On 5 July 2022, the European Parliament adopted the resolution of 5 July 2022 on the proposal for a regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector (Digital Markets Act) and the European Parliament legislative resolution of 5 July 2022 on the proposal for a regulation of the European Parliament and of the Council on a Single Market For Digital Services (Digital Services Act) and amending Directive 2000/31/EC.

The Digital Services Act (DSA) sets clear obligations for digital service providers, such as social media or marketplaces, to tackle the spread of illegal content, online disinformation and other societal risks. These requirements are proportionate to the size and risks platforms pose to society.

The new obligations include:

• New measures to counter illegal content online and obligations for platforms to react quickly, while respecting fundamental rights, including the freedom of expression and data protection;
• Strengthened traceability and checks on traders in online marketplaces to ensure products and services are safe; including efforts to perform random checks on whether illegal content resurfaces;
• Increased transparency and accountability of platforms, for example by providing clear information on content moderation or the use of algorithms for recommending content (so-called recommender systems); users will be able to challenge content moderation decisions;
• Bans on misleading practices and certain types of targeted advertising, such as those targeting children and ads based on sensitive data. The so-called “dark patterns” and misleading practices aimed at manipulating users’ choices will also be prohibited.

Very large online platforms and search engines (with 45 million or more monthly users), which present the highest risk, will have to comply with stricter obligations, enforced by the Commission. These include preventing systemic risks (such as the dissemination of illegal content, adverse effects on fundamental rights, on electoral processes and on gender-based violence or mental health) and being subject to independent audits. These platforms will also have to provide users with the choice to not receive recommendations based on profiling. They will also have to facilitate access to their data and algorithms to authorities and vetted researchers.

The Digital Markets Act (DMA) sets obligations for large online platforms acting as “gatekeepers” (platforms whose dominant online position make them hard for consumers to avoid) on the digital market to ensure a fairer business environment and more services for consumers.

To prevent unfair business practices, those designated as gatekeepers will have to:

• allow third parties to inter-operate with their own services, meaning that smaller platforms will be able to request that dominant messaging platforms enable their users to exchange messages, send voice messages or files across messaging apps. This will give users greater choice and avoid the so-called “lock-in” effect where they are restricted to one app or platform;
• allow business users to access the data they generate in the gatekeeper’s platform, to promote their own offers and conclude contracts with their customers outside the gatekeeper’s platforms.

Gatekeepers can no longer:

• Rank their own services or products more favourably (self-preferencing) than other third parties on their platforms;
• Prevent users from easily un-installing any pre-loaded software or apps, or using third-party applications and app stores;
• Process users’ personal data for targeted advertising, unless consent is explicitly granted.

Once formally adopted by the Council in July (DMA) and September (DSA), both acts will be published in the EU Official Journal and enter into force twenty days after publication.

The DSA will be directly applicable across the EU and will apply fifteen months or from 1 January 2024 (whichever comes later) after the entry into force. As regards the obligations for very large online platforms and very large online search engines, the DSA will apply earlier - four months after they have been designated as such by the Commission.

The DMA will start to apply six months following its entry into force. The gatekeepers will have a maximum of six months after they have been designated to comply with the new obligations.

On 6 July 2022, the Commission Delegated Regulation (EU) 2022/1159 of 11 March 2022 supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards for public disclosure of investment policy by investment firms was published in the Official Journal of the European Union (OJ).

The provisions of the Delegated Regulation specify uniform disclosure formats and associated instructions for the requirements on investment policy by investment firms referred to in Article 52(1) of the IFR. The disclosure required includes information on the proportion of voting rights attached to the shares held directly or indirectly by the investment firms, information on their voting behavior, an explanation of votes and the ratio of proposals put forward and approved, information on the use of proxy advisor firms and information on their voting guidelines.

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

On 29 July 2022, the European Banking Authority (EBA) published its final guidelines on the criteria for the exemption of investment firms from liquidity requirements in accordance with Investment Firms Regulation.

These Guidelines ensure that all competent authorities granting this exemption follow the same harmonised approach, while preserving the IFR general objective of maintaining the prudential requirements proportional to the size and complexity of the smaller investment firms. 

The IFR introduces mandatory liquidity requirements for all investment firms. However, the IFR aims at further ensuring a proportionate approach for small and non interconnected investment firms, which allows competent authorities to completely exempt such firms from liquidity requirements.  

In order to have a harmonised application of the exemption, the EBA guidelines address three main elements: 

• the set of investment services and activities which make an investment firm eligible for the exemption; 
• the set of criteria a competent authority should assess before granting the exemption; 
• guidance for competent authorities when granting and withdrawing the exemption.

The EBA has developed these Guidelines in accordance with Article 43(1) of Regulation (EU) 2019/2033 that provide specific mandates to the EBA to issue Guidelines for the exemption of investment firms from liquidity requirements. The Guidelines apply from two months after issuance date. 

On 25 July 2022, the European Union published Commission Delegated Regulation (EU) 2022/1288  supplementing Regulation (EU) 2019/2088 of the European Parliament and of the Council (SFDR) with regard to regulatory technical standards specifying the details of the content and presentation of the information in relation to the principle of ‘do no significant harm’, specifying the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts, and the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in pre-contractual documents, on websites and in periodic reports in its Official Journal (OJ).

The regulatory technical standards in this Regulation:

• prescribe the information that must be annexed to pre-contractual and periodic product documentation
• require a mandatory reporting template to describe how principal adverse impacts on sustainability factors are taken into consideration in investment decisions. 
• divide indicators into a core set of universal mandatory indicators that will always lead to principal adverse impacts and additional opt-in indicators to identify, assess and prioritise the consideration of additional principal adverse impacts. 
• require a summary section, and information on policies on the identification of principal adverse impacts, actions taken and planned to mitigate the principal adverse impacts (for instance, reduction of carbon emissions by means of engagement or other policies), or adherence to international standards and historical comparisons. 
• include rules on the statement of no consideration of adverse impacts on sustainability factors by financial market participants and financial advisers.

This Regulation shall apply from 1 January 2023.

On 29 July 2022, European Securities and Markets Authority (ESMA) updated the implementation timeline for SFDR, Taxonomy  regulation, CSRD, MiFID, IDD, UCITS  and AIFMD with regards to the sustainable finance.

On 29 July 2022, the Autorité des marchés financiers (AMF) announced applying ESMA guidelines on common procedures and methodologies on supervisory review and evaluation process of CCPs under Article 21 of EMIR. 

Version française

Le 29 juillet 2022, l'Autorité des marchés financiers (AMF) a annoncé l'application des lignes directrices de l'ESMA sur les procédures et méthodologies communes concernant le processus de surveillance et d'évaluation des contreparties centrales au titre de l'article 21 d'EMIR. 

On 3 August 2022, the Système unifié de rapport financier (e-surfi) published the Declaration of rights to sign: form to be completed by reporting institutions and returned to the department managing their file at the SG ACPR.

Version française

Le 3 août 2022, le Système unifié de rapport financier (e-surfi) a publié la Déclaration des droits à signer : formulaire à remplir par les établissements assujettis et à retourner au service gestionnaire de leur dossier au SG ACPR.

On 3 August 2022, the Système unifié de rapport financier (e-surfi) published the Declaration of rights to sign: form to be completed by central bodies and other establishments having received a delegation.

Version française

Le 3 août 2022, le Système unifié de rapport financier (e-surfi) a publié la Déclaration des droits à signer : formulaire à remplir par les organismes centraux et autres établissements ayant reçu une délégation.

On 7 July 2022, the Autorité de contrôle prudentiel et de résolution (ACPR) published the outline of the internal control reports provided for by the decree of November 3, 2014.

The report on internal control credit institutions, finance companies and investment firms and investment firms is to report on internal control activities during the year just ended and to describe the systems for measuring, monitoring and to describe the measures taken to measure, monitor and control the risks to which the company is exposed and the dissemination of information about them.

The report on internal control payment institutions, account information service providers account information services and electronic money institutions The purpose of the report on internal control is to give an account of the internal control activity during the past financial year and to describe the measures taken to measure, monitor and control the risks to which the institution is to which the institution is exposed and the dissemination of information concerning them.

Version française

Le 7 juillet 2022, l'Autorité de contrôle prudentiel et de résolution (ACPR) a publié le canevas des rapports de contrôle interne prévus par l'arrêté du 3 novembre 2014.

Le rapport sur le contrôle interne établissements de crédit, sociétés de financement et entreprises d'investissement et entreprises d'investissement doit rendre compte des activités de contrôle interne au cours de l'exercice écoulé et décrire les dispositifs de mesure, de suivi et de maîtrise des risques auxquels la société est exposée et la diffusion des informations les concernant.

Le rapport sur le contrôle interne établissements de paiement, prestataires de services d'information sur les comptes services d'information sur les comptes et établissements de monnaie électronique Le rapport sur le contrôle interne a pour objet de rendre compte de l'activité de contrôle interne au cours de l'exercice écoulé et de décrire les mesures prises pour mesurer, surveiller et maîtriser les risques auxquels l'établissement est exposé et la diffusion des informations les concernant.

On 2 August 2022, the Order of 25 July 2022 approving amendments to the general regulation of the Autorité des marchés financiers was published in Legifrance (France's Official Journal). 

The decree of 25 July 2022 transposes into Book III of the AMF General Regulation Commission Delegated Directives (EU) 2021/1269 and 2021/1270 of 21 April 2021 applicable respectively to investment service providers other than asset management companies and UCITS management companies. The Decree also applies the relevant provisions of Delegated Regulation (EU) 2021/1253 and Delegated Directive (EU) 2021/1269 to financial investment advisers.

The amendments to the general regulations of the Autorité des marchés financiers approved by this decree enter into force:

1. On August 1, 2022, with regard to the amendments contained in VII to XIII of the annex to this decree;
2. November 22, 2022, with regard to the amendments contained in I to VI and XVIII of the annex to this order;
3. January 1, 2023, with regard to the amendments contained in XIV to XVII and XIX of the annex to this order.

Version française

Le 2 août 2022, l'arrêté du 25 juillet 2022 portant homologation de modifications du règlement général de l'Autorité des marchés financiers a été publié sur Legifrance (Journal officiel de la France). 

L'arrêté du 25 juillet 2022 transpose dans le livre III du règlement général de l'AMF les directives déléguées (UE) 2021/1269 et 2021/1270 de la Commission du 21 avril 2021 applicables respectivement aux prestataires de services d'investissement autres que les sociétés de gestion de portefeuille et les sociétés de gestion d'OPCVM. Le décret applique également les dispositions pertinentes du règlement délégué (UE) 2021/1253 et de la directive déléguée (UE) 2021/1269 aux conseillers en investissements financiers.

Les modifications du règlement général de l'Autorité des marchés financiers approuvées par ce décret entrent en vigueur :

1. Le 1er août 2022, en ce qui concerne les modifications contenues aux VII à XIII de l'annexe au présent décret ;
2. Le 22 novembre 2022, s'agissant des modifications contenues aux I à VI et XVIII de l'annexe au présent arrêté ;
3. Le 1er janvier 2023, en ce qui concerne les modifications contenues dans les articles XIV à XVII et XIX de l'annexe au présent décret.

On 18 July 2022, the Association Française de Gestion (AFG) and AFTI updated the guide on performance fees in non-reserved UCITS and AIFMs.

In November 2018, AFG and AFTI published a guide on performance fees in non-reserved UCITS and FIVGs. Since then, European regulations have evolved and last year ESMA published an update of its UCITS Q&A and its AIFMD Q&A , adding important details.

In particular, it introduces a catch-up condition for years of underperformance over a 5-year period. This new version takes these regulatory changes into account. It includes a prospectus drafting model in line with the latest ESMA guidelines as well as a detailed calculation algorithm proposed by AFTI. An overhaul of the definitions in this guide was also carried out in order to have a vocabulary more consistent with that used in the regulatory texts.

Version française

Le 18 juillet 2022, l'Association Française de Gestion (AFG) et l'AFTI ont mis à jour le guide sur les commissions de performance dans les OPCVM non réservés et les FIVG.

En novembre 2018, l'AFG et l'AFTI ont publié un guide sur les commissions de performance dans les OPCVM non réservés et les FIVG. Depuis, la réglementation européenne a évolué et l'année dernière, l'ESMA a publié une mise à jour de son Q&A OPCVM et de son Q&A AIFMD , ajoutant des détails importants.

En particulier, elle introduit une condition de rattrapage pour les années de sous-performance sur une période de 5 ans. Cette nouvelle version tient compte de ces changements réglementaires. Elle inclut un modèle de rédaction de prospectus conforme aux dernières lignes directrices de l'ESMA ainsi qu'un algorithme de calcul détaillé proposé par l'AFTI. Une refonte des définitions de ce guide a également été réalisée afin d'avoir un vocabulaire plus cohérent avec celui utilisé dans les textes réglementaires.

On 28 July 2022, the Autorité des marchés financiers (AMF) launched a consultation on the end of life of private equity funds intended for retail investors.

The AMF has observed that the announced life of private equity funds intended for retail clients, whose compliance is the responsibility of the asset management company, is regularly exceeded by a significant number of funds for various reasons. This results in diverse impacts for their investors, from the perspective of both the information provided at the outset and during the life of the fund, and the problems of all kinds caused by liquidation procedures that are excessively lengthy. In recent years this subject has given rise to a significant flow of claims to the AMF and case referrals to the AMF Ombudsman by retail investors. The funds concerned are innovation venture capital funds (FCPIs), local investment funds (FIPs) and venture capital funds (FCPRs) intended for non-professional clients.

The end of life of private equity funds can be divided into three successive stages: pre-liquidation, which is an optional stage making it possible to prepare the liquidation operations, followed by the termination decision (mandatory stage subject to the prior approval of the AMF), and then liquidation.

A working group was formed on the initiative of the AMF Board and chaired by AMF Board member Mrs Muriel Faure, with representatives of the various stakeholders (representatives of retail investors, private equity investment firms, depositories and auditing and legal professionals). It worked with the support of the AMF staff on various legislative, regulatory and operational proposals designed to improve the protection of retail investors investing in these products.

The AMF is now conducting a consultation on the 19 proposals arising from this working group and contained in the attached report, aimed at addressing the following issues:

• strengthening the regulatory framework of liquidation operations, by clarifying the powers of the fund liquidator and, for example, systematically requiring pre-liquidation, to avoid situations in which the asset management companies might really start their work in order to sell their equity investments only as the originally planned date of termination of the fund draws near;
• the availability of financial resources enabling the liquidator of the funds to allocate sufficient means to this important phase, particularly in situations where the original asset management company might not be capable of performing these liquidation operations itself;
• enhancement of the information for holders of fund units, both at inception of the fund and during the liquidation phase; in particular, those asset management companies that have not complied with the lifetime of at least 50% of the funds that they manage during the last 10 years must insert a warning notice in the fund documentation concerning the asset management company's failure to comply with the announced liquidation dates;
• strengthening of the AMF's supervision, with the establishment of a specific half-year report for the attention of the regulator concerning the liquidation status of funds that have exceeded their lifetime;
• a series of measures to remove the obstacles to liquidation that may exist as of the fund design stage, and in particular a recognition that the current maximum theoretical 10-year duration of private equity funds may be inappropriate for the cycle of value creation in certain economic sectors;
• a series of measures aimed at limiting the occurrence of situations in which the asset management company, in its role as registrar of the fund units, might have lost contact with certain investors and might therefore be incapable of paying them the amounts due at the time of liquidation;
• creation of a marketplace mechanism for the liquidation of funds in special situations.

Some of these proposals are covered by legislative documents (and will therefore have the status of proposals made by the AMF to the legislator), while others are covered by regulatory provisions coming under the AMF General Regulation or policy, so their application will inevitably take place according to different timetables.

Contributions should be sent no later than Friday 14 October 2022 to directiondelacommunication@amf-france.org.

Version française

Le 28 juillet 2022, l'Autorité des marchés financiers (AMF) a lancé une consultation sur la fin de vie des fonds de capital-investissement destinés aux particuliers.

L'AMF a constaté que la durée de vie annoncée des fonds de capital-investissement destinés à la clientèle de détail, dont la conformité relève de la responsabilité de la société de gestion, est régulièrement dépassée par un nombre significatif de fonds pour diverses raisons. Il en résulte des impacts divers pour leurs investisseurs, tant du point de vue de l'information fournie à l'origine et en cours de vie du fonds, que des problèmes de toute nature engendrés par des procédures de liquidation excessivement longues. Ce sujet a donné lieu ces dernières années à un flux important de réclamations auprès de l'AMF et de saisines du médiateur de l'AMF par des investisseurs particuliers. Les fonds concernés sont les fonds communs de placement dans l'innovation (FCPI), les fonds d'investissement de proximité (FIP) et les fonds communs de placement à risques (FCPR) destinés à une clientèle non professionnelle.

La fin de vie des fonds de capital-investissement peut être divisée en trois étapes successives : la pré-liquidation, qui est une étape facultative permettant de préparer les opérations de liquidation, puis la décision de clôture (étape obligatoire soumise à l'accord préalable de l'AMF), et enfin la liquidation.

Un groupe de travail a été constitué à l'initiative du Collège de l'AMF et présidé par Mme Muriel Faure, membre du Collège de l'AMF, avec des représentants des différentes parties prenantes (représentants des investisseurs particuliers, des sociétés de capital investissement, des dépositaires et des professionnels de l'audit et du droit). Il a travaillé, avec l'appui des services de l'AMF, sur différentes propositions législatives, réglementaires et opérationnelles visant à améliorer la protection des investisseurs particuliers investissant dans ces produits.

