On 14 June 2022, the European Banking Authority (EBA) published its Guidelines specifying the role and responsibilities of the anti-money laundering and countering the financing of terrorism (AML/CFT) compliance officer and of the management body of credit or financial institutions. 

These Guidelines aim to ensure a common interpretation and adequate implementation of AML/CFT internal governance arrangements across the EU in line with the requirements of the EU Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (ML/FT). 

These Guidelines set clear expectations on the role, tasks and responsibilities of the AML/CFT compliance officer and the management body. They specify that credit or financial institutions should appoint one member of their management body who will ultimately be responsible for the implementation of the AML/CFT obligations and clarify the tasks and functions of that person. They also describe the roles and responsibilities of the AML/CFT compliance officer, when this person is appointed by the management body pursuant to the proportionality criteria. When the credit or financial institution is part of a group, the Guidelines prescribe that a group AML/CFT compliance officer should be appointed and clarify this person’s tasks and responsibilities. 

These Guidelines aim to create a common understanding, by competent authorities and credit or financial institutions, of credit or financial institutions’ AML/CFT governance arrangements. They complement but do not replace relevant guidelines issued by the EBA on wider governance arrangements and suitability checks. 

The guidelines will be translated into the official EU languages and published on the EBA website.

The deadline for competent authorities to report whether they comply with the guidelines will be six months after the publication of the translations. The guidelines will apply from 1 December 2022.

On 29 June 2022, European Parliament and the Council of the EU reached provisional agreement on new rules to stop illicit flows in the EU. 

The proposed regulation aims to ensure that crypto transfers can always be traced and suspicious transactions blocked.

The agreement extends the so-called “travel rule”, already existing in traditional finance, to cover transfers in crypto assets. This rule requires that information on the source of the asset and its beneficiary travels with the transaction and is stored on both sides of the transfer. Crypto-assets service providers (CASPs) will be obliged to provide this information to competent authorities if an investigation is conducted into money laundering and terrorist financing.

As crypto-asset transactions easily circumvent existing thresholds that would trigger traceability requirements, Parliament negotiators assured that there is no minimum thresholds nor exemptions for low-value transfers, as originally proposed.

Regarding protecting personal data, including a name and an address required by the travel rule, negotiators agreed that if there is no guarantee that privacy is upheld by the receiving end, such data should not be sent.

Before making the crypto-assets available to beneficiaries, providers will have to verify that the source of the asset is not subject to restrictive measures or sanctions, and there are no risks of money laundering or terrorism financing.

Negotiators agreed that the set-up of a public register for non-compliant and non-supervised CASPs, with which EU CASPs would not be allowed to trade, will be covered in the Markets in Crypto-assets rules (MiCA), currently being negotiated.

The rules would also cover transactions from so-called un-hosted wallets (a crypto-asset wallet address that is in the custody of a private user) when they interact with hosted wallets managed by CASPs.

In case a customer sends or receives more than 1000 euros to or from their own un-hosted wallet, the CASP will need to verify whether the un-hosted wallet is effectively owned or controlled by this customer.

The rules do not apply to person-to-person transfers conducted without a provider, such as bitcoins trading platforms, or among providers acting on their own behalf.

On 29 June 2022, the European Parliament issued statement on  Digital Service Act adoption in July's plenary.

In December 2020, the European Commission published a proposal for a digital services act (DSA) designed to revamp EU content moderation rules and promote a transparent and safer online environment. Parliament is set to vote during its July 2022 plenary session on the political agreement reached with the Council. 

The main provisions of the DSA are the following:

• Online platforms (e.g. social media and marketplaces) and online search engines must take measures to protect their users from harmful and illegal content, goods and services. 
• Online platforms must be more transparent and more accountable (e.g. on how their  content is recommended to their users) and put in place special measures to ensure their  users' safety online. They cannot target advertising based on minors' personal data or on sensitive data (e.g. sexual orientation, religion and ethnicity). They should also not use their online interface to influence users' behaviour, i.e. 'dark patterns'. Online marketplaces are required to make more effort to ensure the information provided by the online traders using their platforms is reliable, including through random checks.
• Very large online platforms (VLOPs) and very large online search engines (VLOSE) will  have to comply with stricter obligations under the DSA, given the significant societal risks they pose when disseminating illegal and harmful content, including disinformation. They will have to conduct an annual risk assessment of their services and adapt their design or  algorithms to limit their impact. Furthermore, they must take action to limit public security  or health threats that their operation may pose in times of crisis (e.g. Covid disinformation).
• Micro and small enterprises are exempted from some obligations and have more time than other businesses to implement others. The Commission will assess the impact of new rules  on small businesses.
• Enforcement is shared between national authorities, who supervise smaller platforms, and  the Commission, which has exclusive competence for VLOPS and VLOSE.

BACKGROUND

Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) provides for a temporary exemption from the clearing obligation for Pension Scheme Arrangements (PSAs) meeting certain criteria. 

This transitional period is set out in Article 89(1) of EMIR and provides further time for central counterparties (CCPs), PSAs and clearing members to develop viable technical solutions which would allow PSAs to meet the cash variation margin calls of CCPs, mitigating potential adverse effects of centrally clearing derivative contracts on the retirement benefits of future pensioners. The temporary exemption has been extended over the years, since no viable technical solution has emerged.

WHAT'S NEW?

Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) provides for a temporary exemption from the clearing obligation for Pension Scheme Arrangements (PSAs) meeting certain criteria. 

This transitional period is set out in Article 89(1) of EMIR and provides further time for central counterparties (CCPs), PSAs and clearing members to develop viable technical solutions which would allow PSAs to meet the cash variation margin calls of CCPs, mitigating potential adverse effects of centrally clearing derivative contracts on the retirement benefits of future pensioners. The temporary exemption has been extended over the years, since no viable technical solution has emerged.

WHAT'S NEXT?

The draft Commission Delegated Regulation extending the transitional period referred to in Article 89(1), first subparagraph, of EMIR is subjected to adoption procedure. 

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

On 28 June 2022, European Securities and Markets Authority (ESMA) updated an overview of planned consultation papers 2022 (28 June 2022).

The purpose of the below table is to provide an overview of the planned consultations to help stakeholders planning ahead. The table will be updated by ESMA on a regular basis. A list of ongoing and past consultations is available on ESMA’s website.

On 30 June 2022, European Securities and Markets Authority (ESMA)  published its prioritisation of 2022  deliverables. 

As part of a wider effort to continually improve efficiency within ESMA, this exercise aims to ensure that resources are appropriately allocated in light of external factors impacting on ESMA’s workload since the publication of the AWP. The primary external factors affecting ESMA this year are (i) the financial market impact of the Russian invasion of Ukraine; (ii) several ambitious legislative proposals, including the European single access point and the consolidated tape providers; and (iii) overall resource constraints.

In order to ensure ESMA’s ability to deliver on its 2022 work programme taking into account these factors, ESMA identified among its planned work a set of deliverables which could be deprioritised or postponed.

On 21 June 2022, Council of the EU adopted its position on AIFMD II as regards delegation arrangements, liquidity risk management, supervisory reporting, provision of depositary and custody services and loan origination.

In accordance with Article 69 of Directive 2011/61/EU of the European Parliament and of the Council, the Commission has reviewed the application and the scope of that Directive and concluded that the objectives of integrating the Union market for alternative investment funds (‘AIF’), ensuring a high level of investor protection and protecting financial stability have mostly been met. However, in that review the Commission also concluded that there is a need to harmonise rules for the managers of alternative investment funds (‘AIFMs’) managing loan-originating AIFs, to clarify standards applicable to AIFMs that delegate their functions to third parties, to ensure equal treatment of custodians, to improve cross-border access to depositary services, to optimise supervisory data collection and to facilitate the use of liquidity management tools (LMTs) across the Union. Therefore, amendments are necessary to address those regulatory gaps to improve the functioning of Directive 2011/61/EU.

A robust delegation regime, an equal treatment of custodians, coherence of supervisory reporting and a harmonised approach to the use of LMTs are equally necessary for the management of undertakings for collective investment in transferable securities (‘UCITS’). Therefore, it is appropriate to also amend Directive 2009/65/EC of the European Parliament and of the Council, which lays down rules regarding the authorisation and operation of UCITS, in the areas of delegation, asset safekeeping, supervisory reporting and liquidity risk management.

On 29 June 2022,  the European Securities and Markets Authority (ESMA) published summaries of the applicable national laws and administrative provisions governing cross-border fund distribution.

Regulation (EU) 2019/1156 on facilitating cross-border distribution of collective investment  undertakings requires ESMA to publish on its website the hyperlinks to the websites of competent  authorities where they publish complete and up-to-date information on the applicable national  laws, regulations and administrative provisions governing marketing requirements for AIFs and  UCITS, as well as the summaries thereof, and the hyperlinks to the websites of competent  authorities where they publish and maintain complete and up-to-date list of the fees and charges  they levy for carrying out their duties in relation to the cross-border activities of fund managers. 

This document contains both hyperlinks and the summaries of national rules governing marketing requirements, which were provided by competent authorities.

On 21 June 2022, EU published in the Official Journal of the European Union (OJ) the recommendation of the members of the Council representing Member States whose currency is the euro of 17 June 2022 to the Council on the adoption by Croatia of the euro on 1 January 2023 2022/C 238/01.

In the light of their assessment, the Members of the Council representing Member States whose currency is the euro share the Commission’s view that Croatia has achieved legal compatibility and respects the convergence criteria and, also taking into account the additional factors, consider that Croatia fulfils the necessary conditions for the adoption of the euro.

Referring also to the Commission’s and the European Central Bank’s convergence assessment, the Members of the Council representing Member States whose currency is the euro also stress the importance of the successful completion of the commitments made upon entry into the Exchange Rate Mechanism II and underline that policies need to be fully geared towards meeting the challenge of maintaining sustainable convergence, and in particular inflation convergence, of the Croatian economy in the long-run. To that end, they encourage the Croatian authorities to continue pursuing a fiscal policy that aims to achieve a prudent medium-term fiscal position and to proceed with the implementation of Croatia’s Recovery and Resilience Plan, so as to ensure a successful participation in the euro area.

The Members of the Council representing Member States whose currency is the euro expect Croatia to cooperate constructively in matters pertaining to European Stability Mechanism governance, euro area crisis management and the completion of the Economic and Monetary Union architecture,

HEREBY RECOMMEND TO THE COUNCIL OF THE EUROPEAN UNION:

The derogation regarding Croatia within the meaning of Article 139(1) of the Treaty on the Functioning of the European Union as referred to in Article 5 of the 2012 Act of Accession (1) should be abrogated with effect from 1 January 2023.

On 24 June 2022, EU published Commission Delegated Regulation (EU) 2022/975 of 17 March 2022 amending the regulatory technical standards laid down in Delegated Regulation (EU) 2017/653 as regards the extension of the transitional arrangement laid down in Article 14(2) of that Regulation and amending the regulatory technical standards laid down in Delegated Regulation (EU) 2021/2268 as regards the date of application of that Regulation.

Article 1

Amendment to Delegated Regulation (EU) 2017/653 

In Article 18 of Delegated Regulation (EU) 2017/653, the third paragraph is replaced by the following: ‘Article 14(2) shall apply until 31 December 2022.’.

Article 2

Amendment to Delegated Regulation (EU) 2021/2268 

In Article 2, second paragraph, of Delegated Regulation (EU) 2021/2268, ‘1 July 2022’ is replaced by ‘1 January 2023’. 

Article 3

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

Furthermore, the European Supervisory Authorities (ESAs) would like to draw the attention of stakeholders to a Statement by the European Commission concerning the application date of new rules for the Key Information Document (KID) for packaged retail and insurance-based investment products (PRIIPs).

The Statement of the European Commission confirms that it is intended:

• For the rules for the KID in Delegated Regulation 2017/653 to continue to apply until 31 December 2022, including the ability to use the Key Investor Information Document (KIID) to provide specific information about UCITS offered as underlying investment options, and 
• For the new rules included in Delegated Regulation 2021/2268 to amend Delegated Regulation 2017/653 to apply from 1 January 2023.

The ESAs expect National Competent Authorities to take the Statement from the European Commission into account during their supervision of PRIIPs.

On 30 June 2022, European Parliament and the Council of the EU reached provisional agreement on the markets in crypto-assets (MiCA) proposal. 

This regulatory framework will protect investors and preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector. This will bring more clarity in the European Union, as some member states already have national legislation for crypto-assets, but so far there had been no specific regulatory framework at EU level.

MiCA will protect consumers against some of the risks associated with the investment in crypto-assets, and help them avoid fraudulent schemes. Currently, consumers have very limited rights to protection or redress, especially if the transactions take place outside the EU. With the new rules, crypto-asset service providers will have to respect strong requirements to protect consumers wallets and become liable in case they lose investors’ crypto-assets. MiCA will also cover any type of market abuse related to any type of transaction or service, notably for market manipulation and insider dealing.

Actors in the crypto-assets market will be required to declare information on their environmental and climate footprint. The European Securities and Markets Authority (ESMA) will develop draft regulatory technical standards on the content, methodologies and presentation of information related to principal adverse environmental and climate-related impact. Within two years, the European Commission will have to provide a report on the environmental impact of crypto-assets and the introduction of mandatory minimum sustainability standards for consensus mechanisms, including the proof-of-work.

To avoid any overlaps with updated legislation on anti-money laundering (AML), which will now also cover crypto-assets, MiCA does not duplicate the anti-money laundering provisions as set out in the newly updated transfer of funds rules agreed on 29 June. However, MiCA requires that the European Banking Authority (EBA) will be tasked with maintaining a public register of non-compliant crypto-asset service providers. Crypto-asset service providers, whose parent company is located in countries listed on the EU list of third countries considered at high risk for anti-money laundering activities, as well as on the EU list of non-cooperative jurisdictions for tax purposes, will be required to implement enhanced checks in line with the EU AML framework. Tougher requirements may also be applied to shareholders and to the management of the CASPs), notably with regard to their localisation.

Recent events on the so-called “stablecoins” markets showed once again the risks incurred by holders in the absence of regulation, as well as the impacts it has on other crypto-assets.

In fact, MiCA will protect consumers by requesting stablecoins issuers to build up a sufficiently liquid reserve, with a 1/1 ratio and partly in the form of deposits. Every so-called “stablecoin” holder will be offered a claim at any time and free of charge by the issuer, and the rules governing the operation of the reserve will also provide for an adequate minimum liquidity. Furthermore, all so-called “stablecoins” will be supervised by the European Banking Authority (EBA), with a presence of the issuer in the EU being a precondition for any issuance.

The development of asset-referenced tokens (ARTs) based on a non-European currency, as a widely used means of payment, will be constrained to preserve our monetary sovereignty. Issuers of ARTs will need to have a registered office in the EU to ensure the proper supervision and monitoring of offers to the public of asset-referenced tokens.

This framework will provide the expected legal certainty and allow innovation to flourish in the European Union.

Under the provisional agreement reached today, crypto-asset service providers (CASPs) will need an authorisation in order to operate within the EU. National authorities will be required to issue authorisations within a timeframe of three months. Regarding the largest CASPs, national authorities will transmit relevant information regularly to the European Securities and Markets Authority (ESMA).

Non-fungible tokens (NFTs), i. e. digital assets representing real objects like art, music and videos, will be excluded from the scope except if they fall under existing crypto-asset categories. Within 18 months the European Commission will be tasked to prepare a comprehensive assessment and, if deemed necessary, a specific, proportionate and horizontal legislative proposal to create a regime for NFTs and address the emerging risks of such new market.

The provisional agreement is subject to approval by the Council and the European Parliament before going through the formal adoption procedure.

On 21 June 2022, Council of the EU published provisional political agreement between the Council and the European Parliament on Corporate Sustainability Reporting Directive (CSRD).

The Council and European Parliament today reached a provisional political agreement on the corporate sustainability reporting directive (CSRD).

The proposal aims to address shortcomings in the existing rules on disclosure of non-financial information, which was of insufficient quality to allow it to be properly taken into account by investors. Such shortcomings hinder the transition to a sustainable economy.

What are the new rules?

The corporate sustainability reporting directive amends the 2014 non-financial reporting directive. It introduces more detailed reporting requirements and ensures that large companies are required to report on sustainability issues such as environmental rights, social rights, human rights and governance factors.            

The CSRD also introduces a certification requirement for sustainability reporting as well as improved accessibility of information, by requiring its publication in a dedicated section of company management reports.

The European Financial Reporting Advisory Group (EFRAG) will be responsible for establishing European standards, following technical advice from a number of European agencies.

Who will be covered by the directive?

EU rules on non-financial information apply to all large companies and all companies listed on regulated markets. These companies are also responsible for assessing the information at the level of their subsidiaries. 

The rules also apply to listed SMEs, taking into account their specific characteristics. An opt-out will be possible for SMEs during a transitional period, meaning that they will be exempted from the application of the directive until 2028.

For non-European companies, the requirement to provide a sustainability report applies to all companies generating a net turnover of EUR 150 million in the EU and which have at least one subsidiary or branch in the EU. These companies must provide a report on their ESG impacts, namely on environmental, social and governance impacts, as defined in this directive. 

Who ensures the quality of reporting?

Reporting must be certified by an accredited independent auditor or certifier. To ensure that companies comply with the reporting rules, an independent auditor or certifier must ensure that the sustainability information complies with the certification standards that have been adopted by the EU. The reporting of non-European companies must also be certified, either by a European auditor or by one established in a third country.

From what date will the rules apply?

The application of the regulation will take place in three stages:

• 1 January 2024 for companies already subject to the non-financial reporting directive;
• 1 January 2025 for companies that are not presently subject to the non-financial reporting directive;
• 1 January 2026 for listed SMEs, small and non-complex credit institutions and captive insurance undertakings.

Next steps

The provisional agreement reached today is subject to approval by the Council and the European Parliament.

From the Council’s side, the provisional political agreement is subject to approval by the Permanent Representatives Committee (Coreper), before going through the formal steps of the adoption procedure. The directive will enter into force 20 days after its publication in the Official Journal of the European Union.

On 8 June 2022, the Autorité des normes comptables (ANC) published Regulation No. 2022-03 of June 3, 2022 amending ANC Regulation No. 2020-07 of December 4, 2020 relating to the annual accounts of undertakings for collective investment with variable capital. 

This document contains two levels of texts:

• on the one hand, the mandatory regulatory provisions of the articles of the ANC regulation N°2020-XX of December 4, 2020 relating to the annual financial statements of undertakings for collective investment with variable capital. These elements with a regulatory scope are identifiable by their black color.
• on the other hand, these articles are completed with non-regulatory comments, identifiable by their blue typographically identified by their blue color.

These infra-regulatory comments are classified according to the following five categories

• contextual comments (IR1), which present the context and the reasons for the development of the the standard;
• comments relating to the scope of an article (IR2) to indicate whether a type of transaction is covered by an article or not concerned by an article or not;
• comments relating to the methods of implementation of an article (IR3);
• illustrative comments (IR4): these are examples;
• recommendations relating to posting schemes (IR5): these specify the operation of the accounts.

Version française

Le 8 juin 2022, l'Autorité des normes comptables (ANC) a publié le règlement n° 2022-03 du 3 juin 2022 modifiant le règlement de l'ANC n° 2020-07 du 4 décembre 2020 relatif aux comptes annuels des organismes de placement collectif à capital variable. 

Ce document contient deux niveaux de textes :

• d'une part, les dispositions réglementaires obligatoires des articles du règlement ANC N°2020-XX du 4 décembre 2020 relatif aux comptes annuels des organismes de placement collectif à capital variable. Ces éléments à portée réglementaire sont identifiables par leur couleur noire.
• d'autre part, ces articles sont complétés par des commentaires infra-réglementaires, identifiables par leur couleur bleue en typographie.

Ces commentaires infra-réglementaires sont classés selon les cinq catégories suivantes

• les commentaires contextuels (IR1), qui présentent le contexte et les raisons de l'élaboration de la norme ;
• les commentaires relatifs au champ d'application d'un article (IR2) qui indiquent si un type d'opération est concerné ou non par un article ;
• des commentaires relatifs aux méthodes de mise en œuvre d'un article (IR3) ;
• des commentaires illustratifs (IR4) : il s'agit d'exemples ;
• des recommandations relatives aux régimes d'écritures (IR5) : elles précisent le fonctionnement des comptes. "

Le 8 juin 2022, l'Autorité des normes comptables (ANC) a publié le règlement n° 2022-03 du 3 juin 2022 modifiant le règlement de l'ANC n° 2020-07 du 4 décembre 2020 relatif aux comptes annuels des organismes de placement collectif à capital variable.

On 1 June 2022, the Autorité des marchés financiers (AMF) published the updated policy on DASPs.

The AMF has revised its policy (Position DOC-2020-07) on the regime for digital asset service providers to reflect changes in the products and business models of industry players. Some provisions have been clarified, while those that have become obsolete have been removed.

First of all, the AMF stresses the importance for companies who wish to register as DASPs to make sure that the assets they are offering in their services are indeed digital assets. The policy therefore stresses the need to monitor the nature of the digital assets concerned by the services proposed for as long as the services are provided (question 2.1).

Question (3.1, formerly question 3.2) has been completed to clarify the concept of promotional marketing that enables a digital asset service to be located in France: this marketing is considered to have been effectively sent by the DASP when it is issued at its initiative or on its behalf by a third party. This point clarifies the situations where the AMF considers that the DASP has taken this initiative.

The AMF has toughened the substantive criteria used for authorising DASPs by requiring the use of language that can be understood by all French customers in their marketing materials and when dealing with complaints from them.

The AMF also states that the use of an Application Programming Interface (API) does not rule out the qualification of the digital asset custody service or other digital asset services. Services should be analysed on a case-by-case basis.

A new question (12.3) has also been added to clarify the extent to which digital asset services may be provided where a provider offers a service that allows customers to participate in "staking" or "cryptolending" activity.

Lastly, questions related to transitional provisions or provisions that were in force prior to 1 May 2021 have been removed because they are now obsolete.

It should be noted that Position DOC-2020-07 remains a work in progress and may be updated regularly, depending on the issues raised by stakeholders.

Version française

Le 1er juin 2022, l'Autorité des marchés financiers (AMF) a publié la mise à jour de la politique relative aux PSAD.

L'AMF a révisé sa politique (Position DOC-2020-07) sur le régime des prestataires de services d'actifs numériques afin de tenir compte de l'évolution des produits et des modèles d'affaires des acteurs du secteur. Certaines dispositions ont été clarifiées, tandis que celles qui sont devenues obsolètes ont été supprimées.

Tout d'abord, l'AMF souligne l'importance pour les sociétés qui souhaitent s'enregistrer en tant que DASP de s'assurer que les actifs qu'elles proposent dans leurs services sont bien des actifs numériques. Elle insiste donc sur la nécessité de contrôler la nature des actifs numériques concernés par les services proposés, et ce tant que les services sont fournis (question 2.1).

La question (3.1, anciennement question 3.2) a été complétée pour clarifier la notion de marketing promotionnel permettant de localiser un service d'actifs numériques en France : ce marketing est considéré comme effectivement envoyé par le DASP lorsqu'il est émis à son initiative ou pour son compte par un tiers. Ce point clarifie les situations dans lesquelles l'AMF considère que le DASP a pris cette initiative.

L'AMF a renforcé les critères de fond utilisés pour l'agrément des DASP en exigeant l'utilisation d'un langage compréhensible par tous les clients français dans leurs documents commerciaux et lors du traitement des réclamations de ces derniers.

L'AMF précise également que l'utilisation d'une interface de programmation d'applications (API) n'exclut pas la qualification du service de conservation d'actifs numériques ou d'autres services d'actifs numériques. Les services doivent être analysés au cas par cas.

Une nouvelle question (12.3) a également été ajoutée pour clarifier dans quelle mesure les services d'actifs numériques peuvent être fournis lorsqu'un prestataire offre un service permettant aux clients de participer à une activité de " staking " ou de " cryptolending ".

Enfin, les questions relatives aux dispositions transitoires ou aux dispositions qui étaient en vigueur avant le 1er mai 2021 ont été supprimées car elles sont désormais obsolètes.

Il convient de noter que la position DOC-2020-07 reste un travail en cours et peut être mise à jour régulièrement, en fonction des questions soulevées par les parties prenantes.

On 14 June 2022, the Agence nationale de la sécurité des systèmes d'information (ANSSI) informed on signing mutual recognition agreement for security certificates between ANSSI and BSI.

The Director General of ANSSI (National Agency for the Security of Information Systems), Guillaume Poupard, and the President of BSI (Bundesamt für Sicherheit in der Informationstechnik), Arne Schönbohm, have signed an agreement for the mutual recognition of certificates of security for the CSPN (First Level Security Certification) and BSZ (Beschleunigte Sicherheitszertifizierung) schemes. Each of these certification schemes allows for assessments within a predetermined timeframe and makes the effort for product suppliers manageable, including limiting documentation.

As soon as the agreement comes into force, the valid and public certificates previously issued will be recognized in France and Germany, while the next ones will be as soon as they are published. The agreement is intended to cover all certificates issued by the two schemes but may be excluded if they are, for example, subject to special national regulations.

In addition to the mutual recognition of certificates, the agreement lays the foundations for enhanced cooperation between the ANSSI and BSI certification bodies. Regular technical exchanges on the pursuit of CSPN and BSZ harmonization, as well as on the development of these schemes, will be able to benefit from a formalized framework.

This agreement represents a further step towards the global harmonization of certification schemes based on a predetermined evaluation period. The European standard FiTCEM (Fixed Time Cybersecurity Evaluation Methodology for ICT products, prEN 17640), currently being developed, will make it possible to extend the harmonization of these practices to European level, in particular through the creation of a European certification system based on the  Cybersecurity Act .

Version française

Le 14 juin 2022, l'Agence nationale de la sécurité des systèmes d'information (ANSSI) a informé de la signature d'un accord de reconnaissance mutuelle des certificats de sécurité entre l'ANSSI et BSI.

