 of Directive 2009/65/EC, where at least one of the underlying investment options is a UCITS or non-UCITS fund. The Commission proposal for a Regulation of the European Parliament and the Council amending Regulation (EU) No 1286/2014 proposes to extend the transitional arrangements referred to in Article 32 thereof until 30 June 2022. It is necessary to enable PRIIP manufacturers to continue using documents drawn up in accordance with Articles 78 to 81 of Directive 2009/65/EC for as long as those transitional arrangements are in place.

Delegated Regulation (EU) 2017/653 is therefore amended accordingly.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

It shall apply from 1 July 2022. However, Article 1, point 13 shall apply from 1 January 2022.

On 2 December 2021, the Council of the EU published the two final texts to officialise the extension of the UCITS PRIIPS KID transitional arrangements to 31 December 2022.

1. Regulation of the European Parliament and of the Council amending Regulation (EU) No 1286/2014 as regards the extension of the transitional arrangement for management companies, investment companies and persons advising on, or selling, units of undertakings for collective investment in transferable securities (UCITS) and non-UCITS.

The date of application of that Delegated Regulation is 1 July 2022, but it is important to reflect the need to give management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS sufficient time to prepare for the end of the transitional arrangement and thus for the obligation to draw up a Key Information Document (KID). That is the reason why, it is necessary to extend the transitional arrangement until 31 December 2022. 

2.  Directive of the European Parliament and of the Council amending Directive 2009/65/EC as regards the use of key information documents by management companies of undertakings for collective investment in transferable securities (UCITS).

• The date of application of the Delegated Regulation requiring to produce a KID is no longer set for 30 June 2022, but it should reflect the need to give those management companies, investment companies, and persons advising on, or selling, units of UCITS, sufficient time to  prepare for the end of the transitional arrangement and thus for the obligation to produce a KID;
• The transitional arrangement of Regulation (EU) No 1286/2014 is amended and is extended until 31 December 2022;
• Retail investors in PRIIPs interested in acquiring units of UCITS would receive, as of 1 January 2023 (and not 1 July 2022), both documents for the same financial product. This also means that for investors other than  retail investors, investment companies and management companies should continue to draw up a ‘key investor information’ in accordance with Directive 2009/65/EC, unless they decide to draw up a ‘key information document’ as set out in Regulation (EU) No 1286/2014, in which case they should not be required by competent authorities to provide the 'key investor information', and only the ‘Key information document’ should then be provided to those investors. 
• Member States shall ensure that competent authorities do not require an investment company or, for any of the common funds it manages, a management company to draw up key investor information as set out in Articles 78 to 82 and Article 94 of this Directive where it draws up, provides, revises and translates a key information document which complies with the requirements for key information documents set out in Regulation (EU) No 1286/2014.
• Member states shall apply those measures from 1 January 2023 (and not 1 July 2022)
• Member States shall communicate to the Commission the text of the main measures of national law which they adopt in the field covered by this Directive.

On 15 December 2021, the Council of the EU proposed two texts to reflect the extension of the PRIIPS KID transitional arrangements to 31 December 2022.

- Draft Regulation (EU) of 15 December 2021 amending Regulation (EU) No 1286/2014 as regards the extension of the transitional arrangement for management companies, investment companies and persons advising on, or selling, units of undertakings for collective investment in transferable securities (UCITS) and non-UCITS (https://data.consilium.europa.eu/doc/document/PE-71-2021-REV-1/en/pdf)

Given the very short period left until the original end of the transitional arrangement, this Regulation should enter into force without delay.

- Draft Directive (EU) of 15 December 2021 amending Directive 2009/65/EC as regards the use of key information documents by management companies of undertakings for collective investment in transferable securities (UCITS) (https://data.consilium.europa.eu/doc/document/PE-72-2021-REV-1/en/pdf)

By 30 June 2022, Member States shall adopt and publish the measures necessary to comply with this Directive. They shall immediately inform the Commission thereof. They shall apply those measures from 1 January 2023.

With these texts, the Council of the EU confirms the Resolution published by the European Parliament on 23 November 2021. In order to ensure that the need for sufficient time to prepare for the obligation to produce a KID is met, it is necessary to extend the transitional arrangement until 31 December 2022.

On 17 December 2021, the European Supervisory Authorities (ESAs) updated the joint committee Q&As on the PRIIPs Key Information Document (KID).

The following topics have been updated:

• General topics;
• Market Risk Assessment: Product categories;
• Performance Scenarios (Annexe IV);
• List of costs of PRIIPs other than investment funds (Annexe VI, Part 1); and 
• Presentation of costs (Annexe VII). 

On 20 December 2021, the European Banking Authority (EBA) published a package of two final draft regulatory technical standards (RTS) regarding the reclassification of investment firms as credit institutions. 

The identification of large investment firms, which will be reclassified as credit institutions and, therefore, subject to the application of the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD), depends on the size of the investment firms and of the groups they belong to. With today’s publication, the EBA is providing a methodological framework for determining the need for reclassification of an investment firm as a credit institution, which is neutral to geographical limitations, thus ensuring a proportionate and consistent calculation of the level of total assets to be compared to the EUR 30 bn threshold.  

The final draft RTS on the calculation methodology also cover other technical aspects, including the accounting standards for the determination of asset values, the methodology for implementing the solo and the group test, as well as the procedure to calculate the total assets on a monthly basis and the treatment of assets belonging to European branches of third-country groups. 

Finally, under the Investment Firms Regulation (IFR), investment firms are required to provide information to enable the monitoring of the threshold for reclassification. The second set of draft RTS submitted today to the Commission specify harmonised reporting requirements to provide competent authorities with the tools for carrying out the ongoing monitoring of the EUR 30 bn threshold. These harmonised requirements are an integral part of the investment firms’ reporting framework. 

The draft regulatory technical standards on the reclassification of investment firms as credit institutions in accordance with Article 8a (6)(b) of Directive 2013/36/EU 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 technical standards will apply 20 days after their publication in the Official Journal. It is planned for the EBA to submit the RTS in early Q4 2021.

The draft regulatory technical standards on the provision of information for the effective monitoring of the credit institution thresholds under Article 55(5) of Regulation (EU) 2019/2033 will be submitted to the European 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. The technical standards are expected to apply from June 2022, subject to the legislative process being concluded in time. The EBA will also develop the data point model (DPM), XBRL taxonomy and validation rules based on the final draft RTS.

On 22 December 2021, the European Union published the Commission Implementing Regulation (EU) 2021/2284 of 10 December 2021 laying down implementing technical standards for the application of Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to supervisory reporting and disclosures of investment firms in their Official Journal (OJ).

This Regulation should provide investment firms with templates and tables to convey sufficiently comprehensive and comparable information on the composition and quality of their own funds. More specifically, it is necessary to introduce a quantitative disclosure template on the composition of own funds and a flexible template on the reconciliation of regulatory own funds with the audited financial statements. For the same reason, it is also necessary to lay down a template with information on the most relevant features of own funds instruments issued by the investment firm.

In order to facilitate the implementation of reporting and disclosure requirements, it is necessary to enhance the consistency between reporting and disclosure templates. The template for the disclosure on composition of own funds should therefore be closely aligned with the related reporting template on the level and composition of own funds. For the same reason, the template for the disclosure on full reconciliation of own funds with the audited financial statements should be flexible in that the breakdown of the template should be based on the breakdown of the balance sheet in the investment firm’s audited financial statements. Additionally, the template to disclose information about the main features of regulatory own funds should be a fixed template and its complexity should depend on the complexity of the own funds instruments.

To ensure that compliance costs for investment firms are not unreasonably increased and that data quality is maintained, reporting and disclosure obligations should be aligned in their substance to the maximum extent possible with each other. It is therefore appropriate to set out, in a single Regulation, standards applicable to both reporting and disclosure requirements.

Text

On 21 December 2021, the Council of the EU announced member states endorsing agreement reached with European Parliament on Distributed ledger technology.

EU ambassadors endorsed the provisional political agreement, reached on 24 November, between the Council Presidency and the European Parliament's negotiators on a pilot regime for market infrastructures based on distributed ledger technology (DLT). The pilot regime lays down the conditions for acquiring permission to operate a DLT market infrastructure, defines which DLT financial instruments can be traded and details the cooperation between the operators of DLT market infrastructures, national competent authorities and ESMA.

The provisional political agreement on the DLT Regulation was endorsed by EU ambassadors in the committee of permanent representatives. It will now be formally adopted by the Council and the Parliament. It will then be published in the Official Journal of the European Union and enter into force.

On 17 December 2021, the European Securities and Markets Authority (ESMA) updated the Q&As on SFTR data reporting.

The updates are the following:

Question 12 [Published on 14 December 2021] Currency for the Overview report (Guidelines on calculation of positions in SFTs by trade repositories)

In the case of the Overview report, how should TRs aggregate positions containing multiple currencies, irrespective of whether those currencies belong to the same or different currency buckets as per Guideline 15 of the “Guidelines on calculation of positions in SFTs by trade repositories”?

Answer 12:

For the Overview report, TRs should calculate and express the aggregate positions in SFTs in their EUR equivalent value, irrespective of whether a position captures SFTs featuring the same or different currencies.

On 14 December 2021, the European Securities and Markets Authority (ESMA) published the national thresholds for shareholder identification under the revised SRD.

In accordance with its legal obligation under Article 3.a(7), and in order to facilitate transparency around the regimes adopted across Member States (and other countries that are part of the EU single market), ESMA is publishing the below table. The table is based on information provided by Member States and presents the national thresholds above which shareholders can be identified. Where a Member State has decided not to adopt a threshold, this is indicated. The table furthermore provides hyperlinks to the applicable national legislation relating to shareholder identification. For Member States that have not yet transposed the Revised Shareholder Rights Directive, the table contains an indication of this.

ESMA highlights that the information in the table is provided for overview purposes only and that reference should be made to national legislation and rules, available via the hyperlinks in the table, for a complete picture of the transposition of the Directive in each Member State.

On 9 December 2021, the European Union published in the Official Journal (OJ) Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives.

The adopted regulation goes as follows:

• The technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives laid down in Article 9 of Regulation (EU) 2020/852 are set out in Annex I to this Regulation.
• The technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives laid down in Article 9 of Regulation (EU) 2020/852 are set out in Annex II to this Regulation.

The regulation shall apply from 1 January 2022.

On 29 December 2021, the Guidance on the interpretation and application of Directive 2005/29/EC (UCPD) of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the internal market was published in the Official Journal of the European Union (OJ).

The purpose of this Guidance Notice is to facilitate the proper application of the UCPD, which applies to all commercial practices that occur before, during and after a business-to-consumer transaction has taken place.

Due to its general scope, the UCPD applies to many commercial practices which are also regulated by other general or sector-specific EU legislation. Information requirements established by Community law in relation to commercial communication including advertising or marketing, a non-exhaustive list of which is contained in Annex II of the UCPD, shall be regarded as material. Such information requirements are found in a number of pieces of sector-specific EU legislation, i.e. financial services (e.g. Markets in Financial Instruments Directive, Payment Services Directive, Consumer Credit Directive, Mortgage Credit Directive, Payment Accounts Directive, Regulation on key information documents for PRIIPs.

On 16 December 2021, the Autorité de contrôle prudentiel et de résolution (ACPR) published the Guidelines on identification, verification of identity and knowledge of the customer.

These guidelines, drawn up by the ACPR, are a response to a request from financial institutions subject to its supervision. They present an analysis of the obligations to identify, verify the identity of and know your customer and to keep information and documents for anti-money laundering and combating the financing of terrorism (AML/CFT) purposes (hereinafter referred to as "due diligence measures"). The effectiveness of the AML/CFT and asset freezing systems depends in particular on the proper implementation of these due diligence measures. 

This is an explanatory document which is not binding in itself. It aims to facilitate the development and implementation by financial institutions of their AML/CFT preventive system. 

These guidelines are based in particular on the legislative and regulatory provisions resulting from the transposition of the revised EU Directive 2015/849 (known as the "5th Anti-Money Laundering Directive") and the Order of 6 January 2021 relating to the system and internal controls to combat money laundering and terrorist financing and the freezing of assets and the prohibition on making funds or economic resources available or using them (hereinafter "Order of 6 January 2021"). They take into account the guidelines of the European supervisory authorities on the risk factors and vigilance measures to be implemented. They also take into account the decisions of the Enforcement Committee. 

In particular, they incorporate : 

• developments in identity verification measures 
• new obligations relating to the beneficial owner 
• changes in the registers of beneficial owners.

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Le 16 décembre 2021, l'Autorité de contrôle prudentiel et de résolution (ACPR) a publié des lignes directrices relatives à l’identification, la vérification de l’identité et la connaissance de la clientèle.

Les présentes lignes directrices élaborées par l’Autorité de contrôle prudentiel et de résolution (ACPR) répondent à une demande des organismes financiers soumis à son contrôle. Elles présentent une analyse des obligations d’identification, de vérification de l’identité et de connaissance de la clientèle ainsi que de conservation des informations et documents, à des fins de lutte contre le blanchiment des capitaux et le financement du terrorisme (LCB-FT) (ci-après, « mesures de vigilance »). L’efficacité des dispositifs de LCB-FT et de gel des avoirs dépend notamment de la bonne mise en œuvre de ces mesures de vigilance.

Il s’agit d’un document explicatif qui n’a pas de caractère contraignant en lui-même. Il vise à faciliter l’élaboration et la mise en place par les organismes financiers de leur système préventif LCB-FT.

Les présentes lignes directrices se fondent notamment sur les dispositions législatives et réglementaires issues de la transposition de la directive UE 2015/849 révisée (dite « 5ème directive anti-blanchiment ») et de l’arrêté du 6 janvier 2021 relatif au dispositif et au contrôle interne en matière de lutte contre le blanchiment de capitaux et le financement du terrorisme et de gel des avoirs et d'interdiction de mise à disposition ou d'utilisation des fonds ou ressources économiques (ci-après « arrêté du 6 janvier 2021 »). Elles prennent en compte les orientations des autorités européennes de surveillance sur les facteurs de risque et les mesures de vigilance à mettre en œuvre. Elles tiennent également compte des décisions de la Commission des sanctions

Elles intègrent notamment : 

• les évolutions concernant les mesures de vérification de l’identité ; 
• les nouvelles obligations relatives au bénéficiaire effectif ; 
• les évolutions apportées aux registres des bénéficiaires effectifs.

On 23 December 2021, the Autorité des marchés financiers (AMF) informed on the supervisory approach on the implementation of the CSDR provisions.

As of 1 February 2022, central securities depositories (CSDs) and their participants shall comply with settlement discipline measures with a particular supervisory approach regarding the mandatory buy-in regime.

To improve securities settlement in the European Union, the regulation on central securities depositories (CSDR) establishes three mechanisms aimed at reducing settlement fails:

• The reporting of settlement fails by CSDs to their authorities;
• The application of a cash penalty mechanism for participants that are responsible for settlement fails; and
• The mandatory buy-in regime allowing the compulsory enforcement of the non-settled original transactions.