L'AMF mène actuellement une consultation sur les 19 propositions issues de ce groupe de travail et contenues dans le rapport ci-joint, visant à répondre aux problématiques suivantes :

• le renforcement du cadre réglementaire des opérations de liquidation, en clarifiant les pouvoirs du liquidateur du fonds et, par exemple, en exigeant systématiquement une pré-liquidation, afin d'éviter des situations dans lesquelles les sociétés de gestion pourraient réellement commencer leurs travaux afin de vendre leurs participations seulement lorsque la date de clôture du fonds initialement prévue approche ;
• la disponibilité de ressources financières permettant au liquidateur des fonds d'allouer des moyens suffisants à cette phase importante, notamment dans les situations où la société de gestion d'origine ne serait pas en mesure de réaliser elle-même ces opérations de liquidation ;
• le renforcement de l'information des porteurs de parts de fonds, tant à la création du fonds que pendant la phase de liquidation ; en particulier, les sociétés de gestion qui n'ont pas respecté la durée de vie d'au moins 50% des fonds qu'elles gèrent au cours des 10 dernières années doivent insérer dans la documentation du fonds une notice d'avertissement sur le non-respect par la société de gestion des dates de liquidation annoncées ;
• un renforcement du contrôle de l'AMF, avec la mise en place d'un rapport semestriel spécifique à l'attention du régulateur sur l'état de liquidation des fonds ayant dépassé leur durée de vie ;
• une série de mesures visant à lever les obstacles à la liquidation qui peuvent exister dès la conception des fonds, et notamment la reconnaissance que la durée théorique maximale actuelle de 10 ans des fonds de private equity peut être inadaptée au cycle de création de valeur de certains secteurs économiques ;
• une série de mesures visant à limiter la survenance de situations dans lesquelles la société de gestion, dans son rôle de teneur de registre des parts du fonds, pourrait avoir perdu le contact avec certains investisseurs et pourrait donc être incapable de leur verser les montants dus au moment de la liquidation ;
• la création d'un mécanisme de place pour la liquidation des fonds dans des situations particulières.

Certaines de ces propositions font l'objet de textes législatifs (et auront donc le statut de propositions faites par l'AMF au législateur), tandis que d'autres relèvent de dispositions réglementaires relevant du règlement général ou de la doctrine de l'AMF, de sorte que leur application se fera inévitablement selon des calendriers différents.

Les contributions doivent être envoyées au plus tard le vendredi 14 octobre 2022 à directiondelacommunication@amf-france.org.

On 4 August 2022, the Autorité des marchés financiers (AMF) announced complying with the ESMA guidelines on updating stress test scenarios in accordance with Article 28 of the Money Market Fund Regulation.

The AMF has updated its position DOC-2018-05 to reference ESMA’s guidance on updating stress test scenarios in accordance with Article 28 of the Money Market Fund Regulation.

In accordance with Article 28 of Regulation (EU) 2017/1131 on money market funds (“the MMF Regulation”), the manager of a money market fund is required to assess the impact of stress test scenarios on the fund. Under Article 37 of the MMF Regulation, the results of stress tests on a money market fund must be reported to the fund’s competent authority on a quarterly basis if the fund’s assets exceed €100 million. Annual reporting is required for all the remaining funds . The competent authority then forwards this reporting to ESMA.

The ESMA guidelines published in 2019 (ESMA34-49-172) define the common reference parameters for different stress test scenarios. In accordance with Article 28(7) of the MMF Regulation, these guidelines are updated at least once a year to take into account the latest market developments. In this regard, on 4 May 2022 ESMA published the official translations of its new guidelines on updating stress test parameters (ESMA34-49-446). Those new parameters reflect market conditions prevailing at year-end 2021. Those notably include an increase of interest rate variation parameters.. This is the second annual update of this data since the implementation of MMFR reporting.

The AMF draws market fund managers’ attention to the importance of updating these parameters on reporting due from 30 September 2022. MMF managers who have updated parameters in reporting due before that date should correct them and resubmit their reporting with the previous parameters.

Version française

Le 4 août 2022, l'Autorité des marchés financiers (AMF) a annoncé se conformer aux orientations de l'ESMA sur la mise à jour des scénarios de stress test conformément à l'article 28 du règlement sur les fonds monétaires.

L'AMF a mis à jour sa position DOC-2018-05 pour faire référence aux orientations de l'ESMA sur la mise à jour des scénarios de simulation de crise conformément à l'article 28 du règlement sur les fonds monétaires.

Conformément à l'article 28 du règlement (UE) 2017/1131 sur les fonds monétaires (" le règlement FMM "), le gestionnaire d'un fonds monétaire est tenu d'évaluer l'impact des scénarios de simulation de crise sur le fonds. En vertu de l'article 37 du règlement MMF, les résultats des tests de résistance d'un fonds monétaire doivent être communiqués à l'autorité compétente du fonds sur une base trimestrielle si les actifs du fonds dépassent 100 millions €. Un rapport annuel est requis pour tous les autres fonds. L'autorité compétente transmet ensuite ce reporting à l'ESMA.

Les lignes directrices de l'AEMF publiées en 2019 (ESMA34-49-172) définissent les paramètres de référence communs pour les différents scénarios de simulation de crise. Conformément à l'article 28, paragraphe 7, du règlement sur les OPC monétaires, ces lignes directrices sont mises à jour au moins une fois par an pour tenir compte des dernières évolutions du marché. À cet égard, le 4 mai 2022, l'ESMA a publié les traductions officielles de ses nouvelles lignes directrices sur la mise à jour des paramètres de simulation de crise (ESMA34-49-446). Ces nouveaux paramètres reflètent les conditions de marché prévalant à la fin de l'année 2021. Ils comprennent notamment une augmentation des paramètres de variation des taux d'intérêt... Il s'agit de la deuxième mise à jour annuelle de ces données depuis la mise en place du reporting MMFR.

L'AMF attire l'attention des gestionnaires d'OPCVM de marché sur l'importance de la mise à jour de ces paramètres dans le cadre de la déclaration prévue à partir du 30 septembre 2022. Les gestionnaires d'OPCVM de marché qui ont mis à jour des paramètres dans les reporting dus avant cette date doivent les corriger et soumettre à nouveau leur reporting avec les paramètres précédents.

On 6 August 2022, the Order of 5 August 2022 for the application of 1 of Article L. 322-9 of the Monetary and Financial Code and relating to the guarantee of management company services was published in Legifrance (France's Official Journal). 

The order determines the compensation ceiling, the terms and deadlines for compensation as well as the rules relating to informing customers about the guarantee of the services of the management companies. It applies in particular to the services of the companies management having their head office in France or their branch established in France or in the European Economic Area.

Enter in the field of the guarantee of the services of the management companies financial instruments (debt securities, units or shares of bodies collective investment schemes, forward instruments, equity securities issued by joint-stock companies) belonging to an investor client of a member institution and that this institution cannot return or to reimburse. Cash, denominated in euros or in the currency of another State, belonging to an investor client of an establishment member and that said establishment cannot reimburse him, also part of the scope of the warranty. The compensation limit of the deposit and resolution guarantee fund is 20,000 euros per investor.

Version française

Le 6 août 2022, l'arrêté du 5 août 2022 pris pour l'application du 1 de l'article L. 322-9 du code monétaire et financier et relatif à la garantie des services des sociétés de gestion a été publié sur Legifrance. 

Les articles de l'arrêté renvoient particulièrement aux points suivants:

• Instruments financiers et espèces entrant dans le champ de la garantie, avec mention des instruments étant exclus de la garantie s'ils répondent à certaines conditions;
• Le maintien, les bénéficiaires et les ayants droits de la garantie;
• Le plafond d'indémnisation, qui est fixé à 20 000 euros par investiseur, ainsi que le calcul du montant cumulé.
• La mise en oeuvre de la garantie des services des sociétés de gestion, les délais et procédures ainsi que otifications et informations accompagnant les indemnisations.

On 13 July 2022, the Autorité des marchés financiers (AMF) published the SPOT inspection campaign summary on market abuse prevention systems in asset management companies.

The purpose of these SPOT investigations was to analyse the systems for preventing, monitoring, detecting and reporting of market abuse among five asset management companies (AMCs). The work carried out by the inspection task force did not identify any particularly serious breaches. Nevertheless, the AMF calls on AMCs to improve their market abuse prevention systems by quickly correcting the shortcomings observed.

At the national level, a market abuse is an administrative breach, but can also, in certain cases, be qualified as a criminal offence. At the European level, the objective of the Market Abuse Regulation (MAR) is to prohibit transactions that allow (or could have allowed) an undue advantage to be gained, directly or indirectly, from a price manipulation, the dissemination of false or misleading information, or the use of inside information.

In its summary document, the AMF outlines the good and poor practices observed covering the period from January 2018 to October 2021 of five AMCs representing the diversity of the asset management industry managing between €0.2 billion and €40 billion at the end of 2021.

The AMF focused its work on the following:

• the organisation and governance of the market abuse prevention system (human resources and training programs);
• the procedural framework for preventing market abuse;
• the systems and measures for monitoring and detecting suspicious transactions (tools used, configuration and reporting of alerts);
• the practical implementation of the market abuse prevention system (watch lists, restricted lists, insider lists, analysis and reporting of suspicious transactions);
• the internal (permanent and periodic) control system implemented upon the process for preventing market abuse.

With regard to the human resources dedicated to the organisation and governance of this system, four of the five AMCs placed the compliance and internal control officer as responsible for the market abuse prevention system. The AMF notes that the same number of AMCs have set up a training programme dedicated to the risks of market abuse. As for the procedural corpus, while all the AMCs on the panel have drawn up a main document on the anti-market abuse systems, all the procedures consulted reveal gaps in their description of the operational mechanism and incomplete regulatory references, failing, for example, to mention the MAR or the suspicious transaction and order report (STOR) Regulation.

The operational management of inside information is based on three types of list which include securities under surveillance, restricted securities and insiders within the AMC. The AMF found that the audit trail explaining changes to the first two types of lists and how they interrelate was inadequate for three of the five AMCs inspected. The monitoring of transactions carried out on behalf of third parties is automated for the five AMCs, and three of them have a robust audit trail of the investigation of alerts issued. However, the inspection task force note that four of the five AMCs do not carry out an a posteriori review of alerts that have been closed without follow-up, which undermines the AMCs' ability to continuously improve their investigation process.

With regard to the practical implementation of the market abuse prevention system, the alert rules and thresholds set by the AMCs in the sample should improve. The AMF conducted a test on a sample of transactions representing an average of 5% of the trades executed during the period under review that were potentially suspicious based on the market abuse risk indicators used by the five AMCs. The rate of undetected suspicious transactions (whose non-detection was not justified by the AMC based on the configuration of their monitoring tool) was significant for two of the five AMCs. These findings make it clear that the configured alert scenarios must be reviewed on a regular basis to ensure that the monitoring system is continuously updated to take account of changes in management activity and market abuse risks. This review must also ensure that the flow of alerts produced can still be dealt with effectively by the teams responsible for investigating them.

Version française

Le 13 juillet 2022, l'Autorité des marchés financiers (AMF) a publié la synthèse de la campagne de contrôle SPOT sur les dispositifs de prévention des abus de marché dans les sociétés de gestion de portefeuille.

Ces enquêtes SPOT avaient pour objet d'analyser les dispositifs de prévention, de surveillance, de détection et de déclaration des abus de marché auprès de cinq sociétés de gestion de portefeuille (SGP). Les travaux menés par la mission de contrôle n'ont pas permis d'identifier de manquements particulièrement graves. Néanmoins, l'AMF invite les SGP à améliorer leur dispositif de prévention des abus de marché en corrigeant rapidement les manquements constatés.

Au niveau national, un abus de marché est une infraction administrative, mais peut également, dans certains cas, être qualifié d'infraction pénale. Au niveau européen, l'objectif du règlement sur les abus de marché (MAR) est d'interdire les opérations qui permettent (ou auraient pu permettre) de tirer un avantage indu, directement ou indirectement, d'une manipulation de cours, de la diffusion d'informations fausses ou trompeuses, ou de l'utilisation d'informations privilégiées.

Dans son document de synthèse, l'AMF expose les bonnes et mauvaises pratiques observées couvrant la période de janvier 2018 à octobre 2021 de cinq AMC représentatifs de la diversité de l'industrie de la gestion d'actifs gérant entre 0,2 milliard et 40 milliards d'euros à fin 2021.

Les travaux de l'AMF ont porté sur les points suivants :

• l'organisation et la gouvernance du dispositif de prévention des abus de marché (ressources humaines et programmes de formation) ;
• le cadre procédural de la prévention des abus de marché ;
• les dispositifs et mesures de surveillance et de détection des opérations suspectes (outils utilisés, paramétrage et remontée des alertes) ;
• la mise en œuvre pratique du système de prévention des abus de marché (listes de surveillance, listes restreintes, listes d'initiés, analyse et déclaration des transactions suspectes) ;
• le système de contrôle interne (permanent et périodique) mis en place sur le processus de prévention des abus de marché.

S'agissant des moyens humains dédiés à l'organisation et à la gouvernance de ce dispositif, quatre des cinq AMC ont placé le responsable de la conformité et du contrôle interne comme responsable du dispositif de prévention des abus de marché. L'AMF constate que le même nombre d'AMC a mis en place un programme de formation dédié aux risques d'abus de marché. Quant au corpus procédural, si tous les AMC du panel ont rédigé un document principal sur les dispositifs de lutte contre les abus de marché, toutes les procédures consultées révèlent des lacunes dans la description du dispositif opérationnel et des références réglementaires incomplètes, omettant par exemple de mentionner le règlement MAR ou le règlement sur les déclarations de soupçons et les ordres (STOR).

La gestion opérationnelle de l'information privilégiée s'appuie sur trois types de listes qui comprennent les titres sous surveillance, les titres restreints et les initiés au sein de l'AMC. L'AMF a constaté que la piste d'audit expliquant les modifications apportées aux deux premiers types de listes et leur articulation était insuffisante pour trois des cinq AMC contrôlées. La surveillance des opérations effectuées pour le compte de tiers est automatisée pour les cinq AMC, et trois d'entre elles disposent d'une piste d'audit robuste sur l'instruction des alertes émises. Cependant, la task force d'inspection note que quatre des cinq AMC ne procèdent pas à un examen a posteriori des alertes qui ont été clôturées sans suivi, ce qui compromet la capacité des AMC à améliorer continuellement leur processus d'investigation.

En ce qui concerne la mise en œuvre pratique du dispositif de prévention des abus de marché, les règles et les seuils d'alerte fixés par les AMC de l'échantillon doivent être améliorés. L'AMF a effectué un test sur un échantillon de transactions représentant en moyenne 5% des transactions exécutées au cours de la période sous revue et potentiellement suspectes au regard des indicateurs de risque d'abus de marché utilisés par les cinq AMC. Le taux de transactions suspectes non détectées (dont la non-détection n'a pas été justifiée par l'AMC sur la base de la configuration de son outil de surveillance) était significatif pour deux des cinq AMC. Ces résultats montrent clairement que les scénarios d'alerte configurés doivent être revus régulièrement afin de s'assurer que le système de surveillance est continuellement mis à jour pour tenir compte des changements dans l'activité de gestion et des risques d'abus de marché. Cette révision doit également permettre de s'assurer que le flux d'alertes produites peut encore être traité efficacement par les équipes chargées de les investiguer.

On 8 July 2022, the Autorité des marchés financiers (AMF) published a summary of its SPOT inspections on the theme of best execution in asset management companies.

After a series of short thematic inspections concerning best selection and best execution obligations, the AMF is asking asset management companies to improve their arrangements in this area, and in particular to specify their policy and the procedures which govern best execution and how quality of execution is monitored, and to strength their internal control systems.

To examine practices, the AMF selected five companies representative of the diversity of the asset management industry in terms of activity (UCITS, alternative investment funds, discretionary portfolio management) and order placing framework.

For each of them, the AMF focused on:

• completeness of the best execution and best selection policy and procedures;
• criteria and due diligence for selection of brokers and trading venues;
• procedures for monitoring best execution and best selection and for assessing  brokers, as well as policy review criteria;
• client information obligations;
• the control system.

In its summary document, the AMF notes the good and poor practices observed for the period from July 2018 to July 2021. Although the inspected asset management companies have indeed put in place their in-house best execution policy and procedures, these are insufficiently precise on the following points:

• factors taken into account in the choice of execution and their respective importance;
• possible execution venues;
• criteria for the selection of brokers and, as the case may be, of external  providers to which selection of brokers or order execution may be outsourced, and the methodology used to assess those brokers and service providers. 

Regarding the procedures for monitoring best execution and best selection, the four AMCs in the sample group that use brokers have established a half-yearly committee in charge of monitoring the quality of the services provided, and have determined a set of qualitative assessment criteria based on which they state their opinion periodically. Four of the five asset management companies in the sample group have quantitative measures enabling them to perform an ex-post check on the quality of execution of orders executed by themselves or by brokers. But how such data may be used to assess the quality of execution is, unclear and covered by only little or no in-house formal presentation and documenting. Only one of the companies in the sample group has determined and used an alert threshold and a methodology to detect any outliers, but without substantiation of the nature and level of this threshold, which has proved ineffective given the volume of alerts generated.

With regard to client information, the inspected entities chose their website as the channel for publication of their best execution policy, but this publication is limited merely to the principles.

Regarding the control system, the AMF noted shortcomings with respect to analysis of the suitability and completeness of the best execution policies, and of their implementation. Over the period investigated, for example, internal control did not make sure that due diligence for assessing the quality of order execution by asset management companies or their brokers was effectively carried out, apart from merely holding regular committee meetings.

The AMF therefore calls on asset management companies to strengthen their in-house best selection/execution policy and procedures, and to reinforce and define more formally their arrangements for monitoring the quality of order execution.

Version française

L'Autorité des marchés financiers (AMF) a publié le 8 juillet 2022 une synthèse de ses contrôles SPOT sur le thème de la meilleure exécution dans les sociétés de gestion.

Après une série de contrôles thématiques courts portant sur les obligations de meilleure sélection et de meilleure exécution, l'AMF demande aux sociétés de gestion d'améliorer leur dispositif en la matière, et notamment de préciser leur politique et les procédures qui encadrent la meilleure exécution et le suivi de la qualité de l'exécution, et de renforcer leur dispositif de contrôle interne.

Pour examiner les pratiques, l'AMF a sélectionné cinq sociétés représentatives de la diversité de l'industrie de la gestion d'actifs en termes d'activité (OPCVM, fonds de gestion alternative, gestion discrétionnaire de portefeuille) et de cadre de passation des ordres.

Pour chacune d'entre elles, l'AMF s'est intéressée aux aspects suivants

• l'exhaustivité de la politique et des procédures de meilleure exécution et de meilleure sélection ;
• les critères et les diligences pour la sélection des courtiers et des lieux de négociation ;
• les procédures de suivi de la meilleure exécution et de la meilleure sélection et d'évaluation des courtiers, ainsi que les critères de révision de la politique ;
• les obligations en matière d'information des clients ;
• le dispositif de contrôle.

Dans son document de synthèse, l'AMF relève les bonnes et mauvaises pratiques observées pour la période de juillet 2018 à juillet 2021. Si les sociétés de gestion contrôlées ont effectivement mis en place leur politique et leurs procédures internes de meilleure exécution, celles-ci sont insuffisamment précises sur les points suivants :

• les facteurs pris en compte dans le choix de l'exécution et leur importance respective ;
• les lieux d'exécution possibles ;
• les critères de sélection des courtiers et, le cas échéant, des prestataires externes auxquels la sélection des courtiers ou l'exécution des ordres peut être confiée, ainsi que la méthodologie utilisée pour évaluer ces courtiers et prestataires. 