Le directeur général de l'ANSSI (Agence nationale de la sécurité des systèmes d'information), Guillaume Poupard, et le président du BSI (Bundesamt für Sicherheit in der Informationstechnik), Arne Schönbohm, ont signé un accord de reconnaissance mutuelle des certificats de sécurité pour les schémas CSPN (First Level Security Certification) et BSZ (Beschleunigte Sicherheitszertifizierung). Chacun de ces systèmes de certification permet des évaluations dans un délai prédéterminé et rend l'effort des fournisseurs de produits gérable, y compris la limitation de la documentation.

Dès l'entrée en vigueur de l'accord, les certificats valides et publics précédemment délivrés seront reconnus en France et en Allemagne, tandis que les prochains le seront dès leur publication. L'accord est destiné à couvrir tous les certificats émis par les deux régimes, mais peut être exclu s'ils sont, par exemple, soumis à des réglementations nationales particulières.

Outre la reconnaissance mutuelle des certificats, l'accord jette les bases d'une coopération renforcée entre les organismes de certification de l'ANSSI et du BSI. Les échanges techniques réguliers sur la poursuite de l'harmonisation des CSPN et BSZ, ainsi que sur le développement de ces schémas, pourront bénéficier d'un cadre formalisé.

Cet accord représente un pas supplémentaire vers l'harmonisation mondiale des systèmes de certification basés sur une période d'évaluation prédéterminée. La norme européenne FiTCEM (Fixed Time Cybersecurity Evaluation Methodology for ICT products, prEN 17640), en cours d'élaboration, permettra d'étendre l'harmonisation de ces pratiques au niveau européen, notamment par la création d'un système de certification européen basé sur le Cybersecurity Act .

On 17 June 2022, the Autorité de contrôle prudentiel et de résolution (ACPR) announced joint exercise being carried out by MAS, BdF and ACPR to strengthen cross-border cyber crisis response and preparedness.

The Monetary Authority of Singapore (MAS), the Banque de France (BdF) and the Prudential Control and Resolution Authority (ACPR) conducted a joint crisis management exercise yesterday focusing on cybersecurity threats. The exercise follows the cybersecurity cooperation agreement signed between MAS, BdF and ACPR in November 2019.

Version française

Le 17 juin 2022, l'Autorité de contrôle prudentiel et de résolution (ACPR) a annoncé un exercice conjoint mené par la MAS, la BdF et l'ACPR pour renforcer la réponse et la préparation aux cyber-crises transfrontalières.

L'Autorité monétaire de Singapour (MAS), la Banque de France (BdF) et l'Autorité de contrôle prudentiel et de résolution (ACPR) ont mené hier un exercice conjoint de gestion de crise axé sur les menaces de cybersécurité. Cet exercice fait suite à l'accord de coopération en matière de cybersécurité signé entre la MAS, la BdF et l'ACPR en novembre 2019.

On 14 June 2022, the Autorité de contrôle prudentiel et de résolution (ACPR) published the ACPR and AMF Joint Unit for Insurance, Banking and Retail Investment 2021 annual report. 

In a highly dynamic capital markets environment, the Joint Unit of the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the Autorité des Marchés Financiers (AMF) continued its theme-based work in 2021, and also continued to monitor and oversee commercial practices. The two authorities also stepped up their cooperation in the fight against financial scams.

In 2021, the Joint Unit completed several of its theme-based projects.

Work on the digital marketing of financial savings products continued throughout 2021. A summary published in April 2022 and appended to the Joint Unit’s 2021 annual report set out its findings, the good practices to be promoted and cases of non-compliance with regulations on customer information and informed consent. It also identified areas where improvements could be made, such as pre-contractual information and the presentation of fees.

The working group on vulnerable ageing people published a summary of its work in April 2021. The two authorities called on financial institutions to exercise greater vigilance with regard to this group of customers, to avoid the marketing of unsuitable products, and to address the areas for improvement identified. They will hold discussions and meetings with professionals in the autumn to review their progress.

With regard to sustainable finance, a working group was set up in the spring of 2021 to share findings on market practices and harmonise the policies of the two authorities on promotional communications that give prominence to "green" arguments. It explored the possibility of developing an ACPR policy similar to the one published by the AMF in 2020 on collective investment schemes, adapting it to the specific characteristics of life insurance products. This work is taking place ahead of the entry into force in August 2022 of the amendments to the delegated acts of the European Directives on Markets in Financial Instruments (MiFID II) and Insurance Distribution (IDD) on the collection of information on client sustainability preferences.

One of the priority topics of the Joint Unit in the coming months will be the issue of fees for financial products and services, a major concern of both authorities. The aim is to improve the accessibility and clarity of information on fees.

The prevention of scams has remained a major area of cooperation between the two authorities under the Joint Unit. In 2021, more than 1,300 websites and addresses were added to the five blacklists, with 1,200 of them on the list for "loans, savings accounts, payment services, insurance contracts". In all, by the end of 2021, more than 3,860 names of fraudulent or suspicious websites or market participants had been identified on these blacklists.

The Joint Unit also continued its educational initiatives through a new prevention campaign, in the form of short videos on social media, on the theme “Don’t do on the Internet what you wouldn’t do in real life.” The four videos attracted a total of over 1.5 million views on YouTube.

As part of its mission to provide the public with reliable information, the Joint Unit received more than 190,000 calls via the Assurance Banque Épargne Info Service (ABEIS) telephone platform. After two exceptional years linked to the health crisis, the audience of the abe-infoservice.fr website increased again with 1.4 million visits and nearly 2 million pages viewed in 2021.

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L'Autorité de contrôle prudentiel et de résolution (ACPR) a publié, le 14 juin 2022, le rapport annuel 2021 du Pôle commun de l'ACPR et de l'AMF pour les assurances, la banque et les placements de détail. 

Dans un contexte de marchés financiers très dynamique, le Pôle commun de l'Autorité de contrôle prudentiel et de résolution (ACPR) et de l'Autorité des marchés financiers (AMF) a poursuivi en 2021 ses travaux thématiques et a également continué à assurer le suivi et le contrôle des pratiques commerciales. Les deux autorités ont également renforcé leur coopération en matière de lutte contre les escroqueries financières.

En 2021, l'Unité mixte a achevé plusieurs de ses projets thématiques.

Les travaux sur la commercialisation numérique des produits d'épargne financière se sont poursuivis tout au long de l'année 2021. Une synthèse publiée en avril 2022 et annexée au rapport annuel 2021 de l'Unité mixte a présenté ses conclusions, les bonnes pratiques à promouvoir et les cas de non-respect de la réglementation sur l'information et le consentement éclairé des clients. Il a également identifié les domaines dans lesquels des améliorations pourraient être apportées, comme l'information précontractuelle et la présentation des frais.

Le groupe de travail sur les personnes âgées vulnérables a publié une synthèse de ses travaux en avril 2021. Les deux autorités ont appelé les institutions financières à faire preuve d'une plus grande vigilance à l'égard de ce groupe de clients, à éviter la commercialisation de produits inadaptés et à traiter les points d'amélioration identifiés. Elles organiseront des discussions et des réunions avec les professionnels à l'automne pour faire le point sur leurs progrès.

En matière de finance durable, un groupe de travail a été mis en place au printemps 2021 pour partager les constats sur les pratiques de marché et harmoniser les politiques des deux autorités en matière de communication promotionnelle mettant en avant des arguments " verts ". Il a exploré la possibilité de développer une politique de l'ACPR similaire à celle publiée par l'AMF en 2020 sur les organismes de placement collectif, en l'adaptant aux spécificités des produits d'assurance-vie. Ces travaux se déroulent en amont de l'entrée en vigueur, en août 2022, des modifications des actes délégués des directives européennes sur les marchés d'instruments financiers (MiFID II) et sur la distribution d'assurance (IDD) concernant la collecte d'informations sur les préférences des clients en matière de durabilité.

L'un des sujets prioritaires de l'Unité conjointe dans les mois à venir sera la question des frais pour les produits et services financiers, une préoccupation majeure des deux autorités. L'objectif est d'améliorer l'accessibilité et la clarté des informations sur les frais.

La prévention des escroqueries est restée un domaine majeur de coopération entre les deux autorités dans le cadre de l'Unité conjointe. En 2021, plus de 1 300 sites internet et adresses ont été ajoutés aux cinq listes noires, dont 1 200 sur la liste des ""prêts, comptes d'épargne, services de paiement, contrats d'assurance"". Au total, à la fin de 2021, plus de 3 860 noms de sites web ou d'acteurs du marché frauduleux ou suspects avaient été identifiés sur ces listes noires.

L'Unité mixte a également poursuivi ses actions pédagogiques à travers une nouvelle campagne de prévention, sous forme de courtes vidéos diffusées sur les médias sociaux, sur le thème "Ne faites pas sur Internet ce que vous ne feriez pas dans la vie réelle." Les quatre vidéos ont attiré au total plus de 1,5 million de vues sur YouTube.

Dans le cadre de sa mission d'information fiable du public, le syndicat mixte a reçu plus de 190 000 appels via la plateforme téléphonique Assurance Banque Épargne Info Service (ABEIS). Après deux années exceptionnelles liées à la crise sanitaire, l'audience du site abe-infoservice.fr est repartie à la hausse avec 1,4 million de visites et près de 2 millions de pages vues en 2021."

On 9 June 2022, the Autorité des marchés financiers (AMF)  announced applying the ESMA guidelines on the appropriateness and execution-only requirements of Directive 2014/65/EU (MiFID II).

The Autorité des Marchés Financiers (AMF) published a Position DOC-2022-03 to incorporate the guidelines of the European Securities and Markets Authority (ESMA) on the appropriateness and execution-only requirements of Directive 2014/65/EU (MiFID II). This will cancel its policy on collecting know-your-client information at the date on which these guidelines come into force.

These guidelines are designed to clarify the application of these requirements and aim to promote greater convergence in their interpretation and supervision, emphasising a number of important issues. They will accordingly be able to reinforce investor protection.

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Le 9 juin 2022, l'Autorité des marchés financiers (AMF) a annoncé appliquer les lignes directrices de l'ESMA sur les exigences d'adéquation et d'exécution seule de la directive 2014/65/UE (MiFID II).

L'Autorité des Marchés Financiers (AMF) a publié une Position DOC-2022-03 afin d'intégrer les lignes directrices de l'Autorité européenne des marchés financiers (ESMA) sur les exigences d'opportunité et d'exécution seule de la directive 2014/65/UE (MiFID II). Cela annulera sa politique de collecte d'informations sur la connaissance du client à la date d'entrée en vigueur de ces lignes directrices.

Ces lignes directrices sont destinées à clarifier l'application de ces exigences et visent à promouvoir une plus grande convergence dans leur interprétation et leur supervision, en mettant l'accent sur un certain nombre de points importants. Elles pourront ainsi renforcer la protection des investisseurs.

On 23 June 2022, the Association Française de Gestion (AFG) published the table of spreads under MiFID II and PRIIPs for Mai 2022.

As a reminder, the AFG publishes for its members a table of half-spreads used to calculate and display the implicit transaction costs under MIF II and PRIIPS. The table is optional and indicative. It is accompanied by an explanatory note.

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 L'Association Française de Gestion (AFG) a publié le 23 juin dernier le tableau des spreads sous MIF II et PRIIPs pour le mois de mai 2022.

Pour rappel, l'AFG publie pour ses adhérents un tableau des demi-fourchettes utilisé pour le calcul et l'affichage des coûts implicites de transaction sous MIF II et PRIIPS. Ce tableau est facultatif et indicatif. Il est accompagné d'une note explicative."

On 30 June 2022, the Banque de France published the risk assessment of the French financial system - June 2022.

The invasion of Ukraine by Russia contributes to deteriorating the global macroeconomic environment, by accentuating the pre-existing inflationary pressures, and lowers the prospects for growth, which nevertheless remain positive in the central scenario of the forecasts. The appreciation of the market prices of raw materials and in particular of energy constitutes the main channel of transmission both in terms of growth and inflation. In addition to the effects of the war in Ukraine, there are uncertainties linked to the Chinese economy, in a context where supply difficulties throughout the production chain have persisted since the health crisis.

In this context of high inflation, the rise in interest rates in the euro zone and in the rest of the world, under the impetus of the normalization of monetary policies, constitutes the major factor of influence for the French financial system in the first half of 2022. It is mainly in the light of this evolution of interest rates, as well as its prospects, that we review the vulnerabilities for the assessment of the risks of the French financial system.

The situation of French banks and insurers continues to be characterized by a high level of solvency and liquidity, which allows the former to absorb without difficulty the economic consequences of the war linked to a deterioration in the credit quality of some of their exhibitions. These are essentially exposures to non-financial companies that are most sensitive to rising commodity prices and inflation. The first direct effects of the geopolitical shock on the French financial system were limited due to modest direct exposures to Russia and Ukraine.

Normalization, and therefore an orderly rise in interest rates, should increase the net interest margin of French banking institutions. In the transition phase, however, it could have a negative impact on their portfolios valued at fair value. For insurers, the rise in interest rates will improve the return on their future investments, but could introduce an increased risk of redemptions by investors on life insurance investments, to take advantage of higher rates of return. . This increased surrender risk has not yet materialized and insurers' liquidity position is strong enough to deal with it.

The rise in interest rates comes in a context where the outstanding consolidated gross debt of French non-financial corporations (NFCs) as a percentage of GDP, even if it has been decreasing since mid-2021, remains relatively high compared to European comparisons and international. While market financing rates for French companies are tending, with a more marked increase in yields for the least highly rated companies, the volumes of issues on the primary bond market do not indicate any particular difficulties in accessing market financing, apart from a slowdown in issues on these speculative-grade companies. Faced with an additional rise in rates, French NFCs, due to the maturity profile of their debt spread over time, and the very majority share of fixed rates,

The public deficit should follow a downward trajectory for 2022 and 2023, the extent of which will nevertheless be limited by the new budgetary measures, in particular related to the cushioning of the consequences of the war in Ukraine. Under the effect of the rise in sovereign yields, the debt burden should gradually increase for France and all the countries of the euro zone, with a more marked rise, however, for certain sovereign debts in the euro zone. This risk of fragmentation is the subject of particular vigilance by the Eurosystem's Governing Council and will be limited by the mobilization of tools intended to ensure the adequate transmission of monetary policy.

Households considered as a whole still benefit from a favorable financial savings situation. Short-term vulnerabilities for the household sector are contained at this stage. Indeed, the risks induced by a rise in interest rates for the solvency of indebted households are very low, insofar as mortgage loans are almost all granted at fixed rates in France. In addition, access to credit remains favorable. Despite the normalization of reference market rates, mortgage rates remain, at this stage, historically low and loan production still particularly high, in a context of significant improvement in the conditions for granting mortgages thanks to to the decisions of the HCSF.

The geopolitical context also requires increased vigilance regarding the risk of cyber attacks of systemic importance. A thematic chapter is dedicated to cyber risk with a general overview of the threat, its potentially systemic dimension, and finally an overview of the responses, regulatory and other.

A second thematic chapter is dedicated to commodity markets, given their central place in developments over the past six months. This chapter describes the mechanisms behind the surge in prices by type of commodity, highlights the role of financial derivatives on these markets and the importance of financial links between the different types of participants in these derivatives markets. The financial stability issues related to the functioning of these markets, in particular due to the liquidity tensions observed in March 2022 in connection with margin calls, are significant and deserve adequate responses, including regulatory ones, to protect against new shocks to come. . In this regard, current trends in energy commodity prices shed harsh light on the macro-financial risks associated with the transition to a carbon-neutral economy. It is expected that the transition will be accompanied by an increase in the price of fossil fuels (at least a doubling, according to the scenarios of the Network of central banks and supervisors for the greening of the financial sector (NGFS); this increase would be doubled by tensions on the availability and/or the price of raw materials essential to the transition (cf. minerals, etc.) The rise in the prices of raw materials (and therefore inflation) would be even greater and quite close to the evolutions of the last semester, if the transition were to be delayed and therefore disorderly.

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La Banque de France a publié le 30 juin 2022 l'évaluation des risques du système financier français - juin 2022.

L'invasion de l'Ukraine par la Russie contribue à détériorer l'environnement macroéconomique mondial, en accentuant les tensions inflationnistes préexistantes, et abaisse les perspectives de croissance, qui restent néanmoins positives dans le scénario central des prévisions. L'appréciation des prix de marché des matières premières et en particulier de l'énergie constitue le principal canal de transmission tant en termes de croissance que d'inflation. Aux effets de la guerre en Ukraine s'ajoutent les incertitudes liées à l'économie chinoise, dans un contexte où les difficultés d'approvisionnement tout au long de la chaîne de production persistent depuis la crise sanitaire.

Dans ce contexte de forte inflation, la remontée des taux d'intérêt dans la zone euro et dans le reste du monde, sous l'impulsion de la normalisation des politiques monétaires, constitue le principal facteur d'influence pour le système financier français au premier semestre 2022. C'est principalement à la lumière de cette évolution des taux d'intérêt, ainsi que de ses perspectives, que nous passons en revue les vulnérabilités pour l'évaluation des risques du système financier français.

La situation des banques et des assureurs français reste caractérisée par un niveau élevé de solvabilité et de liquidité, qui permet aux premières d'absorber sans difficulté les conséquences économiques de la guerre liées à la dégradation de la qualité de crédit de certaines de leurs expositions. Il s'agit essentiellement d'expositions sur des sociétés non financières qui sont les plus sensibles à la hausse des prix des matières premières et à l'inflation. Les premiers effets directs du choc géopolitique sur le système financier français ont été limités en raison d'expositions directes modestes sur la Russie et l'Ukraine.

La normalisation, et donc une remontée ordonnée des taux d'intérêt, devrait augmenter la marge nette d'intérêt des établissements bancaires français. En phase de transition, elle pourrait toutefois avoir un impact négatif sur leurs portefeuilles évalués à la juste valeur. Pour les assureurs, la hausse des taux d'intérêt améliorera le rendement de leurs investissements futurs, mais pourrait introduire un risque accru de rachats par les investisseurs sur les placements en assurance-vie, pour profiter de taux de rendement plus élevés. . Ce risque accru de rachat ne s'est pas encore matérialisé et la position de liquidité des assureurs est suffisamment solide pour y faire face.

La hausse des taux d'intérêt intervient dans un contexte où l'encours de la dette brute consolidée des sociétés non financières (SNF) françaises en pourcentage du PIB, même s'il diminue depuis mi-2021, reste relativement élevé par rapport aux comparaisons européennes et internationales. Alors que les taux de financement de marché des entreprises françaises sont tendus, avec une hausse des rendements plus marquée pour les entreprises les moins bien notées, les volumes d'émissions sur le marché primaire obligataire n'indiquent pas de difficultés particulières d'accès au financement de marché, hormis un ralentissement des émissions sur ces entreprises de catégorie spéculative. Face à une hausse supplémentaire des taux, les SNF françaises, en raison du profil de maturité de leur dette étalée dans le temps, et de la part très majoritaire des taux fixes,

Le déficit public devrait suivre une trajectoire de baisse pour 2022 et 2023, dont l'ampleur sera néanmoins limitée par les nouvelles mesures budgétaires, notamment liées à l'amortissement des conséquences de la guerre en Ukraine. Sous l'effet de la hausse des taux souverains, la charge de la dette devrait progressivement augmenter pour la France et l'ensemble des pays de la zone euro, avec toutefois une hausse plus marquée pour certaines dettes souveraines de la zone euro. Ce risque de fragmentation fait l'objet d'une vigilance particulière du Conseil des gouverneurs de l'Eurosystème et sera limité par la mobilisation d'outils destinés à assurer une transmission adéquate de la politique monétaire.

Les ménages considérés dans leur ensemble bénéficient toujours d'une situation d'épargne financière favorable. Les vulnérabilités de court terme pour le secteur des ménages sont contenues à ce stade. En effet, les risques induits par une hausse des taux d'intérêt pour la solvabilité des ménages endettés sont très faibles, dans la mesure où les crédits immobiliers sont presque tous accordés à taux fixe en France. De plus, l'accès au crédit reste favorable. Malgré la normalisation des taux de référence du marché, les taux hypothécaires restent, à ce stade, historiquement bas et la production de crédits toujours particulièrement élevée, dans un contexte d'amélioration significative des conditions d'octroi des crédits immobiliers grâce aux décisions du HCSF.

Le contexte géopolitique impose également une vigilance accrue quant au risque de cyberattaques d'importance systémique. Un chapitre thématique est consacré au risque cyber avec un aperçu général de la menace, de sa dimension potentiellement systémique, et enfin un aperçu des réponses, réglementaires et autres.

Un deuxième chapitre thématique est consacré aux marchés des matières premières, compte tenu de la place centrale qu'ils ont occupée dans les évolutions des six derniers mois. Ce chapitre décrit les mécanismes à l'origine de la flambée des prix par type de matières premières, souligne le rôle des produits financiers dérivés sur ces marchés et l'importance des liens financiers entre les différents types d'intervenants sur ces marchés dérivés. Les enjeux de stabilité financière liés au fonctionnement de ces marchés, notamment en raison des tensions de liquidité observées en mars 2022 dans le cadre des appels de marge, sont importants et méritent des réponses adéquates, y compris réglementaires, pour se prémunir contre de nouveaux chocs à venir. . À cet égard, les tendances actuelles des prix des matières premières énergétiques jettent une lumière crue sur les risques macro-financiers liés à la transition vers une économie neutre en carbone. On s'attend à ce que la transition s'accompagne d'une augmentation du prix des combustibles fossiles (au moins un doublement, selon les scénarios du Réseau des banques centrales et des superviseurs pour le verdissement du secteur financier (NGFS) ; cette augmentation serait doublée de tensions sur la disponibilité et/ou le prix des matières premières essentielles à la transition (cf. minéraux, etc.) La hausse des prix des matières premières (et donc de l'inflation) serait encore plus importante et assez proche des évolutions du dernier semestre, si la transition devait être retardée et donc désordonnée.

On 1 June 2022, the Association Française de Gestion (AFG) updated the list of SRI Funds that have signed the AFG-FIR Transparency Code (end of May 2022), with hyperlinks to the transparency codes.

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Le 1er juin 2022, l'Association Française de Gestion (AFG) a mis à jour la liste des fonds ISR ayant signé le code de transparence AFG-FIR (fin mai 2022), avec des hyperliens vers les codes de transparence.

On 2 June 2022, the Autorité des marchés financiers (AMF) reiterated its call for a European regulation of ESG data, ratings, and related services.

In its response to the European Commission's public consultation on ESG ratings, the AMF reiterates the need for a European regulatory framework for providers of ESG data, ratings and related services.

As the market for sustainability-related services continues to grow at a rapid pace and as these products play an increasingly central role in financial markets, the provision of sustainability-related products remains largely unregulated.

Such situation confirms the need for a European regulatory framework for the provision of ESG data, ratings and other services. The AMF's response to the European Commission's public consultation renews the positions developed in the position paper jointly published in December 2020 with its Dutch counterpart, the Autoriteit Financiële Markten (AFM).

The AMF stresses in particular the following main points of attention:

• This future regulation must cover the entire range of ESG data, ratings and services and not be limited to ESG ratings. Indeed, the issues identified are common to all these products.
• This regulation should include transparency requirements on methodologies, the underlying data used (source and nature), and the objectives of the products (notably risk or impact). It should also include requirements for conflict of interest management, internal control procedures, and enhanced dialogue with companies that are subject to ESG ratings. At this stage of the market's development, where the analysis of ESG performance remains protean and evolving, this regulatory framework must not lead to a standardisation of methodologies, but must guarantee sufficient transparency from the players vis-à-vis the market.
• The supervision of players must be centralised at European level, with the aim of guaranteeing a harmonised supervision and in line with the structure of this market. Entrusting this task to the European financial markets regulator, ESMA, would make it possible to benefit from its experience in supervising credit rating agencies and would be consistent with the plan to entrust it with the supervision of external examiners of European green bonds.
• Actors wishing to provide ESG data or services to EU market participants must operate through a permanent establishment in the EU and be registered with ESMA.

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Le 2 juin 2022, l'Autorité des marchés financiers (AMF) a réitéré son appel à une régulation européenne des données, notations et services associés ESG.

Dans sa réponse à la consultation publique de la Commission européenne sur les notations ESG, l'AMF réaffirme la nécessité d'un cadre réglementaire européen pour les fournisseurs de données, de notations et de services connexes ESG.

Alors que le marché des services liés à la durabilité continue de croître à un rythme rapide et que ces produits jouent un rôle de plus en plus central sur les marchés financiers, la fourniture de produits liés à la durabilité reste largement non réglementée.

Cette situation confirme la nécessité d'un cadre réglementaire européen pour la fourniture de données, de notations et autres services ESG. La réponse de l'AMF à la consultation publique de la Commission européenne renouvelle les positions développées dans le document de position publié conjointement en décembre 2020 avec son homologue néerlandaise, l'Autoriteit Financiële Markten (AFM).

L'AMF insiste notamment sur les principaux points d'attention suivants :

• cette future réglementation doit couvrir l'ensemble des données, notations et services ESG et ne pas se limiter aux notations ESG. En effet, les problématiques identifiées sont communes à tous ces produits.
• cette réglementation devrait inclure des exigences de transparence sur les méthodologies, les données sous-jacentes utilisées (source et nature), et les objectifs des produits (notamment le risque ou l'impact). Elle devrait également inclure des exigences en matière de gestion des conflits d'intérêts, de procédures de contrôle interne et de dialogue renforcé avec les entreprises faisant l'objet de notations ESG. A ce stade de développement du marché, où l'analyse des performances ESG reste protéiforme et évolutive, ce cadre réglementaire ne doit pas conduire à une standardisation des méthodologies, mais doit garantir une transparence suffisante des acteurs vis-à-vis du marché.
• la supervision des acteurs doit être centralisée au niveau européen, dans le but de garantir une supervision harmonisée et en adéquation avec la structure de ce marché. Confier cette tâche au régulateur européen des marchés financiers, l'ESMA, permettrait de bénéficier de son expérience en matière de supervision des agences de notation et serait cohérent avec le projet de lui confier la supervision des examinateurs externes des obligations vertes européennes.
• les acteurs qui souhaitent fournir des données ou des services ESG aux participants du marché de l'UE doivent opérer par le biais d'un établissement permanent dans l'UE et être enregistrés auprès de l'ESMA.