The settlement fail reporting and cash penalty measures will apply as of 1st February 2022, while the application date of the buy-in process is to be officially postponed in the first half of 2022.

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Le 23 décembre 2021, l'Autorité des marchés financiers (AMF) a informé sur son approche de supervision sur la mise en œuvre des mesures prévues par CSDR.

A compter du 1er février 2022, les dépositaires centraux de titres et leurs participants devront respecter les mesures de discipline en matière de règlement avec une approche spécifique de supervision concernant le dispositif de rachat d’office (buy-in).

Afin d’améliorer le règlement des transactions dans l’Union européenne, le règlement sur les dépositaires centraux de titres (CSDR) prévoit trois dispositifs destinés à réduire les défauts de règlement :

• la déclaration par les dépositaires centraux des défauts de règlement des transactions aux autorités ;
• l’application de sanctions pécuniaires aux participants responsables d’un défaut de règlement ; et
• la procédure de rachat d’office permettant l’exécution forcée des transactions non dénouées.

Les deux premiers dispositifs entreront en application le 1er février 2022, alors que le régime de rachat d’office fera l’objet d’un report qui sera officiellement acté au cours du premier semestre 2022.

On 9 December 2021, the Autorité de contrôle prudentiel et de résolution (ACPR) published an Instruction 2021-I-21 amending Instruction 2013-I-16 of 12 December 2013 on the communication to the ACPR of the international identifier "Legal entity identifier" by certain reporting entities.

The reporting entities mentioned in Article 1 of this instruction (excluding European passports) must report their legal entity identifier to the Autorité de Contrôle Prudentiel et de Résolution (ACPR). 

If the reporting entity is a branch established in France of an institution with its head office outside the European Economic Area, it must also notify the ACPR of the legal entity identifier assigned, where applicable, to its parent company. Entities with their head office in a State party to the Agreement on the European Economic Area, acting in the form of a branch or under the freedom to provide services in France, must inform the ACPR - via their national supervisory authority - of the legal entity identifier that has been issued to them. 

These entities must also inform the ACPR, under the same conditions, of the legal entity identifier assigned to their branches operating in France. To this end, they shall send the ACPR the standard "Legal entity identifier declaration form" attached to this instruction, together with a supporting document (certificate, invoice) submitted when the identifier was obtained.

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Le 9 décembre 2021, l'Autorité de contrôle prudentiel et de résolution (ACPR) a publié l'Instruction n° 2021-I-21 modifiant l’instruction n° 2013-I-16 du 12 décembre 2013 relative à la communication à l’ACPR de l’identifiant international « Identifiant d’entité juridique » par certains organismes assujettis.

Les organismes assujettis mentionnés à l’article 1er de la présente instruction (hors passeports européens) doivent déclarer à l’Autorité de Contrôle Prudentiel et de Résolution (ACPR) leur identifiant d’entité juridique.

Si l’organisme assujetti est une succursale établie en France d’un établissement ayant son siège social hors de l’Espace Économique Européen, il doit également communiquer à l’ACPR l’identifiant d’entité juridique attribué, le cas échéant, à son entreprise mère. Les entités ayant leur siège social dans un État partie à l’accord sur l’Espace Économique Européen, agissant sous forme de succursale ou par voie de libre prestation de services en France, doivent informer l’ACPR - via leur autorité nationale de surveillance - de l’identifiant d’entité juridique qui leur a été délivré. 

Ces entités doivent également communiquer à l’ACPR, dans les mêmes conditions, l’identifiant d’entité juridique attribué à leurs succursales exerçant en France. À ces fins, ils adressent à l’ACPR le dossier type « Formulaire de déclaration de l’identifiant d’entité juridique » figurant en annexe de la présente instruction accompagné d’une pièce justificative (certificat, facture) remise lors de l’obtention de l’identifiant.

On 9 December 2021, the Autorité de contrôle prudentiel et de résolution (ACPR) published Instruction 2021-I-15 on the submission of information required to calculate contributions to deposit, securities and surety guarantee schemes.

Credit institutions, branches of credit institutions mentioned in Article L. 511-10 of the Monetary and Financial Code, hereinafter "credit institutions", investment firms, branches of third-country firms mentioned in Article L. 532-47 of the same code, intermediaries authorised to hold accounts and custody and market undertakings authorised to provide investment services mentioned in Articles L. 321-1 and L. 321-2 of the Monetary and Financial Code, hereinafter "investment firms", as well as other entities that are not authorised to provide investment services. 321-1 of the Monetary and Financial Code, hereinafter referred to as "investment firms", as well as finance companies concerned by one or more of the deposit, securities or surety guarantee mechanisms, shall submit the information requested in the appendices to this instruction under the conditions defined in the instruction.

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Le 9 décembre 2021, l'Autorité de contrôle prudentiel et de résolution (ACPR) a publié une Instruction n° 2021-I-15 relative à la remise des informations nécessaires aux calculs de contributions aux mécanismes de garantie des dépôts, des titres et des cautions.

Les établissements de crédit, les succursales d’établissement de crédit mentionnées à l’article L. 511-10 du code monétaire et financier, ci-après les « établissements de crédit », les entreprises d’investissement, les succursales d’entreprises de pays tiers mentionnées à l’article L. 532-47 du même code, les intermédiaires habilités à la tenue de compte et à la conservation et les entreprises de marché autorisées à fournir les services d’investissement mentionnées aux 8 et 9 de l’article L. 321-1 du code monétaire et financier, ci-après « les entreprises d’investissement », ainsi que les sociétés de financement concernés par un ou plusieurs des mécanismes de garantie des dépôts, des titres ou des cautions, remettent dans les conditions définies ci-après, les informations demandées aux annexes de la présente instruction.

On 9 December 2021, the Autorité de contrôle prudentiel et de résolution (ACPR) published an Instruction 2021-I-16 on the monitoring of the threshold of an intermediate parent undertaking for third country groups in the Union.

The institutions listed in Article 1 that are the EU parent of a third-country group at the highest level of consolidation in the EU ("parent institutions"), or reporting institutions that are not part of a group subject to supervision on a consolidated basis in the EU ("stand-alone institutions"), must assess, prospectively and at least once a year, whether the total value of the assets of the EU third-country group to which they belong would exceed the threshold mentioned in Article L. 517-11 of the Monetary and Financial Code requiring the establishment of an intermediate parent undertaking ("supervision") for a period of at least four consecutive quarters. 517-11 of the Monetary and Financial Code requiring the establishment of an intermediate parent undertaking ("prospective supervision"). 

Institutions in the third-country group no longer have to carry out prospective supervision after the establishment of an intermediate parent undertaking in the Union. The prospective supervision shall be based on strategic planning and asset forecasts for a period of at least three years for the whole group. The total value of the assets in the Union of a third country group shall be calculated in accordance with Article R. 517-9 of the Monetary and Financial Code. The institutions referred to in Article 1 shall exchange with each other, and, where appropriate, with institutions located in other European Union countries belonging to the same group of third countries in a timely manner, all the information required to conduct the prospective supervision.

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Le 9 décembre 2021, l'Autorité de contrôle prudentiel et de résolution (ACPR) a publié une Instruction n° 2021-I-16 relative au suivi du seuil constitutif d’une entreprise mère intermédiaire pour les groupes de pays tiers dans l’Union.

Les établissements recensés à l’article 1, qui sont mères dans l’Union d’un groupe de pays tiers au niveau de consolidation le plus élevé de l’Union (« établissements mères »), ou les établissements assujettis qui ne font pas partie d’un groupe soumis à une surveillance sur base consolidée dans l’Union (« établissements autonomes ») devront évaluer, de manière prospective et au moins une fois par an, si la valeur totale des actifs du groupe de pays tiers dans l’Union auquel ils appartiennent serait appelé à franchir pendant quatre trimestres consécutifs le seuil mentionné à l’article L. 517-11 du Code monétaire et financier imposant la constitution d’une entreprise mère intermédiaire (« surveillance prospective »). 

Les établissements du groupe de pays tiers n’ont plus à réaliser de surveillance prospective après l’établissement d’une entreprise mère intermédiaire dans l’Union. La surveillance prospective se fonde sur la planification stratégique et les prévisions d’actifs établies pour une période d’au moins trois ans pour l’ensemble du groupe. La valeur totale des actifs dans l’Union d’un groupe de pays tiers est calculée conformément à l’article R. 517-9 du Code monétaire et financier. Les établissements visés à l’article 1 échangent entre eux, et, le cas échéant, avec les établissements implantés dans d’autres pays de l’Union Européenne faisant partie du même groupe de pays tiers en temps utile, toutes les informations requises pour mener la surveillance prospective.

On 2 December 2021, the Autorité des marchés financiers (AMF) published its annual report on corporate governance and the executive compensation of listed companies.

Against the backdrop of the health crisis, the 2021 annual report is the opportunity to review the functioning of shareholders' meetings and discuss the issues of the adjustment of remunerations and interactions of the board with executive management and shareholders. For the second year running, the report examines the information provided by proxy advisers.

Each year, the AMF reviews the information published by listed companies on corporate governance and executive compensation. It only examines certain themes that it considers topical or on which there is still room for improvement. This report is the occasion to highlight best practices, to issue new recommendations to companies and propose new avenues for discussion by the AFEP, the MEDEF and the High Committee on Corporate Governance (HCGE). The AMF also names companies that have not applied the recommendations of the AFEP-MEDEF Code, the HCGE or the AMF.

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Le 2 décembre 2021, l'Autorité des marchés financiers (AMF) a publié son rapport annuel sur le gouvernement d’entreprise et la rémunération des dirigeants des sociétés cotées.

Dans le contexte de la crise sanitaire, l’édition 2021 est l’occasion de revenir sur le fonctionnement des assemblées générales (AG) et d’évoquer les thématiques de l’ajustement des rémunérations et des interactions du conseil d’administration avec la direction générale et les actionnaires. Pour la deuxième année consécutive, le rapport examine l’information fournie par les conseillers en vote.

L’Autorité des marchés financiers (AMF) procède chaque année à une revue de l’information publiée par les sociétés cotées sur les thématiques de gouvernement d’entreprise et de rémunération des dirigeants. L’AMF n’étudie que certains thèmes jugés d’actualité ou pour lesquels une marge de progression existe encore. Cet exercice est l’occasion de mettre en avant les meilleures pratiques, d’émettre de nouvelles recommandations à destination des entreprises et de nouvelles pistes de réflexion pour l’AFEP, le MEDEF et le Haut comité de gouvernement d’entreprise (HCGE). L’AMF cite par ailleurs nominativement des sociétés qui n’auraient pas appliqué les recommandations du code AFEP-MEDEF, du HCGE ou de l’AMF.

On 7 December 2021, the Autorité de contrôle prudentiel et de résolution (ACPR) implemented the EBA Guidelines 2021/04 to 2021/09 on internal governance.

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Le 7 décembre 2021, l'Autorité de contrôle prudentiel et de résolution (ACPR) s'est déclaré conforme aux orientations de l'ABE sur la gouvernance interne.

On 24 December 2021, the Decree no. 2021-1758 of December 22, 2021 extending the temporary lowering of the threshold for control of foreign investments in French companies whose shares are admitted to trading on a regulated market was published in the Official Journal.

The decree extends for a further year the measure lowering from 25% to 10% the threshold for acquiring voting rights likely to trigger control in French companies engaged in activities sensitive to public security, public order and national defence interests and whose shares are admitted to trading on a regulated market, under the regulation on foreign investment control.

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Le 24 décembre 2021, le Décret no 2021-1758 du 22 décembre 2021 prorogeant l’abaissement temporaire du seuil de contrôle des investissements étrangers dans les sociétés françaises dont les actions sont admises aux négociations sur un marché réglementé a été publié au Journal Officiel.

Le décret proroge d’un an supplémentaire la mesure d’abaissement de 25 % à 10 % du seuil d’acquisition des droits de vote susceptible de déclencher le contrôle dans les sociétés françaises exerçant des activités sensibles pour la sécurité publique, l’ordre public et les intérêts de la défense nationale et dont les actions sont admises aux négociations sur un marché réglementé, au titre de la réglementation portant sur le contrôle des investissements étrangers.

On 16 December 2021, the Order 2021-1652 of 15 December 2021 on various provisions for adapting to European Union law in the area of disclosure requirements, governance of financial products and investor position limits designed to facilitate business financing was published in the Official Journal. 

This Order is issued on the basis of the authorisation given to the Government by Article 43 of Law 2021-1308 of 8 October 2021 on various provisions of adaptation to European Union law in the fields of transport, the environment, the economy and finance. It aims to transpose the so-called "Quick Fix" directive (directive (EU) 2021/338) which makes targeted adjustments to the so-called "MiFID2" directive (directive 2014/65/EU) in order to encourage the financing of the European economy by financial markets and investment firms in a context of economic recovery and increased need for financing in the context of the crisis linked to COVID-19.

The "Quick Fix" directive is part of the emergency legislative initiative called the "Capital Markets Recovery Package" proposed by the European Commission in July 2020. In addition to the directive in question, this initiative also contained a targeted revision of the so-called "Prospectus" regulation and the framework applicable to securitisation. The aim is to promote the visibility of European small and medium-sized enterprises on the financial markets.

Article 1 specifies that the default mode of communication between investment firms and their professional clients will be electronic.

Articles 2 and 3 adapt the regime for position limits on commodity derivatives to take account of the changes introduced by the Quick Fix Directive. In particular, they define which commodity derivatives are considered critical or significant and specify the entities to which the position limits do not apply. The Autorité des marchés financiers (AMF) may review the position limits in the event of a significant change in the market. It shall notify the European Securities and Markets Authority of the position limits it intends to set. Depending on the opinion of the European Securities and Markets Authority following the notification, the AMF shall either amend the position limits or provide the European Securities and Markets Authority with a justification as to why the amendment is not considered necessary.

Articles 4 to 6, 9 and 13 lighten the information requirements that ISPs currently have to meet for their professional clients (these provisions remain in place for non-professionals). In particular, they concern the elimination of the publication of a weekly report presenting the aggregate positions held by different categories of person in a commodity derivative; the elimination of the cost-benefit analysis that investment services providers (ISPs) are required to provide to their professional clients when the latter wish to change their investment strategy by altering the composition of their portfolio of financial products (unless the professional clients wish to maintain this current obligation); abolition of the obligation for ISPs to provide their professional clients with a report on the services they provide, mentioning in particular the costs of transactions and services; suspension until 28 February 2023 of the annual periodic report on the execution quality of trading platforms provided for in Article L. 420-17 of the Monetary and Financial Code ("Each trading platform shall make available to the public at least once a year, free of charge, data relating to the quality of execution of transactions carried out on it").

Article 8 specifies the conditions under which ISPs may jointly provide execution and research services for issuers with capitalisations of up to 1 Billion euros.

Article 12 stipulates that ISPs that design financial instruments for sale to clients or that offer, recommend or market financial instruments are not subject to product governance requirements when the investment service they provide concerns bonds that do not incorporate a derivative instrument other than a make-whole clause.

Article 15 introduces the express extension measures to the Pacific Overseas Territories.