En ce qui concerne les procédures de suivi de la meilleure exécution et de la meilleure sélection, les quatre SGP du groupe échantillon qui ont recours à des courtiers ont mis en place un comité semestriel chargé de suivre la qualité des services fournis, et ont déterminé un ensemble de critères d'évaluation qualitative sur la base desquels ils se prononcent périodiquement. Quatre des cinq sociétés de gestion du groupe échantillon disposent de mesures quantitatives leur permettant d'effectuer un contrôle a posteriori de la qualité d'exécution des ordres exécutés par elles-mêmes ou par des courtiers. Mais la manière dont ces données peuvent être utilisées pour évaluer la qualité d'exécution n'est pas claire et ne fait l'objet que de peu ou pas de présentation et de documentation formelle en interne. Une seule des sociétés du groupe échantillon a déterminé et utilisé un seuil d'alerte et une méthodologie pour détecter les éventuelles valeurs aberrantes, mais sans justification de la nature et du niveau de ce seuil, qui s'est avéré inefficace compte tenu du volume des alertes générées.

En matière d'information des clients, les entités contrôlées ont choisi leur site internet comme canal de publication de leur politique de meilleure exécution, mais cette publication se limite aux seuls principes.

On 20 July 2022, the Decree n°2022-1015 of 19 July 2022 relating to the fees due under the National Business Register and adapting other business registers was published in Legifrance (France's Official Journal). 

The decree proceeds, in application of the Ordinance No. 2021-1189 of September 15, 2021 creating the National Register of Companies, setting the amounts of duties owed by certain companies (companies, traders, companies in the trades and crafts sector) in the event of registration , amending registrations or filings in the National Business Register.

The provisions relating to the registers abolished by Ordinance No. 2021-1189 of September 15, 2021 establishing the National Register of Companies (directory of trades, national register of commerce and companies, agricultural register, register of agricultural assets) as well as the references to these registers are also subject to deletion or a modification within all the texts mentioning them.

The provisions of this decree enter into force as of 1 January 2023.

Version française

Le 20 juillet 2022, le décret n°2022-1015 du 19 juillet 2022 relatif aux droits dus au titre du répertoire national des entreprises et adaptant d'autres répertoires d'entreprises a été publié dans Legifrance (Journal officiel de la France). 

Le décret procède, en application de l'ordonnance n°2021-1189 du 15 septembre 2021 portant création du Registre national des entreprises, à la fixation des montants des droits dus par certaines entreprises (sociétés, commerçants, entreprises du secteur des métiers et de l'artisanat) en cas d'immatriculation , de modification d'immatriculation ou de dépôt au Registre national des entreprises.

Les dispositions relatives aux registres supprimés par l'ordonnance n° 2021-1189 du 15 septembre 2021 portant création du répertoire national des entreprises (répertoire des métiers, registre national du commerce et des sociétés, registre agricole, registre des actifs agricoles) ainsi que les références à ces registres font également l'objet d'une suppression ou d'une modification au sein de tous les textes les mentionnant.

Les dispositions du présent décret entrent en vigueur à compter du 1er janvier 2023.

On 29 August 2022, the Autorité des marchés financiers (AMF) encouraged market participants to inform the AMF on anomalies identified in the reports on net short positions.

On the occasion of the closure of an investigation on net short positions, the AMF reviews the obligations linked to it and the behavior to be followed by the market participants in the event of the detection of anomalies.

On the occasion of a specific case, that of a participant who had reported on his own initiative to the AMF, after having identified, during an internal review, anomalies in his notifications to the regulator, the AMF recently closed an investigation after which it took into account the diligent behavior of the participant concerned in determining the action to be taken. After ensuring that these anomalies were insignificant and that almost all of them were below the 0.5% threshold implying publication on the market, the AMF took into consideration the fact that the interested party approached the regulator spontaneously, its involvement and active cooperation during the investigation and during the phase of definition and implementation of remedial measures in order to ensure that the anomalies observed do not recur in the future. In view of the context of the investigation and the aforementioned elements, the AMF decided to send a simple letter of observations to the participant concerned, reminding him of the importance of compliance with the regulations in this area for the proper functioning of the market and investor protection.

The AMF encourages market participants to adopt the same behavior as the participant concerned, namely to inform its services in the event of the identification of anomalies in the notifications of net short positions transmitted and to collaborate actively for the implementation of corrective actions and remedial measures.

Version française

Le 29 août 2022, l'Autorité des marchés financiers (AMF) a encouragé les acteurs du marché à l'informer des anomalies identifiées dans les rapports sur les positions courtes nettes.

A l'occasion de la clôture d'une enquête sur les positions courtes nettes, l'AMF revoit les obligations qui y sont liées et le comportement à suivre par les acteurs du marché en cas de détection d'anomalies.

A l'occasion d'un cas particulier, celui d'un participant qui s'était signalé de sa propre initiative à l'AMF, après avoir identifié, lors d'une revue interne, des anomalies dans ses notifications au régulateur, l'AMF a récemment clôturé une enquête à l'issue de laquelle elle a tenu compte du comportement diligent du participant concerné pour déterminer les suites à donner. Après s'être assurée que ces anomalies étaient non significatives et que la quasi-totalité d'entre elles étaient inférieures au seuil de 0,5% impliquant une publication sur le marché, l'AMF a pris en considération le fait que l'intéressé s'est adressé spontanément au régulateur, son implication et sa coopération active pendant l'enquête et pendant la phase de définition et de mise en œuvre des mesures correctives afin de s'assurer que les anomalies observées ne se reproduisent pas à l'avenir. Compte tenu du contexte de l'enquête et des éléments précités, l'AMF a décidé d'adresser une simple lettre d'observations au participant concerné, lui rappelant l'importance du respect de la réglementation en la matière pour le bon fonctionnement du marché et la protection des investisseurs.

L'AMF encourage les acteurs du marché à adopter le même comportement que le participant concerné, à savoir informer ses services en cas d'identification d'anomalies dans les notifications de positions courtes nettes transmises et collaborer activement à la mise en œuvre d'actions correctives et de mesures correctrices.

On 26 July 2022, the Autorité des marchés financiers (AMF) updated the instructions for AMF certification and sustainable finance module.

The Autorité des Marchés Financiers has decided, on the proposal of the High Certification Council of the Market (HCCP), to update the instructions relating to the organization of the AMF and Sustainable Finance examinations. The modifications clarify the requirements for the organization of distance exams and add a Qualiopi certification obligation in addition to the justification of a significant number of hours of training for the organisations.

The organization of the AMF exam and its sustainable finance module is governed by AMF instructions 2010-09 and 2021-03. These instructions specify, for each of the two examinations, the certification conditions of organizations applying for their organization, the operating rules of the common examination bases and the program for each examination.

Version française

Le 26 juillet 2022, l'Autorité des marchés financiers (AMF) a mis à jour les instructions relatives à la certification AMF et au module finance durable.

L'Autorité des marchés financiers a décidé, sur proposition du Haut Conseil de la certification de la Place (HCCP), de mettre à jour les instructions relatives à l'organisation des examens AMF et Finance durable. Les modifications apportées clarifient les exigences relatives à l'organisation des examens à distance et ajoutent une obligation de certification Qualiopi en plus de la justification d'un nombre significatif d'heures de formation pour les organismes.

L'organisation de l'examen AMF et de son module finance durable est régie par les instructions AMF 2010-09 et 2021-03. Ces instructions précisent, pour chacun des deux examens, les conditions de certification des organismes candidats à leur organisation, les règles de fonctionnement des bases communes d'examen et le programme de chaque examen.

On 12 July 2022, the Chambre des représentants de Belgique published a resolution to advocate at the European level for the implementation of an interconnected European register of assets in order to combat the phenomenon of financial secrecy and thus arm Europe in the fight against crime.

The purpose of this motion for a resolution is to reiterate that the fight against financial crime, money laundering and the financing of terrorism is indeed a priority at the European level. In this context, it aims to provide for the creation of a broad-spectrum register of assets and to allow automatic consultation between States. This register would contain the relevant information on all the different types of assets distributed on the territory of the States of the European Union and on their owners. It would bring together information collected by national authorities and make it available to other competent authorities.

The interest is manifold: the present motion for a resolution allows to reflect on the possibility of broadening the basis of the UBO register, in particular with a view to include non-European trusts, in accordance with the recent recommendations of the Financial Action Task Force (FATF), to extend the register in order to apprehend real estate (which is often used to launder black money), crypto-currency, yachts, luxury cars, works of art, etc.

Obviously, the implementation of such a registry would take time, but the purpose of this motion for a resolution is to lay the groundwork for this work. Europe would then have an effective tool to confiscate and freeze targeted assets and to exchange information in an efficient way. Such a tool would considerably improve the fight against money laundering and terrorist financing.

On 5 August 2022, Belgium published the Law of 20 July 2022 on the Certification of Cybersecurity of Information and Communication Technologies and on the Designation of a National Cybersecurity Certification Authority (1).

This Law partially implements Regulation (EU) 2019/881 of the European Parliament and of the Council of 17 April 2019 on ENISA (European Union Agency for Cybersecurity) and on cybersecurity certification of information and communication technologies, and repealing Regulation (EU) No 526/2013 (the Cybersecurity Regulation).

This Law therefore applies to the voluntary European cybersecurity certification of  information and communications technology (ICT) products, ICT services and ICT processes covered by the Cybersecurity Regulation.

On 6 July 2022, the Financial Services and Markets Authority (FSMA) opened a consultation on the communication on the classification of crypto-assets as securities, investment instruments or financial instruments.

Crypto-assets are currently the subject of much interest. It is thus not surprising that the FSMA regularly receives questions about the classification of such assets. The FSMA has therefore drawn up a Communication on the classification of crypto-assets as securities, investment instruments or financial instruments.

With this Communication, the FSMA wishes to provide clarity, while awaiting a harmonized European approach, about when crypto-assets may be considered to be securities, investment instruments or financial instruments, and whether they may fall within the scope of the prospectus legislation and/or the MiFID conduct of business rules.

The Communication and the stepwise plan attached are intended to help issuers, offerors and service providers carry out the exercise of classifying crypto-assets within the applicable legal framework that was not drawn up specifically for these types of instruments.

The FSMA focuses to this end on the basic questions and the situations which it has encountered most frequently to date. This means that it does not address all potential classifications and that the stepwise plan is likely to evolve over time.

The stepwise plan is not intended, in any case, to replace a thorough analysis of all specific characteristics and presentation of the product in the light of the applicable rules. Moreover, it is best not to rely solely on the name of a product when deciding how to classify it. The label does not always match the content.

The FSMA is holding an open consultation on the Communication. It will run from 05/07/2022 to 31/07/2022. The consultation is addressed to all players in the financial sector and to investors’ representatives. Responses can be submitted to the email address consult1@fsma.be

On 19 July 2022, Belgium published Law of 5 July 2022 on Miscellaneous Financial Provisions (1).

The law contains several chapters:

• Chapter 1 amends the law of 22 February 1998 establishing the organic status of the National Bank of Belgium.
• Chapter 2 amends the law of 2 August 2002 on the supervision of the financial sector and financial services.
• Chapter 3 relates to changes to the Act of 22 March 2006 on intermediation in banking services and investment services and on the distribution of financial instruments.
• Chapter 4 amends the Act of 24 July 2008 on miscellaneous provisions (I)
• Chapters 5 and 6 transpose Directive (EU) 2021/2261 of the European Parliament and of the Council of 15 December 2021 amending Directive 2009/65/EC as regards the use of key information documents by management companies of undertakings for collective investment in transferable securities (UCITS). Chapters 5 and 6 will enter into force on 1 January 2023. 
• Chapter 7 makes amendments to the Law of 25 April 2014 on the status and supervision of credit institutions and securities companies.
• Chapter 8 refers to amendments to the Act of 11 July 2018 on the Caisse des Dépôts et Consignations.
• Chapter 9 refers to amendments to the Law of 11 July 2021 to ensure the transposition of Directive 2019/878 of the European Parliament and of the Council of 20 May 2019 on exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures; Directive 2019/879 of the European Parliament and of the Council of 20 May 2019 on loss-absorbing and recapitalisation capacity of credit institutions and investment firms; Directive 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms; Directive 2019/2177 of the European Parliament and of the Council of 19 December 2019 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II); Directive 2021/338 of the European Parliament and of the Council of 16 February 2021 on information requirements, product governance and position limits, and Directives 2013/36/EU and (EU) 2019/878 as regards their application to investment firms, to help the recovery from the COVID-19 crisis; and on miscellaneous provisions.

On 20 July 2022, the Financial Services and Markets Authority (FSMA) entended the definition of personne en contact avec le public (public-facing staff, PCP) in the area of credit starting on 1 August 2022.

The definition of PCP has been being extended for credit intermediation. This is the consequence of a legislative amendment that enters into force on 1 August 2022.

The main impact of this legislative amendment is at the level of professional knowledge. Persons who are considered equivalent to a PCP and those who carry out such functions with a credit provider or credit intermediary as at 1 August 2022 have a period of 12 months to meet the requirements in terms of professional knowledge.

On 12 July 2022, the Banque nationale de Belgique (BnB) published Communication 2022_19 on the exercise of external functions by managers and heads of independent supervisory functions of regulated undertakings.

The supervisory laws applicable to the financial institutions covered by this communication provide that the managers and heads of independent supervisory functions must devote the necessary time to the performance of their functions within these institutions and accordingly provide a framework for their right to perform other functions outside these institutions. 

The framework for external functions is not new, but it has recently been reviewed following the entry into force of the law of 27 June 2002 which, among other things, extended its scope ratione personae to the heads of independent supervisory functions of the financial institutions covered by this Communication. 

Taking this development into account, the BnB has recently updated its regulation on external functions. The former Regulation of the Bank of 6 December 2011 has been repealed and replaced by the Regulation of 9 November 2021 on the exercise of external functions by managers and heads of an independent supervisory function of regulated undertakings . 

The purpose of this communication is therefore to recall the principles and the scope of the legal and regulatory provisions on external functions and to specify their practical consequences. 

On 15 July 2022, the Financial Services and Markets Authority (FSMA) publishes communication 2022_23 implementing the Guidelines on stress test scenarios under the Money Market Funds (MMF) Regulation.

This Communication discusses the guidelines drawn up by the European Securities and Markets Authority (ESMA) on stress test scenarios under the MMF Regulation and the implementation of those guidelines by the FSMA.

On 5 July 2022, the Financial Services and Markets Authority (FSMA) publishes a communication on the amended European Securities and Markets Authority (ESMA) Guidelines relating to the delay in the disclosure of inside information and interactions with prudential supervision under the MAR Regulation.

The FSMA informs the relevant issuers of the incorporation into its supervisory practice of the ESMA Guidelines on delay in the disclosure of inside information and interactions with prudential supervision.

On 13 July 2022, the Financial Services and Markets Authority (FSMA) published three sectoral reports on compliance with the Markets in Financial Instruments Directive (MiFID) conduct of business rules.

Compliance with those rules is important in order to ensure that the right products are offered to the right people. The sectoral reports are based on inspections carried out by the FSMA. The results show that there has been improvement in terms compliance with the MiFID rules of conduct. These rules are now better incorporated into business practice and have proven their added value. There are a few points for which improvement is still needed. All those points are discussed in detail in the three sectoral reports published by the FSMA.

The reports address the following topics:

• the suitability assessment; 
• the appropriateness assessment;
• product governance.

On July 2022, the Febelfin published a joint opinion with Assuralia on sustainability preferences.

The two organisations welcome the new European regulation under which banks, insurers and intermediaries will have to ask customers about their sustainability preferences when they want to buy savings and investment products from 2 August next. Better alignment of sustainable savings and investment opportunities with customer preferences will continue to increase portfolio greening and enable banks and insurers to assume a greater societal role by fully investing in our society's sustainable transition.

An important step, therefore, a role that banks, insurers and intermediaries wish to assume in a fair way, but for which they must now face an important concern. Although the obligation to inform the customer about sustainability and to ask him/her about his/her preferences in this area takes effect from 2 August, the European implementing orders necessary to be able to comply properly with this obligation will only enter into force from January 2023. In concrete terms, this means that banks, insurers and intermediaries are currently faced with loopholes in European legislation that prevent them from providing all the appropriate information to the customer, with the consequences of an impact on the reliability of the information given and a lack of savings and investment products that also meet the new requirements. Although banks and insurers will spare no effort to bring to market a correct and sustainable product offering, we run the risk that these difficulties will moderate customers' enthusiasm and understanding for sustainable investments, which of course is far from the intention of the European legislator.

The financial sector must therefore  work within an unstable European regulatory framework, precisely where it needs clarity in order to be able to operate legitimately. The customer does not expect anything more or less from his dedicated banking and insurance organization and this is perfectly justified.

On 26 July 2022, the Act to introduce virtual general meetings of stock corporations and changes to cooperative, insolvency and restructuring regulations was published in the Bundesgesetzblatt. 

The law provides in detail:

• A new Section 118a will be inserted into the AktG as a central provision of the virtual Annual General Meeting. The decision for the virtual Annual General Meeting requires a basis in the articles of association, so that the shareholders decide on its format. The face-to-face meeting thus continues to form the basic form of the Annual General Meeting. The provision in the Articles of Association or a corresponding authorization of the Executive Board must be limited to up to five years in order to regularly renew the legitimacy of the decision.
• In order to protect shareholders, the holding of the meeting as a virtual general meeting is subject to the following conditions, among others:
• The entire meeting is to be transmitted in picture and sound.
• It is necessary to enable shareholders to exercise their voting rights electronically.
• Shareholders must be able to submit motions at the meeting by means of video communication. This also includes countermotions.
• Shareholders receive a right to information by means of electronic communication. As in the face-to-face meeting, this right to information can only be granted on the date of the meeting. However, the Executive Board may also decide that shareholder questions must be submitted no later than three days before the date of the meeting. Then the following applies:
  1. The questions must be answered by one day before the meeting. Shareholders can ask for these answers at the meeting.
  2. In addition, shareholders can ask questions at the meeting about new issues that they could not have asked up to three days before the meeting.
  3. Only questions that could have been submitted before the meeting no longer have to be admitted and answered at the meeting date. However, the chairman of the meeting may allow these questions.
• In order to improve transparency, the report of the Management Board or its material content must be made available to shareholders seven days before the meeting, provided that the Management Board has specified that questions from shareholders must be submitted by electronic communication no later than three days before the meeting.
• All shareholders are given the right to submit comments prior to the meeting, which must also be made available to shareholders.
• Provision shall be made for the right to speak at the meeting for the electronically connected shareholders by means of video communication. Questions, interpellations and motions may be asked in speeches.
• Shareholders who have been connected electronically to the meeting must be provided with a right to object.
• In order to mitigate the risks of avoidance for the companies, the existing provisions of the German Stock Corporation Act, which limit the possibilities of contestation in the event of technical malfunctions, will be extended to the virtual Annual General Meeting. Beyond such technical faults, the right of appeal remains open.
• The virtual Annual General Meeting does not contain any legal limitation with regard to the items to be dealt with in it.
• In addition to public limited companies, the Act also covers the meetings of the related legal forms Kommanditgesellschaft auf Aktien (KGaA), Europäische Aktiengesellschaft (SE) and Versicherungsverein auf Gegenseitigkeit (VVaG).
• New regulations on digital forms of assembly also come into force for the general assembly of cooperatives.