On 20 June 2022, Belgium published in its Official Journal a Royal Decree amending the Royal Decree of 30 July 2018 on the operating procedures of the Ultimate Beneficial Owner(UBO) register.

These amendments were necessary for the following reasons:

• The amendment of a number of provisions that the European Commission has considered to be deficient;
• Free consultations are already included in Article 75 of the Law of 18 September 2017; the deletion of Article 14 of the Royal Decree therefore follows this.

More particularly:

• This draft mainly aims to partially transpose Directive 2018/843 into Belgian law. This is a partial transposition, as most of the provisions of these directives have been transposed by other legislation, in particular by the law of 18 September 2017.
• The draft article confirms that consultations are free of charge. This is already included in Article 75 of the Law of 18 September 2017; the repeal of Article 14 of the Royal Decree therefore follows that article.
• Provides for the amendment of a number of provisions in Article 17 of the Royal Decree which the European Commission has considered to be deficient: points 1° to 3° are technical corrections aimed at making the terminology and references used fully consistent with those used in the 4 and 5 Directives. Point 1° is amended in accordance with the remarks of the Council of State and the Data Protection Authority. Point 4° implements the amendment required by the European Commission in its control of the correct transposition of the 5 Directive. The 4 and 5 Directives oblige the UBO registers of all Member States to link together via a Central European Platform established by Article 22, paragraph 1 of Directive (EU) 2017/1132. However, this was not yet technically possible when the Royal Decree of 30 July 2018 was drafted. Moreover, the provision of point 4° has become superfluous and, according to the European Commission, also not in conformity with the 4 and 5 Directives.

The Government takes note of the comments of the Council of State on the amendment of the law of 18 September 2017 to include certain elements of data processing in this law. Currently, these elements are included in the Royal Decree of 30 July 2018.

Given that the law of 18 September 2017 and the Royal Decree of 30 July 2018 will have to be revised in depth following the new proposals for regulations and AML directive launched by the Commission in July 2021 (the "AML-Package"), any amendments to the law of 18 September 2017 will be made in this context.

In addition, the main objective of this Royal Decree amending the Royal Decree of 30 July 2018 is to bring the provisions into line with the European Commission's remarks.

On 1 June 2022, the Financial Services and Markets Authority (FSMA) published a Form for notification of the exercise of the activity of providing services related to virtual currencies.

On 13 June 2022, the Financial Services and Markets Authority (FSMA) published Opinion_2016_04 on the adaptation of websites accepted by the FSMA for the publication on net inventory values and press releases with regard to the Royal Decree of 25 April 2014.

During the year 2013, the FSMA had recognised two websites as a means of publishing the net asset value (NAV) and/or press releases of undertakings for collective investment (UCIs) in accordance with the relevant provisions of the UCITS Law and the UCITS Royal Decree.

To the extent that the FSMA can accept other means of publication of the NAV and press releases, it can therefore set the conditions.

In this context, the FSMA ensures that websites accepted as a means of publication of the NAV and press releases comply with the provisions applicable to "advertisements and other documents and notices" provided that they mention, in addition to the NAV and/or press releases, other information relating to the characteristics of a CIV enabling an investor to decide on a purchase or subscription of securities, even if the communication of such information does not come from the collective investment undertaking or a person in a position to dispose of the securities, or a person acting on their behalf.

Indeed, once a website is approved by the FSMA as an equivalent means of publication within the meaning of the OPC regulations, it seems important that the information relating to one or more UCIs contained therein be presented in a complete, non-misleading and accurate manner.

On the occasion of the entry into force of the Royal Decree of 25 April 2014 imposing certain information obligations when communicating financial products to retail clients, the FSMA has therefore endeavoured to verify that the two aforementioned websites meet the conditions laid down by this Royal Decree of 25 April 2014 for "advertisements and other documents and opinions".

For this reason, the websites concerned have adapted themselves either by publishing the information relating to the NAV on a website separate from that containing the other information concerning the UCI in question; or by deleting the additional information relating to the CIVs concerned to mention only the information related to the NAV and the press releases of those UCIs.

Finally, in order to be completely transparent towards investors and market participants, the FSMA now publishes on its website the list of websites accepted by the FSMA as a means of publishing the NAV and/or press releases.

On 22 June 2022, the Financial Services and Markets Authority (FSMA) published communication 2022/20 on the European Securities and Markets Authority (ESMA) Guidelines on certain aspects of appropriateness and execution-only requirements.

The purpose of the ESMA Guidelines is to clarify the application of certain aspects of the MiFID II appropriateness and execution-only requirements in order to ensure the common, uniform and consistent application of Article 27ter, §§ 3 and 5, of the Law of 2 August 2002 on the supervision of the financial sector and on financial services and of Articles 55 to 57 of the Commission Delegated Regulation (EU).

The Guidelines will apply as of 22 October 2022.

On 9 June 2022, the Financial Services and Markets Authority (FSMA) informed on the integration of the ESMA Guidelines of 10 May 2021 on Outsourcing to Cloud Service Providers into its supervisory practice and the steps to be taken by the relevant firms in this regard.

The main purpose of these Guidelines is to help firms, which outsource a particular function to a cloud service provider (CSP), to identify, address and monitor the risks and challenges of cloud service outsourcing agreements - from the decision to outsource, selecting a CSP, monitoring outsourced functions to developing exit strategies. The FSMA integrates the Guidelines into its supervisory practice. In assessing whether firms comply with the relevant Guidelines, the FSMA will take into account the principle of proportionality. Moreover, what the Guidelines entail depends on whether the outsourcing to a CSP involves a critical or important function. 

For the implementation of the Guidelines, the following pivotal dates are envisioned: 

• 31 July 2021: for outsourcing agreements that become effective, are amended or are renewed on or after this date; 
• 31 December 2022: for existing outsourcing agreements on cloud services.

The FSMA requests that companies make a written notification for each outsourcing involving a critical or important function. For this purpose, companies need to complete a sheet for each outsourcing agreement in accordance with the template attached as Annex 2 to this communication. These sheet need to be send to amc@fsma.be.

Finally, the FSMA will use the data it receives in this way to assess, among other things, the risks arising from outsourcing agreements concluded by undertakings in relation to cloud services and to identify and monitor possible concentration risks. The FSMA will then evaluate any impact of such risks on other firms it supervises and on the stability of the financial market. 

On 23 June 2022, the Chambre des représentants de Belgique published a draft law amending the Law of 25 October 2016 on access to the activity of providing investment services and on the statute and supervision of portfolio management and investment advisory firms and laying down other miscellaneous provisions to transpose Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms.

This bill is part of a series of three bills which finalise the transposition into Belgian law of the provisions of Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (IFD). 

The European concept of "investment firm" includes, in Belgian law: stock exchange companies and portfolio management and investment advisory companies. The status and supervision of these two categories of investment firms are currently regulated in Belgian law in two separate laws. 

A first draft (DOC 55 2763/001) transposes the IFD as regards stock exchange companies. 

The present draft law transposes the IFD with respect to portfolio management and investment advisory companies. These are already currently governed by a specific law, the Law of 25 October 2016 on the taking up of the business of providing investment services and on the status and supervision of portfolio management and investment advisory companies, which is amended by this bill to transpose the IFD. 

A third bill (DOC 55 2762/001) will adapt the law of 22 February 1998 laying down the organic status of the National Bank of Belgium to the provisions relating to the status and supervision of stock exchange companies under the new law on the status and supervision of stock exchange companies.

On 1 June 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published guideline 02/2022 on the notes on the authorization procedure for crypto securities registers.

The presented information gives companies that want to apply for a license to keep cryptocurrency securities registers within the meaning of section 1 ( 1a) sentence 2 no. 8 KWG initial information as to which aspects BaFin believes are of particular importance in the licensing process.

The formulated expectations apply expressly to the crypto security register management; not for existing administrative practices relating to banking or other financial services. The information does not claim to be complete. The legal bases apply. The applicable circulars, leaflets and overviews of BaFin and the Deutsche Bundesbank must be taken into account.

On 17 June 2022, the Ordinance on Crypto Fund Shares (KryptoFAV) was published in the  Bundesgesetzblatt.

The Ordinance forsees that units in investment funds or in individual unit classes of an investment fund may be issued in whole or in part as crypto fund units. Crypto fund units are electronic unit certificates that are entered in a crypto paper register.

Concerning the register-keeping entity, the ordinance foresees that deviating from §16 paragraph 2 of the Electronic Securities Act, the register-keeping entity for crypto fund units is the depositary or another company appointed by the depositary that has a permit to keep crypto securities registers pursuant to §1 paragraph 1a sentence 2 number 8 in conjunction with §32 paragraph 1 sentence 1 of the German Banking Act. If the depositary appoints another company pursuant to sentence 1, it must ensure that it can fulfill its duties and obligations pursuant to §§70 to 78 paragraph 1 and §79 or pursuant to §§81 to 89 paragraph 1 and §§89a and 90 of the German Capital Investment Code.

On 20 June 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) announced applying ESMA guidelines on the common procedures and methods for the supervisory review and evaluation process of central counterparties.

It will apply the German version in full in its supervisory practice from June 30, 2022.

The guidelines aim to ensure a common, uniform and coherent application of Article 21 of Regulation ( EU ) 648/2012 . In particular, they contain suggestions on the format, scope and methodology for reviewing and evaluating CCPs . In addition, it is stipulated that the test must be carried out regularly once a year. In addition, the guidelines stipulate that in the case of certain significant and one-off changes, an ad hoc review should take place after their introduction. The aim is to assess the impact of changing systems, processes, procedures and risk management strategies to ensure that EMIR-Requirements continue to be met. The guidelines also contain specifications on the sources of information on the basis of which the supervisory review and evaluation should take place.

On 10 June 2022, the Deutsche Bundesbank published their projections (June 2022). 

According to current Bundesbank projections, the economy will probably grow by 1.9% this year. Germany’s economic recovery is therefore likely to continue, but at a considerably more subdued pace than projected last December. For 2023 and 2024, the Bundesbank’s experts are expecting real gross domestic product growth of 2.4% and 1.8%, respectively, in their new projections.

At the same time, they stress that uncertainty about future economic developments is exceptionally high, mainly as a result of Russia’s war of aggression on Ukraine. The baseline scenario of the projections builds on the assumption that the war and its consequences will not intensify any further. The Bundesbank has, in addition, calculated an alternative risk scenario which includes a cessation of Russian energy supplies. In this scenario, economic activity could experience a pronounced decline in 2023.

According to the Bundesbank’s projections, the German economy is currently caught between opposing forces. From the second half of 2022 onwards, the expansionary forces resulting from the largely eliminated pandemic protection measures are likely to predominate to a greater extent. It is also to be expected that energy commodity prices fall somewhat, supply bottlenecks gradually ease and foreign demand picks up again. At the same time, households are likely to spend at least part of the savings accumulated during the coronavirus pandemic on consumption. The projections indicate that additional government defense spending will provide further stimulus. However, the exceptionally high inflation is expected to stoke uncertainty among consumers and will erode their purchasing power.

Furthermore, the labor market is projected to remain on an upward trajectory whilst employment growth weakens and unemployment barely falls any further. With regard to the forthcoming wage agreements, the Bundesbank expects wage bargainers to agree on noticeably higher new pay deals. The substantial wage increases initially only partially offset the high inflation rate, however.

On 2 June 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) informed on applying the updated market abuse regulation guidelines of ESMA.

BaFin has approved the updated MAR guidelines of the European Securities and Markets Authority ( ESMA ), which regulate the postponement of the disclosure of insider information and interactions with the supervisory authority, in the comply-or-explain procedure and is applying them without restriction.

In this respect, the amended MAR guidelines provide orientation on two key aspects:

With regard to the deferral provision of Article 17 paragraph 4 letter a) MAR , the list of legitimate interests in Section 5 is supplemented by the two case groups h) and g). These reasons for deferral apply to institutions that are subject to the requirements of the CRR or the CRD . If insider information emerges in the approval process of Article 77 CRR or in exchanges with the supervisory authority on draft resolutions that arise in the process of the supervisory review and evaluation process ( SREP ), issuers are entitled to temporarily postpone the publication of this insider information.

In addition, there is a new separate sub-section 3 (“P2R and P2G and inside information”) in Section 5 of the MAR Guidelines: This classifies the respective price-influencing potential with regard to Pillar-2 Capital Requirements (Pillar-2 Capital Requirements – P2R) and Pillar -2 recommendations (Pillar-2 Capital Guidance – P2G) and thus the property as insider information.

On 30 June 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published the General decree on post-trade transparency Trading venues that are not operated by an exchange/equity instruments.

According to § 41 paragraphs 3 and 4 VwVfG in connection with § 17 paragraph 2 FinDAG for the purpose of announcing the general decree of the Federal Financial Supervisory Authority (hereinafter: Federal Agency) on July 4th, 2022 regarding the post-trade transparency requirements for trading venues with regard to shares , share certificates, exchange-traded funds, certificates and other comparable financial instruments, Article 6 paragraph 1, Article 7 paragraph 1 of Regulation ( EU ) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending the Regulation ( EU ) No. 648/2012 ( OJL 173 of 06/12/2014, p. 84; L 6 of January 10, 2015, p. 6; L 270 of 15.10.2015, p. 4; L 278 of 27.10.2017, p. 54), which was last amended by Regulation ( EU ) 2021/23 ( OJ L 22 of 22.01.2021, p. 1) - ("MiFIR"), Delegated Regulation ( EU ) 2017/587 of the Commission of July 14, 2016 supplementing Regulation ( EU ) No.600/2014 of the European Parliament and of the Council on markets in financial instruments through regulatory technical standards on transparency requirements for trading venues and investment firms in relation to shares, depositary receipts, exchange traded funds, certificates and other similar financial instruments ( OJ L 87 of 31.03.2017, L 228 from September 2nd, 2017, p. 33 – "RTS 1").

BaFin authorized investment services companies within the meaning of Section 2 (10) of the Securities Trading Act ( WpHG ) pursuant to Article 7 Paragraph 1 Subparagraph 1 of the MiFIR that operate a trading venue pursuant to Section 2 Paragraph 8 No. 8 WpHG and have an authorization pursuant to Article 7 Paragraph 1 Subparagraph 3 order to publish details of transactions within the meaning of Article 7(1) subparagraph 2 of MiFIR within the framework prescribed by Article 7(1) of MiFIR and Article 15 RTS 1 at a later date than required by Article 6 of MiFIR . 

This general decree will take effect on July 4th, 2022.

This general decree is limited until January 1st, 2023.

On 30 June 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published the General decree on post -trade transparency OTC transactions/ non-equity instruments. 

According to § 41 paragraphs 3 and 4 VwVfG in connection with § 17 paragraph 2 FinDAG for the purpose of announcing the general decree of the Federal Financial Supervisory Authority (hereinafter: Federal Agency) on July 4th, 2022 regarding publications by investment firms - including systematic internalisers - after trading in bonds, structured financial products, emission allowances and derivatives, Article 21 paragraph 4 of Regulation ( EU ) No. 600/2014 of the European Parliament and of the Council of May 15, 2014 on markets in financial instruments and amending Regulation ( EU ) No. 648/2012 ( OJL 173 of 06/12/2014, p. 84; L 6 of January 10, 2015, p. 6; L 270 of 15.10.2015, p. 4; L 278 of 27.10.2017, p. 54), which was last amended by Regulation ( EU ) 2021/23 ( OJ L 22 of 22.01.2021, p. 1) - ("MiFIR"), Delegated Regulation ( EU ) 2017/583 of the Commission of July 14, 2016 supplementing Regulation ( EU ) No.600/2014 of the European Parliament and of the Council on markets in financial instruments through regulatory technical standards on transparency requirements for trading venues and investment firms in relation to bonds, structured finance products, emission allowances and derivatives ( OJ L 87 of 31.03.2017, p. 229; L 276 from 26.10.2017, p. 78 - "RTS 2").

BaFin authorized investment services companies within the meaning of Section 2 Paragraph 10 of the German Securities Trading Act ( WpHG ) that conduct transactions in financial instruments pursuant to Article 21 Paragraph 1 MiFIR either for their own account or on behalf of clients , details of transactions pursuant to Article 21(1) MiFIR that meet the requirements of Article 11(1) subparagraph 2 letters a) to c) MiFIR , Article 8(1) letters a) to d) RTS 2 at a later date than pursuant to Article 21(3) in conjunction with Article 10 MiFIR required to publish as follows.

This permission includes, at the option of the investment services enterprise, the following types of subsequent publication:

a) subsequent publication of the relevant transaction pursuant to Article 8 paragraph 1 RTS 2,

b) non-publication of the scope of the relevant transaction during an extended delay period pursuant to Article 11 paragraph 1 letter b RTS 2,

c) in the case of non-equity instruments that are not sovereign debt instruments, the publication of multiple transactions in an aggregated form during an extended deferral period in accordance with Article 11(1)(c ) RTS 2, or

d) in the case of public debt instruments, the publication of several transactions in aggregate form for an indefinite period in accordance with Article 11 paragraph 1 letter d RTS 2.

This general ruling will take effect on July 4th, 2022.

This general decree is limited until January 1st, 2023.

On 30 June 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published General Decree Post-Trade Transparency Trading Venues/Non-Equity Instruments.

According to § 41 paragraphs 3 and 4 VwVfG in connection with § 17 paragraph 2 FinDAG for the purpose of announcing the general decree of the Federal Financial Supervisory Authority (hereinafter: Federal Agency) on July 4th, 2022 regarding the post-trade transparency requirements for trading venues with regard to bonds , structured financial products, emission allowances and derivatives in accordance with Article 11 paragraph 1 and paragraph 3 of Regulation ( EU ) No. 600/2014 of the European Parliament and of the Council of May 15, 2014 on markets in financial instruments and amending Regulation ( EU ) No. 648/2012 ( OJ L 173 of 12.06.2014,p. 84; L 6 of January 10, 2015, p. 6; L 270 of 15.10.2015, p. 4; L 278 of 27.10.2017, p. 54), which was last amended by Regulation ( EU ) 2021/23 ( OJ L 22 of 22.01.2021, p. 1) - ("MiFIR"), Delegated Regulation ( EU ) 2017/583 of the Commission of 14 July 2016 supplementing Regulation ( EU ) No. 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms with regard to bonds, structured financial products , emission allowances and derivatives (ABl. L 87 vom 31.03.2017, S. 229; L 276 vom 26.10.2017, S. 78 – „RTS 2“).

BaFin permited pursuant to Article 11 paragraph 1 subparagraphs 1 and 2, also in conjunction with paragraph 3, of the MiFIR investment service provider within the meaning of Section 2 paragraph 10 of the Securities Trading Act ( WpHG ), the trading venues pursuant to Section 2 paragraph 8 no. 8 or no. 9 WpHG and have a license pursuant to Article 11 paragraph 1 subparagraph 3 MiFIR , details of transactions within the meaning of Article 11 paragraph 1 subparagraph 2 letters a) to c) MiFIR , Article 8 paragraph 1 letters a) to d) RTS 2 at a later date than required by Article 10 of MiFIR as follows.

This permission includes the following types of subsequent publication at the option of the investment services enterprise:

a) subsequent publication of the corresponding transaction pursuant to Article 8 Paragraph 1 RTS 2 or

b) pursuant to Article 11 Paragraph 3 MiFIR during the entire period of an extended deferral, publication in accordance with the requirements Article 11 paragraph 3 subparagraph 1 letters b) to d) MiFIR , also in conjunction with subparagraph 2, and Article 11 RTS 2.

This general decree will take effect on July 4th, 2022.

This general decree is limited until January 1st, 2023.

On 9 June 2022, the BVI Bundesverband Investment und Asset Management e.V. published a position paper on the European Commission’s “Targeted consultation on the functioning of the ESG ratings market in the European Union and on the consideration of ESG factors in credit ratings”.

On 6 June 2022, the Securities and Futures Commission (SFC) reminded investors of the risks associated with investing in non-fungible tokens (NFTs), which have increased in popularity in recent years.

The SFC has recently noted NFTs which cross the boundary between a collectible and a financial asset, for instance, fractionalised or fungible NFTs structured in a form similar to “securities”, or in particular, interests in a “collective investment scheme” (CIS).

Where an NFT constitutes an interest in a CIS, marketing or distributing it may constitute a “regulated activity”. Parties carrying on a regulated activity, whether in Hong Kong or targeting Hong Kong investors, require a licence from the SFC unless an exemption applies.

In addition, where an arrangement in relation to an NFT involves an offer to the Hong Kong public to participate in a CIS, authorisation requirements under the SFO may also be triggered.

On 10 June 2022, the Securities and Futures Commission (SFC) launched a two-month consultation on proposed enforcement-related amendments to the Securities and Futures Ordinance (SFO) to enable it to take more effective enforcement action.

The amendments would broaden the scope of some SFO provisions to expand the basis for the SFC to apply for remedial and other orders against a regulated person under section 213. They would also enable the SFC to address insider dealing perpetrated in Hong Kong involving overseas-listed securities and insider dealing involving Hong Kong-listed securities perpetrated elsewhere (Note 3).

Other amendments include clarifying an exemption in section 103(3)(k) of the SFO such that, unless authorised by the SFC, advertisements of investment products which are intended to be sold only to professional investors may only be issued to professional investors who have been identified in advance as such by an intermediary through its know-your-client and related procedures.

On 24 June 2022, the Limited Partnership Fund Ordinance (Chapter 637) was published in the Government Gazette of Hong Kong.

The Ordinance specifies that with effect from 27 June 2022, any document to be delivered in electronic form to the Registrar of Companies for registration shall comply with following requirements:

• System: e-Registry or GovHK
• Format: electronic template or the template in PDF
• Signature: document in electronic form to be authenticated, approved or certified electronically.

On 28 June 2022, the Securities and Futures Commission (SFC) issued a joint announcement on the launch of ETF Connect. Trading of exchange-traded funds (ETFs) under Mainland-Hong Kong Stock Connect will commence on 4 July 2022.

The SFC and the CSRC have agreed on arrangements for cross-boundary regulatory cooperation and investor education in relation to the inclusion of ETFs in Stock Connect and will enhance cooperation on enforcement against cross-boundary illegal activities and market misconduct to maintain an orderly market and protect investors.

On 17 June 2022, the Securities and Futures Commission (SFC) published Circular to Intermediaries - Reminder on End-To-End (E2E) Test for the Hong Kong Investor Identification Regime (HKIDR).

Relevant Regulated Intermediaries (RRIs) are reminded to complete the mandatory E2E Test for the HKIDR by 15 July 2022. Relevant Regulated Intermediaries1 (RRIs) are reminded to complete the mandatory E2E Test for the HKIDR by 15 July 2022. 

After completion of the E2E Test, RRIs should submit the E2E test confirmation reply forms (contained in the E2E test package) by 15 July 2022 to:

1. the SFC – for E2E Test on the submission of the BCAN-CID Mapping File and Reporting Forms to SEHK’s data repository (applicable to all RRIs); and/or
2. Hong Kong Exchanges and Clearing Limited (HKEX) – for E2E Test on BCAN tagging for order submission to the SEHK trading system (applicable to RRIs who are Exchange Participants only).

On 30 June 2022, the Securities and Futures Commission (SFC) published Circular on the publication of the Updated Supplementary Reporting Instructions and the Gazette Notice.

The SFC informed that the Hong Kong Monetary Authority issued a notice (Notice) about the publication of the updated Supplementary Reporting Instructions (“SRI”) and the Gazette Notice for over-the-counter (OTC) derivatives trade reporting to the Hong Kong Trade Repository (HKTR). A copy of the Notice is attached to this Circular.

Licensed Corporations that may be subject to mandatory reporting obligation are advised to refer to the Notice.

On 21 June 2022, the Hong Kong Monetary Authority (HKMA) announced the progress made and the way forward to advance Hong Kong’s leading position in green and sustainable finance (GSF) and help the financial ecosystem’s transition towards carbon neutrality.

The GSF Centre has been working to build capacity and enhance talent and data resources for the financial industry. 

The Steering Group has been engaging with the industry and other relevant stakeholders to better understand the features and challenges of the local green classification framework. Following the publication of the updated Common Ground Taxonomy (CGT) report by the International Platform on Sustainable Finance , the Steering Group will, with support from experts, work towards proposing the structure and core elements of the local green classification framework for consultation.

Following the Steering Group’s engagement with stakeholders and the publication on 30 March 2022 of its preliminary feasibility assessment of carbon market opportunities for Hong Kong, the HKEX has commenced further discussions with various carbon exchanges and stakeholders from across the carbon market ecosystem.

On 15 June 2022, the Houses of the Oireachtas (Ireland's national parliament) published a report on cybersecurity and resilience "Securing the future". 

The Joint Committee on European Union Affairs  (the Committee) considered the government’s current cybersecurity strategy, plans to review the strategy, and the role of the National Cybersecurity Centre. The Committee received evidence on the importance of awareness, skills  and education in promoting cybersecurity. The Committee also addressed the theme of collaboration between industry, government, and academia, highlighting its  importance.

The Committee examined the importance of cybersecurity resilience in critical entities  and in supply chains. The Committee received evidence that the dominance of a small  number of service providers can have wider effects whereby a single vulnerability can  affect a large number of entities. The Committee also heard evidence on the  importance of security-by-design in protecting supply chains.

The role of pan-EU cooperation in cybersecurity was also an important theme in the  proceedings. The Committee received evidence regarding the sharing of information  with EU colleagues following the HSE cyberattack, the role of EU agencies such as  ENISA and the EDA in supporting member state capacity building, and proposals for a Joint Cyber Unit to enhance cooperation. The Committee also heard evidence that  participation in joint cybersecurity exercises is on a voluntary basis.

The Committee considered the theme of cyber diplomacy, noting the importance of  working with both EU member states and with third countries in order to enhance cybersecurity and respond to major cybersecurity incidents.