Article 16 brings the order into force on 28 February 2022 in accordance with Article 4(2) of the transposition directive.

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Le 16 décembre 2021, une Ordonnance no 2021-1652 du 15 décembre 2021 portant diverses dispositions d’adaptation au droit de l’Union européenne dans le domaine des obligations d’information, de la gouvernance des produits financiers et des limites de position des investisseurs destinées à faciliter le financement des entreprises a été publiée au Journal Officiel.

La présente ordonnance est prise sur le fondement de l'habilitation donnée au Gouvernement par l'article 43 de la loi n° 2021-1308 du 8 octobre 2021 portant diverses dispositions d'adaptation au droit de l'Union européenne dans le domaine des transports, de l'environnement, de l'économie et des finances. Elle vise à transposer la directive dite « Quick Fix » (directive (UE) 2021/338) qui procède à des ajustements ciblés de la directive dite « MiFID2 » (directive 2014/65/UE) afin d'encourager le financement de l'économie européenne par les marchés financiers et les entreprises d'investissement dans un contexte de reprise économique et de besoin accru de financements dans le contexte de la crise liée à la COVID-19.

La directive « Quick Fix » s'inscrit dans le cadre de l'initiative législative d'urgence baptisée « Capital Markets Recovery Package » proposée par la Commission européenne en juillet 2020. Outre la directive en question, cette initiative contenait également une révision ciblée du règlement dit « Prospectus » ainsi que du cadre applicable à la titrisation. L'objectif est ainsi de promouvoir la visibilité des petites et moyennes entreprises européennes sur les marchés financiers.

L'article 1er précise que le mode de communication entre les entreprises d'investissement et leurs clients professionnels devient, par défaut, le format électronique.

Les articles 2 et 3 adaptent le régime relatif aux limites de position sur instruments dérivés sur matières premières pour tenir compte des aménagements introduits par la directive « Quick Fix ». Ils définissent notamment les instruments dérivés sur matières premières considérés comme étant d'importance critique ou significative et précisent les entités auxquelles les limites de position ne s'appliquent pas. L'Autorité des marchés financiers (AMF) peut réexaminer les limites de position en cas de modification significative sur le marché. Elle notifie à l'Autorité européenne des marchés financiers les limites de position qu'elle entend fixer. Selon l'avis rendu par cette dernière à la suite de la notification, l'AMF modifie les limites de position ou lui fournit une justification expliquant pour quelle raison cette modification n'est pas jugée nécessaire.

Les articles 4 à 6, 9 et 13 allègent notamment les exigences en matière d'information qui pèsent actuellement sur les PSI vis-à-vis de leurs clients professionnels (ces dispositions demeurent en revanche pour les non-professionnels). Elles concernent en particulier : la suppression de la publication d'un rapport hebdomadaire présentant les positions agrégées détenues par différentes catégories de personne sur un instrument dérivé sur matières premières ; la suppression de l'analyse coût-avantage que sont tenus de fournir les prestataires de services d'investissement (PSI) à leurs clients professionnels lorsque ces derniers souhaitent changer leur stratégie d'investissement en changeant la composition de leur portefeuille de produits financiers (sauf si les clients professionnels souhaitent le maintien de cette obligation actuelle) ; la suppression de l'obligation pour les PSI de fournir à leurs clients professionnels un compte rendu des services qu'ils leur rendent mentionnant en particulier les coûts liés aux transactions effectuées et aux services fournis ; la suspension jusqu'au 28 février 2023 du rapport périodique annuel sur la qualité d'exécution des plates-formes de négociation prévue à l'article L. 420-17 du code monétaire et financier (« Chaque plate-forme de négociation met à la disposition du public au moins une fois par an, sans frais, les données relatives à la qualité d'exécution des transactions qui y ont été effectuées »).

L'article 8 précise dans quelles conditions est autorisée la fourniture conjointe par les PSI de services d'exécution et de recherche sur les émetteurs dont la capitalisation n'excède pas un milliard d'euros.

L'article 12 dispose que les PSI qui conçoivent des instruments financiers destinés à la vente aux clients ou qui proposent, recommandent ou commercialisent des instruments financiers ne sont pas soumis aux obligations de la « gouvernance des produits » lorsque le service d'investissement qu'ils fournissent porte sur des obligations qui n'incorporent pas d'instrument dérivé autre qu'une clause de remboursement avec indemnité de remboursement anticipé (« make whole »).

L'article 15 introduit les mesures d'extension expresse aux collectivités d'outre-mer du Pacifique.

L'article 16 fait entrer en vigueur l'ordonnance le 28 février 2022 conformément au 2 de l'article 4 de la directive à transposer.

On 9 December 2021, the Association Française des Titres (AFTI) informed Broadridge and SLIB announced the availability of their voting solution compliant with the SRDII directive on the French market.

This solution, unique on the French market, allows intermediaries (banks, brokers and asset managers working on behalf of investors based in France in particular) to meet the obligations imposed by the new shareholder rights directive (SRDII), which provides, in particular, for the obligation to inform all shareholders of the holding of general meetings. 

French intermediaries can now meet the new SRDII regulatory requirements, thanks to the management of European securities. Broadridge Financial solutions, a major player in FinTech, and SLIB, the leading software publisher in the record keeping, electronic voting, risk and post-trade markets, announce the availability of their joint solution cross-border proxy voting.

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Le 9 décembre 2021, l'Association Française des Titres (AFTI) a informé que Broadridge et SLIB ont annoncé la mise à disposition de leur solution de vote conforme à la directive SRDII sur le marché français.

Les intermédiaires français peuvent désormais répondre aux nouvelles exigences réglementaires SRDII, grâce à la gestion de valeurs européennes. Broadridge Financial solutions, acteur majeur de la Fintech, et SLIB, l’éditeur de logiciels de référence sur les marchés de la tenue de registre, du vote électronique, du risk et du post-trade, annoncent la mise à disposition de leur solution commune de vote par procuration transfrontalière.

On 16 December 2021, the Autorité des marchés financiers (AMF) presented an overview of corporate financial and non-financial reporting on climate.

The report presents an overview of corporate financial and non-financial reporting on climate issues based on a sample of French listed companies. While there has been some progress since 2019, the forthcoming European regulatory deadlines and heightened expectations of their stakeholders mean that they need to accelerate their efforts.

The report analyses the quantitative climate-related indicators published by companies in their non-financial statements (NFS), the information disclosed by companies regarding their carbon neutrality commitments for those that have made them, and, where applicable, the accounting implications as well as the climate-related information presented in their financial statements. 

The AMF studied the information required by the regulatory framework in force, as well as the other disclosures made by the companies. It observed that while companies have made efforts at this stage, there is still room for improvement with respect to the figures and information that are already monitored by investors under the Sustainable Finance Disclosures Directive (SFDR), or the ones that should be soon required under the forthcoming European Corporate Sustainability Reporting Directive (CSRD). 

The report highlights the following key points based on a sample of companies from sectors highly impacted by climate change:

• with regard to greenhouse gas (GHG) emissions data, the extent of the organisational and operational perimeter (scopes) to be taken into account, as well as the information provided to justify it and the methodology used should be improved;
• companies should be prepared to set and disclose short- and medium-term GHG emission reduction targets for the three scopes, in absolute terms and in intensity, either as part of transition plans or in connection with corporate GHG emission reduction commitments or carbon neutrality strategies;
• where material, the AMF also encourages companies to increase their transparency on the physical risks they face from global warming, whether they result from changes in average temperatures or rainfall patterns or from an increase in the frequency and severity of extreme weather events;
• the AMF notes that company financial statements currently contain very little information on the impacts of climate change. Companies should continue to reflect on and work on incorporating the consequences of climate change into their financial statements and ensure that the information presented in the financial statements is consistent with the company's other communications media.

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Le 16 décembre 2021, l'Autorité des marchés financiers (AMF) a présenté un panorama financier et extra-financier du reporting carbone des entreprises.

Ce rapport présente un état des lieux du reporting financier et extra-financier des entreprises concernant les enjeux climatiques à partir d’un échantillon de sociétés cotées françaises. Si des progrès ont été accomplis depuis 2019, les prochaines échéances réglementaires européennes et les attentes croissantes de leurs parties prenantes obligent à accélérer les efforts.

Ce rapport analyse les indicateurs quantitatifs liés au climat publiés par les entreprises dans leur déclaration de performance extra-financière (DPEF), les informations communiquées par les entreprises en ce qui concerne leurs engagements de neutralité carbone pour celles qui en ont pris, et, le cas échéant, les incidences comptables ainsi que les informations liées au climat présentées dans les états financiers des entreprises.  

L’AMF a étudié à la fois les informations exigées par le cadre réglementaire en vigueur, ainsi que les autres informations fournies par les entreprises. Le constat est, qu’à ce stade, des efforts ont été entamés par les entreprises. Il reste néanmoins une marge de progression à franchir quant aux indicateurs chiffrés et informations qui sont déjà scrutés par les investisseurs notamment en application du règlement sur la publication d’informations en matière de durabilité dans le secteur financier (SFDR), ou qui devraient être prochainement exigées avec la future Directive européenne sur le reporting de durabilité (CSRD).  

Les points clés suivants sont mis en avant dans le rapport à partir d’un échantillon d’entreprises appartenant à des secteurs fortement impactés par le changement climatique :

• s’agissant des données sur les émissions de gaz à effet de serre (GES), l’étendue du périmètre organisationnel et opérationnel (scopes) à prendre en compte, ainsi que les  éléments fournis pour le justifier et pour rendre compte de la méthodologie utilisée ont vocation à être améliorés ;
• les entreprises doivent se préparer à définir et rendre publics des objectifs de réduction des émissions de GES sur les trois scopes à court et moyen terme, en valeur absolue et en intensité, que ce soit dans le cadre de plans de transition ou en lien avec des engagements de réduction des émissions de GES de l’entreprise, ou des approches de neutralité carbone ;
• lorsqu’ils sont matériels, l’AMF encourage aussi les entreprises à renforcer leur transparence sur les risques physiques liés au réchauffement climatique auxquels elles sont confrontées, qu’ils résultent d’une modification des températures moyennes ou des régimes de précipitation ou de l’augmentation de la fréquence et de la sévérité des évènements climatiques extrêmes ;
• l’AMF constate que très peu d’informations relatives aux impacts du changement climatique apparaissent aujourd’hui dans les états financiers des entreprises ; celles-ci doivent poursuivre leurs réflexions et travaux en ce qui concerne la prise en compte des conséquences du changement climatique dans les états financiers et s’assurer de la cohérence entre les informations présentées dans les comptes et les autres supports de communication de l’entreprise.

On 13 December 2021, the Banque nationale de Belgique (BnB) published a Memorandum of Understanding on the co-operation and exchange of information with regard to Euroclear Bank.

The Irish securities market has no domestic securities settlement infrastructure and utilises settlement systems located in different European countries, primarily Euroclear Bank (hereafter, "EB"). Irish Government bonds are issued and settled in EB since 2002. From March 2021, the vast majority of corporate securities and a large proportion of Exchange Traded Funds (ETFs) are also issued and settled in EB. Securities are deposited with EB in accordance with the law of constitution of the security and subsequent book-entry transfers in the Euroclear System are governed by Belgian law. Pursuant to such deposit, EB participants are granted rights under Belgian law, pursuant to Belgian Royal Decree No. 62 (RD 62) (Belgian Law Rights). Taking into account the situation of the Irish securities market, the Signatory Authorities acknowledge that the activities ofEB are of substantial importance to the functioning of the securities market and the protection of the investors in Ireland under Article 24 (4) of the CSD Regulation (hereafter, "CSDR"). The CBI maintains the register for Irish Government bonds, which are issued by the National Treasury Management Agency (NTMA). The interest of the CBI in EB's functioning relates to the settlement of aforementioned Irish government bonds, the settlement of Irish corporate securities and the CBI's designation as the national competent authority responsible for carrying out the functions of a competent authority referred to in the CSDR. This IVtoU updates and replaces the Memorandum of Understanding on co-operation relating to the oversight of the system operated by EB between the NBB and CBI, dated 14 May 2012.

The purpose of this MoU is to ensure the comprehensive and effective delivery of the Signatory Authorities oversight and supervision mandate with respect to EB.

On 7 December 2021, the Law amending the Act of 25 April 2014 on the status and supervision of credit institutions and securities firms in order to ensure the transposition of Directive (EU) 2019/2162 of the European Parliament and of the Council of 27 November 2019 on the issuance of covered bonds and the public oversight of covered bonds, and also amending the law of 11 March 2018 on the status and supervision of payment institutions and electronic money institutions, access to the activity of payment service provider, and to the activity of issuing electronic money, and access to payment systems was published in the Moniteur Belge.

It enters into force on 6 July 2022.

On 22 December 2021, the Financial Services and Markets Authority (FSMA) publishes FAQ FSMA_2021_19 on the European Single Electronic Format and the eCorporate platform.

The FAQs answer specific questions on the scope of the ESEF, annual report format and when to publish it as well as technical aspects on the eCorporate platform. 

On 16 November 2021, the Banque nationale de Belgique (BnB) published a Circular 2021_27 on the EBA Guidelines of 2 July 2021 on the assessment of the suitability of members of the management body and holders of key positions (EBAGL/2021/06).

This circular transposes into the Belgian supervisory framework the European Banking Authority (EBA) guidelines of 2 July 2021 on the assessment of the suitability of the members of the management body and the holders of key positions. The EBA's GL/2021/06 guidelines were published on 2 July 2021 and replace - for the financial institutions concerned - the EBA's EBAGL/2017/12 guidelines of 26 September 2017 with effect from 31 December 2021. 

The revised EBAGL/2021/06 guidance is the guideline, as was the case with the previous EBA guidance. The financial institutions concerned are therefore required to apply and comply with these guidelines in addition to and as a clarification of the legal provisions on suitability assessment, as explained in this circular. This Circular is applicable as from 31 December 2021 and replaces - for the financial institutions concerned - the second point of Circular NBB_2018_25 on the transposition of the EBA/GL/2017/12 guidelines.

On 3 December 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) updated the Circular 10/2017 (BA) on Supervisory Requirements for IT in Financial Institutions.

This Circular provides a flexible and practical framework for institutions’ technical and organisational resources on the basis of section 25a (1) of the German Banking Act (Kreditwesengesetz) – in particular for IT resource management, information risk management and information security management. Moreover, it specifies the requirements laid down in section 25b of the Banking Act (outsourcing of activities and processes).

On 15 December 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) updated the Guidance Notice (2013) for marketing units or shares of EU AIFs or domestic special AIFs (Spezial-AIF) managed by an EU AIF management company to semi-professional and professional investors in the Federal Republic of Germany pursuant to section 323 of the Investment Code (Kapitalanlagegesetzbuch – KAGB).

On 2 December 2021, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) updated the FAQ on understanding and applying the IFR and WPIG.

There are a number of questions about understanding and applying the IFR and WPIG. These questions are currently being clarified by BaFin with the involvement of the Deutsche Bundesbank. The answers to frequently asked questions (" FAQ ") should therefore be published at this point. These are continuously updated.