Articles 7 to 9 will enter into force on 1 August 2022.

Article 11 (1) and Article 13 will enter into force on 1 November 2022.

The law will enter into force on 27 July 2022.

On 5 August 2022, the Bundesrat adopted the draft law to improve the protection of whistleblowers and to implement the Directive on the protection of those who report breaches of Union law.

The new law for the protection of whistleblowers (Whistleblower Protection Act - HinSchG) is intended to expand their hitherto incomplete and inadequate protection. Whistleblowers make an important contribution to uncovering and punishing abuses. However, there have always been cases in the past in which they were disadvantaged as a result of reporting or disclosing abuses. The aim of this draft law is to rule out these disadvantages and to give whistleblowers legal certainty. The draft law aims to reconcile the goal of improved whistleblower protection with the interests of companies and public administration, which are obliged to take protective measures for whistleblowers, in such a way that bureaucratic burdens remain manageable.

In Germany, whistleblower protection has so far been shaped primarily by case law.

The draft provides for the following central regulatory elements:

• The personal scope of application (§ 1 HinSchG) includes all persons who have obtained information about violations in their professional environment.
• The material scope of application (§ 2 HinSchG) takes up the legal areas specified by the HinSch-RL. In order to avoid inconsistencies in evaluation and to make the practical application manageable for persons providing information as well as for internal and external reporting offices, criminal law and certain administrative offenses in particular were included and the legal areas specified by the HinSch-RL were extended to a limited extent to include corresponding national law .
• Two equivalent reporting channels, internal and external, are provided for whistleblowers, from which they can freely choose (§§ 7 to 31 HinSchG).
• In the implementation of the requirements of the HinSch-RL and taking into account the case law of the ECHR, the conditions are defined under which a reporting person may make information about violations publicly accessible (§ 32 HinSchG).
• If the persons providing the information comply with the requirements of the HinSchG for reporting or disclosure, they are extensively protected against reprisals such as dismissal or other disadvantages (§§ 33 to 39 HinSchG).

On 5 July 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) updated the FAQ on the distribution and acquisition of investment funds according to the KAGB.

The update contains the following questions:

• How do pre-marketing and sales relate to each other?
• Where to direct pre-marketing ads from August 2, 2021?
• To what extent are pre-marketing and the concept of sales restricted by section 293 ( 1) sentence 3 KAGB when selling to professional and semi-professional investors?
• Are the facilities to be made available in Germany in accordance with section 306a ( 1) of the KAGB?
• Which supervisory requirements do institutions have to fulfill according to § 306a Para. 1 KAGB?
• Can several different institutions be named. And, in which document must the information specified in section 306a ( 1) nos. 2 to 5 KAGB be contained?

On 20 July 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) announced applying ESMA guidelines for stress test scenarios in accordance with Article 28 of the Money Market Funds Regulation.

BaFin will apply the guidelines for stress test scenarios for money market funds published by the European Securities and Markets Authority ( ESMA ) at the beginning of May with immediate effect.

The aim of these guidelines is to ensure a common, uniform and coherent application of the provisions of Article 28 of the Money Market Fund Regulation throughout Europe. In particular, these guidelines set common reference parameters for the scenarios underlying the stress tests, as foreseen in Article 28(7) of the MMF Regulation.

In accordance with Article 28(7) of the MMF Regulation, ESMA shall update these guidelines at least annually, taking into account recent market developments. For example, the ESMA guidelines contain specifications on the types of stress tests and their calibration. This information is required by money market fund managers in order to fill in the fields in the reporting template provided for by Article 37 of the Money Market Funds Regulation – in a way that complies with the European Union ( EU ) Implementing Regulation 2018/708 of the Commission.

On 3 August 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) informed on taking into account any sustainability preferences of customers when providing securities investment advice and financial portfolio management. 

This results from the adjustment of the Delegated Regulation 2017/565, which is directly applicable in Germany and with which the European legislator supplemented the MiFID II financial market directive. The change aims to include sustainability aspects in financial advice and to direct financial and capital flows towards environmentally friendly investments.

On 8 August 2022, the Bundesfinanzministerium (Federal Ministry of Finance) published the draft regulation implementing the Delegated Directive (EU) 2021/1269.

The Delegated Guideline to be implemented serves to introduce sustainability-related factors and goals in the design and sale of financial instruments.

The draft transfers the changes to be implemented one-to-one into the ordinance specifying the rules of conduct and organizational requirements for investment services companies (Investment Services Conduct and Organization Ordinance - WpDVerOV ).

On 17 August 2022, the Association of German Banks (Bankenverband) published the common minimum standard for target market identification.

As part of the product governance requirements of MiFID II, manufacturers of financial instruments must define a target market for the products they issue. The sales offices must take this target market into account when selling the products. The latter is only possible in bulk business if the target market for all products is determined according to uniform criteria. For this reason, the associations of the German banking industry, together with the BVI and the German Derivatives Association (DDV), have agreed on a common minimum standard for determining the target market for the German market. Due to new regulatory requirements, the concept was supplemented by information on sustainability-related goals and sustainability factors (so-called ESG target market concept).

On 4 August 2022, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published a regulatory notice on PRIIPs KID replacing KIID as of 1 January 2023.

According to Article 32 of Regulation ( EU ) No. 1286/2014 ( PRIIPs Regulation ), they are still exempt from this obligation until 31 December 2022, provided they prepare key investor information in accordance with the Capital Investment Code ( KAGB ).

As of this date, the obligation for KVGen to prepare key investor information pursuant to Section 166 KAGB (possibly in conjunction with Section 270 KAGB ) no longer applies: According to the newly introduced Article 82a of Directive 2009/65/EC (Directive on Undertakings for Collective Investment in Transferable Securities - UCITS - Directive), a key information document that meets the requirements of the PRIIPs Regulation is considered equivalent to key investor information.

If units or shares of a UCITS are marketed to professional investors, the KVG has the choice of providing either the key investor information or the PRIIPs key information document. If units or shares of a public AIF (alternative investment fund ) are sold to professional investors, the obligation to prepare key investor information will no longer apply from 1 January 2023. Corresponding changes in the law have already been made by the Fourth Law on the Implementation of Tax Assistance Measures to Cope with the Corona Crisis and will come into force on 1 January 2023.

On 21 July 2022, Hong Kong published Accounting and Financial Reporting Council (Transitional and Saving Provisions and Consequential Amendments) Regulation (Cap. 588B).

The updated provision relate to:

• Part 1 Preliminary
• Part 10 Miscellaneous Matters in relation to Ordinance

On 22 July 2022, the Honk Kong Government published a notice on the Banking Ordinance - Minimum Criteria for Authorization - A Guideline issued by the Monetary Authority under section 16(10).

This “Guideline on Minimum Criteria for Authorization”, which is issued under section 16(10) of the Banking Ordinance (the Ordinance) (Cap. 155), sets out the manner in which the Monetary Authority (MA) will interpret the licensing criteria set out in the Seventh Schedule to the Ordinance (the Schedule) and exercise the functions conferred by it.

Under section 16(1) of the Ordinance the MA has a general discretion to grant or refuse an application for authorization. Under section 16(2), the MA is required to refuse to authorize if any one or more of the criteria specified in the Schedule are not fulfilled with respect to the applicant. 

On 21 July 2022, Hong Kong published Banking (Capital) Rules (Cap. 155L).

The updated provisions are the following:

• Part 1 Preliminary
• Part 4 Calculation of Credit Risk for Non-securitization Exposures: STC Approach
• Part 5 Calculation of Credit Risk for Non-securitization Exposures: BSC Approach
• Part 6 Calculation of Credit Risk for Non-securitization Exposures: IRB Approach
• Part 6A Calculation of Counterparty Credit Risk
• Part 6B Calculation of Risk-weighted Amounts of CIS Exposures
• Schedule 1 Specifications for Purposes of Certain Definitions in these Rules
• Schedule 4F Deduction of Holdings where Authorized Institution has Insignificant LAC
• Investments in Financial Sector Entities that are outside Scope of Consolidation under Section 3C Requirement
• Schedule 4G Deduction of Holdings where Authorized Institution has Significant LAC Investments in Financial Sector Entities that are outside Scope of Consolidation under Section 3C Requirement
• Schedule 6 Credit Quality Grades

On 20 July 2022, the Honk Kong Association of Banks (HKAB) published a communication on an alternative means of payments of funds under Payment Arrangements for Property Transactions (PAPT), to enhance customer protection, with the strong support of the Hong Kong Monetary Authority (HKMA).

The PAPT will cover refinancing cases for residential properties at this point, including car parking spaces in a residential building, which are generally speaking simpler. This would enable banks to observe how PAPT performs.

All HKAB member banks offering HKD mortgage loans for residential properties in Hong Kong should be ready to adopt PAPT before the end of the year. Customers seeking refinancing from banks would be provided with an option to adopt PAPT.

Under PAPT, the Refinancing Mortgage Institution (RMI) will transfer the mortgage loan proceeds directly to the Original Mortgage Institution (OMI) via the interbank payment system (Clearing House Automated Transfer System or CHATS), instead of transferring the same to law firms and held custody, followed by law firms' issuance of solicitor cheques to the OMI for redemption of customers' original mortgage loans. If the loan amount granted by the RMI is greater than the redemption amount, the RMI will credit the excess to the borrower's repayment account maintained with the RMI.

PAPT is part of the digital journey of the banking industry which aims to enhance customer protection by providing direct electronic bank-to-bank transfer of mortgage loan funds. HKAB has had discussions with a variety of stakeholders, including the HKMA, and a series of pilot refinancing transactions using PAPT has been completed smoothly by selected banks. As a result, the pilot arrangement is now expanded to all relevant member banks. The initiative would enhance protection of residential mortgage customers against any unforeseeable circumstances leading to customers' funds being frozen.

On 5 August 2022, the Securities and Futures Commission (SFC) updated the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. 

This Code of Conduct is applicable from 5 August onwards.

On 31 August 2022, the Securities and Futures Commission (SFC) reviewed the online brokerage, distribution and advisory services of the Circular to licensed corporations (LCs).

The SFC conducted a review of the business models of LCs which provided online brokerage, distribution and advisory services and their compliance with regulatory requirements when onboarding clients and distributing or advising on investment products via their online platforms. The review was conducted in various ways including via a fact-finding survey, desktop analysis and inspections.

This circular summarises key observations and compliance issues identified from the review. Details of the review, along with the related expected regulatory standards which LCs should be attentive to when providing services online as part of their regulated activities, are summarised in a report attached in the Appendix (the Report).

As more retail investors use various types of online platforms for investing, LCs should review their systems, controls and procedures having regard to the expected standards as reminded in this circular and the Report, and ensure that their online platforms are properly designed and operate in compliance with all applicable rules and regulations.

On 13 July 2022, the Securities and Futures Commission (SFC)  published a Circular to Intermediaries on the Extension of End-To-End (E2E) Test for the Hong Kong Investor Identification Regime (HKIDR).

In response to requests by some Relevant Regulated Intermediaries1 (RRIs) to extend the E2E Test period, the E2E Test for the HKIDR will be extended to include the period from 19 July 2022 to 5 August 2022 (both dates inclusive). For RRIs who have not completed the mandatory E2E Test yet, they are hereby reminded to complete the test as soon as possible in order to proceed to the market rehearsals.

After completion of the E2E Test, RRIs should submit (if they have not already submitted) the E2E Test confirmation reply forms (contained in the E2E Test package) by 5 August 2022 to:

• 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
• 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).

Following the successful completion of the E2E Test, Market Rehearsals (MRs) for systems relating to the HKIDR will be arranged in due course for RRIs to verify their readiness before the launch of the HKIDR. Details of the MRs will be announced later. 

RRIs can submit the BCAN-CID Mapping File and Reporting Forms to SEHK’s data repository via ECP web interface and/or ECP (SFTP) interface. Non-EP RRIs who intend to leverage on the ECP (SFTP) interface during the market rehearsals and after the launch of the HKIDR  should install HKEX’s Securities and Derivatives Network (SDNet/2) production line for this purpose. Please refer to HKEX’s Circular dated 13 July 2022 for further details.

On 22 July 2022, the Securities and Futures Commission (SFC) published Circular to Intermediaries on the update of Technical Information Paper for the Over-the-counter Securities Transactions Reporting Regime (OTCR) and OTCR Reporting File Template and Submission Process Flow.

Reference is made to the Circular on 26 November 2021 regarding the OTCR Technical Information Paper. 

Please note that an updated version of the OTCR Technical Information Paper, with some updates on the specifications, has been published.

The SFC has also prepared an OTCR Reporting File Template and Submission Process Flow, to facilitate preparation of submission files under the OTCR and illustrate the process flow of file submission. 

On 12 August 2022, the Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) jointly announced their in-principle approval for changes to the trading calendar for Stock Connect. The changes would apply to both northbound and southbound trading.

Because different public holidays are observed in the Mainland and Hong Kong, investors currently cannot trade through Stock Connect on certain days . The proposed changes enable Stock Connect trading on any day when both the Mainland and Hong Kong markets are open, even when the corresponding settlement day falls on a public holiday. 

The implementation of the enhancements to the trading calendar will take six months to prepare and is subject to regulatory approvals and market readiness. The launch date will be announced in due course.

On 5 July 2022, Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) (Amendment) Regulations 2022 was published in  in the Irish Statute Book.

The purpose of these Regulations is to amend the Central Bank Act 1942 Section 32D) (Certain Financial Vehicles Dedicated Levy) Regulations 2021(S.I. No. 335 of 2021).

On 29 July 2022, the Houses of the Oireachtas (Ireland's national parliament) initiates Central Bank (Individual Accountability Framework) Bill 2022. 

Bill entitled an Act to amend the Central Bank Act 1942 to extend the application of the administrative sanctions procedure to persons performing controlled functions and to certain holding companies, to provide for the appointment of a panel from which appointments may be made for the purposes of certain decisions, to provide for the admissibility of business records at an inquiry, to provide for disclosure agreements, and to provide for an application for confirmation by the High Court of a decision of an inquiry under Part IIIC and a decision of the Irish Financial Services Appeals Tribunal under Part VIIA of that Act; to amend the Central Bank Reform Act 2010 to extend the regulation and supervision of financial service providers and persons performing controlled functions and pre-approval controlled functions through the introduction of business standards, conduct standards and the duty of responsibility, to provide for the independence of persons carrying out an investigation in the performance of their functions, to provide for the independence of persons to whom a function of the Head of Financial Regulation, the Central Bank or the Governor is delegated in the performance of their functions, to provide for a right of appeal to the Irish Financial Services Appeals Tribunal of a decision of the Head of Financial Regulation to confirm a suspension notice, to increase the period for which the High Court may extend the duration of a suspension notice, and to provide for an application for confirmation by the High Court of a decision of the Central Bank or Governor to issue a prohibition notice; to amend the Central Bank (Supervision and Enforcement) Act 2013 to extend the regulation making power of the Central Bank to provide for arrangements that financial service providers shall adopt in relation to the allocation of responsibilities and compliance with obligations under financial services legislation; to amend the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (S.I. No. 352 of 2011); and to provide for related matters.

On 4 July 2022, the Central Bank of Ireland published a notice of intention in relation to the application of the ESMA Guidelines on stress test scenarios under the Money Market Fund (MMF) Regulation.

The notice sets out that the CBI expects full compliance with the Guidelines from 04 July 2022.  The Central Bank will, in due course, consult on the incorporation of a provision in the Central Bank UCITS Regulations and AIF Rulebook that all managers of MMFs adhere to the Guidelines.

On 15 July 2022, European Union (Markets in Financial Instruments) (Amendment) (No. 3) Regulations 2022 was published  in the Irish Statute Book.

These Regulations amend the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No.375 of 2017) to provide for the integration of sustainability factors into product governance obligations, as required by Commission Delegated Directive (EU) 2021/1269 of 21 April 2021, amending Commission Delegated Directive (EU) 2017/593 of 7 April 2016.

These Regulations shall come into operation on 22 November 2022.

On 1 July 2022,European Union (Investment Firms) (No. 2) (Amendment) Regulations 2022 was published in the Irish Statute Book.

These Regulations amend the Central Bank Act 1971 (No. 24 of 1971) to provide for undertakings referred to in point (1)(b) of Article 4(1) of the Capital Requirements Regulation, which have been authorised under Part 2 of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017), to apply for re-authorisation as a credit institution, as required by Directive (EU) 2019/2034 of the European Parliament and Council of 27 November 2019, and sets out certain requirements for the Central Bank of Ireland in relation to such applications. In addition, these Regulations amend the European Union (Investment Firms) Regulations 2021 (S.I. No. 355 of 2021) to update internal referencing.

On 1 July 2022, European Union (Investment Firms) (Amendment) Regulations 2022 was published in the Irish Statute Book.

These Regulations amend the Central Bank Act 1971 (No. 24 of 1971) to provide for the prohibition of certain investment services and activities (‘Class 1 business’) in the State by certain investment firms (Class 1 firms) operating without the requisite permission (‘Class 1 authorisation’ or banking licence), the application process for a Class 1 authorisation and the associated conditions of authorisation and sets out the process and grounds for the withdrawal of a Class 1 authorisation.

On 1 July 222, European Union (Markets in Financial Instruments) (Amendment) (No. 2) Regulations 2022 was published in the Irish Statute Book.