On 24 June 2022, he Houses of the Oireachtas (Ireland's national parliament) published an action plan for Dormant accounts fund disbursement scheme 2023 - 2025 and review for 2020-2022. 

The Dormant Accounts Act 2001, together with the Unclaimed Life Assurance Policies Act  2003, provide a framework for the administration of unclaimed accounts in credit institutions  and unclaimed life assurance policies in insurance undertakings. 

Dormant funds or unclaimed life assurance policies which have not been reclaimed by the original accounts/policy holder, or their beneficiaries, are transferred each year by the holding institution to the Dormant Accounts Fund which is managed by the National Treasury Management Agency (NTMA). The transfer of moneys takes place on the basis that the beneficial owner will have a guaranteed right of reclaim to their property at any time in the future.

The types of projects and programmes approved in Dormant Accounts Action Plans  developed over the 2023-2025 period will align with one or more of objectives 1-3 below:

1) To assist programmes/projects designed to counter economic and/or social  disadvantage. 

2) To assist programmes/projects designed to address issues (e.g. socio-economic or other disadvantage such as disability, literacy difficulties, ill health etc.)  preventing children and adults from deriving appropriate benefit from education.

3) To assist programmes/projects designed to give effect to the Government’s  objective to ensure that persons with a disability (as defined in the Equal Status Act 2000) play a more active role in society and increase their level of independence. 

4) To maximise the overall impact of the fund and to ensure an appropriate spread of projects and programmes both in terms of the socio-economic objectives and geographic spread.

With regards the review for 2020-2022, there has been huge improvements in the operation and administration of Dormant Account Fund since the last review. . The approach of reducing complexity and ensuring more formal Departmental and interdepartmental structures has proven very effective. The review for 2020-2022 suggests that a number of areas do need a continued focus for the 2023-2025 period, with the following recommendations emerging from that analysis:

1. The implementation of reforms has been effective and there needs to be a continued focus on areas including the appropriate administration of the fund, meeting legislative requirements, and ensuring effective interdepartmental engagement and knowledge sharing. Such actions have greatly improved the use of the fund and that focus needs to be maintained in future years so as to continue this success. 
2. There needs to be a continued focus on ensuring timely drawdown of funds from the NTMA, both to facilitate NTMA management of the fund, and to ensure DRCD can maintain an accurate picture of the overall value and liabilities on the fund.
3. While the research into potential additional sources of dormant funds has been completed, as recommended in the previous review, further work is now required to explore whether it is feasible to utilise a small number of asset types identified as having potential in that work.
4. There is also a need for a continued focus across Government on raising awareness of the fund and ensuring that beneficiaries clearly communicate the fact they have received funding from the Dormant Accounts Fund.
5. Likewise, there is also a need to continue the focus on ensuring that existing and new measures facilitate funding reaching community and local groups which deliver services to disadvantaged groups and persons with a disability.

On 28 June 2022, the Irish Funds Industry Association (IF) published a paper on EU Sustainable finance duties for fund management companies. 

The paper provides a practical insights as to how fund management companies (FMCs) can comply with sustainable finance related requirements set out in delegated acts amending the UCITS Directive and the Alternative Investment Fund Managers Directive.

These requirements are due to apply from 1 August 2022 and relate to the manner in which an FMC takes sustainability risks into account in respect of its assets under management.

The paper provides an overview of the background and context to the Delegated Acts before going on to outline practical considerations for FMCs relating to the organisational structure, resourcing, conflicts of interest, sustainability risk management, ESG data strategies and the investment due diligence process.

A compliance checklist for FMCs and a timeline of expected developments is also provided to assist FMCs with their preparations and planning.

The paper is available for IF's members. 

On 23 June 2022, the Central Bank of Ireland (CBI) published in final form revised Central Bank Investment Firms Regulations in final form, which incorporate amendments to the Central Bank Client Asset requirements and accompanying Guidance Note. 

The regulation contains  amendments to the Client Asset Requirements (the CAR), which are set out in Part 6. The Regulations in final form will not be subject to further change and are expected to be published in the Irish Statute Book in H2 2022. The Central Bank has also published a Guidance Note to accompany the revised CAR.

Following the publication of the revised Regulations, the CBI  has granted a transitional period for compliance. The revised CAR will be applicable to investment firms from 1 July 2023 and credit institutions from 1 Jan 2024.

As set out in the Feedback Statement to the Consultation Paper (CP133), revisions to the Regulations include broadening the scope and application of the CAR to credit institutions, targeted enhancements to include investment firms and credit institutions holding client assets in the context of conducting wholesale activities as well as other amendments applicable to all investment firms currently in scope of the CAR.

The protection of client assets is a key priority for the Central Bank and the enhancements aim to ensure that client assets held by investment firms and credit institutions, authorised by the Central Bank, remain appropriately safeguarded.

On 15 June 2022, the Central Bank of Ireland (CBI) published Financial Stability Review 2022 I. 

The Financial Stability Review outlines key risks facing the financial system and the CBI's  assessment of the resilience of the economy and financial system to adverse shocks.

The Financial Stability Review indicates:

• Following a rapid economic recovery from the pandemic, Russia’s invasion of Ukraine has led to lower global growth expectations and intensified inflationary pressures. Global financial conditions have tightened considerably, amid the beginning of a period of monetary policy normalisation.
• Domestically, price pressures coupled with a tight labour market point to emerging cyclical pressures in certain sectors, including the housing market.
• Inflationary pressures and rising interest rates present new challenges for borrowers, but from a starting point of stronger resilience over the past decade.
• Profitability in the banking sector has recovered and is set to be bolstered with cost savings from consolidation and potential interest rate increases, which are likely beneficial for profitability.
• Consistent with previous guidance on the rebuilding of macroprudential capital buffers, the Counter-Cyclical Capital Buffer (CCyB) rate will increase to 0.5 per cent. This increase acknowledges a shift in the risk environment and the resilience required to ensure the banking system can serve households and firms in future periods of stress. Should macro-financial conditions evolve consistent with the central economic outlook, a CCyB rate of 1.5 per cent is expected to be announced by mid-2023.

On 2 June 2022, Finance (Covid-19 and Miscellaneous Provisions) Act 2022 was published in the Irish Statute Book.

An Act to provide for the imposition, repeal, remission, alteration and regulation of taxation, and among other elements make further provision in connection with finance and provide for cost recovery mechanisms in relation to the Central Bank of Ireland, as operator of two beneficial ownership registers; and to provide for related matters.

On 3 June 2022, the Irish Funds Industry Association (IF) published its respond to the  to the targeted consultation on the functioning of the ESG ratings market in the EU and on the consideration of ESG factors in credit ratings. 

IF as a trade association does not use ESG ratings directly but many of their members do. In its respond, the IF stated that the EU could help with non-regulatory intervention (e.g., guidelines, code of conduct to: 

• create a common understanding in the market as to the purpose and limitations of ESG ratings; 
• increase the transparency of the methodologies used by providers and the sources of data;  
• bring about greater consistency in how ESG providers collect ESG data from companies and the frequency with which it is update; 
• enhancing internal controls and governance (with specific focus on data governance and data quality); 
• ensuring better alignment with EU ESG reporting and disclosure requirements where data packages are offered to meet these requirements, ensuring appropriate management and disclosure of potential conflicts of interest and providing greater transparency on pricing arrangements. 

On 30 June 2022,  the Central Bank of Ireland (CBI) published Sustainable Investment  Charter. 

The Charter has been developed by the CBI as the latest in a series of measures to embed climate change and sustainability considerations into its own operations. It will provide a guide to apply sustainable investment principles to the CBI’s investment assets. 

In this first iteration of the Charter, the approach to sustainable investment will focus on Exclusion, Impact Investing, and Environmental, Social, and Governance (ESG) Integration as core strategies: 

• The Charter excludes certain companies and/or sectors from the CBI’s investment universe. The CBI will not knowingly invest in any company that is involved in the manufacture of prohibited/controversial weapons as defined in relevant international treaties, in the tobacco industry or in coal companies. The CBI further expects investee companies to comply with the principles of corporate sustainability as defined in the UN Global Compact (UN GC).
• The Charter aims to generate an intentional and quantifiable positive impact alongside financial returns. The CBI allocates a portion of its investment assets to green/sustainable bonds.
• The Central Bank will include ESG factors in its investments.  

The Charter further sets out that the CBI will report annually on progress made in its commitment to incorporating sustainable investment principles. As of early 2023, it will disclose climate change-related metrics of the investment assets.

On 15 June 2022, Banca d'Italia published a communication on decentralised technologies in finance and crypto-assets.

The Bank of Italy is publishing a communication on decentralised technologies (so-called distributed ledger technologies, DLT) in finance and crypto-assets. The document is intended to draw the attention of supervised intermediaries, supervised entities and those operating in various capacities in decentralised ecosystems, including as users, to both the opportunities and risks associated with the use of such technologies and with crypto-assets, highlighting certain relevant profiles for their supervision.

On 10 June 2022, CONSOB informed on its compliance with Guidelines issued by ESMA on delayed disclosure of inside information to the public and interactions with prudential supervision.

Consob, as the competent Authority for the supervision of market abuse, complies with the "Guidelines relating to the regulation on market abuse (EU) no. 596/2014 (MAR) - Delays in the disclosure of inside information to the public and interactions with the prudential supervision", published by ESMA in their final version in English on 5 January 2022, integrating them into its supervisory practices.

The Guidelines, published on ESMA's website in all the official languages of the Union on 13 April 2022, replace the Guidelines on delay in disclosure of inside information to the public (Doc. ESMA70-159-4966 IT), supplementing them with: i) two new reasons of legitimate interest in delaying the disclosure of inside information pursuant to Article no. 17 (4) MAR, relating, respectively, to the repurchase, redemption or other operations on own funds for issuers subject to the Regulation (EU) n. 575/2013 (CRR) and the outcomes of the Supervisory Review and Evaluation Process (SREP) for issuers subject to prudential supervision pursuant to Directive 2013/36/EU (CRD), and, ii) two new sections providing explanations on the existence of inside information in relation to the additional second pillar own funds requirements (so-called "Pillar 2 capital requirements" or "P2R") and the second pillar capital guidelines (so-called "Pillar 2 Guidance" or "P2G") .

The Guidelines, with the changes made, therefore provide issuers, typically banks, with useful information regarding the qualification of information relating to P2R and P2G and the existence of legitimate reasons underlying any decision to delay the publication of information assuming a privileged nature. This with regard, respectively, to the repurchase, redemption or other transactions on own funds, and the results of the SREP.

The Guidelines are also available on the Consob website in the Italian version, together with the full text of ESMA's "Final report" in English (containing the summary of the responses to the consultation and the consequent ESMA observations), useful for allowing a correct application of the same Guidelines.

Issuers subject to MAR are required to comply with the interpretative guidelines provided by ESMA through the Guidelines subject of this Notice, which are applicable from 13 June 2022.

Pursuant to Article no. 16, par. 3, of Regulation (EU) no. 1095/2010 (ESMA Regulation), the European Authority was informed that Consob complies with the guidelines in question, integrating them into its supervisory practices.

On 27 June 2022, CONSOB published a report on emerging trends in sustainable investing and cryptoasset markets.

The Report analyses the emerging trends in sustainable investing and in the markets for cryptoassets, also with regard to the developments that can affect the achievement of CONSOB remit.

On 23 June 2022, Borsa Italiana published amendments to the instructions accompanying the rules of the markets organised and managed by borsa italiana regarding connection to markets.

The amendments to the Instructions accompanying the Rules of the Markets described in the present Notice will enter into force on the 29th of June 2022. *** The rules regarding the outsourcing of technological systems within the connection to the markets managed by Borsa Italiana have been amended. In particular, the amendments concern the following areas: the carriers’ accreditation and the rules applied to service providers. Under the new model the intermediaries wishing to connect to the markets via the Customer Managed Connectivity (CMC) service may use all the carriers available on the market and not only the ones accredited by Borsa Italiana in order to increase the possibility of customer connection. This does not affect the security of access to markets, which is anyway ensured by central firewalls delimiting the perimeter of Borsa Italiana’s responsibility and by the test and acceptance phases set up by Borsa Italiana’s staff; however, please note, that in the connectivity CMC model the market intermediaries shall guarantee the connection from their venues to the access points located by the primary and secondary data centers. The remaining modalities available for intermediaries operating on markets managed by Borsa Italiana shall not be amended. Moreover, the rules governing the content of the contracts concluded between Borsa Italiana and the service provider remain unchanged, except for the provision regarding the case in which the third-party subcontracts some of the services outsourced by the market intermediary. In this event the reference to the primary service provider role shall be canceled but the service provider contractual liability towards Borsa Italiana shall remain unchanged. This simplification is needed in order to facilitate the migration of customers currently connected via LSEG backbone allowing them additional connectivity options and reducing the connectivity closing time of the services provided by LSEG.

On 22 June 2022, the Commission de Surveillance du secteur financier (CSSF) published Circular 22/815 on the FATF statements on (1) high-risk jurisdictions for which enhanced due diligence measures and, where appropriate, countermeasures are required (2) jurisdictions subject to the FATF enhanced scrutiny process. 

The CSSF informs in its Circular about the decisions taken by the FATF at its June 2022 plenary meeting regarding the countries subject to enhanced monitoring.

This circular repeals CSSF circular 22/801 of 11 March 2022. 

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Le 22 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié la Circulaire 22/815 relative aux déclarations du GAFI concernant (1) les juridictions à haut risque pour lesquelles des mesures de vigilance renforcée et, le cas échéant, des contre-mesures sont requises (2) les juridictions soumises au processus de surveillance renforcée du GAFI. 

La CSSF informe dans sa circulaire des décisions prises par le GAFI lors de sa réunion plénière de juin 2022 concernant les pays soumis à une surveillance renforcée.

Cette circulaire abroge la circulaire CSSF 22/801 du 11 mars 2022. 

On 30 June 2022, the Commission de Surveillance du secteur financier (CSSF) updated Circular CSSF 20/758 as amended by Circulars CSSF 21/785 and CSSF 22/806. 

Circular covers investment firms. The amendments reflect to Circular 22/806  on outsourcing  arrangements. In particular, the 9th bullet point (including its 4 sub-bullet points) of point 184 of Chapter 7 of Part II of Circular CSSF 20/758 as amended, is replaced by points 59 and 60 of the Circular 22/806. 

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Le 30 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a mis à jour la circulaire CSSF 20/758 telle que modifiée par les circulaires CSSF 21/785 et CSSF 22/806. 

La circulaire couvre les entreprises d'investissement. Les amendements reflètent la circulaire 22/806 sur les accords d'externalisation. En particulier, le 9ème point (y compris ses 4 sous-points) du point 184 du chapitre 7 de la partie II de la circulaire CSSF 20/758 telle que modifiée, est remplacé par les points 59 et 60 de la circulaire 22/806

On 1 June 2022, the Commission de Surveillance du secteur financier (CSSF) published the global situation of undertakings for collective investment at the end of April 2022. 

As at 30 April 2022, the total net assets of undertakings for collective investment, comprising UCIs subject to the 2010 Law, specialised investment funds and SICARs, amounted to EUR 5,477.104 billion compared to EUR 5,557.342 billion as at 31 March 2022, i.e. a decrease of 1.44% over one month. Over the last twelve months, the volume of net assets rose by 3.46%.

The financial market activity was weakened by the continuing Ukraine crisis, new lockdowns due to zero-COVID policy in China, inflation levels exceeding 7% on both sides of the Atlantic, increasingly stricter monetary policy stances and downward revisions of global growth prospects. In consequence most of the UCI equity categories lost value.

Concerning developed markets, the European equity UCI category registered a negative performance. Europe recorded a deceleration in activity and a dropdown in consumer and manufacturer confidence indices due to persisting supply chain disruptions, high energy prices and inflation-induced compressed real incomes. The US equity UCI category also recorded a negative performance, the United States registered a larger than expected decline in GDP in the first quarter of 2022, weaker industrial activity, supply chain problems in some sectors and a record inflation which made the Fed signalling higher interest rate increases. The decline of US equity market was particularly sharp, pulled down by tech firms mainly. The Japanese equity UCI category was primarily driven in April by news on currencies and interest rates. Due to the rising differential of monetary policies – rising interest rates in the US and no change policy in Japan – the Yen sharply depreciated against the USD, which contributed to the downward trend in equity markets.

As for emerging countries, the Asian equity UCI category realised a negative performance in consequence of new lockdowns applied in Shanghai and announced for Beijing at the end of April, expectations of rising interest rates and the ongoing Ukraine crisis. Indonesia, with its country outlook upgraded by ratings agency S&P, is one of the few major markets of the region registering a positive performance. The Eastern European equity UCI category realised a negative performance due to the lasting Russia’s invasion of Ukraine and the problems of different countries like Poland which was cut off from gas supply. The Latin American equity UCI category also realised a negative performance in April as in Brazil or Mexico where investor sentiment was negatively impacted by food and energy inflation.

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Le 1er juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié la situation globale des organismes de placement collectif à la fin du mois d'avril 2022. 

Au 30 avril 2022, l'actif net total des organismes de placement collectif, comprenant les OPC soumis à la loi de 2010, les fonds d'investissement spécialisés et les SICAR, s'élève à 5 477,104 milliards d'euros contre 5 557,342 milliards d'euros au 31 mars 2022, soit une diminution de 1,44% sur un mois. Sur les douze derniers mois, le volume de l'actif net a augmenté de 3,46%.

L'activité des marchés financiers a été affaiblie par la poursuite de la crise ukrainienne, les nouveaux blocages dus à la politique du zéro COVID en Chine, les niveaux d'inflation supérieurs à 7% de part et d'autre de l'Atlantique, les orientations de plus en plus strictes des politiques monétaires et les révisions à la baisse des perspectives de croissance mondiale. En conséquence, la plupart des catégories d'actions de l'OPC ont perdu de la valeur.

Concernant les marchés développés, la catégorie des OPC actions européennes a enregistré une performance négative. L'Europe a enregistré un ralentissement de l'activité et une baisse des indices de confiance des consommateurs et des fabricants en raison de la persistance des perturbations de la chaîne d'approvisionnement, des prix élevés de l'énergie et de la compression des revenus réels induite par l'inflation. Les États-Unis ont enregistré une baisse du PIB plus importante que prévu au premier trimestre 2022, un ralentissement de l'activité industrielle, des problèmes de chaîne d'approvisionnement dans certains secteurs et une inflation record qui a incité la Fed à annoncer une hausse des taux d'intérêt. Le recul du marché des actions américaines a été particulièrement marqué, tiré vers le bas par les entreprises technologiques principalement. La catégorie des OPC d'actions japonaises a été principalement influencée en avril par les nouvelles sur les devises et les taux d'intérêt. En raison du différentiel croissant des politiques monétaires - hausse des taux d'intérêt aux États-Unis et politique de statu quo au Japon - le yen s'est fortement déprécié par rapport à l'USD, ce qui a contribué à la tendance à la baisse des marchés des actions.

En ce qui concerne les pays émergents, la catégorie des OPC actions asiatiques a réalisé une performance négative en raison des nouveaux lockdowns appliqués à Shanghai et annoncés pour Pékin fin avril, des anticipations de hausse des taux d'intérêt et de la crise ukrainienne en cours. L'Indonésie, dont les perspectives ont été revues à la hausse par l'agence de notation S&P, est l'un des rares grands marchés de la région à enregistrer une performance positive. La catégorie des OPC actions d'Europe de l'Est a réalisé une performance négative en raison de l'invasion durable de l'Ukraine par la Russie et des problèmes de différents pays comme la Pologne qui a été coupée de son approvisionnement en gaz. La catégorie des OPC actions d'Amérique latine a également enregistré une performance négative en avril, comme au Brésil ou au Mexique, où le sentiment des investisseurs a été affecté par l'inflation des prix alimentaires et de l'énergie.

On 2 June 2022, the Commission de Surveillance du secteur financier (CSSF) published  forms of a notification letter for marketing by Luxembourg managers of qualifying venture capital funds (“EuVECA managers”) and managers of qualifying social entrepreneurship funds (“EuSEF managers”) to potential investors in the European Union. 

The notification letters' purpose is to notify marketing arrangements by EuVECA managers” pursuant to Article 4a of Regulation (EU) No 345/2013 on European venture capital funds (the “EuVECA Regulation”) and EuSEF managers pursuant to Article 4a of Regulation (EU) No 346/2013 on European social entrepreneurship funds (the “EuSEF Regulation”).

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Le 2 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié les formulaires d'une lettre de notification pour la commercialisation par les gestionnaires luxembourgeois de fonds de capital-risque qualifiés ("gestionnaires EuVECA") et les gestionnaires de fonds d'entrepreneuriat social qualifiés ("gestionnaires EuSEF") auprès d'investisseurs potentiels dans l'Union européenne. 

Les lettres de notification ont pour objet de notifier les modalités de commercialisation par les gestionnaires EuVECA" conformément à l'article 4 bis du règlement (UE) n° 345/2013 relatif aux fonds européens de capital-risque (le "règlement EuVECA") et les gestionnaires EuSEF conformément à l'article 4 bis du règlement (UE) n° 346/2013 relatif aux fonds européens d'entrepreneuriat social (le "règlement EuSEF").

On 10 June 2022, the Commission de Surveillance du secteur financier (CSSF) updated the  FAQ on SICARs.

The FAQ now covers (in question 7) the following additional mandatory submissions by SICARs to the CSSF, applicable with respect to financial years closing on or after 30 June 2022:

• a self-assessment questionnaire (SAQ) to be submitted via eDesk within four months after the end of the financial year;
• the separate report, pertaining to the reliability of the answers provided by the SICAR in the SAQ and validated by the statutory auditor, to be submitted within six months after the end of the financial year; and
• in case the audited report contains a modified audit opinion with respect to any sub-fund or the SICAR as a whole, a letter to be sent within one month of the publication of the audit report explaining the underlying reasons for the modified audit opinion, their impact on the investors and the SICAR, the corrective measures taken by the management, and the timeline for their implementation.

The update also reflects the fact that the management letter relating to the statutory audit of the SICAR’s accounts to be submitted within six months after the end of the financial year will now be made available to the approved statutory auditor on eDesk and submitted to the CSSF by the SICAR’s management body through eDesk as well.

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Le 10 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a mis à jour la FAQ sur les SICARs.

La FAQ couvre maintenant (à la question 7) les soumissions obligatoires supplémentaires suivantes par les SICARs à la CSSF, applicables aux exercices financiers clôturant le ou après le 30 juin 2022 :

• un questionnaire d'auto-évaluation (SAQ) à soumettre via eDesk dans les quatre mois suivant la clôture de l'exercice financier ;
• le rapport séparé, relatif à la fiabilité des réponses fournies par la SICAR dans le SAQ et validé par le commissaire aux comptes, à soumettre dans les six mois suivant la fin de l'exercice financier ; et
• dans le cas où le rapport d'audit contient une opinion d'audit modifiée concernant un compartiment ou la SICAR dans son ensemble, une lettre à envoyer dans le mois suivant la publication du rapport d'audit expliquant les raisons sous-jacentes de l'opinion d'audit modifiée, leur impact sur les investisseurs et la SICAR, les mesures correctives prises par la direction et le calendrier de leur mise en œuvre.

La mise à jour reflète également le fait que la lettre de gestion relative au contrôle légal des comptes de la SICAR qui doit être soumise dans les six mois suivant la fin de l'exercice financier sera désormais mise à la disposition du réviseur d'entreprises agréé sur eDesk et soumise à la CSSF par l'organe de gestion de la SICAR via eDesk également.

On 14 June 2022, the Commission de Surveillance du secteur financier (CSSF) published a working paper (WP) titled "An Assessment of Investment Funds’ Liquidity Management Tools".

The CSSF presented in this joint work with two co-authors from the BIS an empirical assessment of the effectiveness of liquidity management tools used by Luxembourg-domiciled open-ended funds (UCITS) during the COVID-19 crisis and the years before.

The analysis focuses on the following tools: the funds’ portfolio management, including cash and other liquid assets; the use of swing pricing; and the temporary suspension of redemptions.

The main findings are the following:

• For most funds, the liquid asset ratio generally exceeds the maximum daily redemptions, suggesting that these funds have sufficient liquidity buffers to meet elevated redemptions. However, funds increase cash positions in periods of high volatility, such as the March 2020 market turmoil, and thereby contribute to pro-cyclical selling of assets.
• Fund managers’ estimates of how the liquidity of the fund portfolio would be affected in a stress scenario vary considerably across funds. Some assessments may underestimate the potential impact of concerted sales of the same, or highly correlated, assets by other funds.
• Funds frequently use swing pricing to pass on the trading costs to transacting investors. Swing pricing mitigates dilution of the fund value. It also dampens fund outflows during episodes of elevated market volatility, except during episodes of systemic stress, such as the March 2020 turmoil.
• Funds rarely suspend redemptions. Suspensions often precede the permanent closure and liquidation of the fund. They may also lead to higher outflows from funds with similar portfolios. Lower survival rates and adverse signaling effects may imply that funds wait too long before suspending redemptions.

Overall, these results generally confirm the relevance and effectiveness of these tools in contributing to the overall liquidity risk management of open-ended funds, especially in supporting open-ended funds in managing large outflows. However, they also call for further guidance to support fund managers in assessing the liquidity of their portfolio to better reflect a macroprudential perspective and internalise the risk of concerted selling of assets by funds in a stress scenario. Further guidance could also be given to the calibration of swing pricing to make it more responsive to deteriorating market conditions. Finally, additional guidance on the use and timing of suspensions could make these more effective and enhance market stability.

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Le 14 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié un document de travail (WP) intitulé "An Assessment of Investment Funds' Liquidity Management Tools".

La CSSF a présenté dans ce travail conjoint avec deux co-auteurs de la BRI une évaluation empirique de l'efficacité des outils de gestion de la liquidité utilisés par les fonds ouverts (UCITS) domiciliés au Luxembourg pendant la crise COVID-19 et les années précédentes.