On 17 December 2021, the Securities and Futures Commission (SFC) published Circular to licensed corporations - Revised financial return form and new electronic submission platform.

With effect from 1 February 2022, the electronic version of the revised form shall be used for submitting a return in respect of any period ending on or after 24 January 20221 and it supersedes the electronic form in the notice gazetted on 29 March 2019 (G.N.2198). However, the SFC will accept financial returns submitted by LCs using the superseded form for periods ending on or before 7 January 2022.

With effect from 1 February 2022, the electronic submission of financial returns will migrate to WINGS. Pursuant to section 58(8) of the FRR, the SFC now publishes the following directions and instructions for this purpose:

(a) An LC’s submission of a return which is required under section 56 of the FRR shall be made via WINGS and signed by attaching an electronic signature of a responsible officer or another officer of the LC approved under section 58(5)(e) of the FRR;

(b) To submit a return via WINGS, the responsible officer or approved officer signing the return on behalf of the LC shall first register and log in to his or her individual account on WINGS (to upload the return); and then register and log in to his or her account using the WINGS mobile app (to sign the return electronically); and

(c) The responsible officer or approved officer can electronically sign the return by using the WINGS mobile app to scan the QR code which will be displayed on WINGS when the return is successfully uploaded. 

On 15 December 2021, the Securities and Futures Commission (SFC) announced that it would launch its next generation licensing platform on WINGS on 3 January 2022.

The fully digitalised platform will provide a one-stop, comprehensive service for users to prepare, electronically sign and submit licensing forms, track the progress of applications, pay licensing fees and communicate directly with the SFC. A companion mobile application, WINGS Mobile App, will offer key features of the website version.

From 3 January 2022, the new electronic licensing forms for licence applications, annual returns, notifications and regulatory filings are to be submitted through WINGS. The SFC will continue to accept paper forms for corporate applications until 31 March 2022.

On 1 December 2021, the Securities and Futures Commission (SFC) published Ongoing Compliance Form for Reporting Pricing Errors of  UCITS schemes.

This Ongoing Compliance Form should be used for reporting of pricing error(s) in relation to UCITS scheme(s) to the Securities and Futures Commission (the “Commission” or the “SFC”) in accordance with 10.2, 10.2A and 10.2B of the Code on Unit Trusts and Mutual Funds (“UT Code”).

On 1 December 2021, the Securities and Futures Commission (SFC) updated FAQs on Post Authorization Compliance Issues of SFC-authorized Unit Trusts and Mutual Funds.

FAQs has been revised to: 

• update Question 1, which provides guidance on whether a fund authorised by the SFC is required to comply with any post-authorisation requirements; 
• update Question 4, which provides guidance on the type of form to be submitted to inform the SFC when there has been a pricing error with respect to a UCITS fund authorised by the SFC for public offerings in Hong Kong; and 
• add a new Question 4A, which provides clarification on when a manager of a UCITS fund is required to submit Part A and Part B of the UCITS pricing errors form respectively to the SFC.

On 3 December 2021, the Securities and Futures Commission (SFC) published  Circular in relation to the clearing and record keeping rules for the OTC derivatives regime – changes to the list of persons designated as financial services providers.

The SFC informed that the revised list of persons designated as financial services providers (FSPs) for the purposes of the Securities and Futures (OTC Derivative Transactions—Clearing and Record Keeping Obligations and Designation of Central Counterparties) Rules (Clearing Rules) was published in the HK Gazette, and becomes effective on 1 January 2022.

Licensed Persons are reminded that if their average total position in OTC derivatives during a Calculation Period reaches the corresponding Clearing Threshold, relevant OTC derivative transactions they enter into on and after the corresponding Prescribed Day, including those with FSPs must be centrally cleared in accordance with the Clearing Rules.

On 1 December 2021, the Central Bank of Ireland (CBI) published Feedback Statement – Consultation Paper 140: Cross  Industry Guidance on Operational  Resilience.

After considering all the feedback, the finalised Guidance remains largely unchanged from that consulted upon. Where changes have been made, they do not alter the intent or purpose of the guidelines but instead provide additional context to remove any perceived ambiguity or provide additional reassurance about how the Guidance will be applied. The key guidelines where additional context has been added are: 

• Guideline 2 to more accurately reflect the need for alignment between the Operational Risk and Operational Resilience Frameworks rather than incorporating frameworks into each other; 
• Guideline 4 to confirm that that the number of critical or important business services should be proportionate to a firm’s business model and not solely determined by the size of the firm; 
• Guideline 5 & 6 to clarify that impact tolerance metrics can be both qualitative and quantitative and that firms may leverage appropriate existing approved processes as part of the development of impact tolerances; and 
• Guideline 8 to further align the expectations of this Guidance with those of the Cross Industry Guidance on Outsourcing.

On 20 December 2021, the Central Bank of Ireland (CBI) published 36th edition of UCITS Q&A.

The new Q&A, ID 1105, sets out the Central Bank’s expectations that multi-manager UCITS will comply with ESMA’s Q&A of July 2021 on performance fees in multi-manager UCITS. It confirms that existing multi-manager UCITS must bring their performance fee methodologies into compliance by 1 January 2023. 

ID 1106 addresses the circumstances of establishment of a new multi-manager UCITS utilising a performance fee and notes that those wishing to establish a new multi-manager UCITS with a performance fee must do so in compliance with ESMA’s Q&A of July 2021 on performance fees in multi-manager UCITS.

On 20 December 2021, the Central Bank of Ireland (CBI) published 44th edition of AIFMD Q&A.

ID 1151 sets out the Central Bank’s expectations in respect of an arrangement involving a non-discretionary investment advisor which provides services to a QIAIF. The Q&A affirms the Central Bank’s expectation that the investment advisor is performing a role that is advisory in nature and the AIFM must be able to evidence this upon request from the Central Bank.

ID 1152 sets out the Central Bank’s expectations that multi-manager Retail Investor AIFs (“RIAIFs”) will comply with ESMA’s Q&A of July 2021 on performance fees in multi-manager AIFs. It confirms that existing multi-manager RIAIFs must bring their performance fee methodologies into compliance by 1 January 2023. 

ID 1153 addresses the circumstances of establishment of a new multi-manager RIAIF utilising a performance fee and notes that those wishing to establish a new multi-manager RIAIF with a performance fee must do so in compliance with ESMAs Q&A of July 2021 on performance fees in multi-manager AIFs.

On 1 December 2021, the Central Bank of Ireland published its letter outlining the findings of a review of investment firms’ compliance with the suitability requirements under MiFID II.

The review identified evidence of positive practices, particularly where firms took a personalised and comprehensive approach to suitability assessments for their clients. However, it also identified instances where further action is required by firms. For example:

• Firms need to take a more client focused approach, using tailored suitability assessments specific to their businesses and the needs and circumstances of their clients.
• Firms must improve their assessment of clients’ knowledge and experience, financial situation and investment objectives, particularly information relating to clients’ financial situation and their capacity to withstand losses.
• Firms must ensure suitability reports are sufficiently detailed and personalised to clients’ objectives and individual circumstances.
• There is particular concern at the quality of firms’ oversight of cases where a client insists on proceeding with the transaction at their own initiative against the firm’s suitability advice. In such a case, clients should be clearly informed that the transaction is not considered by the firm to be suitable, including a clear explanation of the potential risks involved if the client proceeds.

In light of these findings, all Irish authorised MiFID Firms and Credit Institutions, who provide portfolio management and advisory services to retail clients, are required to conduct a thorough review of their individual sales practices and suitability arrangements. This review must be documented and must include details of actions taken to address findings in the ESMA public statement and this letter. This review should be completed and an action plan discussed and approved by the board of each Firm by end of Q1 2022.

On 17 December 2021, the Central Bank of Ireland (CBI) published Feedback Statement – Consultation Paper 138: Cross-Industry Guidance on Outsourcing.

Having reviewed the feedback and taken on board a number of constructive comments and suggestions the Central Bank has made some specific revisions to the Guidance, which is published together with this Feedback Statement. Where changes have been made, they do not alter the intent or purpose of the Guidance but instead provide additional clarity or context based on some of the consultation responses.

The Central Bank will publish the finalised Cross-Industry Guidance on Outsourcing in conjunction with this Feedback Statement. While the Guidance will come into effect on the publication date, the supervisory approach to its implementation will be mindful of the adjustments to be made by firms relative to the nature, scale and complexity of the use of outsourcing as an element of their business model.

Notification Templates appropriate to each sector and aligned with the requirements of the EBA Guidelines will be published on the Central Bank website in Q1 2022 with the exception of the template for Banks, which will be published by the SSM and is expected during 2022. The notification of such proposed arrangements does not constitute a pre-approval process and specific timings in respect of the submission of notifications are not prescribed unless required by existing regulation.

A spreadsheet template for the Outsourcing Register will be made available for all firms to download from the Central Bank website during the first quarter of 2022 as a tool for organising and storing the required data for the Register. It is intended that all firms4 whose PRISM Impact Rating is Medium Low (ML) or above (or its equivalent) will submit their Outsourcing Register via a new Online Return on an annual basis. The timing of the first submission is planned for Q2 2022. Firms will be advised within a reasonable notice period in advance of making a submission in 2022.

On 1 December 2021, the Irish Funds Industry Association (IF) informed on the launch of the Green Pledge to help the funds and asset management industry join together to reduce its environmental impact and increase our sustainable actions.

The Green Pledge encourages and supports firms in the Irish funds and asset management industry to take action on sustainability issues affecting their business and to promote those actions they have already taken. To participate in the Green Pledge, firms select from a list of environmentally sustainable pledge-able actions. The initial goal of the Green Pledge is to produce statistics and allow firms to see how they compare across the industry on their environmentally sustainable actions. 

Once firms have completed the Green Pledge, the entry will be reviewed and scored by The Green Team Network. Firms will be awarded a score dependent on the number of pledges completed and any weighting attached to a particular Pledge. Individual scores will not be shared publicly.

On 3 December 2021, the Irish Funds Industry Association (IF) published Corporate Sustainability Reporting Directive (CSRD): An overview from a funds and asset manager perspective,

This publication provides an overview of CSRD and addresses:

• Scope and impact on asset managers and funds
• Proposed CSRD reporting requirements
• CSRD and the concept of ‘double materiality’
• EFRAG’s role as the new European sustainability reporting standard setter
• The role of ESMA and supervisory considerations
• Consolidated/group reporting
• Sustainable finance timeframe with deadlines
• Provision of assurance
• Digitalisation and the European Single Access Point (ESAP)
• Interaction with existing sustainability standards and international context

On 9 December 2021, the Irish Funds Industry Association (IF) published EU Taxonomy Regulation - Practical Insights for Fund Management Companies, which covers:

• Background to and context of the Taxonomy Regulation
• What the Taxonomy Regulation is 
• Application scope of Taxonomy Regulation 
• Key requirements
• How EU Taxonomy eligibility and alignment is assessed
• What steps fund managers should take to implement the Taxonomy Regulation
• The implications of non-compliance
• Interaction with other Sustainable Finance Legislation 
• The Data Challenge
• Reliability of data solutions
• The assurance options to address data reliability
• Future Developments 
• How the EU Taxonomy might be expanded in future
• How the Taxonomy Regulation interact with international taxonomies
• Taxonomy Regulation Timeline.

On 2 December 2021, CONSOB issued a public consultation on the possibility for listed companies to appoint members of the Board of Directors on the basis of a list, presented by the Board of the outgoing administration.

After having illustrated the risks and significant aspects connected to this possibility, CONSOB drew the attention of listed companies to the following issues:

• necessary transparency and documentability of the selection process of candidate achieved through accurate minutes of the meetings of the Board of Directors
• adoption and prior publication of the procedures governing the process of identifying candidates
• appropriate enhancement of the role of the independent members of the Board of Directors;
• relevance of the dialogue with the shareholders for the purposes of preparation of the list for the appointment of the new members of the Board of Directors
• behavior of the directors during the meetings in which components vote on the list of the Board of Directors outgoing
• relevant connections based on the rules governing the voting procedure
• correct and complete information on the list presented by the Board of Directors 
• timely publication of the list 
• the possibility of qualifying a shareholder as a related party 

On 20 December 2021, Banca d'Italia published Note no. 22 to comply with the joint guidelines of EBA and ESMA regarding the assessment of the suitability of the members of the management body and personnel with key roles (EBA / GL / 2021/06).

Title IX of the Guidelines applies, starting from 31 December 2021 to intermediaries that fall within the scope of application of the Directives 2013/36 / UE and 2014/59 / UE.

The Guidelines will be applicable from 31 December 2021.

On 30 November 2021, the Legislative Decree 191/2021 was published on the Gazzetta Ufficiale. It implemented changes to the legislative decree 24 February 1998, n. 58 (TUF), implementing Directive (EU) 2019/1160 and Regulation (EU) 2019/1156 relating to the cross-border distribution of collective investments.

The Legislative Decree 191/2021:

• defines the activity and content of the pre-marketing notification of reserved AIFs, attributing to CONSOB the task of identifying the terms and procedures for the transmission to CONSOB of the pre-marketing communication; the cases in which the signature by professional investors of units / shares of an AIF indicated in the information provided in the context of pre-marketing or established as a result of pre-marketing, is considering the result of the marketing carried out and  therefore art. 43 TUF applies; third parties who may carry out pre-marketing activities for the account of a manager.

The Legislative Decree also:

• attributes to CONSOB (as regards AIFs) and to Banca d'Italia (with regard to UCITS), the task of establishing by regulation the implementing rules for the withdrawal of the notification with which it was previously announced the marketing of UCIs in one EU country other than Italy;
• assigns to CONSOB the task of implementing regulations applicable to EU UCITS and non-reserved AIFs must with regards to information that these structures need to share with investors in Italy, the duties of the aforementioned structures to guarantee investors the exercise of their rights and access to the information provided respectively by art. 92 of the UCITS directive and art. 43-bis of the AIFMD. The regulations to be implemented by CONSOB also concern the language used by these structures, the conditions under which these tasks can be carried out by a third party or jointly with a third party.

The Legislative Decree 191/2021 will come into force on 15 December 2021; within 120 days of date of entry into force of the provision, CONSOB and Banca d'Italia need to adapt their own regulations.

On 17 December 2021, CONSOB, with Resolution no. 22134, implemented changes to Resolutions no. 21639 and n. 21640 of 15 December 2020, relating to how to access documents containing key information (“KID”) of packaged retail and insurance investment products ("PRIIPs") before their marketing in Italy and the obligation for creators of the PRIIPs to make information and data accessible to CONSOB.

In particular, with Resolution no. 22134, CONSOB extended from 31 December 2021 to 28 February 2022 the transitional period during which the creators of the PRIIPs can make use of the previous regime, consisting of notification preventive of KIDs to CONSOB via PEC.

On 28 December 2021, Banca d'Italia published the third update to the Collective Asset Management Regulations (the "RGC") in order to:

• standardize the rules on asset management based on the ESMA guidelines on performance fees of UCITS and certain types of AIFs, dated 5 November 2020 (the "Guidelines")
• simplify and adapt the regulations on the management of savings due to market developments.