These Regulations amend the European Union (Markets in Financial Instruments Regulations 2017 (S.I. No. 375 of 2017) to provide that a Class 1 investment firm’s authorisation as an investment firm shall be deemed withdrawn upon it being granted a credit institution authorisation/licence. In addition, these Regulations amend the Central Bank Act 1971 (No. 24 of 1971) to require the Central Bank to establish to its satisfaction that an applicant for a credit institution authorisation, who intends to provide investment services or perform investment activities, will comply with the relevant provisions of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017).

On 21 July2022, Ireland publishes draft of protected disclosures (Amendment) Act 2022.

An Act to give effect to Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law and for that purpose to amend and extend the Protected Disclosures Act 2014 ; to provide for the establishment of the Office of the Protected Disclosures Commissioner and to confer functions on it; to amend the Freedom of Information Act 2014 , the Ombudsman Act 1980 and the Workplace Relations Act 2015 ; and to provide for related matters.

On 6 July 2022, CONSOB published the parameters provided for by article 89-quater of the issuers' regulation determined for the year 2022 regarding Consob controls on listed companies.

Consob has determined the parameters provided for in Article 89-quater of the Issuers' Regulation, representative of the risk for the correctness and completeness of the financial information disseminated to the market, for the purpose of identifying all the listed issuers whose documents are subject to control (resolution no. 22392 of 6 July 2022).

The regulatory provision defines, by way of non-exhaustive example, the parameters representing the risk on the basis of which to identify listed issuers to be subjected to supervision. In particular paragraph 3 of Article 89-quater of the Issuers' Regulation envisages that each year Consob shall establish the parameters representative of the risks, taking into account inter alia:

a) the economic and financial data of the companies concerned;

b) the reports received from the issuer's control body and statutory auditor;

c) the activity on securities;

d) significant information received from other administrations or stakeholders.

The regulation envisages, moreover, random selection models for the identification, up to a fifth of the issuers selected, of listed companies to be included into the control, even in the absence of significant risks (paragraph 4, Article 89-quater).

Consob, for 2022, taking into account the impact on the financial reporting of listed issuers for the year 2021 of the effects related to the Covid-19 pandemic, as highlighted by the ESMA public statements of 29 October 2021 (ESMA 32-63-1186) and by the warnings published by Consob on the matter (Consob warning no. 6/2020 of 9 April 2020, Consob warning no. 8/20 of 16 July 2020 and Consob warning no. 1/21 of 16 February 2021), determined that the parameters on the financial information disseminated to the public by listed issuers and listed issuers that have Italy as their Member State of origin for 2021, are:

1. For the economic-income and financial data of the companies concerned, the following items:

(i) an indicator of the operating profitability of the asset;

(iii) the ratio of debt to equity (D/E);

(iv) an indicator measuring the repayment capacity of short-term debt;

(v) the change in equity in the last year;

2. As to the reports received from the issuer's control body and statutory auditor, the following indicators:

• communications transmitted to CONSOB by the control body on the irregularities found in the supervisory activity within the meaning of Article 149, paragraph 3, of the TUF;
• reports of reprehensible facts pursuant to Article 155, paragraph 2 of the TUF;
• the judgments with negative remarks, and the statements of impossibility of the auditor to express a judgment, contained in the reports of the auditing firm drawn up pursuant to Articles 14 of Legislative Decree no. 39 of 2010 and 10 of Regulation (EU) no. 537 of 16 April 2014;
• the reports relating to the operation of the internal audit system;

3. As to the activities on securities, the following elements: the trend of the share price, market capitalisation, the volatility of share prices;

4. As to significant information received from other administrations or interested parties, the following indicators:

i) the information received from public administrations as defined by Article 1, paragraph 2, of Italian Legislative Decree no. 165 of 2001, from Banca d'Italia, from national and foreign administrative Authorities and from the Judicial Authority;

ii) the significant information supplied by interested parties;

5. As to the additional parameters not expressly identified by Article 89-quater, the following indicators:

i) CONSOB's inspection or investigation activities that have led to activate powers of appeals or reports to the Judicial Authority for aspects subject to prosecution or for which CONSOB has reported or detected critical issues in regard to the completeness or accuracy of the information;

ii) the presence of relevant extraordinary operations;

iii) information on the creditworthiness of issuers and an indicator of credit risk constructed on the basis of the systematic analysis of market communications from issuers;

iv) an indicator of exposure to the risk of credit losses, specific to financial issuers;

v) the exposure of the issuer's economic sector to the risk of climate change and energy transition;

vi) the direct exposure to the effects of Russia's invasion of Ukraine;

vii) the seniority of analysis of each company in the previous selections pursuant to art. 89-quater of the Issuers' Regulation.

Consob has also determined that the criterion for random selection is the extraction of a number of companies not exceeding one fifth of the total number of issuers to be controlled, net of the companies that will be identified on the basis of the aforementioned criteria and, to promote a rotation of issuers, of the companies that were already included in the selections of the last ten years, that have been listed in 2022 or that are in any case subject to periodic reporting obligations pursuant to Article 114, paragraph 5, of the Consolidated Law on Finance.

However, in order to ensure that it is always possible for a company to be selected, at least one company will be extracted by excluding only the companies referred to in the previous point A).

Issuers will be randomly selected by taking into account the capitalisation of the issuer and/or the counter-value placed, in order to increase the probability of being extracted for those of larger dimensions. A replicable random number generation procedure will be applied.

On 29 July 2022,  CONSOB published amendments to the Consob Intermediaries Regulation.

Consob, having concluded the public consultation (see Consob Informa no. 6/22), amended with Resolution no. 22430 of 28 July 2022 the Regulation no. 20307 of 15 February 2018, concerning the regulation of intermediaries ("Intermediaries Regulation"), to adapt the domestic system to the following European acts:

• Directive (EU) 2021/338 which, as part of the Capital Markets Recovery Package, modifies MiFID II concerning investor protection, dealing in particular with the aspects concerning the disclosure to customers on the costs and charges of financial instruments and investment, periodic reports to customers, the assessment of adequacy, the provisions applicable to eligible counterparties;
• Delegated acts for the implementation of MiFID II, UCITS and IDD regulations on the integration of sustainable finance in the provision of investment services, in the distribution of IBIPs and in collective management;
• Directive (EU) 2019/2034 amending MiFID II as regards the provision of investment services by non-EU companies on the exclusive initiative of customers (so-called reverse solicitation).

On this occasion, rationalization and simplification interventions were carried out on the regulations in force also with reference to the following additional areas:

• The requirements of knowledge and competence of the staff of intermediaries, in order to provide certain details regarding the obligations of document retention imposed on operators;
• The register and the rules applicable to financial advisors;
• The procedure for extending the authorization of the SIMs to carry out investment services, the management of the register provided for by Article no. 20 of the Consolidated Law on Finance (TUF), as well as the cross-border operations of SIMs.

On 1 August 2022, CONSOB  simplified the procedure for approving prospectuses.

Simplified procedures for the approval of prospectuses by Consob and green light for documentation in English: these are the two main changes introduced by the amendments to the Issuers Regulations approved by the Commission to comply with the needs of the market.

Among the innovations introduced at the end of a consultation with operators started in 2021 is the abolition of the preliminary verification of the completeness of the documentation. With the entry into force of the new rules (Resolution no. 22423 of 28 July 2022, being published in the Official Gazette), the administrative proceedings will start from the date of submission of the related applications to Consob.

The deadlines for the maximum duration of the proceedings and for the response to requests for additions to the prospectus have also been eliminated and the timing has been aligned with the provisions of the European Regulation on prospectus.

In agreement with the requests coming from the consultation with the market, the documents to be attached to the draft prospectus have been also reduced. The possibility has been confirmed for the issuer and/or the offeror to first submit to Consob issues of particular relevance related to the public offer or admission to trading, to ease the promptness of the preliminary process.

Finally, the possibility to draw up the prospectus in English has also been introduced, providing for the translation into Italian of the Summary Note only in the case of offers carried out entirely or partially in Italy, or if admission to trading on the Italian regulated market has been requested.

The report illustrating the results of the consultation, the contributions received as part of the consultation, the Resolution amending Issuers Regulation and the opinion of Committee of Market Operators and Investors (COMI) can be consulted on the Consob website www.consob.it.

On 10 August 2022, Italy published a communication on supervisory provisions on penalties and administrative penalty procedure.

This measure amends the "Supervisory Provisions on Penalties and Administrative Penalty Procedure" adopted on December 18, 2012, and subsequently amended, most recently by order dated August 13, 2020. 

In particular, the text of the provisions is aligned with the innovations in organizational and procedural arrangements resulting from the establishment of the Supervisory and Regulatory Anti-Money Laundering Unit (SNA) (see Sect. II, paragraphs 1.1, 1.2 and 1.4).

In accordance with the provisions of the regulation on the regulation of the adoption of acts of a regulatory nature or general content of the Bank of Italy in the exercise of supervisory functions, pursuant to Article 23 of Law No. 262 of December 28, 2005 (measure of July 9, 2019), the changes made to the provisions were not subject to public consultation as they consisted exclusively in the identification of the person in charge of the procedure - carried out pursuant to Law No. 241/90 - and in mere adjustments to the internal organizational structures consequent to the creation of the new SNA Unit. 

This provision and the full version of the provisions, as amended, which can be consulted on the Bank's website of Italy, will be published in the Official Gazette of the Italian Republic. 

The amendments will enter into force on the day following their publication in the Official Gazette and will apply to irregularities ascertained after their entry into force; pending proceedings will continue to follow the procedural process prevailing. 

On 22 June 2022, law of June 22, 2022 on the management and recovery of seized or confiscated assets  was published in Legilux (Journal Officiel du Grand-Duché de Luxembourg).

The Law outlines the following: 

• the establishment  of  an Asset Management and Recovery Office ( "BGRA") under the administrative supervision of the State Prosecutor, which will be responsible for the management and recovery of the seized assets handed over to it.  BGRA  will have the power to carry out investigations into the convicted person's assets as well as the  power to manage the confiscated assets, including the ability to sell them in order to avoid any loss of value; 
• the transposition of the Council Framework Decision 2007/845/JAI of 6 December 2007 on cooperation between Asset Recovery Offices of the Member States in tracing and identifying proceeds of crime or other crime-related property, designating the BGRA as the national contact point in Luxembourg; 
• the adaptation of the confiscation regime to improve its effectiveness. The new regime enables the detection and tracing of property to be frozen and confiscated, even after a final conviction for a criminal offence, and ensuring the effective execution of a confiscation order (if any);
• the right of access to a lawyer for any person claiming to have a right to an asset subject to a criminal seizure proceeding.

The law will come into force on 5 July 2022.

Version française

Le 22 juin 2022, la loi du 22 juin 2022 relative à la gestion et au recouvrement des avoirs saisis ou confisqués a été publiée dans Legilux (Journal Officiel du Grand-Duché de Luxembourg).

La loi prévoit les points suivants :

• la création d'un Bureau de Gestion et de Recouvrement des Avoirs (" BGRA ") sous la tutelle administrative du Procureur d'Etat, qui sera chargé de la gestion et du recouvrement des avoirs saisis qui lui seront remis.  Le BGRA aura le pouvoir de mener des enquêtes sur le patrimoine de la personne condamnée ainsi que le pouvoir de gérer les biens confisqués, y compris la possibilité de les vendre afin d'éviter toute perte de valeur ; 
• la transposition de la décision-cadre 2007/845/JAI du Conseil du 6 décembre 2007 relative à la coopération entre les bureaux de recouvrement des avoirs des États membres en matière de dépistage et d'identification des produits du crime ou d'autres biens en rapport avec le crime, désignant le BGRA comme point de contact national au Luxembourg ; 
• l'adaptation du régime de confiscation pour en améliorer l'efficacité. Le nouveau régime permet de détecter et de localiser les biens à geler et à confisquer, même après une condamnation définitive pour une infraction pénale, et de garantir l'exécution effective d'une décision de confiscation (le cas échéant) ;
• le droit d'accès à un avocat pour toute personne prétendant avoir un droit sur un bien faisant l'objet d'une procédure de saisie pénale.

La loi entrera en vigueur le 5 juillet 2022. 

On 20 July 2022, the Commission de Surveillance du secteur financier (CSSF) published a communication on the European Banking Authority Guidelines on the role and responsibilities of the AML/CFT compliance officer.

The CSSF drew attention to the publication by the European Banking Authority (EBA) on 14 June 2022 of the Guidelines specifying the role, tasks and responsibilities of the AML/CFT compliance officer, the management body and senior manager in charge of AML/CFT compliance as well as internal policies, controls and procedures as referred to in Article 8, and Article 45 and Article 46 of Directive (EU) 2015/849.

These Guidelines apply to credit or financial institutions as defined in Article 3(1) and 3(2) of Directive (EU) 2015/849.

Important provisions set out in the Guidelines :

• Governance: clarification of the role of the management body in its management function and the role of the management body in its supervisory function;
• Proportionality: proportionality criteria for the appointment of a separate AML/CFT compliance officer;
• Assessment: assessment prior to the appointment, by the credit or financial institutions, of the suitability, skills and expertise that the AML/CFT compliance officer should possess;
• Tasks and responsibilities: clarification of expectations regarding the role, tasks and responsibilities of the AML/CFT compliance officer and management (including the member of the management body who will be responsible for implementing the AML/CFT obligations). In particular: Details of the AML/CFT’s reporting expectations (i.e. a list of information to be included in the AML/CFT compliance officer’s report); information transmitted to the FIU (i.e. reporting of suspicious transactions); training (i.e. including practical training to be provided to individuals exposed to different levels of ML/FT risks); cooperation between the AML/CFT compliance function and other functions (e.g. risk and internal audit).
• Outsourcing: clarification of the list of strategic decisions to comply with AML/CFT obligations that should not be outsourced. The new Guidelines refer to the outsourcing process as defined in the ESAs Guidelines on outsourcing, in particular when outsourcing operational functions of the AML/CFT compliance officer;
• Group level: the organisation of the AML/CFT compliance function at group level with the appointment of a group AML/CFT compliance officer and the tasks and responsibilities assigned.

The Guidelines will apply from 1 December 2022. The CSSF is currently analysing the impact of these Guidelines on different regulatory texts currently in place.

Version française

Le 20 juillet 2022, la Commission de Surveillance du secteur financier (CSSF) a publié une communication relative aux lignes directrices de l'Autorité bancaire européenne sur le rôle et les responsabilités du responsable de la conformité en matière de lutte contre le blanchiment et le financement du terrorisme.

La CSSF a attiré l'attention sur la publication par l'Autorité bancaire européenne (ABE), le 14 juin 2022, des lignes directrices précisant le rôle, les tâches et les responsabilités du responsable de la conformité en matière de LBC/FT, de l'organe de direction et du cadre supérieur chargé de la conformité en matière de LBC/FT ainsi que des politiques, contrôles et procédures internes visés à l'article 8, et aux articles 45 et 46 de la directive (UE) 2015/849.

Les présentes lignes directrices s'appliquent aux établissements de crédit ou financiers tels que définis à l'article 3, paragraphes 1 et 2, de la directive (UE) 2015/849.

Dispositions importantes énoncées dans les lignes directrices :

• Gouvernance : clarification du rôle de l'organe de direction dans sa fonction de gestion et du rôle de l'organe de direction dans sa fonction de surveillance ;
• Proportionnalité : critères de proportionnalité pour la nomination d'un responsable de la conformité en matière de LBC/FT distinct ;
• Évaluation : évaluation préalable à la nomination, par les établissements de crédit ou financiers, de l'aptitude, des compétences et de l'expertise que doit posséder le responsable de la conformité en matière de LBC/FT ;
• Tâches et responsabilités : clarification des attentes concernant le rôle, les tâches et les responsabilités du responsable de la conformité en matière de LBC/FT et de la direction (y compris le membre de l'organe de direction qui sera responsable de la mise en œuvre des obligations en matière de LBC/FT). En particulier : Des précisions sur les attentes en matière de déclaration (c'est-à-dire une liste d'informations à inclure dans le rapport du responsable de la conformité en matière de LBC/FT) ; les informations transmises à la CRF (c'est-à-dire la déclaration des transactions suspectes) ; la formation (c'est-à-dire notamment la formation pratique à dispenser aux personnes exposées à différents niveaux de risques de LBC/FT) ; la coopération entre la fonction de conformité en matière de LBC/FT et d'autres fonctions (par exemple, le risque et l'audit interne) ;
• Externalisation : clarification de la liste des décisions stratégiques visant à se conformer aux obligations de LBC/FT qui ne doivent pas être externalisées. Les nouvelles lignes directrices font référence au processus d'externalisation tel que défini dans les lignes directrices de l'AES sur l'externalisation, en particulier lors de l'externalisation des fonctions opérationnelles du responsable de la conformité en matière de LBC/FT ;
• Au niveau du groupe : l'organisation de la fonction de conformité LBC/FT au niveau du groupe avec la nomination d'un responsable de la conformité LBC/FT du groupe et les tâches et responsabilités qui lui sont attribuées.

Les lignes directrices seront applicables à partir du 1er décembre 2022. La CSSF analyse actuellement l'impact de ces lignes directrices sur les différents textes réglementaires actuellement en vigueur.

On 19 August 2022, the Commission de Surveillance du secteur financier (CSSF) published the Circular 22/820 on the application of the Guidelines of the European Securities and Market Authority on standardised procedures and messaging protocols under Article 6(2) of Regulation (EU) No 909/2014.

The purpose of this circular is to inform you that the CSSF, in its capacity as competent authority, applies the Guidelines of the European Securities and Market Authority on standardised procedures and messaging protocols under Article 6(2) of Regulation (EU) No 909/2014 (ESMA70-151-2906) (the “Guidelines”), published on 06/04/2020. Consequently, the CSSF has integrated the Guidelines into its administrative practice and regulatory approach with a view to promote supervisory convergence in this field at European level.

All entities providing investment services or exercising investment activities shall duly comply with them.

Version française

Le 19 août 2022, la Commission de Surveillance du secteur financier (CSSF) a publié la circulaire 22/820 relative à l'application des lignes directrices de l'Autorité européenne des marchés financiers sur les procédures standardisées et les protocoles de messagerie en vertu de l'article 6(2) du règlement (UE) n° 909/2014.

La présente circulaire a pour objet de vous informer que la CSSF, en sa qualité d'autorité compétente, applique les lignes directrices de l'Autorité européenne des marchés financiers relatives aux procédures standardisées et aux protocoles de messagerie en vertu de l'article 6, paragraphe 2, du règlement (UE) n° 909/2014 (ESMA70-151-2906) (les " Lignes directrices "), publiées le 06/04/2020. Par conséquent, la CSSF a intégré les Lignes directrices dans sa pratique administrative et son approche réglementaire en vue de promouvoir la convergence de la surveillance dans ce domaine au niveau européen.