L'analyse se concentre sur les outils suivants : la gestion du portefeuille des fonds, y compris les liquidités et autres actifs liquides ; l'utilisation du swing pricing ; et la suspension temporaire des rachats.

Les principales conclusions sont les suivantes :

• Pour la plupart des fonds, le ratio d'actifs liquides dépasse généralement les rachats quotidiens maximums, ce qui suggère que ces fonds disposent de réserves de liquidités suffisantes pour faire face à des rachats élevés. Cependant, les fonds augmentent leurs positions en liquidités dans les périodes de forte volatilité, comme les turbulences du marché de mars 2020, et contribuent ainsi à la vente pro-cyclique d'actifs.
• Les estimations des gestionnaires de fonds sur la manière dont la liquidité du portefeuille du fonds serait affectée dans un scénario de stress varient considérablement d'un fonds à l'autre. Certaines évaluations peuvent sous-estimer l'impact potentiel des ventes concertées des mêmes actifs, ou d'actifs fortement corrélés, par d'autres fonds.
• Les fonds utilisent fréquemment le swing pricing pour répercuter les coûts de transaction sur les investisseurs. Le swing pricing atténue la dilution de la valeur du fonds. Il atténue également les sorties de fonds lors d'épisodes de volatilité élevée du marché, sauf lors d'épisodes de stress systémique, comme les turbulences de mars 2020.
• Les fonds suspendent rarement les rachats. Les suspensions précèdent souvent la fermeture définitive et la liquidation du fonds. Elles peuvent également entraîner des sorties plus importantes de fonds ayant des portefeuilles similaires. Des taux de survie plus faibles et des effets de signal négatifs peuvent impliquer que les fonds attendent trop longtemps avant de suspendre les rachats.

Dans l'ensemble, ces résultats confirment généralement la pertinence et l'efficacité de ces outils pour contribuer à la gestion globale du risque de liquidité des fonds ouverts, en particulier pour aider les fonds ouverts à gérer les sorties importantes. Cependant, ils appellent également à des orientations supplémentaires pour aider les gestionnaires de fonds à évaluer la liquidité de leur portefeuille afin de mieux refléter une perspective macroprudentielle et d'internaliser le risque de vente concertée d'actifs par les fonds dans un scénario de crise. Des orientations supplémentaires pourraient également être données sur le calibrage du swing pricing afin de le rendre plus réactif à la détérioration des conditions de marché. Enfin, des orientations supplémentaires sur l'utilisation et le calendrier des suspensions pourraient rendre celles-ci plus efficaces et renforcer la stabilité du marché.

BACKGROUND

This Guidelines on UCITS reporting (URR) gives further guidance on the UCITS risk reporting and contains definitions, explanations and examples for the items as referred to in the Excel reporting file.

WHAT'S NEW?

The updated version of the guidelines concerns the reporting obligation that applies to all Luxembourg domiciled UCITS authorized by the CSSF as at 30 June 2022. UCITS liquidated during the reference period are out of scope.

While management companies and investment companies know the UCITS they manage and that are covered by the reporting scope, the CSSF asks them nevertheless to critically verify, prior to the submission of the report, that they cover all UCITS authorized as at 30 June 2022 by consulting the following list available on the CSSF website:

www.cssf.lu/en/document/ucits-identifiers-for-urr-reporting

The list will be available only as of 18 July. 

The reporting file encompasses two separate sheets:

• the first sheet named “DataURR” mainly refers to risk information at UCITS level; 
• the second sheet labelled “Contact details” aims at collecting contact details at the level of the management company or self-managed investment company in order to enable the CSSF, amongst others, to send the circular letter for UCITS risk reporting by e-mail to all addressees.

WHAT'S NEXT?

UCITS shall submit the UCITS risk reporting as at 30 June 2022 to the CSSF by 16 August 2022 at the latest.

The UCITS risk reporting shall be drawn up separately for each sub-fund. No consolidation is required at entity level.

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BACKGROUND

Les présentes lignes directrices sur le reporting des OPCVM (URR) donnent des indications supplémentaires sur le reporting des risques des OPCVM et contiennent des définitions, des explications et des exemples pour les éléments tels que mentionnés dans le fichier Excel de reporting.

WHAT'S NEW?

La version actualisée des lignes directrices concerne l'obligation de déclaration qui s'applique à tous les OPCVM domiciliés au Luxembourg et autorisés par la CSSF au 30 juin 2022. Les OPCVM liquidés pendant la période de référence sont hors champ.Si les sociétés de gestion et les sociétés d'investissement connaissent les OPCVM qu'elles gèrent et qui sont couverts par le périmètre de reporting, la CSSF leur demande néanmoins de vérifier de manière critique, avant la soumission du rapport, qu'elles couvrent tous les OPCVM agréés au 30 juin 2022 en consultant la liste suivante disponible sur le site Internet de la CSSF :https://www.cssf.lu/en/document/ucits-identifiers-for-urr-reportingCette liste ne sera disponible qu'à partir du 18 juillet. Le fichier de reporting comprend deux feuilles distinctes :

• la première feuille intitulée "DataURR" se réfère principalement aux informations sur les risques au niveau des OPCVM ; 
• la deuxième feuille intitulée "Coordonnées" vise à collecter les coordonnées au niveau de la société de gestion ou de la société d'investissement autogérée afin de permettre à la CSSF, entre autres, d'envoyer la lettre circulaire pour le reporting des risques des OPCVM par e-mail à tous les destinataires. 

par e-mail à tous les destinataires.

WHAT'S NEXT?

Les OPCVM soumettent à la CSSF le rapport sur les risques des OPCVM au 30 juin 2022 au plus tard le 16 août 2022. 

Le reporting des risques de l'OPCVM est établi séparément pour chaque compartiment. Aucune consolidation n'est requise au niveau de l'entité.

On 20 June 2022, Commission de Surveillance du secteur financier (CSSF) launched a new eDesk module for the notification (and de-notification) of fund marketing activities.

Following the publication of Circular CSSF 22/810 on 12 May 2022, the CSSF informs the following supervised entities that they must comply with the marketing notification and de-notification procedures, including any updates, which will be exclusively available via the eDesk Portal as of 1 July 2022:

a. Luxembourg AIFMs wishing to notify arrangements or de-notify arrangements made for marketing in Luxembourg of units or shares of an EU AIF that they manage in accordance with Article 29 respectively Article 29-1 of the AIFM Law;

b. Luxembourg AIFMs wishing to notify arrangements or de-notify arrangements made for marketing in another Member State of units or shares of an EU AIF that they manage in accordance with Article 30 respectively Article 30-1 of the AIFM Law;

c. Managers of Luxembourg EuVECAs or EuSEFs wishing to market in Luxembourg or another Member State in accordance with Article 16(1) of Regulation (EU) No 345/2013 or Article 17(1) of Regulation (EU) No 346/2013 respectively.

For the avoidance of doubt, the AIFMs mentioned under point a. and b. also include Luxembourg AIFMs of European long-term investment funds (“ELTIFs”) that wish to (de-) notify arrangements for marketing of units or shares of ELTIFs in accordance with Articles 29, 29-1, 30 and 30-1 of the AIFM Law respectively.

The eDesk Portal can be accessed at the following address: edesk.apps.cssf.lu/edesk-dashboard/dashboard/getstarted.

The list of procedures concerned is published and updated on the home page of the eDesk Portal and should be regularly checked by the relevant entities.

Additional information and instructions in the form of user guide is also provided by following this link: User guide – eDesk – ePassporting module.

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Le 20 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a lancé un nouveau module eDesk pour la notification (et la dé-notification) des activités de commercialisation des fonds.

Suite à la publication de la circulaire CSSF 22/810 le 12 mai 2022, la CSSF informe les entités surveillées suivantes qu'elles doivent se conformer aux procédures de notification et de dé-notification des activités de commercialisation, y compris les éventuelles mises à jour, qui seront exclusivement disponibles via le portail eDesk à partir du 1er juillet 2022 :

a. Les gestionnaires de fonds alternatifs luxembourgeois souhaitant notifier des arrangements ou dé-notifier des arrangements pris pour la commercialisation au Luxembourg d'unités ou de parts d'un fonds alternatif de l'UE qu'ils gèrent conformément à l'article 29 respectivement l'article 29-1 de la loi AIFM ;

b. Les gestionnaires luxembourgeois souhaitant notifier ou retirer des dispositions prises pour la commercialisation dans un autre État membre d'unités ou de parts d'un fonds alternatif de l'UE qu'ils gèrent conformément à l'article 30, respectivement l'article 30-1 de la loi AIFM ;

c. Les gestionnaires d'EuVECA ou d'EuSEF luxembourgeois souhaitant commercialiser au Luxembourg ou dans un autre État membre conformément à l'article 16, paragraphe 1, du règlement (UE) n° 345/2013 ou à l'article 17, paragraphe 1, du règlement (UE) n° 346/2013 respectivement.

Pour éviter toute ambiguïté, les gestionnaires mentionnés aux points a. et b. comprennent également les gestionnaires luxembourgeois de fonds européens d'investissement à long terme (ELTIF") qui souhaitent (dé)notifier les dispositions relatives à la commercialisation des unités ou des parts d'ELTIF conformément aux articles 29, 29-1, 30 et 30-1 de la loi AIFM respectivement.

On 21 June 2022, the Commission de Surveillance du secteur financier (CSSF) published Frequently asked questions (FAQ) on the Undertaking for collective investment administrators (UCIA) circular.

Two questions have been answered.

What type of data backup is expected of UCIAs pursuant to point 80 of the UCIA Circular?

The aim of this requirement is to ensure that in case of sudden interruption of services provided by a service provider, the last accounting and registrar positions are known and available to the UCIA in Luxembourg or in the EEA. The objective is therefore not to ensure the continuity of the accounting function, as such objective is being tackled in other provisions of the circular (i.e. point 79 of the UCIA Circular). It is, therefore, solely required to have a secure backup (i.e. a copy/picture e.g. via simple extraction from the system) of accounting balances and registrar positions.

Can the unit-/shareholder register be maintained by using distributed ledger technology (“DLT”)?

In accordance with point 11 of the UCIA Circular, only one service provider may be designated to perform the registrar function for a UCI. Any UCIA performing the registrar function may use DLT to maintain the unit-/shareholder register.  Whilst it is important to emphasise that one service provider has to remain responsible for a specific UCI administration function, it is also worth mentioning that the CSSF will, in the context of the digital transformation process, remain technology neutral and maintain a flexible regulatory approach in order not to hinder new opportunities  and stay open to innovation. The CSSF has, in this context, published a “white paper” aimed at guiding interested professionals in the conduct of their due diligence process related to DLT and its use in the provision of services in the Luxembourg financial sector.

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Le 21 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié une Foire aux questions (FAQ) relative à la circulaire sur les organismes de placement collectif (OPC).

Deux questions ont trouvé une réponse.

Quel type de sauvegarde des données est attendu des OPCVM en vertu du point 80 de la circulaire OPCVM ?

L'objectif de cette exigence est de garantir qu'en cas d'interruption soudaine des services fournis par un prestataire de services, les dernières positions comptables et de registre sont connues et disponibles pour l'UCIA au Luxembourg ou dans l'EEE. L'objectif n'est donc pas d'assurer la continuité de la fonction comptable, cet objectif étant abordé dans d'autres dispositions de la circulaire (i.e. point 79 de la circulaire UCIA), mais uniquement de disposer d'une sauvegarde sécurisée (i.e. une copie/image, par exemple par simple extraction du système) des soldes comptables et des positions de registre.

Le registre des parts/actionnaires peut-il être tenu en utilisant la technologie des registres distribués (DLT") ?

On 22 June 2022, Commission de Surveillance du secteur financier (CSSF) published forms for marketing of EU AIFs/ELTIFs in Member States and/or home Member State of the AIFM established in Luxembourg.

The forms are the following:

• Notification letter for the marketing of units or shares of EU AIFs/ELTIFs in Member States and/or home Member State of the AIFM established in Luxembourg (Article 31/32 of the AIFMD and Article 31 of Regulation (EU) 2015/760 on ELTIFs);
• Notification letter for the marketing of units or shares of EU AIFs in Member States and/or home Member State of the AIFM established in Luxembourg (Article 31/32 of the AIFMD);
• Any additional information referred to in Article 23(1) for each AIF the AIFM intends to market (Paragraph (f) of annex IV of AIFMD).

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Le 22 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié des formulaires pour la commercialisation des fonds alternatifs/ELTIF de l'UE dans les États membres et/ou dans l'État membre d'origine du gestionnaire établi au Luxembourg.

Les formulaires sont les suivants :

• Lettre de notification pour la commercialisation d'unités ou de parts de fonds alternatifs/ELTIF de l'UE dans les États membres et/ou l'État membre d'origine du gestionnaire établi au Luxembourg (article 31/32 de l'AIFMD et article 31 du règlement (UE) 2015/760 sur les ELTIF) ;
• Lettre de notification pour la commercialisation d'unités ou de parts de fonds alternatifs de l'UE dans les États membres et/ou l'État membre d'origine du gestionnaire établi au Luxembourg (article 31/32 de la directive AIFMD) ;
• Toute information supplémentaire visée à l'article 23, paragraphe 1, pour chaque fonds alternatif que le gestionnaire entend commercialiser (paragraphe (f) de l'annexe IV de l'AIFMD).

On 29 June 2022,  the Commission de Surveillance du secteur financier (CSSF) published Circular 22/818 on the application of ESMA Guidelines on stress test scenarios under Article 28 of the Money Market Fund Regulation – Update 2021 (ESMA/34-49-446).

The Circular aims to inform relevant market participants that the CSSF, as competent authority, integrates the latest version of the ESMA Guidelines on stress test scenarios under the MMF Regulation (Ref. ESMA/34-49-446), as published on 4 May 2022 (the “2021 Guidelines”), in its administrative practices. 

The Guideline was changed  in its section 5 on the calibration. All the other sections of the 2020 Guidelines continue to apply unchanged. The update was motivated by a recalibration of the stress scenario. The shocks have, in accordance with that Final Report, been calibrated to be severe, plausible and consistent with the ECB and the ESRB projections, taking into account the impact of the COVID-19 pandemic.

The scenario calibration reflects important systemic risks identified by the ESRB General Board, including widespread defaults in the private sector due to any deep global recession, any re-emergence of sovereign financing risk and debt sustainability concerns, and instability and pockets of illiquidity in financial markets. This scenario is reflected in the new calibration of the parameters.

ESMA therefore assessed that the 2020 Guidelines shall be updated in 2021 and the risk parameters modified in light of the new scenario calibration. 

The 2021 Guidelines have the following key characteristics concerning the stress scenario:

• In the adverse scenario an upward trend of risk-free rates is assumed against the background of uncertainties surrounding inflation expectations globally. Shocks to swap rates are generally higher across maturities when compared to the 2020 Guidelines.
• Resurfacing of concerns about the sustainability of public debt, along with a surge in inflation expectations, triggers a sharp increase in credit risk premia and a widening of credit spreads worldwide. While the 2020 scenario already reflected debt sustainability concerns, in 2021 countries with an elevated debt burden are particularly affected, whereas countries with few debt sustainability concerns experience somewhat more muted increases in sovereign spreads. Rising government bond yields spill over to other asset classes, including corporate bonds, thus resulting in an increase of corporate spreads close to the 2020 calibration.
• The hypothetical levels of redemption under section 4.8 are still considered  appropriate and have not been changed. The redemption shocks for the weekly liquidity stress test have been retained from the 2020 Guidelines (i.e. 40% for professional investors and 30% for retail investors).

Finally, the 2021 Guidelines, while remaining unchanged in relation to the principle-based guidelines on stress testing which the MMF or the manager of an MMF shall regularly conduct in accordance with sections 4.1 to 4.7 of the Guidelines, still specify that the factors set out therein are minimum requirements. 

On that basis, MMFs or managers of MMFs have to tailor the approach to the specificities of the MMFs and add any factors or requirements that are deemed useful to the stress test exercise, thereby factoring in the impact of the recent market stress according to the risk profile of the fund when designing internal stress tests. Furthermore, the Guidelines still mention that besides univariate stress tests, multivariate scenarios with different levels of severity have also to be built.

Circular CSSF 21/780 implementing the 2020 version of the Guidelines is repealed and replaced by this circular with effect as of 4 July 2022. 

The CSSF expects all entities falling under the scope of this circular to apply the 2021 Guidelines for the preparation of the required MMF reporting as from the reporting date 30 September 2022 onwards. The 2020 version of the Guidelines, with the related calibration, shall still be applied for the reporting date 30 June 2022. 

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Le 29 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire 22/818 relative à l'application des lignes directrices de l'ESMA sur les scénarios de simulation de crise en vertu de l'article 28 du règlement sur les fonds du marché monétaire - Mise à jour 2021 (ESMA/34-49-446).

La circulaire vise à informer les participants au marché concernés que la CSSF, en tant qu'autorité compétente, intègre dans ses pratiques administratives la dernière version des lignes directrices de l'ESMA sur les scénarios de simulation de crise en vertu du règlement sur les OPC monétaires (réf. ESMA/34-49-446), telle que publiée le 4 mai 2022 (les " lignes directrices 2021 "). 

La ligne directrice a été modifiée dans sa section 5 relative à l'étalonnage. Toutes les autres sections des lignes directrices 2020 continuent de s'appliquer sans changement. La mise à jour a été motivée par un recalibrage du scénario de stress. Les chocs ont, conformément à ce rapport final, été calibrés pour être sévères, plausibles et cohérents avec les projections de la BCE et du CERS, en tenant compte de l'impact de la pandémie COVID-19.

Le calibrage du scénario reflète d'importants risques systémiques identifiés par le Conseil général du CERS, notamment des défauts de paiement généralisés dans le secteur privé en raison d'une profonde récession mondiale, la réapparition du risque de financement souverain et des problèmes de viabilité de la dette, ainsi que l'instabilité et les poches d'illiquidité sur les marchés financiers. Ce scénario est reflété dans le nouveau calibrage des paramètres.

L'ESMA a donc estimé que les lignes directrices 2020 doivent être mises à jour en 2021 et que les paramètres de risque doivent être modifiés à la lumière du nouveau calibrage des scénarios. 

Les lignes directrices 2021 présentent les caractéristiques clés suivantes concernant le scénario de stress stress :

• Dans le scénario défavorable, une tendance à la hausse des taux sans risque est supposée dans un contexte d'incertitudes entourant les anticipations d'inflation au niveau mondial. Les chocs sur les taux swap sont généralement plus élevés pour toutes les échéances par rapport aux lignes directrices de 2020.
• La résurgence des inquiétudes concernant la viabilité de la dette publique, conjuguée à une poussée des anticipations d'inflation, déclenche une forte augmentation des primes de risque de crédit et un élargissement des écarts de crédit dans le monde entier. Alors que le scénario 2020 reflétait déjà les préoccupations relatives à la viabilité de la dette, en 2021, les pays dont la dette est élevée sont particulièrement touchés, tandis que les pays dont la dette est peu préoccupante connaissent une augmentation un peu plus modérée des écarts de taux souverains. La hausse des rendements des obligations d'État se répercute sur d'autres catégories d'actifs, notamment les obligations d'entreprise, ce qui entraîne une augmentation des écarts de rendement des entreprises proche du calibrage de 2020.
• Les niveaux hypothétiques de remboursement de la section 4.8 sont toujours considérés comme appropriés et n'ont pas été modifiés. Les chocs de rachat pour le test de liquidité hebdomadaire ont été conservés dans les lignes directrices de 2020 (c'est-à-dire 40 % pour les investisseurs professionnels et 30 % pour les investisseurs particuliers).

Enfin, les lignes directrices 2021, tout en restant inchangées en ce qui concerne les directives fondées sur les principes relatifs aux simulations de crise que le FMM ou le gestionnaire d'un FMM doit effectuer régulièrement conformément aux sections 4.1 à 4.7 des lignes directrices, précisent toujours que les facteurs qui y sont énoncés constituent des exigences minimales. 

Sur cette base, les OPC monétaires ou les gestionnaires d'OPC monétaires doivent adapter l'approche aux spécificités des OPC monétaires et ajouter tout facteur ou exigence jugé utile à l'exercice de simulation de crise, ce qui permet de prendre en compte l'impact des récentes tensions sur le marché en fonction du profil de risque du fonds lors de la conception des simulations de crise internes. En outre, les lignes directrices mentionnent toujours qu'en plus des tests de résistance univariés, des scénarios multivariés avec différents niveaux de sévérité doivent aussi être construits.

La circulaire CSSF 21/780 mettant en œuvre la version 2020 des lignes directrices est abrogée et remplacée par la présente circulaire avec effet au 4 juillet 2022. 

La CSSF s'attend à ce que toutes les entités entrant dans le champ d'application de la présente circulaire appliquent les lignes directrices 2021 pour l'établissement des rapports obligatoires sur les OPC monétaires à partir de la date de reporting du 30 septembre 2022. La version 2020 des lignes directrices, avec le calibrage y afférent, doit encore être appliquée pour la date de reporting du 30 juin 2022.

BACKGROUND

The purpose of the ESMA Guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements is to clarify the application of certain aspects of the MiFID II appropriateness and execution-only requirements in order to ensure the common, uniform, and consistent application of, respectively, Article 25(3) of MiFID II and of Articles 55 and 56 of the MiFID II Delegated Regulation as well as of Article 25(4) of MiFID II and of Article 57 of the MiFID II Delegated Regulation.

MiFID requires you to do appropriateness test: 

• when you provide investment services other than investment advice or portfolio management (so-called ’’non-advised services’’ such as EO, RTO or dealing on own account);
• to retail clients. 

The firm wants to make sure that the client has the necessary knowledge and experience to understand the risks involved in relation to the specific investment service or product. If this is not the case, the investment shall not be considered as appropriate (for professional clients there is already an assumption that such clients poses the necessary knowledge and experience hence why you do not need to do appropriateness test for them). 

If firm considers that the client does not have the necessary knowledge and experience to understand the risks involved in relation to the specific investment service or product, a firm should warn the client accordingly. A warning is also required if a client does not provide the necessary information on his knowledge and experience, or where insufficient information is provided. The Guidelines provide very detailed requirements on warnings and how these should be displayed to be effective.

WHAT'S NEW?

The Circular 22/817 aims to inform  that the CSSF, in its capacity as competent authority, will apply the Guidelines of the European Securities and Markets Authority on certain aspects of the MiFID II appropriateness and execution-only requirements from 12 October 2022 onwards. The CSSF will integrate the Guidelines, issued with a view to promoting supervisory convergence in this field at European level, into its administrative practice and regulatory approach.

WHAT'S NEXT?

The Guidelines shall apply from 12 October 2022 onwards.

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BACKGROUND

L'objectif des lignes directrices de l'ESMA sur certains aspects des exigences de caractère approprié et d'exécution seule de MiFID II est de clarifier l'application de certains aspects des exigences de caractère approprié et d'exécution seule de MiFID II afin de garantir l'application commune, uniforme et cohérente, respectivement, de l'article 25, paragraphe 3, de MiFID II et des articles 55 et 56 du règlement délégué de MiFID II, ainsi que de l'article 25, paragraphe 4, de MiFID II et de l'article 57 du règlement délégué de MiFID II.

WHAT'S NEW?

La circulaire 22/817 a pour objet d'informer que la CSSF, en sa qualité d'autorité compétente, appliquera à partir du 12 octobre 2022 les lignes directrices de l'Autorité européenne des marchés financiers sur certains aspects des exigences de caractère approprié et d'exécution seule de MiFID II. La CSSF intégrera les lignes directrices, publiées en vue de promouvoir la convergence de la surveillance dans ce domaine au niveau européen, dans sa pratique administrative et son approche réglementaire.

WHAT'S NEXT?

Les lignes directrices s'appliquent à partir du 12 octobre 2022. 

On 28 June 2022, the Commission de Surveillance du secteur financier (CSSF) issued a statement on the delay of the application date of certain PRIIPs-related disclosures.

The CSSF draws attention to the publication of the European Commission on 24 June 2022 in the Official Journal of the EU of the Delegated Regulation (EU) 2022/975 of 17 March 2022 amending the regulatory technical standards laid down in Delegated Regulation (EU) 2017/653 as regards the extension of the transitional arrangement laid down in Article 14(2) of that Regulation and amending the regulatory technical standards laid down in Delegated Regulation (EU) 2021/2268 as regards the date of application of that Regulation (Delegated Regulation 2022/975).

The Delegated Regulation 2022/975 concerns the amendment of the application date of rules for the Key Information Document (KID) for packaged retail and insurance-based investment products (PRIIPs).

More specifically, the Delegated Regulation 2022/975 states that:

Article 14 (2) of Delegated Regulation (EU) 2017/653 continues to apply until 31 December 2022, and that the new rules included in Delegated Regulation (EU) 2021/2268 amending Delegated Regulation (EU) 2017/653 shall apply as from 1 January 2023.

The Delegated Regulation 2022/975 and the amendments concerned should be read in light of the following statement of the European Commission.

The CSSF will take into account the elements of timing as put forward in such statement when discharging its supervisory tasks in the framework of PRIIPs.

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Le 28 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié un communiqué relatif au report de la date d'application de certaines informations liées à PRIIPs.

La CSSF attire l'attention sur la publication par la Commission européenne le 24 juin 2022 au Journal officiel de l'UE du règlement délégué (UE) 2022/975 du 17 mars 2022 modifiant les normes techniques réglementaires établies par le règlement délégué (UE) 2017/653 en ce qui concerne la prolongation de l'arrangement transitoire prévu à l'article 14(2) de ce règlement et modifiant les normes techniques réglementaires établies par le règlement délégué (UE) 2021/2268 en ce qui concerne la date d'application de ce règlement (règlement délégué 2022/975).

Le règlement délégué 2022/975 concerne la modification de la date d'application des règles relatives au document d'informations clés (DIC) pour les produits d'investissement packagés de détail et fondés sur l'assurance (PRIIPs).