Banca d'Italia also updated its Note in order to provide clarifications regarding the regime of expenses, application of the Guidelines, frequency and crystallization of the commissions of performance, mechanism for recovering negative performance, model high-water mark and representation of incentive commissions in annual and semi-annual reports.

Managers of UCITS and open-ended AIFs marketed to non-professionals investors are required to apply the Guidelines:

• from 31 December 2021 for funds established after this date
• by the beginning of the financial year following 31 December 2021, for funds existing at this date and which already foreseeing performance fees

The managers of the funds indicated above for which the first financial year of application of the Guidelines begins on 1 January 2022, need to adapt the fund settlement by 31 March 2022.

The asset management companies, within 10 days of the adoption of the changes, will have to send the resolution of the strategic supervisory function amending the regulation and the new text of the regulation in electronic format to Banca d'Italia.

Changes to fund regulations will take effect immediately if they determine more favorable economic conditions for the participants. In the others cases, the effectiveness of the changes is suspended for at least 40 days following the publication of the amendments, except for reduced terms provided for by fund regulations, in accordance with the provisions of Title V, Chapter 1, Section II, paragraph 4.4 of the RGC.

The amendments to the RGC come into force on the day following the one of publication in the Official Gazette of the Italian Republic.

On 22 December 2021, CONSOB published Resolution no. 22144 following the public consultation launched on 8 October 2021. 

The resolution approved a series of amendments to the regulation adopted by CONSOB with:

• resolution of 14 May 1999, n. 11971 (Issuers' Regulation) and
• a regulation approved by CONSOB with resolution no. 17221 of 12 March 2010 and subsequent amendments (Related Parties Regulation). The amendments aimed at aligning the regulation with the provisions of Regulation (EU) 2019/2115 on promotion and use of growth markets for small and medium-sized enterprises (SMEs), as well as to those of Legislative Decree 2 February 2021, n. 17, implemented in the national legislation of Regulation (EU) 2017/1129 (Prospectus Regulation).

On 23 December 2021, CONSOB launched a public consultation concerning the proposed amendments to the regulation adopted with resolution no. 11971 (Issuers' Regulation).

The goal is to align the Issuers Regulation with the provisions of Regulation (EU) 2017/1129 (Prospectus Regulation) by anticipating, among other things, an alignment of the terms approval of the prospectus with European legislation, a major specification of the contents of the application for approval, the strengthening of the so-called prefiling, the authorization to draw up the prospectus in English for offers promoted in Italy as a source member state, with the summary translated into Italian.

The deadline for sending comments and observations is set for 6 February 2022.

On 1 December 2021, Legislative Decree 201/2021 has been published in the Gazzetta Ufficiale.

The Decree implemented changes to the legislative decree 24 February 1998, n. 58 and to the legislative decree 1 September 1993, n. 385, in transposition of the Directive (EU) 2019/2034 relating to the prudential supervision of investment companies. The Decree also amended Regulation (EU) 2019/2033 relating to the requirements regulations of investment firms (IFR).

On 21 December 2021, Borsa Italiana published Notice no. 42657 updating the price variation limits relating to ETNs on shares (or basket of shares) with leverage, as well as the price variation limits relating to the SeDeX market to include volatility indices among the types of underlying provided for leverage certificates, class B.

The updated version of the guide to market trading parameters organized and managed by Borsa Italiana will enter into force on 28 December 2021.

On 14 December 2021, the Commission de Surveillance du secteur financier (CSSF) published a communication on the 2021 survey related to the fight against money laundering and terrorism financing.

The CSSF will start the annual online survey for the year 2021 on 15 February 2022.

The objective is to collect standardised key information concerning money laundering and terrorism financing (ML/TF) risks to which professionals under CSSF supervision are exposed and the implementation of measures to mitigate these risks. This cross-sector survey contributes to the CSSF’s ongoing assessment of ML/TF risks present in the financial sectors under its supervision and forms part of the AML/CFT risk-based supervision approach put in place by the CSSF.

The 2021 survey remains mostly unchanged compared to the previous year. However, some questions have been removed, added or amended. The new questions have been highlighted in the survey.

Answers to the survey questions will have to be submitted through the CSSF eDesk Portal by 15 April 2022 (at the latest).

On 20 December 2021, the Law of 17 December 2021 amending the amended law of 23 September 2020 on measures concerning the holding of meetings in companies and other legal persons was published in the Official Journal. 

In Article 5 of the amended law of 23rd September, 2020 on measures concerning the holding of meetings in companies and other legal persons, the number "2021" is replaced by "2022".

On 4 January 2022, the Commission de Surveillance du secteur financier (CSSF) updated its FAQ on Virtual assets (UCIs) (4 January 2022).

The main update is the new question on whether a Luxembourg depositary may act as depositary for investment funds investing directly in virtual assets. The CSSF provided that Luxembourg fund depositaries may be mandated to act as depositary for investment funds investing directly in virtual assets. Certain conditions would need to be complied with as the regulatory requirements that depositaries are subject to would remain applicable. 

In this context, fund depositaries must put in place adequate organisational arrangements and an appropriate operational model, considering the specific risks related to the safekeeping of virtual assets. Moreover, depositaries shall notify the CSSF beforehand when they intend to act as depositary for an investment fund investing directly in virtual assets.

Beside the new question 5, the CSSF also updated the wordings of question 2 whether an AIF may invest in virtual assets. 

On 14 December 2021, the Commission de Surveillance du secteur financier (CSSF) issued a warning in relation to “log4j” vulnerability.

This is a Cyber-security alert, which has been initially written by the Cyber incidents Team of the European Central Bank.

It is about a critical unauthenticated Remote Code Execution (RCE) vulnerability (CVE-2021-4428) which is affecting a Java software library named “Log4j” that deals with logging at application level. This Java software library is present in many applications and services run by supervised institutions. Some of them facing the Internet.

Best practices in these cases suggest that IT Security Operations should have undertaken a collection of steps along the following lines of action:

• Check their software landscape (both internal servers and, most importantly, Internet-facing servers) for the use of Log4j and apply the corresponding patches where necessary and as soon as possible.
• If patching is not possible, isolating the system from the Internet is strongly recommended.
• If patching and isolation are not possible, then filtering aids such as application level firewalls, together with Intrusion Detection/Prevention systems (IDS/IPS) are advisable.
• Check for exploitation attempts – no matter whether they are successful or not – in the web server logs.
• Check the network perimeter logs for the presence of indicators of compromise (IOCs)

The number of impacted systems is expected to be high.

On 8 December 2021, Luxembourg published Law of 8 December 2021 on the issuance of letters of pledge transposing the Covered Bonds directive and modifying the amended law of 5 April 1993 on the financial sector, the law establishing the CSSF, the UCITS law. 

This law aims to transpose Directive (EU) 2019/2162 of the European Parliament and of the Council of 27 November 2019 on the issuance of covered bonds and the public oversight of covered bonds and amending Directives 2009/65/EC and 2014/59/EU and to implement Regulation (EU) 2019/2160 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) No 575/2013 as regards exposures in the form of covered bonds and, on the other hand, to introduce a "product" approach to the issuance of letters of pledge and to open up access to the activity of issuing letters of pledge to any Luxembourg credit institution within a strict framework.

As the current Luxembourg regime relating to letters of pledge already largely complies with the provisions of Directive (EU) 2019/2162, the draft law provides that covered bonds constitute a category of Luxembourg letters of pledge which, in addition to the provisions arising from the existing framework, comply with additional conditions arising from Directive (EU) 2019/2162. Thus, only those letters of pledge that comply with these additional provisions can be qualified as covered bonds within the meaning of Directive (EU) 2019/2162.

Second, the law adopts a "product" approach to the issuance of letters of pledge. Thus, a separate law will now be dedicated to the issuance of letters of pledge, following the "product" approach adopted by the European legislator. As a consequence of this change of approach, the draft law provides for access to the activity of issuing letters of pledge to any Luxembourg credit institution, without requiring the establishment of a specialized credit institution having the issuance of letters of pledge as its main purpose ("Spezialbankenprinzip"), as is the case under the current regulation.

The current law modifies article 43 (4) al.1 of the amended UCITS law of 17 December 2010 as such:  “The investment limit of UCITS shall be increased to a maximum of 25% for covered bonds as defined in Article 3(1) of Directive (EU) 2019/2162 of the European Parliament and of the Council of 27 November 2019 on the issuance of covered bonds and on public oversight of covered bonds and amending Directives 2009/65/EC and 2014/59/EU, and for certain bonds, when they are issued before 8 July 2022 by a credit institution which has its registered office in a Member State and which is legally subject to special supervision by public authorities designed to protect bondholders. In particular, the sums deriving from the issue of such bonds issued before 8 July 2022 must be invested, in accordance with the law, in assets which, throughout the period of validity of the bonds, can cover the claims arising from the bonds and which, in the event of the issuer's bankruptcy, would be used as a matter of priority for the repayment of the principal and the payment of accrued interest.”

The current system of specialized issuers of letters of pledge banks will continue to exist alongside the new system that has been set up to allow universal banks access to the issuance of letter of pledge business.

On 22 December 2021, the Grand-Ducal Regulation of 17 December 2021 relating to the fees to be levied by the Commission de Surveillance du Secteur Financier was published in the Legilux (Journal Officiel du Grand-Duché de Luxembourg).

The new Grand Ducal Regulation increases existing fees, and introduces new fees applicable to institutions and entities under CSSF supervision, such as:

• Credit institutions,
• Undertakings for collective investment
• Investment Fund Managers 
• Support & Specialised PFS
• etc.

The Grand-ducal Regulation of 21 December 2017 relating to the fees to be levied by the CSSF shall be repealed.

The Regulation will apply from 1 January 2022.

On 28 December 2021, the Commission de Surveillance du secteur financier (CSSF) published a communication regarding ESRB recommendation on the use of the LEI for the identification of legal entities.

The CSSF encourages all legal entities involved in financial transactions, under the CSSF’s supervisory remit and that have not been required to have an LEI in the context of existing national or European legislation, to obtain and maintain an LEI.

Also, the CSSF requests supervised entities to identify themselves through an LEI, if available, when communicating and reporting to the CSSF.

On 10 December 2021, the Commission de Surveillance du secteur financier (CSSF) updated the SIF / UCI Part II / SICAR Questionnaire.

The CSSF advises that a submitted application file can be assessed only once it is complete i.e. that all of the requested information in the tabs is provided and all of the necessary documents attached. Hence, any incomplete application file will lead to delays in launching, or completing, the examination phase.

On 15 December 2021, the Commission de Surveillance du secteur financier (CSSF) updated the questionnaire on Performance Fees Disclosures for AIFs.

This questionnaire aims at providing the CSSF with information about compliance by the concerned AIFM, in relation to the concerned AIF, with disclosure requirements under the ESMA Guidelines on performance fees (ESMA34-39-992).

On 15 December 2021, the Commission de Surveillance du secteur financier (CSSF) updated the AIFM Confirmation Letter on Performance Fees.

On 17 December 2021, the Commission de Surveillance du secteur financier (CSSF) published a communication on the electronic submission of prospectus for SICARs.

As from 16 December 2021, venture capital investment companies (SICARs) must submit their prospectuses/issue documents to the CSSF in electronic form via a secured system for electronic transmission accepted by the CSSF, which currently is the e-file communication platform or the Sofie communication platform. No other visa submission route will be possible in the future.

More information is available on the page Electronic submission of prospectus.

On 17 December 2021, the Commission de Surveillance du secteur financier (CSSF) updated the FAQ concerning the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment – version 14.

The update concerns whether Special Purpose Acquisition Companies (“SPACs”) constitute eligible investments for UCITS.

Investments in SPACs by UCITS are not prohibited as SPACs may constitute eligible investments for UCITS, provided they qualify, at any point of their life cycle, as transferable securities within the meaning of Article 1 (34) and Article 41 of the Law of 2010 and Article 2 of the Regulation 2008, further clarified by the CESR guidelines. 

However, SPACs may include different kind of risks such as dilution, liquidity, conflicts of interests or the uncertainty as to the identification, evaluation and eligibility of the target company. Moreover, the structure of SPACs can be complex and their characteristics may vary largely from one SPAC to another, meaning that UCITS need to carefully study the structure of each SPAC.

Before investing into SPACs, UCITS shall perform a detailed risk assessment covering all material risks to which the UCITS will be exposed to as a result of the investment. Based on the foregoing, the CSSF is of the opinion that a UCITS’ investment in SPACs should in principle be limited to a maximum of 10% of a UCITS’ NAV, provided that such SPAC investments fulfil all applicable eligibility requirements, are appropriately disclosed in UCITS prospectuses and are captured adequately by the risk management process of the UCITS.

On 17 December 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Annex to the CSSF Circular 19/708 on Electronic transmission of documents to the CSSF.

BACKGROUND

In recent years, investment fund managers have been subject to increased legal, regulatory and supervisory requirements. These provisions have reinforced the need for investment fund managers, inter alia, in terms of financial soundness, governance, substance, organisation, internal control and supervision of delegates. In this context, the CSSF considered it useful to put in place new prudential supervision tools for investment fund managers.

WHAT'S NEW?

On 22 December 2021, the Commission de Surveillance du secteur financier (CSSF) published Circulars CSSF 21/788, 21/789 and 21/790 concerning IFMs and UCIs.

The CSSF published these three circulars whose aim is to improve the Risk-Based Supervision of the CSSF, both for prudential and AML/CFT purposes, concerning investment fund managers (IFMs) and undertakings for collective investment (UCIs).

1. Circular CSSF 21/788 introduces a new CSSF AML/CFT external report to be prepared by the approved statutory auditor (réviseur d’entreprises agréé), as mentioned in Article 49 of the RCSSF 12-02, applicable as from the first time as at year end 31 December 2021 for all Luxembourg investment fund managers including registered AIFMs and all Luxembourg investment funds supervised by the CSSF for AML/CFT purposes.

2. Circular CSSF 21/789 introduces the following requirements and regulatory framework for all authorised IFMs, SIAGs and FIAAGs:

• Authorised IFMs, SIAGs and FIAAGs are required to complete a self-assessment questionnaire (SAQ) on an annual basis.
• The approved statutory auditor (réviseur d’entreprises agréé) of an authorised IFM, SIAG or FIAAG is required to review on an annual basis certain questions of the SAQ and to complete on that basis a separate report.
• This circular also defines a specific regulatory framework applicable to the management letter to be prepared on an annual basis by the approved statutory auditor of an authorised IFM.
• The above requirements and regulatory framework will be applicable for the first time as at year end 31 December 2021.