Toutes les entités fournissant des services d'investissement ou exerçant des activités d'investissement doivent dûment s'y conformer.

On 20 July 2022,  law of July 20, 2022 on several amendments related to financial services laws was published in Legilux (Journal Officiel du Grand-Duché de Luxembourg).

Law of July 20, 2022 entails: 

1°modification of:

a) the amended law of March 15, 2016 relating to OTC derivatives, central counterparties and trade repositories and amending various laws relating to financial services;

b) the amended law of 23 December 1998 creating a commission for the supervision of the financial sector;

c) the amended law of 5 August 2005 on financial guarantee contracts;

d) the amended law of May 19, 2006 transposing Directive 2004/25/EC of the European Parliament and of the Council of April 21, 2004 on takeover bids;

e) the amended law of May 24, 2011 concerning the exercise of certain shareholder rights at general meetings of listed companies;

f) the amended law of 18 December 2015 relating to the failure of credit institutions and certain investment firms; and

g) amended Grand-Ducal regulation of 18 December 1981 concerning fungible deposits of precious metals and amending article 1er of the Grand-Ducal regulation of 17 February 1971 concerning the circulation of transferable securities; and

2° implementation of Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) no. 648/2012, (EU) no. 600/2014, (EU) no. 806/2014 and (EU) 2015/2365, as well as directives 2002/47/EC, 2004/25/EC, 2007/36 /EC, 2014/59/EU and (EU) 2017/1132.

The amendments reflects to the following elements: 

• Chapter 1er - Amendment of the amended law of 15 March 2016 relating to OTC derivatives, central counterparties and trade repositories and amending various laws relating to financial services: 
• Chapter 1bis - Resolution of central counterparties
• Chapter 2 - Amendment of the amended law of 23 December 1998 creating a commission for the supervision of the financial sector
• Chapter 3 - Amendment of the amended law of 5 August 2005 on financial guarantee contracts
• Chapter 4 - Amendment of the amended law of May 19, 2006 transposing Directive 2004/25/EC of the European Parliament and of the Council of April 21, 2004 on public takeover bids;
• Chapter 5 - Amendment of the amended law of 24 May 2011 concerning the exercise of certain rights of shareholders at general meetings of listed companies
• Chapter 6 - Amendment to the amended law of 18 December 2015 relating to the failure of credit institutions and certain investment firms
• Chapter 7 - Modification of the modified Grand-Ducal regulation of 18 December 1981 concerning fungible deposits of precious metals and modifying article 1er of the Grand-Ducal regulation of 17 February 1971 concerning the circulation of transferable securities

It comes into force on 24 July 2022. 

Version française

Le 20 juillet 2022, la loi du 20 juillet 2022 portant plusieurs modifications relatives aux lois sur les services financiers a été publiée dans Legilux (Journal Officiel du Grand-Duché de Luxembourg).

La loi du 20 juillet 2022 entraîne : 

1°la modification de :

a) de la loi modifiée du 15 mars 2016 relative aux produits dérivés de gré à gré, aux contreparties centrales et aux référentiels centraux et modifiant diverses lois relatives aux services financiers ;

b) la loi modifiée du 23 décembre 1998 portant création d'une commission de surveillance du secteur financier ;

c) la loi modifiée du 5 août 2005 relative aux contrats de garantie financière ;

d) la loi modifiée du 19 mai 2006 transposant la directive 2004/25/CE du Parlement européen et du Conseil du 21 avril 2004 concernant les offres publiques d'acquisition ;

e) la loi modifiée du 24 mai 2011 concernant l'exercice de certains droits des actionnaires lors des assemblées générales des sociétés cotées en bourse ;

f) la loi modifiée du 18 décembre 2015 relative à la faillite des établissements de crédit et de certaines entreprises d'investissement ; et

g) le règlement grand-ducal modifié du 18 décembre 1981 concernant les dépôts fongibles de métaux précieux et modifiant l'article 1er du règlement grand-ducal du 17 février 1971 concernant la circulation des valeurs mobilières ; et

2° la mise en œuvre du règlement (UE) 2021/23 du Parlement européen et du Conseil du 16 décembre 2020 relatif à un cadre pour le redressement et la résolution des contreparties centrales et modifiant les règlements (UE) n° 1095/2010, (UE) n° 648/2012, (UE) n° 600/2014, (UE) n° 806/2014 et (UE) 2015/2365, ainsi que les directives 2002/47/CE, 2004/25/CE, 2007/36 /CE, 2014/59/UE et (UE) 2017/1132.

Les modifications reflètent les éléments suivants: 

• Chapitre 1er - Modification de la loi modifiée du 15 mars 2016 relative aux produits dérivés de gré à gré, aux contreparties centrales et aux référentiels centraux et modifiant diverses lois relatives aux services financiers : 
• Chapitre 1bis - Résolution des contreparties centrales.
• Chapitre 2 - Modification de la loi modifiée du 23 décembre 1998 portant création d'une commission de surveillance du secteur financier
• Chapitre 3 - Modification de la loi modifiée du 5 août 2005 relative aux contrats de garantie financière
• Chapitre 4 - Modification de la loi modifiée du 19 mai 2006 portant transposition de la directive 2004/25/CE du Parlement européen et du Conseil du 21 avril 2004 concernant les offres publiques d'acquisition ;
• Chapitre 5 - Modification de la loi modifiée du 24 mai 2011 concernant l'exercice de certains droits des actionnaires lors des assemblées générales des sociétés cotées en bourse.
• Chapitre 6 - Modification de la loi modifiée du 18 décembre 2015 relative à la faillite des établissements de crédit et de certaines entreprises d'investissement.
• Chapitre 7 - Modification du règlement grand-ducal modifié du 18 décembre 1981 concernant les dépôts fongibles de métaux précieux et modifiant l'article 1er er du règlement grand-ducal du 17 février 1971 concernant la circulation des valeurs mobilières.

Il entre en vigueur le 24 juillet 2022. 

On 14 July 2022, Association of the Luxembourg Fund Industry (ALFI) published swing price brochure and survey 2022.

The primary purpose of the paper is to provide insight and guidance concerning swing pricing, with respect its advantages, operation and limitations relevant to those considering adoption of a swing pricing programme and to established practitioners. The paper intends to provide practical guidance relating to the key elements to be considered and to recommend standards of best practice as endorsed by ALFI.

The ALFI Swing Pricing survey 2022 seeks to analyse the evolution of swing pricing, its adoption across the Luxembourg industry, the maturing of swing pricing capabilities and the benefits it has provided through times of market volatility which was observed during the COVID 19 impact in March 2020. Over the last decade the adoption of swing pricing has increased across Europe and has become common market practice since the last ALFI Swing Pricing survey was undertaken in 2015. 

ALFI notes that jurisdictional developments have led asset managers to adopt swing pricing notably in France, Spain and most recently Germany (March 2020). In other markets such as the United States, Asia and Australia where swing pricing is not commonly applied, regulators and industry bodies continue to explore the potential benefits swing pricing as an anti-dilution mechanism can bring to investors in those markets. Asset managers in Luxembourg have matured swing pricing techniques, implementing experience over market cycles and developing system capabilities to mature the swing pricing models in place. The publication of the 2022 survey coincides with the issuance of the revised ALFI Swing pricing Guidelines 2022. 

The documents reflect current market practice and reference to ALFI Swing Pricing Guidelines for jurisdictional developments.  

Version française

Le 14 juillet 2022, l'Association Luxembourgeoise de l'Industrie des Fonds (ALFI) a publié la brochure et l'enquête swing price 2022.

L'objectif principal de ce document est de fournir un aperçu et des conseils concernant le swing pricing, en ce qui concerne ses avantages, son fonctionnement et ses limites, pertinents pour ceux qui envisagent l'adoption d'un programme de swing pricing et pour les praticiens établis. Le document vise à fournir des conseils pratiques sur les éléments clés à prendre en compte et à recommander des normes de bonne pratique telles qu'approuvées par l'ALFI.

L'ALFI Swing Pricing survey 2022 cherche à analyser l'évolution du swing pricing, son adoption dans l'industrie luxembourgeoise, la maturation des capacités de swing pricing et les avantages qu'il a apportés dans les périodes de volatilité du marché qui ont été observées lors de l'impact de COVID 19 en mars 2020. Au cours de la dernière décennie, l'adoption du swing pricing a augmenté à travers l'Europe et est devenue une pratique de marché courante depuis la dernière enquête ALFI Swing Pricing entreprise en 2015. 

L'ALFI note que les développements juridictionnels ont conduit les gestionnaires d'actifs à adopter le swing pricing notamment en France, en Espagne et plus récemment en Allemagne (mars 2020). Sur d'autres marchés tels que les États-Unis, l'Asie et l'Australie où le swing pricing n'est pas couramment appliqué, les régulateurs et les organismes du secteur continuent d'explorer les avantages potentiels que le swing pricing en tant que mécanisme anti-dilution peut apporter aux investisseurs sur ces marchés. Les gestionnaires d'actifs au Luxembourg ont mûri les techniques de swing pricing, en mettant en œuvre l'expérience acquise au fil des cycles de marché et en développant les capacités du système pour faire mûrir les modèles de swing pricing en place. La publication de l'enquête 2022 coïncide avec la publication de la version révisée des ALFI Swing pricing Guidelines 2022. 

Ces documents reflètent les pratiques actuelles du marché et font référence aux ALFI Swing Pricing Guidelines pour les développements juridictionnels. 

On 18 July 2022, the Commission de Surveillance du secteur financier (CSSF) published a technical document on URR - UCITS identifiers.

By virtue of Article 147 of the Law of 17 December 2010 relating to undertakings for collective investment, the CSSF requires financial information from UCITS on a half-yearly basis, including their exposures to financial derivative instruments and liquidity and credit risks.

The funds are informed by a CSSF circular letter if, based on the value of total net assets and use of leverage parameters, they are subject to the light or full version of the UCITS risk reporting.

Version française

Le 18 juillet 2022, la Commission de Surveillance du secteur financier (CSSF) a publié un document technique sur les URR - identifiants des OPCVM.

En vertu de l'article 147 de la loi du 17 décembre 2010 relative aux organismes de placement collectif, la CSSF exige des informations financières des OPCVM sur une base semestrielle, y compris leur exposition aux instruments financiers dérivés et aux risques de liquidité et de crédit.

Les fonds sont informés par une lettre circulaire de la CSSF si, sur base de la valeur des actifs nets totaux et de l'utilisation des paramètres de levier, ils sont soumis à la version allégée ou complète du reporting des risques des OPCVM.

BACKGROUND

On 20 July 2022, the Commission de Surveillance du secteur financier (CSSF) published additional clarifications for the completion/submission of reports of investment funds foreseen by Circular CSSF 21/790.

On 31 March 2022, the CSSF issued a communiqué to inform that, as from that date, the reports introduced by Circular CSSF 21/790, namely the self-assessment questionnaire (“SAQ”), the separate report (“SR”) and the management letter (“ML”) (together the “reports”), which are applicable to UCITS, UCIs subject to Part II of the Law of 17 December 2010 (UCIs Part II), Specialised Investment Funds (SIFs) and Investment Companies in Risk Capital (SICARs) (together the “regulated UCIs”), are available in the Collective Investment Sector Reporting Tool (“CISERO”) module on the CSSF eDesk platform. The publication mentioned that, as of that date, the SAQ, the SR (only for UCITS and UCIs part II) and the ML for regulated UCIs with a financial year ending between 30 June 2022 and 30 November 2022 would be at first available in that module.

The new communication aims to provide further clarifications to regulated UCIs and the entities involved in their functioning (e.g. investment fund managers, other service providers) in relation to the organisation of the operational processes to be carried out in the CISERO module for the completion of the SAQ and the submission of the reports applicable to those regulated UCIs to the CSSF.

Before addressing those modalities, this communication reminds the responsibilities of the dirigeants of the regulated UCIs (the “dirigeants”), as referred to in the applicable sectorial laws, in relation to the reports and confirms that regulated UCIs can rely on the support of service providers (e.g. investment fund managers, other service providers) for the completion and/or the submission to the CSSF of the reports.

WHAT'S NEW?

In the communication, the following topics highlighted: 

1) Responsibilities of the dirigeants and support from service providers. 

The dirigeants are responsible for the submission, within the specified deadlines, of the separate report (SR) and the management letter (ML) to the CSSF, once these reports have been validated by the approved statutory auditor (the “auditor”) in the CISERO module. The dirigeants can rely, by means of duly formalised arrangements (e.g. written Board resolutions, contractual agreements), on the support of service providers (e.g. investment fund manager, other service providers) for (i) gathering all the necessary information / data and filling in the SAQ and (ii) submitting the completed SAQ as well as the SR and the ML prepared by the auditor to the CSSF. Alternatively, the dirigeants can choose to perform on their own the completion of the SAQ and/or the submission of the reports. Regardless of the operational model chosen by the dirigeants, they have in any case to perform a formalised review and validation of the content of the SAQ before its submission to the CSSF.

2) Organisation of the operational processes for the completion of the SAQ and the submission of the reports to the CSSF.

Following the general principles outlined above and depending on the organisation of the regulated UCIs, the dirigeants have different options available for the organisation of the operational processes to be carried out in the CISERO module for the completion of the SAQ and the submission of the reports to the CSSF. In any case, the dirigeants remain ultimately responsible for the content of the SAQ.

The CSSF would like to remind that the auditor of the regulated UCI only has access to the SR and the ML of the regulated UCI once the field “Auditor” set out in the section “General information” – “Information of the entity” has been duly filled in by the authorised user(s) (e.g. investment fund manager, regulated UCI, other service provider) in the CISERO module. This field must be filled in as soon as possible once the reports have been made available in the CISERO module on the CSSF eDesk platform.

3)  Access of authorised user(s) to the reports of regulated UCIs in the CISERO module

In case the appointed IFM performs the operational processes on behalf of the regulated UCIs (i.e. completion of the SAQ and/or completion of the reports to the CSSF), the user access rights and specific roles (“Board member” or “Conducting Officer”) assigned at the level of the IFM allow that IFM to perform those processes in the CISERO module.

In case the dirigeants adopt the options set out under points 2.a) or 2.b) of section II for the completion of the SAQ and the submission of the reports to the CSSF, the document clarified the main steps for providing an access in the CISERO module to the reports applicable to a regulated UCI.

WHAT'S NEXT?

In case of any question relating to the Circular CSSF 21/790 or the functioning of the new “Collective Investment Sector Reporting Tool” should be addressed to cisero@cssf.lu.

Version française

BACKGROUND

Le 20 juillet 2022, la Commission de Surveillance du secteur financier (CSSF) a publié des clarifications supplémentaires pour l'établissement/la soumission des rapports des fonds d'investissement prévus par la circulaire CSSF 21/790.

Le 31 mars 2022, la CSSF a publié un communiqué pour informer qu'à partir de cette date, les rapports introduits par la circulaire CSSF 21/790, à savoir le questionnaire d'auto-évaluation ("SAQ"), le rapport séparé ("SR") et la lettre de gestion ("ML") (ensemble les "rapports"), qui sont applicables aux OPCVM, aux OPC soumis à la partie II de la loi du 17 décembre 2010 (OPC Partie II), aux Fonds d'Investissement Spécialisés (FIS) et aux Sociétés d'Investissement en Capital à Risque (SICAR) (ensemble les "OPC réglementés"), sont disponibles dans le module "Collective Investment Sector Reporting Tool" ("CISERO") de la plate-forme eDesk de la CSSF. La publication mentionnait qu'à partir de cette date, le SAQ, le SR (uniquement pour les OPCVM et OPC partie II) et le ML pour les OPC réglementés dont l'exercice se termine entre le 30 juin 2022 et le 30 novembre 2022 seraient d'abord disponibles dans ce module.

La nouvelle communication vise à fournir des clarifications supplémentaires aux OPC réglementés et aux entités participant à leur fonctionnement (par exemple les gestionnaires de fonds d'investissement, les autres prestataires de services) en ce qui concerne l'organisation des processus opérationnels à effectuer dans le module CISERO pour remplir le SAQ et soumettre à la CSSF les rapports applicables à ces OPC réglementés.

Avant d'aborder ces modalités, la présente communication rappelle les responsabilités des dirigeants des OPC réglementés (les "dirigeants"), telles que visées dans les lois sectorielles applicables, en ce qui concerne les rapports et confirme que les OPC réglementés peuvent s'appuyer sur des prestataires de services (par exemple des gestionnaires de fonds d'investissement, d'autres prestataires de services) pour remplir et/ou soumettre à la CSSF les rapports.

WHAT'S NEW?

Dans la communication, les sujets suivants ont été mis en évidence : 

1) Responsabilités des dirigeants et soutien des prestataires de services. 

Les dirigeants sont responsables de la soumission, dans les délais prévus, du rapport séparé (SR) et de la lettre de gestion (ML) à la CSSF, une fois que ces rapports ont été validés par le réviseur d'entreprises agréé (le "réviseur") dans le module CISERO. Les dirigeants peuvent s'appuyer, par le biais d'arrangements dûment formalisés (par exemple des résolutions écrites du conseil d'administration, des accords contractuels), sur le soutien de prestataires de services (par exemple le gestionnaire du fonds d'investissement, d'autres prestataires de services) pour (i) rassembler toutes les informations / données nécessaires et remplir le SAQ et (ii) soumettre le SAQ complété ainsi que le SR et la ML préparés par le réviseur à la CSSF. Alternativement, les dirigeants peuvent choisir de remplir eux-mêmes le SAQ et/ou de soumettre les rapports. Quel que soit le modèle opérationnel choisi par les dirigeants, ceux-ci doivent en tout état de cause effectuer une revue et une validation formalisées du contenu du SAQ avant sa soumission à la CSSF.

2) L'organisation des processus opérationnels pour la réalisation du SAQ et la soumission des rapports à la CSSF.

Suivant les principes généraux exposés ci-dessus et en fonction de l'organisation des OPC réglementés, les dirigeants disposent de différentes options pour l'organisation des processus opérationnels à effectuer dans le module CISERO pour la réalisation du SAQ et la soumission des rapports à la CSSF. En tout état de cause, les dirigeants restent responsables en dernier ressort du contenu du SAQ.