Plus précisément, le règlement délégué 2022/975 stipule que :

L'article 14 (2) du règlement délégué (UE) 2017/653 continue de s'appliquer jusqu'au 31 décembre 2022, et que les nouvelles règles incluses dans le règlement délégué (UE) 2021/2268 modifiant le règlement délégué (UE) 2017/653 s'appliquent à partir du 1er janvier 2023.

Le règlement délégué 2022/975 et les amendements concernés doivent être lus à la lumière de la déclaration suivante de la Commission européenne.

La CSSF tiendra compte des éléments de calendrier tels que mis en avant dans cette déclaration lorsqu'elle s'acquittera de ses tâches de surveillance dans le cadre des PRIIPs.

On 15 June 2022, the Commission de Surveillance du secteur financier (CSSF) published a communication related to recent publications made by the European Supervisory Authorities (the ESAs) in respect of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR) and of Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (EU Taxonomy Regulation).

The ESAs publications are the following:

• Q&As of the European Commission: The ESAs published Q&As adopted by the European Commission on 13 May 2022, following the submission by the ESAs of further queries related to the interpretation of the SFDR and the EU Taxonomy Regulation. A first set of Q&As had been adopted by the European Commission and published by the ESAs in July 2021 (please refer to the CSSF Communiqué published on 30 July 2021).
• Supervisory Briefing published by the European Securities and Markets Authority (ESMA): ESMA published on 31 May 2022 a Supervisory Briefing on the integration of sustainability risks and disclosures in the area of asset management.
• Clarifications on the draft regulatory technical standards (RTS): The ESAs published on 2 June 2022 a statement providing clarifications on the ESAs’ draft RTS issued under SFDR.

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Le 15 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié une communication relative aux récentes publications faites par les autorités européennes de surveillance (les AES) en ce qui concerne le règlement (UE) 2019/2088 sur les informations relatives à la durabilité dans le secteur des services financiers (SFDR) et le règlement (UE) 2020/852 sur l'établissement d'un cadre visant à faciliter l'investissement durable (règlement sur la taxonomie de l'UE).

Les publications de l'ESA sont les suivantes :

•  Q&As de la Commission européenne : Les AES ont publié des questions-réponses adoptées par la Commission européenne le 13 mai 2022, suite à la soumission par les AES de questions supplémentaires liées à l'interprétation du RGPD et du règlement sur la taxonomie de l'UE. Une première série de Q&R avait été adoptée par la Commission européenne et publiée par les AES en juillet 2021 (veuillez vous référer au Communiqué de la CSSF publié le 30 juillet 2021).
• Supervisory Briefing publié par l'Autorité européenne des marchés financiers (ESMA) : L'ESMA a publié le 31 mai 2022 un Supervisory Briefing sur l'intégration des risques et des divulgations en matière de durabilité dans le domaine de la gestion d'actifs.
• Clarifications sur les projets de normes techniques réglementaires (RTS) : Les AES ont publié le 2 juin 2022 une déclaration apportant des clarifications sur les projets de RTS des AES publiés dans le cadre du SFDR.

On 22 June 2022, Association of the Luxembourg Fund Industry (ALFI) published key findings from the european sustainable investment funds report 2022.

Key findings from study on sustainable investment funds by Morningstar, zeb and ALFI:

• Europe holds 83% of global sustainable funds’ net assets, reaching almost EUR 2 trillion at the end of 2021, up 71% from 2020;
• Sustainable fund products reflect 16% of total net assets of funds domiciled in Europe, ahead of the US and Asia, with only 1% and 5% respectively;
• Luxembourg maintains its market leader position with about a third of the assets managed by sustainable funds in Europe being domiciled there;
• Equity remains the most important asset class making up 64% of the sustainable fund assets compared to 48% in conventional funds, allowing asset managers to exert a great influence on the ESG efforts of companies;
• Sustainability strategies such as impact funds are still far outweighed by funds with less ambitious ESG objectives, yet assets in impact funds did increase by 50% in 2021, compared to 2020;
• At European level, about 44% of net assets were categorised by their managers as Article 8 or Article 9 funds according to the Sustainable Finance Disclosure Regulation (SFDR); 

Europe remains the key driver behind sustainable finance, holding 83% of global sustainable funds’ net assets, according to the second annual European Sustainable Investment Funds Study by Morningstar and zeb, powered by the Association of the Luxembourg Fund Industry (ALFI). The study found that the net assets in sustainable fund products based on Morningstar’s strict definition of sustainability have reached almost EUR 2 trillion at the end of 2021, up 71% from 2020.

This study aims to provide a snapshot on how sustainability objectives and the respective legislative interventions are shaping the fund industry in Europe, and to analyse the role, competitiveness, and positioning of the different domiciles within this dynamically changing environment. It is the second of a series of regularly conducted studies based on an analogous approach to monitor the dynamic development and trends of the European sustainable funds’ sector.

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Le 22 juin 2022, l'Association luxembourgeoise de l'industrie des fonds (ALFI) a publié les principales conclusions du rapport européen sur les fonds d'investissement durables 2022.

Principales conclusions de l'étude sur les fonds d'investissement durables réalisée par Morningstar, zeb et ALFI :

• L'Europe détient 83% des actifs nets des fonds durables mondiaux, atteignant près de 2 000 milliards d'euros à la fin de 2021, soit une hausse de 71% par rapport à 2020 ;
• Les produits de fonds durables reflètent 16% du total des actifs nets des fonds domiciliés en Europe, devant les États-Unis et l'Asie, avec seulement 1% et 5% respectivement ;
• Le Luxembourg conserve sa position de leader du marché, avec environ un tiers des actifs gérés par des fonds durables en Europe qui y sont domiciliés ;
• Les actions restent la classe d'actifs la plus importante, représentant 64 % des actifs des fonds durables contre 48 % pour les fonds conventionnels, ce qui permet aux gestionnaires d'actifs d'exercer une grande influence sur les efforts ESG des entreprises ;
• Les stratégies de durabilité telles que les fonds d'impact sont encore largement dépassées par les fonds ayant des objectifs ESG moins ambitieux, mais les actifs des fonds d'impact ont tout de même augmenté de 50% en 2021, par rapport à 2020 ;
• Au niveau européen, environ 44% des actifs nets ont été catégorisés par leurs gestionnaires comme des fonds de l'article 8 ou de l'article 9 selon le règlement sur la divulgation de la finance durable (SFDR) ;

L'Europe reste le principal moteur de la finance durable, détenant 83% des actifs nets des fonds durables mondiaux, selon la deuxième étude annuelle sur les fonds d'investissement durables européens réalisée par Morningstar et zeb, alimentée par l'Association luxembourgeoise de l'industrie des fonds (ALFI). L'étude révèle que les actifs nets des produits de fonds durables basés sur la définition stricte de la durabilité de Morningstar ont atteint près de 2 000 milliards d'euros à la fin de 2021, soit une hausse de 71 % par rapport à 2020.

Cette étude vise à fournir un aperçu de la façon dont les objectifs de durabilité et les interventions législatives respectives façonnent l'industrie des fonds en Europe, et à analyser le rôle, la compétitivité et le positionnement des différents domiciles dans cet environnement en évolution dynamique. Il s'agit de la deuxième d'une série d'études menées régulièrement sur la base d'une approche analogue pour suivre le développement dynamique et les tendances du secteur européen des fonds durables.

On 22 June 2022, the Luxembourg Sustainable Finance Initiative (LSFI) published a study on European sustainable funds investment. 

The key findings of the study: 

1) Net assets in sustainable funds domiciled in Europe have reached almost EUR 2 trillion in 2021 – this figure is three times  as high as in 2019 and up 71% from 2020. The share in total net  assets went up to 16%, and half of the net flows were attracted by the sustainable sector.

2) Equity remains by far the most important asset class of sustainable funds. The integration of ESG factors into money market funds has significantly accelerated, resulting in a share of 25% in total net assets of money market funds.

3) Sustainable passive funds continue their disproportionate increase, now reaching a 27% share in sustainable assets, as opposed to a share of passive funds of only 21% in the  conventional fund sector. Equity remains by far the most important asset class of  sustainable funds. The integration of ESG factors into money  market funds has significantly accelerated, resulting in a share of 25% in total net assets of money market funds.

4) At European level, about 44% of net assets were invested in funds classified by their managers as Article 8 and Article 9 funds according to the Sustainable Finance Disclosure  Regulation (SFDR). 

5) Europe remains the forerunner in terms of sustainable  investment funds with a market share of 83% of the total EUR 2.4 trillion in net assets considered sustainable in the  major global fund domiciles – far ahead of the US and Asia.

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Le 22 juin 2022, la Luxembourg Sustainable Finance Initiative (LSFI) a publié une étude sur l'investissement des fonds durables européens. 

Les principales conclusions de l'étude : 

1) Les actifs nets des fonds durables domiciliés en Europe ont atteint près de 2 000 milliards d'euros en 2021 - ce chiffre est trois fois plus élevé qu'en 2019 et en hausse de 71 % par rapport à 2020. La part dans le total des actifs nets est passée à 16%, et la moitié des flux nets ont été attirés par le secteur durable.

2) Les actions restent de loin la classe d'actifs la plus importante des fonds durables. L'intégration des facteurs ESG dans les fonds monétaires s'est considérablement accélérée, avec pour résultat une part de 25 % des actifs nets totaux des fonds monétaires.

3) Les fonds passifs durables poursuivent leur augmentation disproportionnée, atteignant désormais une part de 27% des actifs durables, contre une part de fonds passifs de seulement 21% dans le secteur des fonds conventionnels. Les actions restent de loin la classe d'actifs la plus importante des fonds durables. L'intégration des facteurs ESG dans les fonds monétaires s'est considérablement accélérée, aboutissant à une part de 25% dans le total des actifs nets des fonds monétaires.

4) Au niveau européen, environ 44% des actifs nets ont été investis dans des fonds classés par leurs gestionnaires comme fonds de l'article 8 et de l'article 9 selon le règlement sur la divulgation des informations relatives à la finance durable (SFDR). 

5) L'Europe reste le précurseur en termes de fonds d'investissement durable avec une part de marché de 83% du total de 2,4 trillions d'euros d'actifs nets considérés comme durables dans les principaux domiciles de fonds mondiaux - loin devant les États-Unis et l'Asie.

On 16 June 2022, the Autoriteit Financiële Markten (AFM) imposed fines on Revo Capital Management for violations of the Wwft.

On 25 May 2022, the Netherlands Authority for the Financial Markets (AFM) imposed two administrative fines on Revo Capital Management BV (Revo) for violations of the Money Laundering and Terrorist Financing (Prevention) Act (Wwft). The violations took place between July 2018 and December 2020. These involved fines of €28,000 and €125,000. 

Revo was fined €28,000 because the two investment funds it managed had not drawn up a Wwft risk assessment and also did not have policies in place to limit and effectively manage the risks of money laundering and terrorist financing. Revo was also fined €125,000 for failing to ensure that the funds had appropriate procedures in place to determine whether their clients were 'politically exposed persons' (PEP).

On 10 June 2022, the Dutch Banking Association (Nederlandse Vereniging van Banken, NVB) published leaflet on sustainability preferences for customers.

The Dutch Banking Association (NVB), in collaboration with the Dutch Fund and Asset Management Association (DUFAS), is publishing a leaflet for clients who invest with advice and management. The reason is the obligation from 2 August to request so-called 'sustainability preferences' from customers. This is the result of European legislation and regulations that should provide more clarity about what sustainable investment is. The underlying goal is a more sustainable economy.

Due to this obligation, banks and their customers will have to deal with a lot of new documentation in the near future, including definitions that are sometimes difficult to understand. The leaflet explains in broad terms why the sustainability preferences are requested and what the consequences are for the customer and the bank. This leaflet can help banks/advisors in their conversations with customers about these new requirements. The leaflet can also help customers to gain more understanding.

On 21 June 2022, the Comicion Nacional del Mercado del valores (CNMV) and its ukrainian counterpart, the NSSMC, sign a bilateral memorandum of understanding.

In a ceremony held at the CNMV headquarters, the presidents of the two commissions signed the document that contemplates the collaboration between both commissions, assistance and mutual consultation, and the exchange of communications to improve investor protection. T

he agreement also includes the promotion of stability, efficiency, and the development of stock markets in Ukraine and Spain. 

In the meeting, they analyzed the current challenges of the capital markets, especially after the invasion of Ukraine by Russia.

On 8 June 2022, Spain published Circular 2/2022 of May 26 of the Comicion Nacional del Mercado del valores (CNMV) approving the models for notification of significant participations, operations of the issuer on own shares, and market makers.

The novelties respond to the necessary adaptation to Law 5/2021, of April 12, on the promotion of the long-term involvement of shareholders in listed companies. 

This law introduced two important novelties in the Spanish legal system: the regime of double voting shares for loyalty and the elimination of the obligation of directors to notify transactions in shares or financial instruments, who are only obliged to notify such transactions under the regime of transactions of executives established in the Market Abuse Regulation.

The new text replaces the old Circular 8/2015, which established notification models that now have to be repealed so a new text has been drafted to avoid confusion in the market. 

More specifically, the main modifications introduced by this new Circular are as follows:

• Model I is modified to include information on loyalty votes. As a new feature, the positions that the shareholder declares, in sections 6 to 9, must include the additional voting rights corresponding to the shares with loyalty votes that have been attributed to him/her. In addition, for greater transparency in order to provide more detailed information on the significant shareholder's complete position, two new sections have been added to report double loyalty votes. In them, the significant shareholder must indicate the number of additional voting rights that have been attributed to him/her corresponding to the loyalty shares, as well as the number of shares that are pending recognition of such double voting rights. This information is already reflected in the Annual Corporate Governance Report. 
• Models II (directors), III (executives and close links) and VI (compensation systems) are repealed, as they have become inapplicable as a result of legislative amendments. 
• Forms IV (treasury stock) and V (request for exemption from notification for market makers) are renumbered as Forms 2 and 3, without including any significant modification in their content. However, in the instructions for model 2, for treasury stock, it is clarified that the calculation of the percentage of treasury stock will not take into account, in the denominator, the voting rights for loyalty, when they exist. 
• The instructions have been modified, mainly in model 1, to include technical improvements, many of them suggested by the Advisory Committee.

The Circular will come into force sixty days after its publication in the Official State Gazette, to allow time to implement the necessary technical modifications. 

On 24 June 2022, the Comicion Nacional del Mercado del valores (CNMV) opened a consultation on the Code of good practices for institutional investors, asset managers and proxy advisors.

The objective of this type of Code is to promote greater involvement of institutional investors and asset managers with listed companies, so that they have better informed, more active investors who are more involved in their strategy and decisions. This will in turn benefit the openness and attention of issuers to the interests of their shareholders, in a process of continuous improvement of their corporate governance and management. 

The Code is aimed at institutional investors and asset managers based in Spain, although it can also be applied by investors or managers from other jurisdictions. 

It is voluntary and there will be a three-year adaptation period for those entities that decide to adhere to it. 

It contains seven main principles: the need for a long-term strategy, knowledge of investee companies, development and disclosure of the engagement policy, exercise of voting rights, transparency, management of conflicts of interest, internal corporate governance and remuneration policy. 

Its application shall be proportionate to the size, scale or complexity of the entity, as well as to the nature of the investors and the resources of the investee companies.

The deadline for comments from interested parties is 16 September 2022. 

On 27 June 2022, the Government approveed the draft reform of the Securities Markets Law to boost financing to companies and increase investor protection, especially in the field of crypto-assets.

The standard aims to modernise securities markets in order to improve and enhance their ability to finance the economy in a transparent and efficient manner, strengthen the supervisory regime applicable to investment firms and maintain a high level of protection for financial services clients and savers.

This new standard constitutes a framework law that replaces the current regulations of 2015 and bases in a single text European directives and regulations that have been developing this matter to provide legal certainty to companies and investors.

With this, the financial legal framework is adapted to the new technological and economic realities and, in particular, digitalization, Community directives, new instruments and financing markets for SMEs (such as the BME Growth market) and new forms of IPO (such as SPACs, companies that go public without activity and with the sole objective of raising money to buy a company).

On 30 June 2022, the Financial Conduct Authority (FCA) published a consultation paper CP 22/11 "Winding down ‘synthetic’ sterling LIBOR and US dollar LIBOR". 

In September 2021, the FCA announced that the FCA would compel the continued publication of the 1-, 3- and 6-month sterling LIBOR settings for a limited time after end-2021, using a ‘synthetic’ methodology. We have been clear that synthetic LIBOR is temporary.  The FCA can compel its continued production for up to one year at a time, for a maximum period of 10 years. Once outstanding contracts that reference a particular LIBOR setting have had time to transition to an alternative benchmark – or to make provision to do so – it may no longer be appropriate for the FCA to require continued publication of that setting. This consultation is intended to help the FCA in its review of its decisions to require continued publication.

For US dollar LIBOR, in due course the FCA will need to assess whether the remaining settings can be wound down in an orderly fashion when the panel ends on 30 June 2023, and if not, whether a synthetic US dollar LIBOR rate might be appropriate for certain contracts that are not within scope of LIBOR-related federal legislation. The FCA wants to understand whether there are any insurmountable barriers to transitioning outstanding US dollar LIBOR contracts before or upon the cessation of the panel, and if so, the size and nature of any exposures that market participants expect may remain at that point.

The deadline for responses to this consultation is by 24 August 2022

On 15 June 2022, the Financial Reporting Council (FRC) opened a consultation on proposed changes to Technical Actuarial Standard 100 which would require actuaries to include climate change risks in the course of their work.

The FRC is proposing to introduce a new requirement to ensure actuarial practitioners have regard to all material risk, including the consideration of Climate Change and ESG related risks, which they might reasonably be expected to know about at the time of carrying out their work.

Feedback carried out by the FRC has shown that whilst actuaries are well-versed in considering more established areas of risk, non-traditional risks such as climate change and other emerging risks are less well-considered.

Actuarial work continues to evolve to reflect new practice areas, emerging risks, new modelling techniques and new ways of working.

The consultation closes on 7 September 2022.

On 16 June 2022, the Financial Reporting Council (FRC) updated its Guidance on the Strategic Report.

The Guidance was modified to incorporate the new climate-related financial disclosures, following changes in legislation made earlier this year:

• climate-related financial risks and opportunities, in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations;
• the need for traded limited liability partnerships (LLPs) and banking LLPs to publish a strategic report;
• clarifying the scope and definitions of the requirements with regard to public interest entities (PIEs); and
• the government’s  Streamlined Energy and Carbon Reporting (SECR) requirements.

The Guidance includes communication principles that emphasise the qualities of good corporate reporting. It encourages companies to focus on the application of materiality to disclosures and to be innovative in the structuring of information to improve the clarity and conciseness of information.

The strategic report should provide a company’s shareholders with a holistic and meaningful picture of a company’s business model, strategy, risks, development, performance, position and future prospects including relevant non-financial information..

For entities within their scope, the new climate-related financial disclosures are effective for financial years beginning on or after 6 April 2022.

On 24 June 2022, Financial Reporting Council (FRC) published latest list of companies whose Reports and Accounts have been reviewed.

The Financial Reporting Council (FRC) has published the latest list of companies whose reports and accounts have been reviewed by its Corporate Reporting Review function.

On 23 June 2022, UK Parliament published a report on UK-EU relationship in financial services. 

The key findings of the report are as follows: 

• The overall outlook for the UK financial services sector post-Brexit is positive. Far fewer financial services jobs have moved from the UK to the EU as a result of Brexit than some anticipated; current estimates suggest 7,000 jobs have moved, compared to estimates of 75,000 in 2016. London has retained its position as the world's second largest financial center, and there was a strong sense that the sector has remained resilient.
• However, the Committee cautions the Government against complacency. It is not yet clear whether the impact of Brexit on the sector has fully played out. The Committee also calls on the Government to ensure that its approach to financial services delivers for the whole of the country and its economy, not only for the City of London.
• In terms of the Government’s plans to give more powers to the financial services regulators, the Committee notes the greater flexibility and agility this may bring. However, it stresses that new powers for the regulators must be accompanied by appropriate mechanisms for scrutiny and accountability, including by Parliament.
• Post-Brexit regulatory divergence is inevitable as the result of developments in both the UK and the EU. The Committee sees opportunities in divergence, which will allow the UK to innovate and tailor its regulation to its own interests. However, it also urges the Government to weigh the benefits of divergence against the costs of implementing new rules. In addition, it is concerned that the EU’s increasing emphasis on ‘strategic autonomy’ could lead to barriers to cross-border trade in financial services.
• The UK has inevitably lost influence over the development of future EU financial services rules post-Brexit, but the Committee is concerned that the Government appears unwilling to utilise the influence it still has. This is part of a detectable theme that has emerged in other work carried out by the Committee: the Government seems reluctant to recognise the importance of the UK-EU relationship, seeming unwilling to fully engage with the EU institutions, or to acknowledge that developments in the EU still have significance for the UK.
• The Committee found that the absence of EU equivalence decisions for the UK reflects a political, rather than technical, approach on the part of the EU, and it appears that the UK is being held to a higher standard than other countries in this regard. The Committee concludes, however, that the absence of EU equivalence decisions has had less adverse impact than initially feared and that it would, therefore, be unwise for the Government to base its strategy for financial services on a process that it cannot control, and which currently seems unlikely to bear fruit.
• The Committee found that the Memorandum of Understanding (MoU) on regulatory cooperation is being held up because of wider difficulties in the UK-EU relationship. The Committee believes that this MoU would provide a valuable mechanism for strategic dialogue and considers that its earliest possible entry into force should be a priority for the Government. It also calls on the Government to step up its political and diplomatic engagement with the EU regarding financial services.

On 15 June 2022, the UK Government published outcome of the consultation on Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017  Statutory Instrument 2022. 

HM Treasury launched a consultation on 22 July 2021. This consultation outlined how the government  intended to amend the UK’s Money Laundering Regulations (the MLRs) in order to make several time-sensitive updates. These updates are required to ensure that the UK continues to meet international standards, whilst also strengthening and ensuring clarity on how the UK’s anti-money laundering and counter-terrorist financing (AML/CTF) regime operates.

The consultation closed on 14 October 2021, with HM Treasury receiving 94 responses from a wide range of respondents. These included AML/CTF supervisors, industry, civil society, academia, and several government departments.

The outcome summarises outcome from responses to the consultation and sets out the findings and the decisions the government has taken as a result. The findings cover the following topics: 

• Changes in scope to reflect latest risk assessments
• Clarificatory changes to strengthen supervision
• Expanded requirements to strengthen the regime
• Information sharing & gathering 
• Transfers of cryptoassets
• Additional changes to the Regulations 

On 15 June 2022, draft statutory instruments - The Money Laundering and Terrorist Financing (Amendment)  (No. 2) Regulations 2022  was published in UK legislation. 

These Regulations update the existing United Kingdom (“UK”) anti-money laundering legislation.

The main changes make some time-sensitive updates to The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the “MLRs”), which are being made to ensure that the UK continues to meet international standards on anti-money laundering and counter-terrorist financing (“AML/CTF”), whilst also strengthening and clarifying how the UK’s AML regime operates, following feedback from industry and supervisors. 

On 24 June 2022, UK Government published a policy paper on review of the UK’s AML/CFT regulatory and supervisory regime . 

The policy paper entails two post-implementation reviews and a forward-looking review of the UK’s anti-money laundering and countering the financing of terrorism regime.

This review has focused on: 

• improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), 
• ensuring the application of effective risk-based controls across the regulated sector and developing a world-class AML supervisory regime. This recognises the unique threats facing the UK from illicit finance and reiterates the government’s desire to protect the economy and ensure the UK remains a safe and prosperous place to do business. 

The review is structured around three key themes. 

• Systemic Effectiveness: ensuring that as the government works to reform and improve the UK’s regime we have an agreed definition of what effectiveness looks like  and some proposals on how we can start to measure this with more precision.
• Regulatory Effectiveness: ensuring that those firms and individuals on the front  line of the UK’s fight against illicit finance are well-equipped, with a strong risk-understanding and capability to implement effective risk-based controls within their business, as well as the scope to target that activity at areas of highest risk. 
• Supervisory Effectiveness: continuing reform of the supervision regime, building on the improvements made in recent years while assessing the rationale for further structural change to the regime.

On 22 June 2022, Financial Reporting Council (FRC) issued a consultation on publishing audit quality indicators (AQIs) to drive audit quality improvements.

The Financial Reporting Council (FRC) has issued a consultation on publishing audit quality indicators (AQIs) for the largest UK audit firms, which would provide users of audited information with greater detail on audit firms’ efforts to deliver high quality audit. 

The 11 proposed AQIs would provide stakeholders with a range of comparable indicators on perceived culture within an audit firm, audit quality inspection results, staff workloads, and the level of partners’ involvement in individual audits. 

Currently there is limited available information that compares audit quality between the firms so setting out AQIs to enable discussions between Audit Committee Chairs (ACCs) and audit firms on the drivers of audit quality will help ACCs to make more informed comparisons between firms when appointing external auditors. 

This increased emphasis on quality by users will further increase audit firms’ focus on driving further improvements in the key area of audit quality.

On 23 June 2022, Financial Reporting Council (FRC) published comprehensive professional judgement guidance for auditors.

The Financial Reporting Council (FRC) has published comprehensive professional judgement guidance for auditors to improve how they exercise professional judgement.  

Professional judgement is key to high quality audit, however the FRC regularly identifies poor professional judgement as one of the most significant issues affecting audit quality. 

The new guidance includes a framework for making professional judgements and a series of illustrative examples. If applied widely, the guidance will improve audit quality by enhancing the consistency and quality of professional judgement exercised by auditors.

The guidance will be of particular use for auditors and central technical teams but will also have wider interest for those interested in audit quality, such as audit committee members and investors.

On 16 June 2022, the UK Government announced that it plans to reform Consumer Credit Act.

UK government commits to reform and modernise  the Consumer Credit Act. Plans to modernise the act will cut costs for businesses and simplify rules for consumers. A consultation on the direction of reform is expected to be published by the end of 2022. 