3. Circular CSSF 21/790 introduces the following regulatory requirements and regulatory framework for UCITS, UCIs subject to part II of the Law of 17 December 2010, Specialised Investment Funds (SIFs) and Investment Companies in Risk Capital (SICARs) (the “regulated UCIs”):

• The regulated UCIs are required to complete on an annual basis a self-assessment questionnaire (SAQ) and to communicate certain information to the CSSF in case the approved statutory auditor (réviseur d’entreprises agréé) issues a modified audit opinion in the context of the statutory audit of the regulated UCI.
• The approved statutory auditor of regulated UCIs is required to review on an annual basis certain questions of the SAQ and to complete on that basis a separate report.
• This circular also defines a specific regulatory framework applicable to the management letter to be prepared on an annual basis by the approved statutory auditor of a regulated UCI.
• The above requirements will be applicable as of the financial years ending 30 June 2022, with a phased implementation for the separate report as further specified in the circular.
• With the entry into force of the provisions of the circular as of the financial years ending 30 June 2022, Circular CSSF 02/81 on the practical rules concerning the task of auditors of UCIs will be repealed.

WHAT'S NEXT?

The completion of all reports (SAQs, separate reports and management letters) is to be performed using the CSSF eDesk platform.
A new module “Collective Investment Sector Reporting Tool” for preparing and filing with the CSSF the reports foreseen in Circulars CSSF 21/789 (IFMs) and CSSF 21/788 (CSSF AML/CFT external report) will be available as of 10 January 2022, on the CSSF eDesk platform (edesk.apps.cssf.lu) in the section “Investment funds and vehicles/Investment fund managers”. The eDesk homepage can also be accessed via the toolbox of the CSSF site.
The reports and the type of information to be communicated to the CSSF in case the approved statutory auditor issues a modified audit opinion for a regulated UCI, as foreseen in Circular CSSF 21/790 (UCIs) which will become applicable as of the financial years ending 30 June 2022, will be made available respectively on the CSSF eDesk platform and the CSSF website by 31 March 2022 at the latest. The CSSF will issue a separate communication for that purpose.

On 23 December 2021, the Commission de Surveillance du secteur financier (CSSF) updated the FAQ regarding the AML/CFT Market Entry Form (Funds and IFMs).

The document refers to a list of questions & answers (FAQ) in relation to the completion of the AML/CFT Market Entry Form (here-after “Market Entry Form”) in eDesk.

The document will be updated when necessary and the CSSF reserves the right to adapt its approach to any matter covered by the Q&A at any time.

In addition to this documentation, you can find more detailed information on how to use the Market Entry Form application in the dedicated user guide (available in eDesk).

The update was the following:

• Redrafting of question 11 and modification of question 1 accordingly

Here are three updated forms the Commission de Surveillance du secteur financier (CSSF) published concerning investment funds.

1. On 30 November 2021, the Commission de Surveillance du secteur financier (CSSF) updated the form for any notification regarding the free provision of services and amendments to the information included in such a notification, as regards to Article 18 of UCITS Directive and Article 33 of AIFMD. 

2. On 30 November 2021, the Commission de Surveillance du secteur financier (CSSF) updated the form for any notification regarding branch establishment and amendments to the information included in such a notification, as regards to Article 17 of UCITS Directive and Article 33 of AIFMD.

3. On 17 December 2021, the Commission de Surveillance du secteur financier (CSSF) updated the form for the conversion of an existing fund into a UCITS.

On 14 December 2021, the Commission de Surveillance du secteur financier (CSSF) updated three different templates concerning investment funds:

1. G2.1 template addressed to Investment fund managers. This reporting needs to be completed on a quarterly basis.

2. Template table K3.1 reporting SICAR. The English translation is exclusively intended to be used as a supportive aid. Only the French version of Tableau K 3.1" shall be used for reporting purposes.

3. Example for the UCITS risk reporting (URR) as well as the URR reporting file and ManCo identifiers.

On 6 December 2021, the Commission de Surveillance du Secteur Financier (CSSF) updated the form of the confirmation letter for the purpose of CSSF visa stamping of the fund prospectus updated in accordance with EU Regulation 2020/852 (“TR”).

Following implementation in pre-contractual documents of Level 1 requirements in respect to EU Regulation 2019/2088 (“SFDR”) since 10 March 2021, EU Regulation 2020/852 (TR) requires IFM to ensure transparency of environmentally sustainable investments in pre-contractual documents of sub-funds referred to Article 6, 8 and 9 SFDR (“in_scope sub-funds”) from 01 January 2022.

Practitioners intending to update pre-contractual documents of in_scope sub-funds may benefit of a fast track procedure when the following conditions are fulfilled:

• changes made to the pre-contractual documents are made in reference to article 5, 6 or 7 of TR;
• the prospectus in track change is accompanied by the following confirmation letter duly filled out and signed by authorised persons;
• any other changes made apart from changes made in reference to article 5, 6 or 7 of TR must be minor, of editorial nature only and not entail a material change for investors.

The CSSF expects that the statement required by article 7 TR is accurately clear and prominent to allow investors to identify firmly any sub-funds for which the statement is applicable (i.e. any sub-funds not referring to article 8 or 9 SFDR).

Where sub-funds disclose investing in an economic activity that contributes to environmental objective Climate change mitigation and/or climate change adaptation as set out in Article 9, 10 and 11 TR must inform on environmental objective(s) and provide a description informing on how and to what extent the investment underlying the sub-funds are taxonomy-aligned (criteria of article 3 TR fulfilled). This description shall be fair, clear and informative for investors, including in respect to possible transitional considerations, constraints or proportion of investments in targeted taxonomy-aligned investments.

This fast track procedure is available until 17 December 2021, any transmission after that date can only be considered on a best effort basis.

On 1 December 2021, the FINMA publishes a document summarizing the financial market regulation: Current projects (status and outlook).

Version française

Le 1er décembre 2021, la FINMA a publié la réglementation des marchés financiers: Projets en cours (état et perspectives).

On 3 December 2021, the FINMA published a Guidance Reporting on collective investment schemes for asset management companies as well as the reporting template and XML Schema.

This document provides guidance on the data collection for investment funds (the Excel-template) and contains definitions, explanations and examples for the items referred to in the template. The reporting on collective investment schemes aims to close certain data gaps in the area of liquidity risk, leverage risk and counterparty risk. The data is to be reported on a by fund basis directly to FINMA.

Version française

Le 3 décembre 2021, la FINMA a publié un Guide sur le reporting des organismes de placement collectif pour les sociétés de gestion ainsi qu'un modèle de reporting et le format XML.

Le présent document fournit des indications sur le recensement sur les placements collectifs de capitaux (modèle Excel) et contient des définitions, des explications et des exemples concernant les éléments qui y sont mentionnés. L’objectif du rapport sur les organismes de placement collectif de capitaux est de combler certaines lacunes dans les domaines liés aux risques de liquidité, d’effet de levier et de contrepartie. Pour chaque fonds, les données doivent être communiquées directement à la FINMA.

On 3 December 2021, the Federal Council decided to extend by twelve months the transitional period for the preparation of key information documents (KIDs) for complex financial instruments 31 December 2022.

The Financial Services Act (FinSA) entered into force on 1 January 2020. Among other things, it stipulates that the issuers of more complex financial instruments which are offered to private clients must prepare a key information document (KID) as of 1 January 2022. This transitional period is in line with the current regulations in the EU for the replacement of the UCITS KIID by the PRIIPS KID.

In order to ensure equal treatment, but also to avoid a disproportionate burden on issuers of financial instruments and to avoid confusing investors, the Federal Council likewise decided to extend the current transitional period for the preparation of key information documents for all financial instruments by twelve months. Until 31 December 2022, key investor information documents (KIIDs) or simplified prospectuses in accordance with the previous collective investment schemes legislation may continue to be prepared and published for securities funds and other funds for traditional investments, real estate funds and structured products, instead of key information documents (KIDs). 

Version française

Le 3 décembre 2022, le Conseil Fédéral a prolongé le délai transitoire pour l'établissement d'une feuille d'information de base pour les instruments financiers complexes jusqu'au 31 décembre 2022.

Entrée en vigueur le 1er janvier 2020, la loi fédérale sur les services financiers (LSFin) prévoit, entre autres, que les producteurs d'un instrument financier complexe proposé à des clients privés doivent établir une feuille d'information dite de base. Le délai transitoire correspond à la réglementation actuelle de l'UE visant à remplacer le DICI OPCVM par le DIC PRIIP.

Pour des raisons d'égalité de traitement et afin d'éviter des charges disproportionnées pour les producteurs d'instruments financiers, mais aussi pour écarter le risque de confusion chez les investisseurs, le Conseil fédéral a décidé de prolonger également de douze mois le délai transitoire actuel pour l'établissement d'une feuille d'information de base pour tous les instruments financiers. Jusqu'au 31 décembre 2022, pour les fonds en valeurs mobilières et autres fonds en placements traditionnels, les fonds immobiliers et les produits structurés, il restera donc possible d'établir et de publier, en lieu et place des feuilles d'information de base, des informations clés pour l'investisseur ou des prospectus simplifiés, conformément aux dispositions actuelles de la législation sur les placements collectifs de capitaux.

On 28 December 2021, the revised Collective Investment Schemes Act was published in the Swiss Official Journal. The Law is subject to a referendum until 7 April 2022.

The amendment of the Collective Investment Schemes Act aims at including the Limited Qualified Investor Fund (L-QIF) into the legislative scheme. The new rules on L-QIFs, together with the implementing rules at the level of the CISO, should enter into effect on 1 January 2023.

The L-QIF represents a genuine Swiss alternative to foreign fund competition for qualified investors. This innovative fund solution eliminates the existing competitive disadvantages compared to foreign funds. With the L-QIF, the Swiss fund and asset management industry can exploit its existing potential far better and strengthen Switzerland as a fund domicile, as the volume of collective investment schemes launched in Switzerland can now be increased without any competitive disadvantage. 

The core aim of the amendment is to create a flexible form of collective investment scheme under Swiss law that is not subject to FINMA approval and can thus be launched much more quickly and cost-effectively. This innovative product, which is available only to qualified investors, should guarantee the usual levels of quality and security. The L-QIF is inspired by the success and experiences of non-Swiss investment funds, such as the Luxembourg Reserved Alternative Investment Funds (RAIFs).  

The asset manager or fund management company responsible for an L-QIF must be an institution supervised by FINMA. This indirect supervision takes due account of qualified investors’ need for protection. Both open-ended and closed-ended collective investment schemes in accordance with the CISA could be set up as L-QIFs. They would enjoy flexibility as regards their investment universe so as to offer investors the greatest possible choice. In addition, the tax treatment of L-QIFs as Swiss funds would be crucial to their success.

In exceptional cases, the fund management company of an L-QIF in the form of a contractual investment fund or SICAV may suspend the redemption of units for a fixed period of time, if this is in the interest of all investors.

Finally, the text allows for the delegation of investment decisions for L-QIFS to portfolio managers without a licence (subject to a day-to-day supervision of FINMA-licensed privately organized supervisory organisations) to manage collective assets.

Version française

Le 28 décembre 2021, la Loi révisée sur les placements collectifs a été publiée au Journal Officiel.

La modification de la loi sur les placements collectifs de capitaux a pour objectif d’ajouter le Limited Qualified Investor Fund (L-QIF) au corps législatif. Les nouvelles règles sur les L-QIFs, ainsi que les règles d'application au niveau du CISO, devraient entrer en vigueur le 1er janvier 2023.

Pour les investisseurs qualifiés, le L-QIF représente une véritable alternative suisse à la concurrence des fonds étrangers. Cette solution de fonds innovante élimine les désavantages concurrentiels existants par rapport aux fonds étrangers. Grâce à la L-QIF, l'industrie suisse des fonds et de la gestion d'actifs peut bien mieux exploiter son potentiel existant et renforcer la Suisse en tant que domicile de fonds, car le volume des placements collectifs de capitaux créés en Suisse peut désormais être augmenté sans désavantage concurrentiel. Ainsi, une plus grande part de la création de valeur et du substrat fiscal reste en Suisse.

L'objectif principal de la modification est de créer une forme flexible de placement collectif de droit suisse qui n'est pas soumise à autorisation de la FINMA et qui peut donc être lancée beaucoup plus rapidement et à moindre coût. Ce produit innovant, qui n'est accessible qu'aux investisseurs qualifiés, devrait garantir les niveaux habituels de qualité et de sécurité. Le L-QIF s'inspire du succès et de l'expérience de fonds d'investissement non suisses, tels que les fonds d'investissement alternatifs réservés (RAIF) luxembourgeois.  

Le gestionnaire d'actifs ou la société de gestion responsable d'un L-QIF doit être une institution supervisée par la FINMA. Cette surveillance indirecte tient dûment compte du besoin de protection des investisseurs qualifiés. Les organismes de placement collectif ouverts et fermés conformes à la LPCC peuvent être créés en tant que L-QIF. Ils bénéficieraient d'une flexibilité quant à leur univers d'investissement afin d'offrir aux investisseurs le plus grand choix possible. En outre, le traitement fiscal des L-QIFs en tant que fonds suisses serait crucial pour leur succès.

Dans des cas exceptionnels, la direction de fonds d’un L-QIF revêtant la forme d’un fonds de placement contractuel ou d’une SICAV peut suspendre le remboursement des parts pour une durée déterminée, si cela sert l’intérêt de tous les investisseurs.

Enfin, le texte permet de déléguer les décisions d'investissement pour les L-QIFS à des gestionnaires de portefeuille sans licence (sous réserve d'une surveillance quotidienne par des organismes de surveillance organisés de manière privée et agréés par la FINMA) pour gérer des actifs collectifs.

On 21 December 2021, the Autoriteit Financiële Markten (AFM) published a discussion paper on the role of disclosures.

In Europe, financialservices are increasingly provided across national borders. European rules ensure that consumers in Europe - in whichever Member State - receive the same information when reviewing and purchasing an increasing number of financial products and services. Europe has introduced many different requirements with respect to information, on the basis of regulations such as UCITS, MiFID, IDD, DMD, CCD and PRIIPs. In order to promote supervisory convergence and a level European playing field, the focus is more often on the uniformity and completeness of information. There is a risk that pre-contractual legally mandatory information documents (hereinafter: ‘information documents’) are becoming increasingly detailed and technical, making them less comprehensible for consumers.

In this discussion paper, the AFM outlines its views to European policymakers on effective consumer protection, the position of information documents in this context and the role that insights from consumer behaviour can play. First, AFM discusses the objectives of information documents for consumers and for how the market functions, and the extent to which these are currently being met. AFM then put forward a suggestion for a process that policymakers can apply in order to provide effective protection to consumers. AFM concludes with some guidelines for making the information documents for consumers more effective, if policy makers chose this option.

On 15 December 2021, the Autoriteit Financiële Markten (AFM) published papers on customer protection and information.

The AFM calls on financial companies to pay more attention to 'continuous support' after the sale of a financial product. 

Three Principles of Ongoing Customer Support

The AFM therefore wants financial companies to pay more attention to ongoing support for consumers after the sale of a financial product. To help all parties with ongoing customer support, the AFM has  formulated three principles.

1. Formulate your ambition about customer care in the management phase and determine an approach

The AFM considers it important that financial enterprises consider the role they wish to play for their existing customers and how they can help them to continue to achieve their goals. This ambition determines how they organize their services in the management phase.