La CSSF rappelle que le réviseur d'entreprises de l'OPC réglementé n'a accès au RS et au ML de l'OPC réglementé que lorsque le champ "Réviseur d'entreprises" figurant à la section "Informations générales" - "Informations sur l'entité" a été dûment rempli par le(s) utilisateur(s) autorisé(s) (p.ex. gestionnaire de fonds d'investissement, OPC réglementé, autre prestataire de services) dans le module CISERO. Ce champ doit être rempli le plus rapidement possible après la mise à disposition des rapports dans le module CISERO sur la plateforme eDesk de la CSSF.

3) Accès du ou des utilisateurs autorisés aux rapports des OPC réglementés dans le module CISERO

Dans le cas où le GFI désigné exécute les processus opérationnels pour le compte des OPC réglementés (c'est-à-dire la réalisation du SAQ et/ou la réalisation des rapports à la CSSF), les droits d'accès des utilisateurs et les rôles spécifiques ("Board member" ou "Conducting Officer") attribués au niveau du GFI permettent à ce dernier d'exécuter ces processus dans le module CISERO.

Dans le cas où les dirigeants adoptent les options présentées aux points 2.a) ou 2.b) de la section II pour le remplissage du SAQ et la soumission des rapports à la CSSF, le document a clarifié les principales étapes pour fournir un accès dans le module CISERO aux rapports applicables à un OPC réglementé.

WHAT'S NEXT?

En cas de question relative à la circulaire CSSF 21/790 ou au fonctionnement du nouveau « Collective Investment Sector Reporting Tool », veuillez-vous adresser à cisero@cssf.lu.

On 27 July 2022, Commission de Surveillance du secteur financier (CSSF) published communication to the investment fund industry on regulatory requirements in relation to Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR) and upcoming entry into force of SFDR Level 2 provisions (SFDR RTS). 

In the communication, the CSSF reminded about the deadline of 1 January 2023 for specific updates of UCITS and AIFs precontractual and periodic documents. 

The CSSF informed those financial market participants which have not yet submitted to the CSSF the required updates to the prospectus/issuing documents of UCITS and/or AIFs in accordance with the provisions of the SFDR RTS and TR as set forth under Section 1 above, that the CSSF expects to receive the updated precontractual documents by 31 October 2022 at the latest.

The CSSF will give priority for visa-stamping to those issuing documents/prospectuses of UCITS/AIFs for which updates are limited to reflect only the sustainability related disclosure changes referred to under Section 1 above. Provided that submissions made following the filing procedure set out below are complete, compliant and received by the CSSF by 31 October 2022, the CSSF will endeavour to release the visa stamp prior to 31 December 2022.

The CSSF informed the financial market participants that annual reports, issued as from 1 January 2023, of UCITS and AIFs, whether these AIFs are managed by a registered or authorised AIFM, shall comply with the product disclosure requirements in periodic reports laid down in article 11 of SFDR and further clarified by the SFDR RTS, including the information to be presented in an annex to the annual reports by using the mandatory templates.

The CSSF expects to receive a dedicated precontractual and periodic disclosure template per sub-fund/compartment. The precontractual and periodic disclosure templates shall not be amended except as foreseen under Article 2 of the SFDR RTS, i.e. the size and font type of characters and the colours. In case a financial market participant deems sections of the precontractual or periodic template not to be relevant for a given fund or sub- fund/compartment, those sections shall still be maintained in the precontractual and periodic disclosure template and shown as being not applicable. The CSSF expects financial market participants to present the required precontractual and periodic disclosure information exclusively in the dedicated templates, except for those disclosure items which are required under SFDR and not foreseen to be disclosed in the aforementioned templates.

The CSSF intends to launch in the near future a dedicated data collection exercise to digitally collect the information contained in the precontractual and periodic disclosure templates covering also AIFs managed by a Luxembourg based AIFM which were not concerned by the filing procedure outlined above. Further details on timing and practical proceeding of the data collection will be communicated at a later stage.

Version française

Le 27 juillet 2022, la Commission de Surveillance du secteur financier (CSSF) a publié une communication à l'attention de l'industrie des fonds d'investissement sur les exigences réglementaires relatives au règlement (UE) 2019/2088 concernant les informations relatives à la durabilité dans le secteur des services financiers (SFDR) et l'entrée en vigueur prochaine des dispositions SFDR de niveau 2 (SFDR RTS). 

Dans la communication, la CSSF a rappelé l'échéance du 1er janvier 2023 pour les mises à jour spécifiques des documents précontractuels et périodiques des OPCVM et des FIA. 

La CSSF a informé les acteurs des marchés financiers qui n'ont pas encore soumis à la CSSF les mises à jour requises des prospectus/documents d'émission des OPCVM et/ou des fonds alternatifs conformément aux dispositions des SFDR RTS et du TR comme indiqué à la section 1 ci-dessus, que la CSSF s'attend à recevoir les documents précontractuels mis à jour pour le 31 octobre 2022 au plus tard.

La CSSF donnera la priorité pour l'apposition du visa aux documents/prospectus d'émission des OPCVM/FIA pour lesquels les mises à jour se limitent à refléter uniquement les changements de divulgation liés à la durabilité visés à la section 1 ci-dessus. Pour autant que les soumissions effectuées selon la procédure de dépôt décrite ci-dessous soient complètes, conformes et reçues par la CSSF avant le 31 octobre 2022, la CSSF s'efforcera de libérer le visa avant le 31 décembre 2022.

La CSSF a informé les acteurs du marché financier que les rapports annuels, émis à partir du 1er janvier 2023, des OPCVM et des FIA, que ces FIA soient gérés par un gestionnaire enregistré ou agréé, doivent être conformes aux exigences de divulgation des produits dans les rapports périodiques prévues à l'article 11 du RGPD et précisées par les RTS RGPD, y compris les informations à présenter dans une annexe aux rapports annuels en utilisant les modèles obligatoires.

La CSSF s'attend à recevoir un modèle d'information précontractuelle et périodique dédié par compartiment/compartiment. Les modèles d'information précontractuelle et périodique ne seront pas modifiés, sauf dans les cas prévus à l'article 2 des SFDR RTS, c'est-à-dire la taille et le type de police des caractères et les couleurs. Dans le cas où un acteur du marché financier estime que des sections du modèle précontractuel ou périodique ne sont pas pertinentes pour un fonds ou un sous-fonds/compartiment donné, ces sections doivent néanmoins être maintenues dans le modèle d'information précontractuelle et périodique et être indiquées comme non applicables. La CSSF s'attend à ce que les acteurs du marché financier présentent les informations précontractuelles et périodiques requises exclusivement dans les modèles dédiés, à l'exception des éléments d'information qui sont requis par le SFDR et qui ne sont pas prévus d'être divulgués dans les modèles susmentionnés.

La CSSF a l'intention de lancer dans un avenir proche un exercice de collecte de données dédié pour collecter numériquement les informations contenues dans les modèles d'information précontractuelle et périodique couvrant également les fonds alternatifs gérés par un gestionnaire basé au Luxembourg qui n'étaient pas concernés par la procédure de dépôt décrite ci-dessus. De plus amples détails sur le calendrier et le déroulement pratique de la collecte de données seront communiqués ultérieurement.

On 3 August 2022, the Commission de Surveillance du secteur financier (CSSF) updated the post-liquidation form  relevant for:

• Investment companies in risk capital (SICAR)
• Specialised investment funds (SIF)
• Undertakings for collective investment (UCI)
• Undertakings for collective investment in transferable securities (UCITS)

Version française

Le 3 août 2022, la Commission de Surveillance du secteur financier (CSSF) a mis à jour le formulaire de post-liquidation relatif aux :

• Sociétés d'investissement en capital à risque (SICAR)
• Fonds d'investissement spécialisés (FIS)
• Organismes de placement collectif (OPC)
• Organismes de placement collectif en valeurs mobilières (OPCVM)

On 9 August 2022, the Commission de Surveillance du secteur financier (CSSF) updated the registration form for an alternative investment fund manager.

Version française

Le 9 août 2022, la Commission de Surveillance du secteur financier (CSSF) a mis à jour le formulaire d'enregistrement d'un gestionnaire de fonds d'investissement alternatifs.

On 24 August 2022, the Commission de Surveillance du secteur financier (CSSF) published the notification template for delegating critical or important UCI administration tasks.

The template shall be used by entities in scope of Circular CSSF 22/811 and, where applicable, Circular CSSF 22/806, to notify the CSSF in advance in the following cases:

(a) planned, new critical or important outsourcing arrangements;

(b) material changes to existing critical or important outsourcing arrangements; and

(c) changes to outsourcing arrangements that lead to an outsourced function becoming critical or important.

IFMs are subject to Circular CSSF 22/811, especially point 100, when outsourcing a critical or an important function relating to operational tasks of administration of UCIs. However, IFMs are not in scope of Circular CSSF 22/806 when outsourcing critical or important functions other than ICT. In consequence, IFMs should only fill out sections 1, 2, 3, 4.1-4.4, 5, 6.1-6.4, 7, 8, 9 and 11, where applicable, of the template.

Version française

Le 24 août 2022, la Commission de Surveillance du secteur financier (CSSF) a publié le modèle de notification pour la délégation de tâches administratives critiques ou importantes de l'OPC.

Le modèle doit être utilisé par les entités relevant du champ d'application de la circulaire CSSF 22/811 et, le cas échéant, de la circulaire CSSF 22/806, pour notifier préalablement la CSSF dans les cas suivants :

(a) projets de nouveaux accords d'externalisation critiques ou importants ;

(b) modifications importantes des contrats d'externalisation critiques ou importants existants ; et

(c) modifications des accords d'externalisation qui font qu'une fonction externalisée devient critique ou importante.

Les GFI sont soumis à la circulaire CSSF 22/811, notamment au point 100, lorsqu'ils externalisent une fonction critique ou importante relative à des tâches opérationnelles d'administration d'OPC. Par contre, les GFI ne sont pas soumis à la circulaire CSSF 22/806 lorsqu'ils externalisent des fonctions critiques ou importantes autres que les TIC. Par conséquent, les GFI doivent uniquement remplir les sections 1, 2, 3, 4.1-4.4, 5, 6.1-6.4, 7, 8, 9 et 11, le cas échéant, du modèle.

On 22 July 2022, CSSF Regulation N° 22-04 of 20 July 2022 amending CSSF Regulation N° 20-02 of 29 June 2020 on the equivalence of certain third countries in terms of supervision and authorization rules for the purposes of providing services activities or the exercise of investment activities and ancillary services by third-country firms, as amended by CSSF Regulation N° 20-09 of 14 December 2020 was published in the Legilux (Journal Officiel du Grand-Duché de Luxembourg). 

The regulation amended its appendix “LIST OF THIRD-PARTY COUNTRIES AND TERRITORIES DRAWN UP FOR THE PURPOSES OF ARTICLE 2” by adding points 8) and 9) as follows:

• 8) People's Republic of China
• 9) Australia

Version française

Le 22 juillet 2022, le règlement CSSF n° 22-04 du 20 juillet 2022 modifiant le règlement CSSF n° 20-02 du 29 juin 2020 relatif à l'équivalence de certains pays tiers en matière de règles de surveillance et d'agrément aux fins de la fourniture d'activités de services ou de l'exercice d'activités d'investissement et de services auxiliaires par des entreprises de pays tiers, tel que modifié par le règlement CSSF n° 20-09 du 14 décembre 2020 a été publié au Legilux (Journal Officiel du Grand-Duché de Luxembourg). 

Le règlement a modifié son annexe "LISTE DES PAYS ET TERRITOIRES TIERS ÉTABLIS AUX FINS DE L'ARTICLE 2" en ajoutant les points 8) et 9) comme suit : 

• 8) République populaire de Chine
• 9) Australie 

On 27 June 2022, Commission de Surveillance du secteur financier (CSSF) published Circular 22/817 on the application of the ESMA Guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements. 

The circular aims to inform you 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.

The purpose of the 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, 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. 

The Guidelines shall apply from 12 October 2022 onwards.

Version française

Le 27 juin 2022, la Commission de Surveillance du secteur financier (CSSF) a publié la Circulaire 22/817 relative à l'application des lignes directrices de l'ESMA sur certains aspects des exigences d'adéquation et d'exécution pure de MiFID II. 

La circulaire a pour objet de vous informer que la CSSF, en sa qualité d'autorité compétente, appliquera les lignes directrices de l'Autorité européenne des marchés financiers (ESMA) sur certains aspects des exigences en matière d'adéquation et d'exécution uniquement de la directive MiFID II à partir du 12 octobre 2022. 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.

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

L'article 57 du règlement délégué MiFID II.

La MiFID vous oblige à effectuer un test d'adéquation : 

• lorsque vous fournissez des services d'investissement autres que le conseil en investissement ou la gestion de portefeuille (services dits "non conseillés" tels que EO, RTO ou la négociation pour compte propre) ;
• à des clients de détail. 

L'entreprise veut s'assurer que le client possède les connaissances et l'expérience nécessaires pour comprendre les risques liés au service ou au produit d'investissement spécifique. Si ce n'est pas le cas, l'investissement ne sera pas considéré comme approprié (pour les clients professionnels, on suppose déjà que ces clients possèdent les connaissances et l'expérience nécessaires, ce qui explique pourquoi il n'est pas nécessaire d'effectuer un test d'adéquation pour eux). 

Si l'entreprise considère que le client n'a pas les connaissances et l'expérience nécessaires pour comprendre les risques liés au service ou au produit d'investissement spécifique, elle doit avertir le client en conséquence. Un avertissement est également requis si un client ne fournit pas les informations nécessaires sur ses connaissances et son expérience, ou si les informations fournies sont insuffisantes. Les lignes directrices fournissent des exigences très détaillées sur les avertissements et la manière dont ils doivent être affichés pour être efficaces. 

Les lignes directrices sont applicables à partir du 12 octobre 2022.

On 2 August 2022, the Commission de Surveillance du secteur financier (CSSF) published a  reminder on the application of the requirements relating to client sustainability preferences and publication of ESMA’s consultation paper on MiFID II product governance guidelines.

From 2 August 2022, investors' sustainability preferences will have to be taken into account by professionals offering investment advice and discretionary management services.

These entities will now be obliged to ask clients about their preferences and their level of knowledge in terms of sustainable investments. New customers are affected, as well as existing customers, when updating their profile.

The CSSF would like to remind supervised entities that from 2 August 2022 onwards, the date of application of Commission Delegated Regulation 2021/1253, providers of investment advisory and discretionary portfolio management services are required to obtain specific information on their clients’ preferences regarding sustainable investments and meet such preferences, while also meeting their other investment objectives and taking into account their financial situation and knowledge and experience.

The European Securities and Markets Authority (ESMA) is currently finalising the update of its “Guidelines on certain aspects of the MiFID II suitability requirements” in order to take into consideration these amendments. These guidelines will provide firms with further guidance on the application of the new requirements.

Even in the absence of these guidelines, the CSSF expects supervised entities that provide investment advisory or discretionary portfolio management services to collect and take into account all relevant information related to the sustainability preferences of new clients as from 2 August 2022 onwards, and to update existing client information at the latest at the next regular update of the client’s profile.

The CSSF is aware that sustainability related, product-level information is only progressively becoming available. The CSSF expects supervised entities to monitor the developments of the regulatory framework and the publication of the above-mentioned guidelines and to continue to adapt their processes and governance accordingly.

Further sustainability-related amendments to MiFID II framework will apply as from 22 November 2022, as per Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 amending Delegated Directive 2017/593 as regards the integration of sustainability factors into the product governance obligations.

In that context, the CSSF would like to draw attention to the publication by ESMA, on 8 July 2022, of a Consultation Paper in relation to an update of its “Guidelines on MiFID II product governance requirements”. The Consultation Paper is addressed to investors and consumer organisations, and to all firms manufacturing and/or distributing products as defined under MiFID II. The consultation closes on 7 October 2022.

Version française

Le 2 août 2022, la Commission de Surveillance du secteur financier (CSSF) a publié un rappel sur l'application des exigences relatives aux préférences des clients en matière de durabilité et la publication du document de consultation de l'ESMA sur les lignes directrices de gouvernance des produits de MiFID II.

A partir du 2 août 2022, les préférences des investisseurs en matière de durabilité devront être prises en compte par les professionnels offrant des conseils en investissement et des services de gestion discrétionnaire.

Ces entités seront désormais tenues d'interroger les clients sur leurs préférences et leur niveau de connaissance en matière d'investissements durables. Les nouveaux clients sont concernés, ainsi que les clients existants, lors de la mise à jour de leur profil.

La CSSF souhaite rappeler aux entités surveillées qu'à partir du 2 août 2022, date d'application du règlement délégué 2021/1253 de la Commission, les prestataires de services de conseil en investissement et de gestion discrétionnaire de portefeuille sont tenus d'obtenir des informations spécifiques sur les préférences de leurs clients en matière d'investissements durables et de répondre à ces préférences, tout en respectant également leurs autres objectifs d'investissement et en tenant compte de leur situation financière et de leurs connaissances et expérience.

L'Autorité européenne des marchés financiers (AEMF) finalise actuellement la mise à jour de ses "Lignes directrices sur certains aspects des exigences d'adéquation de MiFID II" afin de prendre en compte ces modifications. Ces lignes directrices fourniront aux entreprises des conseils supplémentaires sur l'application des nouvelles exigences.

Même en l'absence de ces lignes directrices, la CSSF attend des entités surveillées qui fournissent des services de conseil en investissement ou de gestion discrétionnaire de portefeuille qu'elles collectent et prennent en compte toutes les informations pertinentes relatives aux préférences des nouveaux clients en matière de durabilité à partir du 2 août 2022, et qu'elles mettent à jour les informations relatives aux clients existants au plus tard lors de la prochaine mise à jour régulière du profil du client.

La CSSF est consciente que les informations relatives à la durabilité au niveau des produits ne sont disponibles que progressivement. La CSSF attend des entités surveillées qu'elles suivent l'évolution du cadre réglementaire et la publication des lignes directrices susmentionnées et qu'elles continuent à adapter leurs processus et leur gouvernance en conséquence.

D'autres modifications du cadre MiFID II liées à la durabilité seront applicables à partir du 22 novembre 2022, conformément à la directive déléguée (UE) 2021/1269 de la Commission du 21 avril 2021 modifiant la directive déléguée 2017/593 en ce qui concerne l'intégration des facteurs de durabilité dans les obligations de gouvernance des produits.