The Consumer Credit Act, which came into force in 1974 and governs billions of credit card purchases and loans each year, is highly prescriptive and increasingly cumbersome and inflexible. 

The government will move much of the Act from statute to sit under the Financial Conduct Authority – enabling the regulator to quickly respond to emerging developments in the consumer credit market, rather than having to amend existing legislation. It will also simplify ambiguous technical terms to make clear to consumers what protections they have - and make it easier and more cost effective for businesses to comply with regulation.

The reforms will allow lenders to provide a wider range of finance whilst maintaining high levels of consumer protection. For example, we will ensure that the information a consumer receives throughout the lending process is easy to understand and will be both screen and print-friendly.

On 20 June 2022, the UK Government published a response to consultation on Regulation of Buy-Now Pay-Later. 

The government has carefully reviewed the responses to the consultation. This document summarises these responses and sets out how the government intends to regulate Buy-Now Pay-Later products. It also seeks further stakeholder views on merchant-provided short-term interest-free credit to enable a final decision on the scope of regulation. Given the complexity of this regulation, the government intends to publish and consult on draft legislation at the end of the year.

The government has analysed the responses to the consultation and used them to develop its policy approach. This document sets out the government’s response, which is that:

• the scope of regulation should capture BNPL and other currently-exempt agreements (which UK Government refers to as short-term interest-free credit (STIFC)) when they are provided by third-party lenders;
• the government is minded to extend this scope to also capture STIFC provided directly by merchants where it is offered online or at a distance, but further stakeholder engagement is necessary to fully understand the scale of the merchant-offered STIFC market;
• the government will allow exemptions for specific agreements where there is limited risk of potential consumer detriment, and where regulation would otherwise adversely impact day-to-day business activities;
• the government’s approach to regulatory controls for agreements that  will be brought into regulation will tailor the application of the Consumer Credit Act 1974 (CCA) to these products, and the elements  of lending practice most linked to potential consumer detriment.

Following the publication of this response, the government will engage with stakeholders to enable a final decision as to whether the scope of regulation should be extended to include STIFC provided directly by merchants online or at a distance. 

On 27 June 2022, the Financial Conduct Authority (FCA) published a letter on FCA supervisory strategy for the debt advice portfolio. 

In the letter the FCA addresses the following: 

• update firms on the key risks we have identified that debt advice firms pose to their customers and the markets in which they operate; 
• outline our expectations of debt advice firms, including how firms should be mitigating these key risks; and
• set out our supervisory strategy and programme of work to ensure that firms meet our expectations, and harms are being appropriately remedied.

The FCA emphasised that its  strategy to reduce harm will prioritise supervisory work in the following areas:

• Insufficient capacity: The impact of coronavirus has amplified potential capacity concerns, highlighting the need to do more to meet the demand for debt advice. The financial hardship arising from the pandemic has been felt by firms and consumers alike, with 16% of UK adults finding themselves over-indebted (October 2020), while firms have faced operational and  business model challenges which have had the potential to affect capacity. The expected increase in demand for debt advice resulting from the pandemic has yet to materialise significantly, however, it is important the sector is prepared for the implications on consumers arising from the rising living costs forecast, as this may require increased capacity for the sector as more consumers find themselves in arrears. The FCA encourages firms to engage with the FCA's offered services such as Innovation pathways and the regulatory sandbox.
• Quality of advice: Good quality advice is fundamental to the integrity and functionality of the sector. As such, firms should ensure that:
  a) all advice given has regard to the best interest of customers, is appropriate to the individual circumstances of the customer and is based on a sufficiently full assessment of the financial circumstances of the customer;
  b) customers receive sufficient information about the available options identified as suitable for the customers' needs;
  c) it explains the reasons why the firm considers the available options suitable and other options unsuitable.
• Customers in vulnerable circumstances: the FCA highlighted that customers in vulnerable circumstances are not always identified and that improvements need to be made in this area.
• Problems outside of our regulatory remit: number of firms are not subject to the FCA supervision yet involved in recommending and/or arranging debt solutions for consumers. Such firms often advertise misleading practices.
• Insufficient prudential resources: The FCA's policy statement on wind down planning should be used to inform firms on how to assess whether they have sufficient resources to wind down in an orderly manner, with minimal adverse impact on customers and the wider markets.
• Data led regulation: the FCA will increase its focus on data, not limited to regulatory returns. 

However, the FCA reminds firms of their obligations to report regulatory returns accurately, in a timely manner, as well as ensure that their standing data is up to date. 

• Raising Standards: the FCA proposes to introduce a new ‘Consumer Duty’, that would set a higher standard of care that firms should provide to consumers in retail financial markets.
• ESG: Firms that lack diversity could be more prone to groupthinking at decision-making levels and may not be able to understand the needs of their customer base, ultimately leading to consumer and market harm. 

All authorised firms in the financial services industry are expected to conduct their activities in a way that treats consumers fairly, provides clear communications to consumers, resolves disputes and complaints fairly, and that complies with FCA Principles and FCA Handbook rules and guidance.

On 28 June 2022,  the Prudential Regulation Authority (PRA) published a conclusion on PRA’s review of the use of the Standardised Initial Margin Methodology (SIMM) Model. 

In this wider context, PRA recently carried out a review of the use of the Standardised Initial Margin Methodology (SIMM) model by large banks with the aims of monitoring its performance during the Covid-19 pandemic market stress period; and, more broadly, assessing model compliance against the regulations governing exchange of margin on non-centrally cleared derivatives.

 Having concluded the review, PRA informs about the conclusions and and the identified issues around:

• SIMM model governance; and 
• firms’ capability to identify and remediate model underperformance on a timely basis. 

In case of the existence of identified risks, PRA expects firms to take the steps indicated in the Annex (where relevant) by December 2022, and then report the findings to their supervisors.

On 9 June 2022, the Bank of England (BoE) published a consultation paper on modifications of derivatives clearing obligation to reflect USD interest rate benchmark reform (amendments to BTS 2015/2205).

The consultation closes on 21 July 2022.

The consultation paper sets out the BoE's proposal to modify the scope of contracts which are subject to the clearing obligation, by adding Overnight Index Swaps (OIS) that reference the Secured Overnight Financing Rate (SOFR) and, subsequently, removing contracts referencing USD Libor. This forms part of the BoE's work in this area to reflect the reforms to interest rate benchmarks and in particular, the discontinuation of the USD Libor benchmark in June 2023.

As the publication of the most widely used USD Libor settings were due to continue until June 2023, and in the interest of international coordination, the BoE did not propose any changes to the clearing obligation in respect of contracts referencing USD Libor and SOFR when consulting on the changes finalised in 2021.

In the light of the changes in market activity observed since then, and aligning with the Commodity Futures Trading Commission’s (CFTC’s) recent announcements, the BoE is now proposing to add OIS contracts referencing SOFR to the clearing obligation and remove contracts referencing USD Libor.

The proposals in the consultation paper would result in further changes to Commission Delegated Regulation (EU) 2015/2205 of 6 August 2015 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to regulatory technical standards on the clearing obligation (hereafter Binding Technical Standards (BTS) 2015/2205), being technical standards made under Article 5(2) of the European Market Infrastructure Regulation (EMIR).

On 7 June 2022, the UK Government published outcome of its consultation for senior managers (SM) and certification regime (CR) for financial market infrastructures (FMIs). 

The consultation document proposed creating an SM&CR for certain FMIs regulated by the Bank of England. The government received 13 responses to the consultation. 

After having reviewed the evidence provided by stakeholders in response to this consultation, the UK government believes that creating an SM&CR for FMIs remains a desirable and effective means of achieving its objectives of enhancing the accountability of senior managers and improving governance arrangements at FMIs. The document sets out how the government intends to implement the proposals outlined in the consultation in due course.

Text

On 10 June 2022, the Financial Conduct Authority (FCA)  published CP22/10  quarterly consultation paper No 36. 

According to the consultation paper, the FCA launched the following consultations on: 

1. A minor amendment to  the Decision Procedure and Penalties manual (DEPP) to reflect changes to the FCA’s decision-making processes implemented on 26 November 2021. The deadline to provide the feedback is 18 July 2022. 
2. Amendments to the Compensation rules relating to the Financial Services Compensation Scheme in relation to funeral plans and to the Funeral Plan: Conduct of Business sourcebook. The deadline to provide the feedback is 27 June 2022. 
3. An update to the annuitant mortality tables in Conduct of Business sourcebook( COBS) to provide better annuity income information to consumers. The deadline to provide the feedback is 18 July 2022. 
4. Changes to row 10(f) of the table in the Interim Prudential sourcebook for Investment Businesses (IPRU-INV )5.8.2R to clarify the items to be deducted as illiquid assets. The deadline to provide the feedback is 18 July 2022. 
5. Updates to the Investment Firms Prudential Regime (IFPR) reporting forms and accompanying guidance. The deadline to provide the feedback is 18 July 2022. 

On 16 June 2022, 

In a report on the Future of Financial Services Regulation, the Committee outlines that while there are real opportunities to improve competitiveness through regulatory reform, competitiveness should not become a primary objective of financial regulators, and it warns against any inappropriate weakening of the UK’s strong regulatory standards.

In the report, the cross-party Committee of MPs reaffirms its commitment to regulatory independence, and warns it will remain alert for any evidence that regulators are coming under undue pressure from the Treasury to inappropriately weaken standards.

The Committee wants to see the regulators take the importance of growing the economy into account and recommends that the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) should each be given a secondary objective to promote long-term economic growth. This objective should reflect the ways in which financial services facilitate economic growth by providing capital, credit and insurance to firms outside of the financial services sector.

While regulators should not be carrying out social policy, or filling the gaps where the Government ought to be stepping in, the Committee recommends that the FCA should have regard for financial inclusion in its rule-making. The FCA should also consider how to improve its engagement with the poorest consumers, and seek data on the issues vulnerable consumers experience directly.

The Committee recommends that the PRA consider what more can be done to level the playing field between smaller banks and insurers, and larger firms which model their own capital requirements. It is the Committee’s view that this could strengthen competition. 

The Committee also encourages the FCA to investigate whether there are opportunities for larger firms to be more experimental with innovative products, for example by setting aside additional capital to compensate consumers if new products turn out not to benefit consumers as anticipated. While this would not be without risks, it is an example of the bold approach which the FCA should be prepared to consider.

On 23 June 2022, the Financial Conduct Authority (FCA) informed about the changes to FCA Firm Reference Numbers (FRNs) and Product Reference Numbers (PRNs). 

The FCA  currently uses six-digit Firm reference Numbers (FRNs) to uniquely identify firms, and six-digit Product Reference Numbers (PRNs) to uniquely identify funds. The FCA will likely to reach the six-digit limit (999999) during 2023, given the volume of applications and notifications it receives.

The FCA is  planning a move to seven-digit FRNs and PRNs for all newly registered firms and funds. Firms that have previously been allocated a six-digit FRN or PRN will keep that number. They won’t change. Seven-digit numbers will start to be allocated for new applications and notifications once our six-digit range is exhausted.

On 24 June 2022, the Financial Conduct Authority (FCA) published Handbook notice No 100. 

This Handbook Notice describes the changes to the FCA Handbook and other material made by the Financial Conduct Authority (FCA) Board under its legislative and other statutory powers on 1 June and 23 June 2022:

• Claims Management (Relevant Connections) Instrument 2022; 
• Funeral Plans (No 4) Instrument 2022; 
• Handbook Administration (No 60) Instrument 2022. 

The Handbook also provides feedback on consultations that will not have a separate policy statement published by the FCA: 

• CP 21/20: Funeral Plans (No 4) Instrument 2022. 

On 24 June 2022, UK Parliament launched consultation on PRA's  ‘Strong and Simple Framework’ proposals. 

The PRA’s Framework seeks to mitigate the ‘complexity problem’ that can arise when the same prudential requirements, including to control risks and hold adequate capital, are applied to all firms regardless of their size and business model.

The draft proposals aim to simplify the prudential framework for smaller – or ‘non-systemic’ - banks and building societies, while maintaining their resilience.

Ahead of an upcoming evidence session, the Sub-Committee requests written evidence on the proposals, the Framework’s scope, and the PRA’s consultation.

Stakeholders are invited to submit evidence on whether the proposals are appropriate to safeguard financial stability and the safety and soundness of individual firms, and whether the Framework sufficiently simplifies the rules for affected firms.

The deadline for response is 11 July 2022. 

On 28 June 2022, the Financial Conduct Authority (FCA) published a policy statement PS22/7 on the FCA regulated fees and levies 2022/23. 

The FCA publishes the 2022/23 periodic regulatory fees and levies for the:  

• Financial Conduct Authority (FCA) 
• Financial Ombudsman Service 
• Money and Pensions Service (referred to in our FEES manual as the Single Financial Guidance Body SFGB) 
• Devolved authorities 
• The Treasury’s expenses in funding the teams that tackle illegal money lending. 

Firms can use our online fees calculator to calculate their individual fees based on the final rates in this PS (https://www.fca.org.uk/firms/calculate-your-annual-fee/fee-calculator). This includes FCA periodic fees and the Financial Ombudsman Service, Money and Pensions Advice Service, Devolved Authorities and illegal money lending levy final rates. The fees calculator will also cover PRA fees and FSCS levies.

The FCA will invoice fee-payers from July 2022 onwards for their 2022/23 periodic fees and levies. 

On 29 June 2022, statutory instruments No. 726 - The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2022 was published  in the UK legislation.

The Order makes amendments to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (“the Order”).

The Financial Guidance and Claims Act 2018 (c. 10) established a single financial guidance body with a number of functions including a pensions guidance function. This body is named by the Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019 (S.I. 2019/383) as the Money and Pensions Service. Paragraphs (2) to (6) of article 2 of this instrument make amendments to allow the Money and Pensions Service to be exempt from carrying on certain regulated activities when providing pensions guidance in specified circumstances. These paragraphs also make amendments to take account of the repealing of provisions in the Financial Services and Markets Act 2000 (c. 8) as a result of the establishment of the Money and Pensions Service.

Article 60H of the Order creates an exemption from regulation for credit agreements where the borrower meets certain requirements. Paragraph (7) of article 2 of this instrument amends article 60H of the Order so that, where an agreement is exempt under article 60H(1) and the borrower is UK resident or treated as present in the UK, the credit agreement is exempt from regulation where the credit agreement is to acquire or retain property rights in land or in an existing or projected building. Paragraph (8) of article 2 of this instrument amends the heading of article 60HA of the Order to clarify that it does not qualify article 60H of the Order.

On 28 June 2022, the Financial Conduct Authority (FCA) published notification form for change in controller in intragroup transactions for target firms authorised under MiFID. 

The form can be used for intragroup transactions (i.e. insertion of new holding companies) when there is no change to the ultimate controllers of authorised firm(s). In case the FCA  deems this form not appropriate, it reserves the right to request use of the full length Section 178 notice for internal reorganisation. 

On 20 June, 2022, the Bank of England (BoE) confirmed a withdrawal of mortgage market affordability test. 

Following its latest review of the mortgage market, the Financial Policy Committee (FPC) has confirmed that it will withdraw its affordability test Recommendation. This will come into effect from 1 August 2022.

Introduced in 2014 the test specifies a stress interest rate for lenders when assessing prospective borrowers’ ability to repay a mortgage. The other Recommendation, the loan to income (LTI) ‘flow limit’, which will not be withdrawn, limits the number of mortgages that can be extended to borrowers at LTI ratios at or greater than 4.5.

The Recommendations were introduced to guard against a loosening in mortgage underwriting standards and a material increase in household indebtedness that could in turn amplify an economic downturn and so increase financial stability risks.

The FPC has regularly reviewed these Recommendations. In its latest review, published in the December 2021 Financial Stability Report, the FPC judged that the LTI flow limit is likely to play a stronger role than the affordability test in guarding against an increase in aggregate household indebtedness and the number of highly indebted households in a scenario of rapidly rising house prices. Therefore the LTI flow limit without the affordability test, but alongside the wider assessment of affordability required by the FCA’s Mortgage Conduct of Business (MCOB) responsible lending rules, ought to deliver the appropriate level of resilience to the UK financial system, but in a simpler, more predictable and more proportionate way.

The FPC consulted in February 2022 on the proposal to withdraw the affordability test and maintain the LTI flow limit, with the majority of responses supportive of the proposals. Lenders do not need to make any changes as a result, as current affordability assessments ought already to be compliant with the FCA’s MCOB framework.

On 8 June 2022, the UK Government published a policy statement on critical third parties to the finance sector. 

Financial services firms and financial market infrastructure firms are increasingly relying on a small number of third parties outside the finance sector for key functions or services, such as cloud-based computing services. These arrangements can come with many benefits but can also create risks.  

The policy statement  sets out HM Treasury’s approach to mitigating the risks posed by such ‘critical’ third parties to the UK finance sector.

The government intends to legislate for this regime when parliamentary time allows.

The financial regulators’ joint Discussion Paper will be published shortly after such legislation is introduced. Following Royal Assent, the financial regulators anticipate publishing a further Consultation Paper on their proposed rules, building on feedback to their Discussion Paper and based on their proposed, new statutory powers.

Following the finalisation of the regulators’ rules, HM Treasury will then expect to begin designating the first critical third parties under this new regime.

On 28 June 2022, 

These Regulations bring into force provisions in Parts 1, 3 and 5 of the Pension Schemes Act 2021 (c. 1) (“the Act”). They are the sixth commencement regulations to be made under the Act. 

These Regulations also contain a transitional provision in relation to section 3 of the Act (qualifying schemes).

Regulation 2 brings the provisions it lists into force on the day after the day these Regulations are made.

Regulation 2(a) and (b) brings into force section 111(2)(b) of the Act (inspection of premises), to the extent that it adds section 73(2)(db) of the Pensions Act 2004 (c. 35) to the provisions within section 73(2)(e) of that Act (inspection of premises). Section 111(2)(b) of the Act amends section 72(2)(e) of the Pensions Act 2004. 

The amendment expands the list of occupational pensions provisions in force in Northern Ireland the investigation of compliance with which is a permitted purpose for a person appointed by the Pensions Regulator (“the Regulator”) to inspect premises liable to inspection.

Regulation 2(c) brings into force the remainder of section 116 of the Act (minor and consequential amendments), except insofar as it inserts a reference to Part 1 of the Act into section 80 of the Pensions Act 2004 (offences of providing false or misleading information). Regulation 2(d) brings into force paragraphs 13 to 20 of Schedule 7 to the Act (the Pensions Regulator: minor and consequential amendments).

Section 116 of the Act introduces Schedule 7 to the Act, which contains minor and consequential amendments to primary legislation in consequence of the powers conferred on the Regulator by Part 3 of the Act (the Pensions Regulator).

Paragraphs 13 and 14 of Schedule 7 amend the Pensions Act 2004. Paragraph 13 adds further powers to the list in Part 4 of Schedule 1 to the Pensions Act 2004 (proceedings and delegation etc) of the Regulator’s powers in relation to which the Secretary of State can make regulations. Paragraph 14 adds a further power to the list in Part 4 of Schedule 2 to the Pensions Act 2004 (functions under this Act) of reserved regulatory functions exercisable by the Determinations Panel on behalf of the Regulator.

Paragraphs 15 to 17 of Schedule 7 amend the Pensions Act 2008 (c. 30). The amendments confer powers on the Regulator to issue penalty notices in the event of a failure to comply with a notice issued under section 72A of the Pensions Act 2004 (interviews) relating to the Regulator’s functions under Part 1 of the Pensions Act 2008 (pension scheme membership for jobholders).

Paragraphs 18 to 20 of Schedule 7 amend the Pension Schemes Act 2017 (c. 17). The amendments confer powers on the Regulator to issue penalty notices in the event of a failure to comply with a notice issued under section 72A of the Pensions Act 2004 relating to the Regulator’s functions under Part 1 of the Pension Schemes Act 2017 (Master Trusts).

Regulation 3 brings the provisions it lists into force on 1st August 2022. Regulation 3(a) brings into force the remainder of Part 1 of the Act (collective money purchase benefits), except paragraph 19 of Schedule 3. Paragraph 19 of Schedule 3 amends section 291 of the Pensions Act 2004 which has been repealed. Part 1 of the Act sets out the legislative framework to establish and operate collective money purchase pension schemes.

Regulation 3(b), (c) and (d) brings into force provisions of Part 3 of the Act which relate to the regime for collective money purchase schemes contained in Part 1 of the Act. Regulation 3(e) brings most of section 128 of the Act (Pension Schemes Act 2015: repeals) into force. Section 128 repeals uncommenced provisions in Parts 1 to 3 of the Pension Schemes Act 2015 (c. 8) concerning collective benefits, the categorisation of pension schemes and related matters. Regulation 3(e) excludes the repeal of section 44 of the Pension Schemes Act 2015 (removal of requirement to maintain register of independent trustees) from the commencement of section 128 of the Act. Section 44 of the Pension Schemes Act 2015 repeals the requirement for the Pensions Regulator to maintain a list of independent trustees which satisfy prescribed requirements.

Regulation 4 makes transitional provision. Regulation 4(1) provides that section 3 of the Act does not apply to a pension scheme which was established before 1st August 2022. Section 3 sets out the conditions for a pension scheme to be a qualifying scheme under the regime for collective money purchase benefits. Regulation 4(2) provides for a limited exception to regulation 4(1), in the case of sections of a pension scheme established before 1st August 2022 where certain conditions are satisfied.

On 7 June 2022, UK Government published a  letter on Directive on corporate sustainability due diligence. 

In the letter UK Government stressed the following: 

• UK Government keeps under review policy approaches involving corporate due diligence, it currently has no plans to replicate the EU’s cross cutting proposal in the UK’s framework of corporate governance and reporting. 
• The UK Government supports voluntary due diligence approaches by UK businesses to  protection of human rights and the environment across their operations and supply  relationships.
• The Government does not intend to replicate the European Commission’s proposal for cross  cutting mandatory due diligence in the UK’s framework of corporate governance and reporting. 
• Large UK companies also already publish annual transparency in supply chain statements  according to the world-leading Modern Slavery Act, to show steps they have taken to  counter human exploitation across their supply networks.
• It is not yet clear how many UK companies will fall directly within the scope of the European Commission’s proposal.

On 23June 2022, the Bank of England (BoE) published its climate-related financial disclosure 2022. 

BoE's  approach to climate change is to play a leading role, through its policies and operations, in ensuring the financial system, the macroeconomy, and the BoE itself, are resilient to the risks from climate change and supportive of the transition to a net-zero emissions economy. In doing so, the BoE helps to advance its mission to promote the good of the people of the United Kingdom by maintaining monetary and financial stability.

This climate disclosure sets out the work the BoE does on climate change and reports on the climate risks and emissions from its own physical and financial operations. Over the past year, the BoE published the results of its Climate Biennial Exploratory Scenario (CBES) exercise, reported on the progress banks and insurers have made against its climate-related supervisory expectations, set out initial views on the relationship between climate change and regulatory capital requirements for banks and insurers, and published a comprehensive framework to green its corporate bond holdings. The emissions from the Bank’s physical and financial operations have continued to reduce as a result of actions it has taken and lower carbon usage in the UK economy.

The BoE has committed to publish annual climate disclosures. This is the third climate disclosure the BoE has produced, setting out the key climate-related developments in the year to February 2022. It builds on the Bank’s second climate disclosure by reflecting: the progress the Bank has made on its climate work plan over the past year; advances in climate data and modelling applied to its financial asset portfolios; progress on reducing emissions from its physical operations; and progress in the domestic and international climate agenda. 

In response to these developments, the BoE has refreshed the priorities that underpin its climate strategy. Climate change and the transition to a net-zero economy are relevant to the BoE's mission to promote the good of the people of the United Kingdom by maintaining monetary and financial stability. The physical effects of climate change and the transition to a net-zero economy can create financial risks and economic consequences, which can affect: the safety and soundness of the firms the BoE regulates; the stability of the financial system; and the economic outlook.

To respond to the broad range of climate-related financial risks in an effective and strategic manner, the BoE has designated Climate Change as one of its seven strategic priorities covering the four-year period to February 2024. In support of this the BoE will continue to fulfil its obligations under its remits and mandate, while focussing its efforts on where it can make the biggest contribution domestically and internationally.

As with the BoE's previous climate disclosures, this year’s disclosure follows the structure recommended by the Financial Stability Board’s (FSB’s) Task Force on Climate-related Financial Disclosures (TCFD), covering four key elements: governance; strategy; risk management; and metrics and targets.

On 29 June 2022, the Financial Conduct Authority (FCA) published Primary Market Bulletin 41.

In this edition, the FCA elaborates on its response to feedback received to the discussion chapter included in CP21/18: Enhancing climate-related disclosures by standard listed companies and seeking views on ESG topics in capital markets. In particular, the FCA covers important issues related to ESG-labelled debt instruments.

On 29 June 2022, the Financial Conduct Authority (FCA) published a feedback statement FS22/4 on ESG integration in UK capital markets. 

The feedback statement summarises feedback to the FCA's discussion chapter (in CP21/18) on environmental, social and governance (ESG) integration in UK capital markets and set out the FCA's potential next steps.

The FCA sought views on: 

• issues related to green, social, sustainability and sustainability-linked debt instruments (ESG-labelled debt instruments), including:
  a) prospectus and ‘use of proceeds’ (UoP) bond frameworks
  b) the role of verifiers and second party opinion (SPO) providers 
• ESG data and rating providers. 

The feedback statement focuses on the following outcomes – which are directly relevant to the FCA's strategic and operational objectives:

• ESG?labelled debt instruments. Market participants must be able to trust the claims made by issuers regarding the sustainability characteristics of green and other ESG labelled financial instruments and to rely on them to perform as they expect.
• ESG data and rating providers. As industry participants more fully integrate ESG into their activities and expand their ESG focussed product offerings, they are increasingly reliant on third party ESG data and rating services. These services are increasingly embedded within investment processes (including mandates and benchmark indices), directly influencing capital allocation. To avoid potential for harm to markets and, ultimately, consumers, we consider that ESG data and rating services should be transparent, well governed, independent, objective, and based on reliable and systematic methodologies and processes. Where ESG data and rating services aim to measure specific ESG attributes, users of those services should be able to clearly interpret their objectives and access sufficient information to be able to assess whether their outputs are fit for purpose. The FCA expects this to lead, in turn, to better information for consumers and investors to make their investment decisions, and to more effective competition.