2. Make it clear to the customer what to expect and what not

The AFM considers it important that customers are made clear in good time about what they can and cannot expect and that, where possible, clear agreements are made about this together and, if necessary, these are repeated during the management phase.

3. Put this into practice and continuously test, evaluate and improve your services

The AFM considers it important that financial enterprises assess whether the service provision actually helps customers in practice and that they continue to develop and improve their service provision in the management phase.

On 22 December 2021, the Autoriteit Financiële Markten (AFM) and AMF called for improvements in cross-border supervision.

This paper focuses on improvements with respect to the cross-border provision of retail investment products and services with a corresponding focus on MiFID 2. The AMF and AFM view the area of retail investment as warranting priority. Nevertheless, the issues outlined in this paper are relevant beyond investment products and services. As such, some suggested solutions would be relevant to consider with respect to other product/services groups for which there is a cross-border market within Europe. 

On 9 December 2021, the De Nederlandsche Bank (DNB) published an article on the new pension system.

The transition to these new pension schemes is a complex, comprehensive and essentially irreversible process. It involves various risks that require adequate management. First of all, the existing collective pension assets must be evenly distributed among the members of the pension fund. To this end, all data on accrued pension rights must be accurate, complete and reproducible. In addition, the new schemes require an agile IT environment and a pension administration that is more closely linked to investments. After all, in the new system a change in the value of investments will have a direct impact on the size of a member's personal pension assets. This is not the case in a system based on entitlements. The investment policy will also change. Under the current system, the investment policy must be in line with the combined risk appetite of all members. In the new system, a pension fund must align its investment policy to the risk appetite per age cohort.

In order to achieve a timely and controlled transition, it is important that pension funds take control of the transition process. This means that they set out a clear, achievable transition path and ensure that the transition is controlled. To this end, they must identify their dependencies on other stakeholders, such as employers' organisations and trade unions or the pension fund administrator. It is also necessary to identify the risks that may arise and how they can be managed. For example, by mapping out relapse scenarios or hiring additional expertise in good time.

On 28 December 2021, the Regulation of the State Secretary for Social Affairs and Employment of 17 December 2021, no. 2021-0000185966, amending the Pension Act Regulation and the Compulsory Occupational Pension Scheme Act due to the amendment of the exemption scheme for the year 2022 was published in the Official Gazette of the Kingdom of the Netherlands.

Pension funds that do not have the minimum required capital can – under certain conditions – invoke the Exemption Scheme to prevent pension discounts in the short term. However, relying on the Exemption Scheme can be disadvantageous for some groups of pension fund participants in the long run. That is why the AFM wants pension funds that make use of the Exemption Scheme to actively inform their participants about this, and not just via, for example, a website or newsletter. They must explain why they choose it and what the negative consequences are in addition to the positive.

AFM draws the attention to the recommendations from the investigation:

• Substantiate why participation in the Exemption Scheme is in the interest of (former) participants and pension beneficiaries; this applies not only to pensioners, but also to participants who are still building up pension;
• Provide insight into the consequences for the pension of (former) participants and pension beneficiaries;
• Indicate clearly how long the Exemption Scheme can be used;
• Warn that future pension cuts are not out of the question;
• Inform in good time about the decision to participate in the Exemption Scheme.

On 3 December 2021, an Advice to the Council of State on the draft order in council to amend the Decree on prudential rules under the Wft, the Decree on the Supervision of the Conduct of Financial Undertakings under the Wft and a number of other decisions implementing the Directive on the prudential supervision of investment firms (Implementation Decree on the Prudential Supervision of Investment Firms) was published in the Official Gazette of the Kingdom of the Netherlands.

In article 59, ninth subsection of the Prudential Rules Decree, it has been clarified that the solvency of a manager of an investment institution or a manager of a UCITS that also provides an investment service is sufficient if the available regulatory capital of the company meets the capital requirements of part 3 of the Regulation on Prudential Requirements for Investment Firms that apply to an investment firm for the same investment service.

In addition, the numbering of article 31g1 of the Decree on Conduct of Business Supervision of Financial Undertakings Wft has been changed to article 31ga in line with the systematics of that decree. 

Furthermore, the entry into force provision has been adjusted in connection with the fact that the Investment Firms (Prudential Supervision) Implementation Act, which was originally intended to enter into force, has already entered into force. The decree now states that it shall enter into force on the day after its publication.

On 7 December 2021, the De Nederlandsche Bank (DNB) published a report on sustainability risks.

Banks, insurers and pension funds must take sustainability risks more into account. A survey among 127 Dutch financial institutions shows that a majority do not yet have an adequate embedding of sustainability risks in risk management. In addition, financial institutions find it difficult to measure and report on sustainability risks due to the limited availability of consistent and reliable data.

On 16 December 2021, the De Nederlandsche Bank (DNB) published a paper on Biodiversity in the financial sector – From pledges to action A practitioners’ Guide by the Working Group on Biodiversity under the Sustainable Finance Platform.

The Biodiversity Working Group of the Sustainable Finance Platform has developed a roadmap to help financial institutions address biodiversity loss. The roadmap offers guidance for institutions that are new to this theme, but also for institutions that have already taken their first steps.

On 23 December 2021, the Autoriteit Financiële Markten (AFM) informed on the reporting of environmental objectives from reporting year 2021.

In 2020, the EU regulation was published to promote sustainable investment. The regulation, also known as the EU taxonomy, contains a classification system to determine whether activities and assets are environmentally sustainable ('green'). It plays an important role in the implementation of the European Green Deal. Companies to which the regulation applies will have a number of reporting obligations from reporting year 2021.

The regulation applies to large securities issuers, banks and insurers with more than 500 employees, who are required to include a non-financial statement in their management report.

The AFM reminds the key principles to reporting environmental objectives.

On 15 December 2021, the Financial Conduct Authority (FCA) published its statement on Apache Log4j cyber vulnerability.

The National Cyber Security Centre (NCSC) is aware that scanning for this vulnerability has been detected in the UK and exploitation detected elsewhere. 

The NCSC has published guidance for firms to help identify if they may be affected. It will be updated regularly by the NCSC where more information is available. 

The FCA recommends that all firms using the Apache Log4j 2 library review the NCSC guidance to ensure the safety of their firm’s systems. Any operational impacts associated with this issue should be escalated via normal supervisory reporting processes. 

On 14 December 2021, the Financial Conduct Authority (FCA) published Response to the report of the Independent Review into the FSA and FCA’s supervisory intervention on Interest Rate Hedging Products (IRHP).

Targeting this scheme so that it could be quickly rolled out to the small businesses that needed it most was a complex undertaking. Nevertheless, the FCA has acknowledged clear shortfalls in processes, governance and record keeping when decisions about the redress scheme were made, and a lack of transparency.  

The FCA will ensure that any significant decisions on redress made in the future will be transparent, with appropriate governance, and supporting evidence will be properly recorded.

The FCA already has a more proactive approach and better systems, oversight and controls than were in place when the IRHP sales took place. A significant transformation programme is underway to ensure the FCA is a more innovative, adaptive and assertive regulator that can and will investigate and act earlier. 

The FCA does not consider that the FSA was wrong to limit the scope of the redress scheme to less sophisticated customers and has concluded that it would not be appropriate or proportionate to take further action. Accordingly, the FCA will not seek to use its powers to require any further redress to be paid to IRHP customers.

On 3 December 2021, the Financial Conduct Authority (FCA) published a report from the 2021 joint survey of FCA regulated firms.

Key themes from the feedback included:

• A positive view, particularly amongst larger firms, of FCA’s performance during the pandemic.
• Some firms told us that that FCA has a reactive, rather than proactive, approach to risk. In particular, some firms are concerned that there may be significant or emerging risks in the market of which FCA are not aware. This is a key area of focus for FCA’s transformation work. 
• FCA is concerned about the number of smaller firms that suggested they aren’t engaging with FCA’s consultation processes. FCA will ensure that all open consultations are included in FCA’s Regulation Roundup newsletter. In addition, FCA has trialed a new online response process, intended to make it easier for firms to respond to consultations. The trial was successful and FCA will roll out the new process soon.
• Firms are often unclear about why FCA collects the data FCA requests from them. FCA will feed these findings into work FCA is undertaking to reduce regulatory burden.
• There were concerns on the time it takes for authorizations to be completed but many of those that expressed that view pressed for more thorough background checks on owners of failed firms seeking to re-join the industry. FCA recently announced changes to FCA’s decision-making process. The new process will ensure FCA can make faster and more effective decisions for consumers, markets, and firms.

FCA will use the results of the survey to better understand the issues affecting all firms and to help improve how FCA operates.

On 3 December 2021, the Financial Conduct Authority (FCA) published CP21/35: Quarterly Consultation Paper No. 34.

The consultation proposes: 

• Minor amendment to the Enforcement Guide to reflect the EU Exit Passport Regulations.
• Amendments to MAR 9 to include wind-down guidance when a data reporting services provider wishes to cancel its data reporting service authorisation
• Changes to RTS 22 as onshored to remove the requirement to report certain Securities Financing Transactions (SFTs) under UK MiFIR.
• Consequential changes to SUP 8 to align with the revised procedure for making decisions on Waiver applications.
• Amendments to FCA forms in line with FCA´s interpretative guide on completing FCA´s forms after the UK’s withdrawal from the EU.

On 9 December 2021, the Financial Conduct Authority (FCA) updated following forms:

• Notification under MIFIDPRU 4.12.7R
• Notification under MIFIDPRU 5.9.3R of the concentration risk hard limit breach
• Notification under MIFIDPRU TP 7.4R(2)(b)
• Notification under MIFIDPRU TP 1.8R
• Notification under MIFIDPRU 4.12.10R and 4.14.20R of the intended use of own delta estimates
• Notification under MIFIDPRU for which there is no dedicated notification form.

On 2 December 2021, the Financial Conduct Authority (FCA) published PS21/22: Primary Market Effectiveness Review: Feedback and final changes to the Listing Rules.

The FCA confirmed a series of rule changes to ensure that the UK’s public markets remain a trusted and attractive place to list successful companies, providing opportunities for companies to grow from which investors will benefit. 

The FCA confirmed the following changes:

• Allowing a targeted form of dual class share structures within the premium listing segment to encourage innovative, often founder-led companies onto public markets sooner and so broaden the listed investment landscape for investors in the UK.
• Reducing the amount of shares an issuer is required to have in public hands (i.e. free float) from 25% to 10%, reducing potential barriers for issuers created by current requirements.
• Increasing the minimum market capitalization (MMC) threshold for both the premium and standard listing segments for shares in ordinary commercial companies from £700,000 to £30 million. Raising the MMC will give investors greater trust and clarity about the types of company with shares admitted to different markets.

On 9 December 2021, the Financial Conduct Authority (FCA) published Long Form A - UK and Overseas Firms (not incoming EEA) for MiFID authorisation applications.

This form is used for the application to perform senior management functions.

On 15 December 2021, the Financial Conduct Authority (FCA) published Article 4 Information Form (SMR) for MiFID members of the management body and key function holders.

MIFID II requires certain information to be provided by the applicant firm when making changes to their management body or key function holders. The information in this form is required to enable us to fulfil our obligations in obtaining this information.

On 13 December 2021, the UK Government published Report and call for evidence response of the Review of the Securitisation Regulation.

The report finds that, at present, it is challenging to definitively draw conclusions on the effect of the Sec Reg on the functioning of the UK securitisation market. The Sec Reg has only applied in the UK since 2019. During this time, unique external factors, like the Covid-19 pandemic, have disrupted financial markets and made it difficult to assess the effects of the Sec Reg.

Nevertheless, there are signs that the Sec Reg has increased the transparency and robustness of the UK securitisation market, which were key aims of the Regulation. At the same time, there are some indications that the Sec Reg has not boosted securitisation issuance or broadened the investor base as much as it could have. 

Overall, HM Treasury continues to support the Sec Reg, in particular noting the importance of preserving confidence in the STS framework. However, there are some areas of the Regulation that may benefit from targeted and appropriate refinement. HM Treasury and the financial services regulators – the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) – will continue to monitor the market.

HM Treasury will consider amending or clarifying some of the jurisdictional scope matters related to the Sec Reg that were raised. In addition, the report concludes that no changes are currently needed to the Sec Reg relating to Third Party Verifiers (TPVs) or Securitisation Special Purpose Entities (SSPEs), because neither of these elements of the regime raised major concerns.

On 16 December 2021, the Bank of England (BoE) published an inventory of senior manager responsibilities. 

This document responds to the feedback in the ‘Evaluation of the Senior Managers and Certification Regime (SM&CR)’ report that it would be useful to have an inventory of references to senior manager responsibilities made in PRA publications that are not directly related to individual accountability. The inventory will be updated periodically, but it does not replace or amend any PRA publication, nor does it remove the need to review relevant PRA publications. Stakeholders should continue to refer to the original publications or the PRA Rulebook, and should not regard the inventory as an exhaustive list.

On 9 December 2021, the Financial Conduct Authority (FCA) published four forms concerning the Senior Managers & Certification Regime (SM&CR):

1. Long Form A - Dual Regulated firms (including EEA and third country firms): This form is used for the application to perform controlled functions including senior management functions.

2.  Short Form A - Solo-regulated firms (including EEA and third country): This form is used for the application to perform controlled functions including senior management functions.

3. Long Form A - Solo-regulated firms (including EEA and third country): This form is used for the application to perform controlled functions including senior management functions.

4. Short Form A - Dual-regulated firms (including EEA and third country firms): This form is used for the application to perform controlled functions including senior management functions.

On 15 December 2021, the Financial Conduct Authority (FCA) published Enhancing climate-related disclosures by asset managers, life insurers and FCA-regulated pension providers.

In this PS, the FCA confirmed that the FCA has introduced a new ESG Sourcebook to the FCA Handbook containing rules and guidance for asset managers and certain FCA-regulated asset owners to make disclosures consistent with the TCFD’s recommendations. 

The rules require in-scope firms to make disclosures on an annual basis at: 

• Entity-level – an annual TCFD entity report published in a prominent place on the main website of the firm’s business setting out how they take climate-related matters into account in managing or administering investments on behalf of clients and consumers 
• Product-level – disclosures (including a core set of climate-related metrics) on the firm’s products and portfolios made publicly in a prominent place on the main website of the firm’s business and included or cross-referenced in an appropriate client communication, or made upon request to certain eligible institutional clients 

The rules are accompanied by guidance to help firms determine whether their disclosures are consistent with the TCFD’s recommendations and recommended disclosures, and/or our requirements. 

On 17 December 2021, the Financial Conduct Authority (FCA) published PS21/23 - Enhancing climate-related disclosures by standard listed companies.

Issuers of standard listed shares, or equity shares represented by certificates (global depositary receipts) must include a statement in their annual financial reports setting out whether their disclosures meet the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). If they don’t, they’ll need to explain why.

The new rule will apply for accounting periods beginning on or after 1 January 2022. The first annual financial reports subject to the new rule will therefore be published in early 2023. 

Listed companies directly affected by the new LR should familiarise themselves with the rule and associated guidance. They need to assess the suitability of their current arrangements to ensure they can meet the requirements of the rule. 

Premium listed issuers should also consider the implications of new and amended guidance provisions which will apply for accounting periods beginning on or after 1 January 2022.

On 22 December 2021, the US Commodity Futures Trading Commission (CFTC) announced that it is extending the temporary no-action letter previously issued to registered derivatives clearing organizations (DCOs) regarding the amended daily reporting requirements in CFTC Regulation 39.19.

CFTC would extend the Letter No. 21-01, which was set to expire on January 27, 2022, for an additional five months, through June 27, 2022. The letter continues to not recommend that the Commission commence an enforcement action against any DCO for failing to comply with the amended daily reporting requirements in CFTC Regulation 39.19, so long as that DCO continues to comply with the daily reporting requirements as they were prior to the 2020 amendments.

In addition, CFTC would also extend through January 27, 2023, a discreet portion of CFTC Letter No. 21-01. The Commission is recommended not to take enforcement action against any DCO for failing to comply with the requirements in Regulation 39.19(c)(1)(B) and (C), so long as that DCO continues to comply with the prior version of the regulation.

On 15 December 2021, the U.S. Securities and Exchange Commission (SEC) proposed new share repurchase disclosure rules.

The proposed rules would require an issuer to provide a new Form SR before the end of the first business day following the day the issuer executes a share repurchase. Form SR would require disclosure identifying the class of securities purchased, the total amount purchased, the average price paid, as well as the aggregate total amount purchased on the open market in reliance on the safe harbor in Exchange Act Rule 10b-18 or pursuant to a plan that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c).

The proposed amendments also would enhance existing periodic disclosure requirements regarding repurchases of an issuer’s equity securities. Specifically, the proposed amendments would require an issuer to disclose: the objective or rationale for the share repurchases and the process or criteria used to determine the repurchase amounts; any policies and procedures relating to purchases and sales of the issuer’s securities by its officers and directors during a repurchase program, including any restriction on such transactions; and whether the issuer is making its repurchases  pursuant to a plan that it intends to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) and/or  the conditions of the Exchange Act Rule 10b-18 non-exclusive safe harbor.

The proposed rules apply to issuers that repurchase securities registered under Section 12 of the Securities Exchange Act of 1934, including foreign private issuers and certain registered closed-end funds.

The proposing release will be published on SEC.gov and in the Federal Register. The comment period will remain open for 45 days after publication in the Federal Register.

On 17 December 2021, Monaco published Sovereign Ordinance No. 8.964 of 6 December 2021 establishing a Committee for the Coordination and Monitoring of the National Strategy to Combat Money Laundering, the Financing of Terrorism, the Proliferation of Weapons of Mass Destruction and Corruption. 

The committee's mission is to coordinate the national strategy to combat money-laundering, the financing of terrorism, the proliferation of weapons of mass destruction and corruption, to ensure its effective implementation, to propose any initiative likely to make it more effective and to raise any question of common interest relating to the coordination and implementation of the said national strategy.

The first college of the Committee referred to in Article 2.1. meets as necessary and at least twice a year, at the invitation of the Minister of State, who sets the agenda for the meeting in consultation with the Government Counsellor-Minister of Finance and the Economy and the Director of the Information and Control Service on Financial Circuits.

The two colleges shall meet in plenary session of the Committee, under the same convening conditions, at least once a year.

On 25 November 2021, the Banco Central do Brasil (BACEN) published Resolution CMN No 4970 - authorization processes related to the operation of the certain institutions, including:

I - development agencies;

II - savings and loan associations;

III - commercial banks;

IV - exchange banks;

V - development banks;

VI - investment banks;

VII - multiple banks;

VIII - mortgage companies;

IX - credit unions;

X - leasing companies;

XI - exchange brokerage companies;

XII - securities brokerage companies;

XIII - direct credit companies;

XIV - credit, financing and investment companies;

XV - real estate credit companies;

XVI - credit companies for micro-entrepreneurs and small businesses;

XVII - companies distributing bonds and securities; and

XVIII - loan companies between persons.

This Resolution enters into force on 1 July 2022.

On 21 December 2021, the Comissão de Valores Mobiliários (CVM) published Circular Letter CVM/SEP 06/21 - Structured Form for Standardized Financial Statements on the CVM's platform.

The document aims to inform public and foreign companies about the continuity and evolution of the migration process of structured forms (Demonstrações Financeiras Padronizadas - DFP) of the platform Empresas.NET.

The Circular also highlights the schedule of the migration process:

• from 3 January 2022: possibility, for the evaluation of experience, of using the DFP Online feature, in the 'Sending documents' menu of the platform.
• from 2 March 2022: release for full use, but not required, of the DFP Online functionality on the platform.
• from 1 April 2022: mandatory use of the new functionality on the web platform with the respective deactivation of 'DFP' in the client tool.

Thus, between 3 February 2022 and 31 March 2022, the delivery of completed DFP forms will be allowed in both tools (client and DFP Online).

The Circular also provides guidance to users of the Multiple Download functionality, in addition to informing about the availability, as of 3 January 2022, of technical material for the use of DFP Online.

On 1 December 2021, the Comissão de Valores Mobiliários (CVM) published Circular Letter CVM/SIN 08/21 - Clarifications on the disclosure of assets in the document Statement of Composition and Diversification of the Portfolio.

The Circular updates the technical area view – presented in 2009 and 2010 – on the reasons that can lead a manager to hide the fund portfolio on the CVM website for up to 90 days. 

Some points updated by the Circular: 

• CVM Instruction (ICVM) 555 revoked ICVM 409 and, consequently, extinguished funds with a minimum application of R$ 1 million. The investment funds were repositioned by target audience (investors in general, qualified and professional) and no longer by value. Therefore, any exercise by the fund manager or fund manager that compares these defunct funds to any type currently existing on the market is incorrect and inappropriate.
• The lag in the disclosure of exclusive funds is intended for those who are actually registered with the CVM and contain explicit provision in regulation that they are intended for an exclusive investor. It does not cover investment funds which, in a circumstantial manner, contain only one investor.  
• The Circular reinforces that the lag in the disclosure of the entire portfolio of the fund or within a maximum of 90 days without plausible justification is inappropriate. The justifications already considered inadequate in the Circular Letter CVM/SIN 3/2010 remain in force.  

On 7 December 2021, the Comissão de Valores Mobiliários (CVM) published CVM/SIN 09/21, which complements and updates the guidelines of the Circular Letter CVM/SIN/No. 2/2017.

The document clarifies that the procedures for submitting information of Equity Investment Funds (FIP), which must be done by the Structured Fund Management System (SGF),and not by CVM Web.

To resolve the problem, CVMWeb will be blocked for this option. The measure is aligned with the decision to gradually discontinue the system, whose functionalities have been replaced by other programs, including the SGF. CVMWeb currently aims to make available to the market the periodical information of the funds, and no longer for the registrations.  

All other guidelines of the Circular Letter CVM/SIN/No. 2/2017 are still in force.  

On 7 December 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) published Q&As on the new tool for the development of liquidity management policies of investment funds, which concern following aspects:

• "Looplex" platform
• Who can access the tool 
• How the access to the tool works
• How to generate a login and password for use of the platform
• Features of the platform? 
• How to join the tool
• The structure of the questionnaire and the needed information
• How to guarantee that the complete information is correct
• When the platform will be available for access
• How the process of adapting the institutions' policies works according to the new rules 
• Whether it is really necessary to develop a new policy for managing the liquidity of funds 
• How ANBIMA can clarify any questions of users of the tool
• Whether the use of the tool is mandatory
• Whether it generates any cost to the institution.

On 17 December 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) published the standard model mandate for EFPC (Closed Supplementary Pension Entities) portfolio managers.

In the future, the model may even be adopted as an annex to the investment policies of these entities if the entities deem it appropriate, which will facilitate the framing controls.

The mandate model of managers for institutional investors, specifically for EFPC, was developed by the market itself. The objective is to provide security and transparency in the treatment of information and also optimize the day-to-day of the agents involved in this relationship. The lack of standardization required relevant time for service providers in identifying policy changes year by year, which could weaken control by the entities themselves.

The layout is not mandatory and will not be supervised by ANBIMA, but it is a suggestion that can be used by all homes that are interested, including, to optimize resources.

Pension entities develop and review their investment policies annually following their own structure. The lack of standardization ends up demanding time from market agents when monitoring and identifying changes, which will generate updates in managers' mandates.

On 22 December 2021, the Comissão de Valores Mobiliários (CVM) published CVM/SINNº 10/2021 - Guidance to IF managers on internal controls for compliance with regulatory obligations for sending periodic documents.

The Circular addresses the provisions of CVM Instruction 555, in particular, article 59, which presents the list of mandatory documents to be sent to the CVM. The Circular also recalls that the untimely sending of periodic information can generate fines of up to R$ 60,000 per document.  

Managers of investment funds (IF), at the time when the obligation to deliver the document expires, is responsible for sending the information to the CVM.

The Circular highlights the relevance of the existence of double check mechanisms in relation to the delivery of the document. The action tends to generate the timely, of the occurrence of an error in the sending and, thus, to give possible delivery lagging with the shortest possible delay.

If the IF manager faces system problems in sending the documentation, he/she must provide for the formalization of these difficulties to the CVM.

On 23 December 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) published new manual for registering funds.

The Manual for Registration of Investment Funds ("Manual") aims to detail the procedures described in the ANBIMA Code of Regulation and Best Practices for Resource Management Third parties ("Code") for registration with the Association, as well as the instructions for completion and access to the data submission system of the ANBIMA website.

The manager must enter the required information in the fields available in the designated area to register investment funds on the ANBIMA website, according to established instructions in this manual.

The scope of this Manual applies to investment funds governed by ICVM 555 (Funds 555), Receivables Investment Funds (FIDCs), Real Estate Investment Funds (FIIs) and Equity Investment Funds (FIPs), as well as their appropriate classes/series, when applicable.

The analysis of records and changes by ANBIMA will be made within 10 working days for all the types of funds that the Manual, counted from the date on which the fund went into the situation “Under analysis” on the ANBIMA or Sistema Galgo website.

The manual includes :

• the methodology for applying fines for the registration of funds, which deals with the devices for applying fines for registration errors
• templates for the letter of justification for the absence of mandatory documents and for the letter of investment restriction of the target audience.

On 29 December 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) published Communication on the Availability of New Model of the Relationship of third parties contracted for the Distribution Activity, to be sent in March 2022.

The ANBIMA Code of Regulation and Best Practices for The Distribution of Investment Products, in its art. 21 and sole paragraph, determines that all Participating Institutions shall forward, by the last day of March of each year, the list of third parties contracted for the Activity of Distribution of Investment Products ("Third Party Report"), according to the model made available by ANBIMA.

Aiming at standardization in the sending of this information and seeking the least possible impact on the way the Participating Institutions prepare the Third Party Report, the Distribution Monitoring Committee approved the following change in the Third Party Report Model made available in the SSM Documents Module: adding a tab to fill out the CPFs of all autonomous investment agents ("AAI") individuals who have a current contract with the Participating Institution on the base date of the Third Party Report.

With the exception of this additional information, the completion of the tab "Contracted Third Parties" will follow in the same way as previous years and will be available for the delivery of 30 calendar days before the deadline.

The ANBIMA also clarifies that the new Third Party Report template available should be used by participating institutions next year (March 2022).

On 23 December 2021, the Comisión Nacional Bancaria y de Valores (CNBV) published a communication on CNBVs stregnthened focus on sustainable finance.

The CNBV and the Finance for Biodiversity Initiative (BIOFIN) Mexico of the United Nations Development Program (UNDP), recognised the relevance and urgency of promoting sustainability in the financial system in Mexico.

In this sense, they consider financial and non-financial disclosures in Environmental, Social and Corporate Governance (ESG) issues to be central, which is why the first phase of a productive collaboration to develop and encourage the adoption of these disclosures recently culminated.

The CNBV has worked on evaluating the inclusion of ESG disclosures in financial decision-making. As an example, the Commission is actively involved in the work of major international sustainability initiatives and organisations.

In addition, within the framework of the work of the Stability Council for the Financial System (CESF), particularly through the Sustainable Finance Committee, the CNBV coordinates the activities and progress of the Working Group on Disclosure of Information and Adoption of ESG Standards.

The Purpose of this Group is to analyze the status of non-financial disclosure frameworks related to ESG indicators to understand their similarities and differences, as well as to understand regulatory efforts in this area in other parts of the world and to identify best practices of disclosure of information and corporate governance in ESG that can be adopted in the Mexican context.

Some of the main initiatives with which the CNBV collaborates, in terms of disclosure of information related to climate change and biodiversity, are: the Working Group on Climate-Related Financial Disclosures (TCFD) and the Working Group on Nature-Related Financial Disclosures (TNFD).

Both initiatives seek to promote the disclosure of financial and non-financial information that allows various stakeholders to have solid elements, in order that decision-making processes facilitate the obtaining of profits and generate positive impacts on the environment and society.

Following the CNBV's accession to the United Nations Global Compact, the evaluation of its progress in labor, environmental, human rights and anti-corruption matters has been coordinated, in order to focus its efforts on compliance with the ten principles based on these pillars.

These actions also contribute to the fulfillment of various international commitments, such as the 2030 Agenda, specifically the Sustainable Development Goals (SDGs), 8 (decent work and economic growth), 13, 14 and 15 (on climate change and biodiversity), 16 (peace, justice and strong institutions) and 17 (partnerships to achieve goals).

In addition to this, the CNBV collaborates with other authorities of the financial system, to analyze in greater depth the context of the disclosure of sustainable information and the adoption of ESG standards. This is within the framework of the work of the Committee on Sustainable Finance of the CESF.

In addition, the CNBV was supported in the participation and monitoring of the activities and initiatives of international organizations with a focus on sustainable finance of which the Commission is a part.

Likewise, strategic elements and technical support were provided for the activities and sessions of the Working Group on Disclosure of Information and Adoption of ESG Standards of the Committee on Sustainable Finance of the CESF.

The work of CNBV and BIOFIN will continue in a second phase that will focus on the integration of sustainability criteria in the financial system, promoting exchanges of regional experiences in financial regulation for sustainability, the mapping of international guidelines to implement tools, scenario analysis and cost analysis for entities in the financial sector. This is with the aim of strengthening the Commission's sustainability strategy.

On 1 December 2021, the International Swaps and Derivatives Association (ISDA) published the Summary of Regulatory Reporting Requirements for Benchmark Cessation. 

Immediately following December 31, 2021, several LIBOR tenors will discontinue or become non-representative. This will impact regulatory reporting requirements for Interest Rate trades across jurisdictions. Some regulators have published guidance of how to adhere to reporting expectations following IBOR cessation, but this guidance is not all in a single location and does not address all the questions raised by market participants.

This summary document aims to consolidate the regulatory guidance published by regulators along with the additional impacts to reporting requirements discussed within ISDA working groups that market participants may want to consider to meet the obligations for reporting fallbacks and transfers to RFRs.