The FCA received 50 responses to the discussion chapter included in CP21/18. The FCA summarises the feedback below in two separate sections:

1. Issues related to ESG?labelled debt instruments
2. ESG data and rating providers

On 10 June 2022, the US Commodity Futures Trading Commission (CFTC) issued an advisory that provides instructions for notifying staff when a swap execution facility (SEF), designated contract market (DCM), or reporting counterparty determines that it is unable to timely correct a swap data error.

CFTC Regulations 45.14(a) and 43.3(e) require SEFs, DCMs, and reporting counterparties to correct swap data errors as soon as technologically practicable following discovery and, in all cases, within seven business days following discovery. A SEF, DCM, or reporting counterparty must notify CFTC if it determines that it will not timely correct a swap data error. The advisory provides instructions for submitting error correction notifications. The advisory also appends a Swap Data Error Correction Notification Form that enumerates information sufficient to provide an initial assessment of the scope of the error and provides a SEF, DCM, or reporting counterparty an opportunity to present an initial remediation plan. 

Additionally, through the advisory, CFTC staff aims to highlight a specific swap data reporting error—swaps that erroneously appear in swap data repositories as open swaps, despite having been terminated—and notify market participants of the significant scope of this error; remind market participants of ongoing obligations to correct swap data errors; and clearly state the importance CFTC places on correcting such errors.

On 23 June 2022, the U.S. Securities and Exchange Commission (SEC) adopted amendments to require certain documents filed by investment advisers, institutional investment managers, and certain other entities to be filed or submitted electronically. The amendments also make technical amendments to modernize Form 13F and enhance the information provided. The amendments are intended to promote efficiency, transparency, and operational resiliency by modernizing how information is filed or submitted to the Commission and disclosed to the public. Electronic filings will be more readily accessible to the public and available on websites in easily searchable formats.

Electronic filing capabilities have helped address logistical and operational issues raised by the spread of COVID-19. Expanding electronic submission will allow the Commission and filers to navigate more effectively any future disruptive events that make the paper submission process unnecessarily burdensome, impractical, or unavailable.

With the exception of the amendments to Form 13F, the new rules and form amendments will be effective 60 days after publication in the Federal Register. The amendments to Form 13F will be effective on 3 January 2023. 

On 27 June 2022, the Federal Reserve System (FED) announced the final timeline and implementation details for the adoption of a new Fedwire Funds Service message format. The final details are broadly similar to the proposal issued last year.

The Board confirmed that the new message format, ISO 20022, will be adopted on a single day as proposed last year, rather than in three separate phases. The Board also provided a new timeline for implementation based on review of public comments, with the new message format to be adopted on March 10, 2025. In addition, the Board provided further information regarding customer testing and other implementation details.

The Fedwire Funds Service is a real-time gross settlement system owned and operated by the Federal Reserve Banks, which enables businesses and financial institutions to transfer funds quickly and securely. Adopting the new message format for the Fedwire Funds Service will allow for enhanced efficiency of both domestic and cross-border payments due to greater interoperability among global payment systems, and a richer set of payment data that may help banks and other entities comply with sanctions and anti-money laundering requirements. The new message format is an industry standard that many global payment and messaging systems are adopting.

The new message format was developed by the International Organization for Standardization, which is an independent, non-governmental organization that publishes standards for a broad range of industries.

On 3 June 2022, the U.S. Securities and Exchange Commission (SEC) announced that it adopted amendments to require certain forms that currently are permitted to be filed or submitted in paper format to be filed or submitted electronically. The amendments also amend certain forms to require structured data reporting and remove outdated references. The amendments are intended to promote efficiency, transparency, and operational resiliency by modernizing how information is filed or submitted to the Commission and disclosed to the public. Furthermore, to benefit investors and the public, electronic filings will be more readily accessible to the public and available on the SEC website in easily searchable formats.

Electronic filing capabilities have helped address logistical and operational issues raised by the spread of COVID-19. Expanding electronic submission will allow the Commission and filers to navigate more effectively any future disruptive events that make the paper submission process unnecessarily burdensome, impractical, or unavailable.

The amendments will be published on SEC.gov and in the Federal Register and will be effective 30 days after publication in the Federal Register. The Commission is providing the following transition periods to provide filers with adequate time to prepare to submit these documents electronically in accordance with the EDGAR Filer Manual, including applying for the necessary filer codes on EDGAR:

• Six months after the effective date of the amendments for filers to submit their “glossy” annual reports to security holders electronically in accordance with the EDGAR Filer Manual and, other than for Form 144, for paper filers who would be first-time electronic filers; 
• Six months after the date of publication in the Federal Register of the Commission release that adopts the version of the EDGAR Filer Manual addressing updates to Form 144 for filing Form 144 electronically on EDGAR; and
• Three years after the effective date of the amendments for filers to submit the financial statements and accompanying schedules to the financial statements required by Form 11-K in the Inline XBRL structured data language.

On 21 June 2022, the U.S. Securities and Exchange Commission (SEC) adopted amendments to Volume II of the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) Filer Manual (“Filer Manual”) and related rules and forms. The EDGAR system was upgraded on June 21, 2022.

On 3 June 2022, the Comissão de Valores Mobiliários (CVM) published 16 new Resolutions:

• CVM Resolution 117:  Approves the consolidation of technical pronouncement CPC 09 of the Accounting Pronouncements Committee - CPC, which deals with the statement of added value. 
• CVM Resolution 118: Approves the Consolidation of technical pronouncement CPC 18(R2) of the Accounting Pronouncements Committee - CPC, which deals with investment in affiliates, subsidiaries and jointly controlled enterprise.
• CVM Resolution 119: Approves the Consolidation of technical pronouncement CPC 38 of the Accounting Pronouncements Committee - CPC, which deals with Financial Instruments: Recognition and Measurement.
• CVM Resolution 120: Approves the Consolidation of technical pronouncement CPC 39 of the Accounting Pronouncements Committee - CPC, which deals with Financial Instruments: Presentation. 
• CVM Resolution 121: Approves the Consolidation of technical pronouncement CPC 40 (R1) of the Accounting Pronouncements Committee - CPC, which deals with Financial Instruments: Evidence.
• CVM Resolution 122: Approves the Consolidation of Technical Interpretation ICPC 01 (R1) of the Accounting Pronouncements Committee - CPC, which deals with concession contracts. 
• CVM Resolution 123: Approves the Consolidation of Technical Interpretation ICPC 07 of the Accounting Pronouncements Committee - CPC, which deals with the distribution of profits in natura.
• CVM Resolution 124: Approves the Consolidation of Technical Interpretation ICPC 09 (R2) of the Accounting Pronouncements Committee - CPC, which deals with individual financial statements, separate statements, consolidated statements and application of the equity method.
• CVM Resolution 125: Approves the Consolidation of Technical Interpretation ICPC 12 of the Accounting Pronouncements Committee - CPC, which deals with changes in liabilities by deactivation, restoration and other similar liabilities.
• CVM Resolution 126: Approves the Consolidation of Technical Interpretation ICPC 13 of the Accounting Pronouncements Committee - CPC, which deals with rights to participation stemming from deactivation, restoration and environmental rehabilitation funds.
• CVM Resolution 127: Approves the Consolidation of Technical Interpretation ICPC 16 of the Accounting Pronouncements Committee - CPC, which deals with the extinction of financial liabilities with equity instruments.
• CVM Resolution 128: Approves the Consolidation of Technical Interpretation ICPC 17 of the Accounting Pronouncements Committee - CPC, which deals with concession contracts: evidence.
• CVM Resolution 129: Approves the Consolidation of Technical Interpretation ICPC 18 of the Accounting Pronouncements Committee - CPC, which deals with costs of removal of barren (stripping) of surface mine in the production phase.
• CVM Resolution 130: Approves the Consolidation of Technical Interpretation ICPC 21 of the Accounting Pronouncements Committee - CPC, which deals with transaction in foreign currency and advance. 
• CVM Resolution 131: Approves the Consolidation of the Technical Guidance OCPC 01 (R1) of the Accounting Pronouncements Committee, which deals with real estate development entities.
• CVM Resolution 132: Approves the Consolidation of the OCPC 05 Technical Guidance of the Accounting Pronouncements Committee, which deals with concession contracts.

On 15 June 2022, the Comissão de Valores Mobiliários (CVM) publishes 19 Resolutions:

• CVM Resolution 136: ratifies the Technical Pronouncement CPC 00(R2) of the Accounting Pronouncements Committee - CPC, which deals with the Conceptual Structure for Financial Report.
• CVM Resolution 137: ratifies technical pronouncement CPC 08(R1) of the Accounting Pronouncements Committee -CPC, which deals with transaction costs and premiums in the issuance of securities.
• CVM Resolution 138: ratifies the Technical Pronouncement CPC 12 of the Accounting Pronouncements Committee - CPC, which deals with adjustment to present value.
• CVM Resolution 139: ratifies the Technical Pronouncement CPC 42 of the Accounting Pronouncements Committee - CPC, which deals with accounting in hyperinflationary economics.
• CVM Resolution 140: ratifies technical pronouncement CPC 43(R1) of the Accounting Pronouncements Committee - CPC, which deals with the initial adoption of Technical Pronouncements CPC 15 to 41.
• CVM Resolution 141: ratifies the Technical Pronouncement CPC 44 of the Accounting Pronouncements Committee - CPC, which deals with combined statements.
• CVM Resolution 142: ratifies the Technical Interpretation ICPC 06 of the Accounting Pronouncements Committee - CPC, which deals with net investment hedge in operation abroad.
• CVM Resolution 143: ratifies the Technical Interpretation ICPC 08 (R1) of the Accounting Pronouncements Committee - CPC, which deals with the accounting of the proposal for payment of dividends.
• CVM Resolution 144: ratifies the Technical Interpretation ICPC 10 of the Accounting Pronouncements Committee - CPC, which deals with the initial application to fixed assets and investment property of Technical Pronouncements CPCs 27, 28, 37 and 43.
• CVM Resolution 145: ratifies the Technical Interpretation ICPC 15 of the Accounting Pronouncements Committee - CPC, which deals with liabilities arising from participation in a specific market - waste of electronic equipment.
• CVM Resolution 146: ratifies the Technical Interpretation ICPC 19 of the Accounting Pronouncements Committee - CPC, which deals with taxes.
• CVM Resolution 147: ratifies the ICPC 20 Technical Interpretation of the Accounting Pronouncements Committee - CPC, which deals with defined benefit asset limit, minimum funding requirements and their interaction.
• CVM Resolution 148: ratifies the Technical Interpretation ICPC 22 of the Accounting Pronouncements Committee – CPC, which deals with uncertainty about the treatment of taxes on profit.
• CVM Resolution 149: ratifies the Technical Interpretation ICPC 23 of the Accounting Pronouncements Committee - CPC, which deals with the application of the monetary update approach provided for in Technical Pronouncement CPC 42.
• CVM Resolution 150: ratifies the OCPC 04 Technical Guidance of the Accounting Pronouncements Committee, which deals with the application of the ICPC 02 Technical Interpretation to Brazilian real estate development entities.
• CVM Resolution 151: ratifies the OCPC 06 Technical Guidance of the Accounting Pronouncements Committee, which deals with the presentation of pro forma financial information.
• CVM Resolution 152: ratifies the OCPC 07 Technical Guidance of the Accounting Pronouncements Committee, which deals with evidence in the disclosure of accounting and financial reports of general purpose.
• CVM Resolution 153: ratifies the OCPC 08 Technical Guidance of the Accounting Pronouncements Committee, which deals with the recognition of certain assets and liabilities in the general purpose accounting and financial reports of electricity distributors issued in accordance with Brazilian and international accounting standards.
• CVM Resolution 154: repeals the normative acts that approved the Revisions of Technical Pronouncements, Interpretations and Guidelines of the Accounting Pronouncements Committee - CPC, as part of the process of revision and consolidation of normative acts, as provided for in Decree No. 10,139, of November 28, 2019.

On 23 June 2022, the Comissão de Valores Mobiliários (CVM) issued three new Resolutions related to Decree 10.139/19 on accounting:

• Resolution 155 - preparation and disclosure of consolidated financial statements, based on the international accounting standard issued by the International Accounting Standards Board
• Resolution 156 - voluntary disclosure of non-accounting information called LAJIDA and LAJIR
• Resolution 157 - procedures to be observed for the preparation and disclosure of financial statements in currency of constant purchasing capacity, when prepared by publicly-held companies, to meet the fundamental qualitative characteristics of relevance and reliable representation of useful financial information, as provided in the Conceptual Structure for Financial Report.

On 9 June 2022, the Comissão de Valores Mobiliários (CVM) launched research to understand how the investor public accesses information related to the financial statements of publicly held companies, as well as their ways of use.

The material will support the study of Regulatory Impact Analysis (AIR) of the Advisory Office of Economic Analysis and Risk Management (ASA / CVM) on legal framework of startups, which is part of the Regulatory Agenda 2022 of the CVM.

On 1 June 2022, the Comissão de Valores Mobiliários (CVM) approved the request to amend the beginning of the term of CVM 877, which will move from 1/6/2022 to 1/9/2022.

It is worth remembering that CVM Resolution 877 grants to Start Me Up Crowdfunding Systems for Collaborative Investment Ltda. SMU authorizations to carry out activities regulated by cvm, under the Regulatory Sandbox, until 31/8/2023.

The request was based on the need for more time to complete the development and integration of technology systems, as well as finalize the documents to be validated by CVM.

On 10 June 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) launched public hearing on the new cybersecurity rules, identification of sustainable FIDCs and FICs.

New rules for the identification of FIDCs (Investment Funds in Credit Rights) and sustainable FICs (quota funds) and for the registration of transactions negotiated by the funds entered a public hearing on 13 July. Cybersecurity standards have also been updated.

• Cybersecurity: The code proposes that financial institutions should implement and maintain, in a written document, rules and procedures about the personal data of customers to whom institutions have access. The file should also include the actions taken to protect the confidentiality of the information and the rules applicable to employees for the management of such data.
• Sustainable FIDCs: In line with the rules for identifying sustainable equity and fixed income funds, the code provides for the recognition of FIDCs. Those who have sustainable investment as an investment objective/thesis will be able to use the term IS (Sustainable Investment) in the name. Those who integrate the ESG aspects in their management process, but do not have sustainable investment as their main purpose, will not be able to use this identification. Still, they will have a differentiation in sales materials intended for investors.

On 28 June 2022, the Comissão de Valores Mobiliários (CVM) released the Annual Risk-Based Supervision Report (SBR) for the year 2021. The Report objectively presents the supervisory actions carried out to treat the 13 risks and respective events considered priority by the Governance and Risk Management Committee of the CVM.

The SBR 2021 Report points to a reduction in the level of two risk events:

• SIN 27: Deficiencies in B3's role in the self-regulation of real estate investment funds – whose level of risk has been reduced from 105 to 24 and will no longer be considered a priority.
• SRE 25: Irregularities and defects in conducting public offers of distribution via crowdfunding – reduced from 128 to 72.

On 29 June 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) informed that the SSM - Market Supervision System has a new functionality to facilitate the exchange of information between the Association and the institutions that follow our codes. As of 1 June, the system automatically issues a reminder to those who need to update or send documents.

In the first phase, the institutions learned the new functionality in June, on an experimental basis. From the second half of July, notifications will be sent monthly. 

On 20 June 2022, the Comissão de Valores Mobiliários (CVM) published CVM/SIN Circular Letter 6/2022 - interpretation of a standard that regulates the functioning of index funds.

The objective is to clarify about Article 14, II, of CVM Instruction 359, which allows the administrator of Market Index Investment Funds to take out or make loans, with the light of the provisions of the arts. 12 and 60 of the same standard.

According to the technical area, this seal seeks to ensure that these funds replicate the variations and profitability of the reference index, without, therefore, a directional position contrary to any of the assets that are components of the index.

However, SIN clarifies its interpretation that loans of assets made by index funds, such as borrowers, are possible, which have the exceptional objective of avoiding failures of delivery of assets before settlement and clearing chambers maintained by securities markets regulated by CVM. In this situation, there is no fence.

On 24 June 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) informed that institutions that have managed portfolios can participate in a pilot project to register the portfolios before the rules are effective. 

Among the data that should be reported are: portfolio target audience, investor segment, date of first contribution, status (active, inactive or closed portfolio), model (standardized or customized strategy), portfolio and investor risk profiles, management fee value, performance rate, profitability.

Participation in the pilot project is a way for institutions to evaluate the system and the impacts of new procedures on their routines.

On 28 June 2022, the Comissão de Valores Mobiliários (CVM) published CVM Resolution 158 promoting one-off changes in new investment crowdfunding rules.

The requirements and obligations relating to the performance of crowdfunding platforms as intermediaries of securities buying and selling transactions remain applicable, and this option shall be informed in section 3 of Annex E, which provides for essential information on the public offering.

In order to grant a longer period for the adaptation of the platforms, Article 53 provides that the obligation to establish ownership control and corporate participation or bookkeeping, as the case may be, pursuant to Article 3, V, will only be required in the event of securities subject to public offerings initiated after 90 days from the entry into force of CVM Resolution 88.

A single paragraph has also been included to determine that during this period of 90 days and as long as the obligation of Article 3, V, is not observed:

a) the maximum target amount of funding provided for in Art. 3, I, may not exceed R$ 5,000,000.00; and

b) subsequent transactions with securities are not permitted.

On 10 June 2022, the Comissão de Valores Mobiliários (CVM) published CVM Resolutions 133, 134 and 135 modernizing rules on organized markets and better execution of client orders.

CVM Resolutions 135 and 134 stem from the SDM 9/2019 Public Hearing and have as their main objective: 

• give new wording to CVM Instruction 461, introducing provisions in the regulations on the functioning of regulated securities markets and regarding the constitution, organization and functioning of organized market management entities; and 
• amend CVM Resolution 35 to provide for the best execution of orders in the context of competition between best execution environments. 

The edition of CVM Resolution 133 results exclusively from the process of revision and consolidation of CVM Instruction 384, required by Decree 10,139. The standard provides for the activity of market trainer for securities in the organized market, and specific adjustments have been made, which did not result in changes in merit. 

On 23 June 2022, the Comissão de Valores Mobiliários (CVM) published the results of the Regulatory Impact Analysis study, regarding regulatory criteria for the transfer of investments between brokers.

The study's recommendations:

• Change of the request for the custodian of destination, following what was observed in the regulation of other jurisdictions and segments, as well as in the result of the investor survey and previous study on investor registration.
• Transfer request via a logged area of the investor/participant, allowing the client to select within his portfolio the assets that will be the subject of the transfer.
• Availability of the progress of the request to the investor, with date and protocol number of the request received and the flow (highlighted point in the research), since it would create greater speed in the communication of errors.
• Redefinition of deadlines for transfer of different assets, being:
  - private fixed income securities: up to 3 working days;
  - investment funds: up to 7 working days;
  - Stock Transfer Order (OTA): up to 15 business days.
• Establishment of the depositary center as responsible for the information on single price and date of purchase of fixed income assets, which enables the automation of the process without the exchange of information between brokers.

On 2 June  2022, the Brazilian Financial and Capital Markets Association (ANBIMA) updated on Pre-Matching Platform.

The Pre-Matching Platform includes definitive full-term operations. Developed by Selic (Special Settlement and Custody System), the platform allows financial market institutions to quickly and securely share data on transactions before they are registered in the system. 

On 21 June 2022, the Comissão de Valores Mobiliários (CVM) published CVM/SSE Circular Letter 1/2022 - new dynamics of sending information to securitization companies.

From 7/1/2022, the sending of periodic and any information regarding the securitization company itself and its issues not subject to separate equity must be carried out exclusively by the Fundos.NET. The change meets the requirements of CVM Resolution 60.

The new forms templates of Monthly Report of Certificates of Real Estate Receivables (CRI) and Agribusiness Receivables (CRA) will also be sent by the Fundos.NET. Then, the first delivery of these documents will take place within July 2022.

It is important to note that the securitization company that maintains its registration as a publicly held company category A or B (pursuant to CVM Resolution 80), should additionally continue sending the documents referring to this standard by the Empresas.Net.

On 8 June 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) published ESG Guide (English version).

The publication helps managers understand the rules for identifying sustainable funds, which are part of self-regulation and came into force in January.

Several cases and negative and positive examples that can happen in the market are presented. The guidelines apply both to funds that have sustainable investment thesis, the so-called IS (Sustainable Investment) funds, and to those that do not have this objective, but consider esg issues in their investment analysis process. With the material, the distinctions between these funds become even more evident.

The guide also provides explanations of the terms most used by the market, in order to help build consensus and references of international ESG initiatives that can inspire the local market.

On 14 June 2022, the Organization for Economic Cooperation and Development (OECD) and the Brazilian Securities and Exchange Commission (CVM) informed that they will publish the report Sustainability Policies and Practices for Corporate Governance in Brazil. The document is the result of a project developed by the OECD, with the CVM, which aims to support the development of the regulation of the Brazilian capital market related to the sustainability risks faced by listed companies.

On 14 June 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) summarized on the public hearing on the recognition of fixed income funds and actions that consider ESG criteria.

FIDCs that have sustainable investment as an investment objective/thesis may use the term IS (Sustainable Investment) in the name. Those who integrate the ESG aspects in their management process, but do not have sustainable investment as their main purpose, will not be able to use this identification. Still, they will have a differentiation in the dissemination materials.

Managers of FIDC IS and funds that integrate sustainability issues should also follow some requirements for ESG commitment, diligence and transparency of assets. One of them is the dissemination of policies and actions carried out to include ESG factors in the fund's management activity.

On 29 June 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) reminded on deadlines that sustainable funds must comply with the new rules.

Financial institutions with fixed income funds and/or sustainable actions have until the 4th July to fall within our rules for identifying these products. The requirements, which are part of the Third Party Resource Management Code, bring criteria for identifying sustainable funds.

Those who have sustainability as their purpose will be able to use the suffix IS, sustainable investment, in the name. Funds that integrate ESG (environmental, social and governance) issues but do not have sustainability as their objective will not have this distinction and will not be able to use terms related to the ESG theme in the name. However, they may include a phrase that informs this condition in their sales materials intended for investors.

Funds that do not prove to be sustainable should exclude any term that referred to it from the name, such as ESG, ASG, green, impact, among others.

On 22 June 2022, the Superintendencia Financiera de Colombia (SFC) announced about the signed memorandum on cooperation and exchange of information regarding AML matters between the Financial Crimes Enforcement Network (US) (FinCEN) and SFC. 

The cooperation agreement is related to the supervisory responsibilities that each entity has in this area in order to strengthen the AML/CFT prevention ecosystem in the United States and Colombia. 

The agreement will allow the authorities to continue promoting - within the scope of their competencies - the detection, protection and compliance with legal requirements with respect to ML/FT and thus ensure the integrity of the financial systems in both jurisdictions.

Additionally, this memorandum will facilitate the assistance and exchange of information related to each authority's ML/FT supervisory responsibilities and contemplates institutional cooperation actions in terms of technological and analytical resources to contribute to the fulfillment of the parties' mission objectives. 

Under this agreement, FinCEN and the SFC may also share aspects related to their own management, such as findings, report statistics, best practices and other data related to ML/FT prevention, exclusively for supervisory purposes and in application of the respective legal frameworks.

On 22 June 2022, he Superintendencia Financiera de Colombia (SFC) published results of the Financial System Coordination and Monitoring Committee session No 82. 

The members of the Committee concluded that in recent years the Colombian banking system has shown  an equity capacity not only to face the exogenous risks faced by the financial system, but also to maintain continuity in the supply of products and services to companies and households, according to the demand of these agents.

The Committee considered it prudent to closely monitor the growth trends of the consumer portfolio, household indebtedness, as well as the industry's liquidity flow, in order to anticipate phenomena that may impact financial stability and, if necessary, adopt the necessary measures in an articulated manner.

On 30 June 2022, Banco de la República announced about the increase of interest rate by 150 basis points. 

The Board of Directors of Banco de la República took into account the following elements:

• The annual inflation rate remains high. Inflation expectations continued to rise and are significantly above the 3% target in the policy horizon.
• Economic growth surprised to the upside in the first quarter thanks to the strengthening of domestic demand driven by household consumption. The consumer portfolio registered an annual growth of 22.1% in mid-June. 
• The sustained recovery of GDP continues to favor the dynamism of the labor market, which has been showing sustained growth in employment. 
• The current account of the balance of payments showed a deficit of 6.4% as a proportion of quarterly GDP in the first quarter of the year, higher than the deficit of 4.1% of GDP for the same period of the previous year. This excess demand occurs in an environment in which external financing becomes more expensive due to the tightening of international financial conditions.

On 21 June 2022, Banco de la República published an article on criteria for environmental, social and governance sustainability in the investment of international reserves. 

In recent years, the practice of considering environmental, social and corporate governance (ESG) factors in making investment decisions has become widespread. Although the term ESG is used interchangeably with sustainable or responsible investing, it denotes an investment approach in which the analysis goes beyond using traditional financial metrics.

The financial system's interest in sustainable investment has increased significantly because ESG issues can manifest themselves in market, credit, legal and reputational risks if an issuer does not manage them properly. The occurrence of environmental disasters and the transition to a low-carbon economy, as well as the eventuality of social controversies and governance deficiencies within a firm, can affect not only the ability of an issuer to receive financing and repay its debts, but also investors' perception of their ability to generate returns in the long term, affecting the security and profitability of their assets.

For two decades, the practice of considering ESG criteria in investment management has gained acceptance among institutional investors. In the central banking community there is a growing interest in adopting sustainable investment policies in the management of international reserves. 

On 30 June 2022, the International Swaps and Derivatives Association (ISDA) updated the OTC Derivatives Compliance Calendar.

ISDA has updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.