Dans ce contexte, la CSSF souhaite attirer l'attention sur la publication par l'ESMA, le 8 juillet 2022, d'un document de consultation relatif à une mise à jour de ses "Guidelines on MiFID II product governance requirements". Le document de consultation est adressé aux investisseurs et aux organisations de consommateurs, ainsi qu'à toutes les entreprises qui fabriquent et/ou distribuent des produits tels que définis par la directive MiFID II. La consultation se termine le 7 octobre 2022.

On 1 July 2022, the Commission de Surveillance du secteur financier (CSSF) updated the reporting handbook for investment firms.

The update containes the following changes:

• Updated numbers and article references to Commission Implementing Regulation (EU) 2021/2284 of 10 December 2021(Section 2.2.2, Section 3 and Section 4.1) in the template;
• Precision on the type of XBRL code to be used for the electronic transmission of the reporting (Section 5.1.1);
• Reporting requirements for certain investment firms in accordance with Article 55 IFR Section 3.4).

Version française

Le 1er juillet 2022, la Commission de Surveillance du secteur financier (CSSF) a mis à jour le manuel de reporting pour les entreprises d'investissement.

La mise à jour contient les changements suivants:

• Mise à jour des numéros et références des articles du règlement d'exécution (UE) 2021/2284 de la Commission du 10 décembre 2021 (section 2.2.2, section 3 et section 4.1) dans le modèle;
• Précision sur le type de code XBRL à utiliser pour la transmission électronique du reporting (Section 5.1.1);
• Exigences de déclaration pour certaines entreprises d'investissement conformément à l'article 55 de la RFP (Section 3.4).

On 28 July 2022, CSSF Regulation N° 22-05 of 27 July 2022 amending CSSF Regulation N° 10-4 of 20 December 2010 was published  in Legilux (Journal Officiel du Grand-Duché de Luxembourg). 

Luxembourg is complying with Commission Delegated Directive (EU) 2021/1270 of 21 April 2021 amending Directive 2010/43/EU as regards sustainability risks and sustainability factors to be taken into account for undertakings for collective investment in transferable securities (UCITS).

Having regard Member States shall comply by 31 July 2022, at the latest, with the Regulation above, Luxembourg is integrating in the UCITS framework sustainability risks (i.e. organization) and the consideration of main negative impacts of investment decisions on sustainability factors.

The following amendments were made:

• Ensuring that they take sustainability risks into account when complying with the general requirements on procedures and organisation;
• Ensuring that they retain the resources and expertise necessary for the effective integration of sustainability risks.
• Ensuring that sustainability risks are integrated into the management of UCITS, taking into account the nature, scale and complexity of the investment companies activity;
• Senior management and supervisory function are responsible for integrating sustainability risks into the controlling activities.
• Detecting possible conflict of interests arise from the integration of sustainability risks into their processes, systems and internal controls.
• In the investment process, both sustainability risks and principle adverse impacts of investment decision on sustainability factors must be considered.
• Inclusion of sustainability risks in the risk management policy.

These rules come into force on July 31, 2022.

Version française

Le 28 juillet 2022, le règlement CSSF n° 22-05 du 27 juillet 2022 modifiant le règlement CSSF n° 10-4 du 20 décembre 2010 a été publié dans Legilux (Journal Officiel du Grand-Duché de Luxembourg). 

Le Luxembourg se conforme à la directive déléguée (UE) 2021/1270 de la Commission du 21 avril 2021 modifiant la directive 2010/43/UE en ce qui concerne les risques de durabilité et les facteurs de durabilité à prendre en compte par les organismes de placement collectif en valeurs mobilières (OPCVM).

Vu que les États membres doivent se conformer au plus tard le 31 juillet 2022 au règlement ci-dessus, le Luxembourg intègre dans le cadre des OPCVM les risques de durabilité (c'est-à-dire l'organisation) et la prise en compte des principaux impacts négatifs des décisions d'investissement sur les facteurs de durabilité.

Les modifications suivantes ont été apportées :

• S'assurer qu'ils prennent en compte les risques de durabilité lorsqu'ils se conforment aux exigences générales en matière de procédures et d'organisation ;
• S'assurer qu'ils conservent les ressources et l'expertise nécessaires à l'intégration effective des risques de durabilité.
• S'assurer que les risques liés au développement durable sont intégrés dans la gestion des OPCVM, en tenant compte de la nature, de l'échelle et de la complexité de l'activité des sociétés d'investissement ;
• La direction générale et la fonction de contrôle sont responsables de l'intégration des risques de durabilité dans les activités de contrôle.
• La détection d'éventuels conflits d'intérêts résulte de l'intégration des risques de durabilité dans leurs processus, systèmes et contrôles internes.
• Dans le processus d'investissement, il faut tenir compte à la fois des risques liés à la durabilité et des principaux impacts négatifs des décisions d'investissement sur les facteurs de durabilité.
• Inclusion des risques liés à la durabilité dans la politique de gestion des risques.

Ces règles entrent en vigueur le 31 juillet 2022.

BACKGROUND

On 4 August 2022, the Grand-Ducal Regulation of 27 July 2022 amending the Grand-Ducal Regulation of 30 May 2018 on the protection of financial instruments and client funds, on applicable product governance requirements and on the rules governing the granting or collection of fees, commissions or any other monetary or non-monetary benefit, for the purpose of transposing Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the applicable product governance requirements was published in Legilux (Journal Officiel du Grand-Duché de Luxembourg).

WHAT'S NEW?

To article 1 of the Grand-Ducal Regulation of 30 May 2018 relating to the protection of financial instruments and client funds, the applicable obligations in terms of product governance and the rules governing the granting or collection of fees, commissions or any other monetary or non-monetary benefit, a new paragraph 5 is added after paragraph 4, worded as follows:

"(5)For the purposes of this Grand-Ducal Regulation, "sustainability factors" means sustainability factors within the meaning of Article 2, point 24, of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability reporting in the financial services sector."

Article 8 of the same regulation is amended as follows:

1. In paragraph 9, paragraph 1is, the words  'whose needs, characteristics and objectives are compatible with this financial instrument'  are replaced by the words  'with whose needs, characteristics and objectives, including any sustainability objectives, the instrument financial instrument is compatible" , and the words  "whose needs, characteristics and objectives are not compatible with this financial instrument"  are replaced by the words  "with the needs, characteristics and objectives of which this financial instrument is not compatible, unless this instrument takes sustainability factors into account”;
2. In paragraph 11, point 2, the words  “requiring, for the instrument to be profitable,”  are replaced by the words  “which requires, for the instrument to be profitable,” ;
3. 3° In paragraph 11, the word  “and”  is deleted at the end of point 1, the full stop at the end of point 2 is replaced by a semicolon followed by the word  “and”  and a new point 3 is inserted worded as follows: "3. whether the financial instrument's sustainability factors, if any, are compatible with the target market.";
4. In paragraph 13, a new paragraph 2 is added which reads as follows:
   “The financial instrument's sustainability factors are presented in a transparent manner and provide distributors with the relevant information to allow them to take due account of any sustainability objectives pursued by the customer or potential customer.";
5. In paragraph 14, the words “,including any sustainability objectives,”  are inserted between the words  “and objectives”  and the words  “of the target market”.

Article 9 of the same regulation is amended as follows:

1. In paragraph 2, paragraph 1is, the words  “including any sustainability objectives,”  are inserted between the words  “and objectives”  and the words  “of the target market”  , and the third sentence is completed by the words  “unless this instrument takes account of sustainability factors”;
2. In paragraph 5, the words  “,including any sustainability objectives,”  are inserted between the words  “and objectives”  and the words  “of the target market”.

WHAT'S NEXT?

The regulation enters into force on 22 November 2022.

Version française

BACKGROUND

Le 4 août 2022, le règlement grand-ducal du 27 juillet 2022 modifiant le règlement grand-ducal du 30 mai 2018 relatif à la protection des instruments financiers et des fonds des clients, aux exigences applicables en matière de gouvernance des produits et aux règles régissant l'octroi ou la perception de frais, commissions ou tout autre avantage monétaire ou non monétaire, aux fins de transposer la directive déléguée (UE) 2021/1269 de la Commission du 21 avril 2021 modifiant la directive déléguée (UE) 2017/593 en ce qui concerne l'intégration des facteurs de durabilité dans les exigences applicables en matière de gouvernance des produits a été publié dans Legilux (Journal Officiel du Grand-Duché de Luxembourg).

WHAT'S NEW?

A l'article 1er du règlement grand-ducal du 30 mai 2018 relatif à la protection des instruments financiers et des fonds des clients, aux obligations applicables en matière de gouvernance des produits et aux règles régissant l'octroi ou la perception de frais, de commissions ou de tout autre avantage monétaire ou non monétaire, un nouveau paragraphe 5 est ajouté après le paragraphe 4, libellé comme suit :

"(5)Aux fins du présent règlement grand-ducal, on entend par "facteurs de durabilité" les facteurs de durabilité au sens de l'article 2, point 24, du règlement (UE) 2019/2088 du Parlement européen et du Conseil du 27 novembre 2019 concernant les rapports sur la durabilité dans le secteur des services financiers."

L'article 8 du même règlement est modifié comme suit :

1. Au paragraphe 9, point 1 bis, les mots : " dont les besoins, les caractéristiques et les objectifs sont compatibles avec cet instrument financier " sont remplacés par les mots : " avec les besoins, les caractéristiques et les objectifs, y compris les éventuels objectifs de durabilité, de l'instrument financier instrument est compatible " , et les mots : " dont les besoins, les caractéristiques et les objectifs ne sont pas compatibles avec cet instrument financier " sont remplacés par les mots : " avec les besoins, les caractéristiques et les objectifs desquels cet instrument financier n'est pas compatible, à moins que cet instrument ne prenne en compte les facteurs de durabilité " ;
2. Au paragraphe 11, point 2, les mots " nécessitant, pour que l'instrument soit rentable, " sont remplacés par les mots " qui nécessite, pour que l'instrument soit rentable, " ;
3. Au paragraphe 11, le mot " et " est supprimé à la fin du point 1, le point à la fin du point 2 est remplacé par un point-virgule suivi du mot " et " et un nouveau point 3 est inséré, rédigé comme suit : " 3. si les facteurs de durabilité de l'instrument financier, le cas échéant, sont compatibles avec le marché cible. " ;
4. 4° Au paragraphe 13, il est ajouté un nouveau paragraphe 2 rédigé comme suit : " Les facteurs de durabilité de l'instrument financier sont présentés de manière transparente et fournissent aux distributeurs les informations pertinentes pour leur permettre de tenir dûment compte de tout objectif de durabilité poursuivi par le client ou le client potentiel. " ; 5° Au paragraphe 14, les mots : " Les facteurs de durabilité de l'instrument financier " sont ajoutés ;
5. Au paragraphe 14, les mots ",y compris tout objectif de durabilité," sont insérés entre les mots "et les objectifs" et les mots "du marché cible".

L'article 9 du même règlement est modifié comme suit :

1. Au paragraphe 2, alinéa 1 bis, les mots " y compris les éventuels objectifs de durabilité, " sont insérés entre les mots " et les objectifs " et les mots " du marché cible " , et la troisième phrase est complétée par les mots " sauf si cet instrument tient compte des facteurs de durabilité " ;
2. Au paragraphe 5, les mots ",y compris tout objectif de durabilité," sont insérés entre les mots "et les objectifs" et les mots "du marché cible".

WHAT'S NEXT?

Le règlement entre en vigueur le 22 novembre 2022.

On 11 July 2022, the Eidgenössische Finanzmarktaufsicht (FINMA) published a model report on regulatory audit report representatives of foreign collective  investment schemes 2022.

Version française

Le 11 juillet 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié un rapport type sur le rapport d'audit réglementaire représentants de placements collectifs étrangers 2022.

On 11 July 2022, Eidgenössische Finanzmarktaufsicht (FINMA) published model report on regulatory audit report limited partnerships for collective investment  2022.

Version française

Le 11 juillet 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié un rapport type sur le rapport d'audit réglementaire des sociétés en commandite de placements collectifs 2022.

On 11 July 2022, the Eidgenössische Finanzmarktaufsicht (FINMA) published a model report on the regulatory audit for investment companies with variable capital (SICAV) 2022.

Version française

Le 11 juillet 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié un rapport type sur l'audit réglementaire des sociétés d'investissement à capital variable (SICAV) 2022.

On 11 July 2022, the Eidgenössische Finanzmarktaufsicht (FINMA) published a model report on the regulatory audit for managers of collective assets 2022.

Version française

Le 11 juillet 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié un rapport type sur l'audit réglementaire des gestionnaires de fortune collective 2022.

On 11 July 2022, the Eidgenössische Finanzmarktaufsicht (FINMA) published a model report on the regulatory audit for fund management companies 2022.

Version française

Le 11 juillet 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié un rapport type sur l'audit réglementaire des directions de fonds 2022.

On 11 July 2022, the Eidgenössische Finanzmarktaufsicht (FINMA) published 3 model reports on the prudential audit of fund management, collective asset managers, open-ended investment companies (SICAVs) and  limited partnerships for collective investment schemes (SCCM) 2022.

Version française

Le 11 juillet 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié 3 rapports types sur l'audit prudentiel des directions de fonds, des gestionnaires de fortune collective, des sociétés d'investissement à capital variable (SICAV) et des sociétés en commandite de placements collectifs (SCCM) 2022.

On 15 July 2022, the Eidgenössische Finanzmarktaufsicht (FINMA) published the 2022 AML audit requirements form for asset management.

Version française

Le 15 juillet 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié le formulaire des exigences de vérification en matière de lutte contre le blanchiment d'argent pour la gestion de fortune.

On 7 July 2022, the Federal Council published a Project Federal Act on Financial Market Infrastructures and Market Behaviour in Securities and Derivatives Trading.

The Federal Council recognised foreign platforms for trading equity securities of companies headquartered in Switzerland.

Trading venues based abroad must first obtain FINMA recognition if the following conditions are met:

• equity securities of companies having their registered office in Switzerland are traded there or they allow such securities to be traded in another way;
• the equity securities referred to in the letter a are listed on a stock exchange in Switzerland or traded on a trading venue in Switzerland.

A foreign stock exchange does not need recognition for trading equity securities if they meet the following conditions:

• they are listed or admitted to trading with the express agreement of their given issuing company before 30 November 2018;
• they were listed or admitted to trading before 30 November 2018;
• their issuing company assumes the obligations related to listing or admission to trading.

FINMA grants recognition on request if the foreign trading venue fulfils the following conditions:

• it is subject to appropriate regulation and supervision;
• it does not have its seat in a jurisdiction which subjects its market participants to rules restricting the trading on Swiss trading venues of equity securities of companies having their registered office in Switzerland and thereby substantially impedes the trading of such securities on Swiss trading venues.

It may also recognise a foreign trading venue that has not filed an application if it meets the requirements set out in para. 1.

This law is subject to referendum.

Version française

Le 7 juillet 2022, le Conseil fédéral a publié un projet de loi fédérale sur les infrastructures des marchés financiers et le comportement sur le marché dans le négoce des valeurs mobilières et des produits dérivés.

Le Conseil fédéral a reconnu les plateformes étrangères pour le négoce de titres de participation de sociétés ayant leur siège en Suisse.

Les plateformes de négoce basées à l'étranger doivent d'abord obtenir la reconnaissance de la FINMA si les conditions suivantes sont remplies :

• les titres de participation de sociétés ayant leur siège en Suisse y sont négociés ou ils permettent de négocier ces titres d'une autre manière ;
• les titres de participation mentionnés à la lettre a sont cotés à une bourse en Suisse ou négociés sur une plate-forme de négociation en Suisse.

Une bourse étrangère n'a pas besoin de reconnaissance pour le négoce de titres de participation si ceux-ci remplissent les conditions suivantes :

• ils sont cotés ou admis au négoce avec l'accord exprès de leur société émettrice donnée avant le 30 novembre 2018 ;
• ils ont été cotés ou admis à la négociation avant le 30 novembre 2018 ;
• leur société émettrice assume les obligations liées à la cotation ou à l'admission à la négociation.

La FINMA accorde la reconnaissance sur demande si la plate-forme de négociation étrangère remplit les conditions suivantes :

• elle est soumise à une réglementation et à une surveillance appropriées ;
• elle n'a pas son siège dans une juridiction qui soumet ses participants au marché à des règles restreignant la négociation sur les places de négoce suisses de titres de participation de sociétés ayant leur siège en Suisse et qui entrave ainsi substantiellement la négociation de ces titres sur les places de négoce suisses.

Elle peut également reconnaître une plate-forme de négociation étrangère qui n'a pas déposé de demande si elle remplit les conditions énoncées à l'al. 1.

La présente loi est sujette au référendum.

On 11 August 2022, the Eidgenössische Finanzmarktaufsicht (FINMA) published a new guidance to inform portfolio managers and trustees about the current status of the licensing process and provide an overview of the measures taken up to now.

FINMA recommended that all institutions submit their complete licence application to a supervisory organisation (SO) by 30 June 2022. Applicants that submitted their application on time to the SO are well prepared for the challenges of the licensing process.

Institutions that have not yet submitted their application to an SO must accept that they may miss the end of the transitional period through their own fault. As a consequence, these institutions will generally not be entitled to any deadline extension.

FINMA has already conducted various investigations and several charges have been filed on grounds of unauthorised activities. FINMA imposes sanctions for breaches of financial market law and will also do so in the case of portfolio managers and trustees who miss the end of the transitional period on 31 December 2022.

Version française

Le 11 août 2022, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié une nouvelle orientation visant à informer les gestionnaires de portefeuille et les fiduciaires de l'état actuel du processus d'autorisation et à donner un aperçu des mesures prises jusqu'à présent.

La FINMA a recommandé à tous les établissements de soumettre leur demande d'autorisation complète à un organisme de surveillance (OS) avant le 30 juin 2022. Les candidats qui ont soumis leur demande dans les délais à l'OS sont bien préparés aux défis du processus d'autorisation.

Les institutions qui n'ont pas encore soumis leur demande à un OS doivent accepter qu'elles puissent manquer la fin de la période transitoire par leur propre faute. Par conséquent, ces institutions n'auront généralement pas droit à une prolongation du délai.

La FINMA a déjà mené plusieurs enquêtes et plusieurs plaintes ont été déposées pour activités non autorisées. La FINMA sanctionne les infractions à la législation sur les marchés financiers et le fera également pour les gestionnaires de portefeuille et les trustees qui ne respectent pas le délai transitoire du 31 décembre 2022.

On 14 July 2022, the Decree of 7 July 2022 amending the Decree on the Supervision of the Conduct of Financial Undertakings Wft and the Decree on Administrative Fines in the Financial Sector in connection with the implementation of Directive (EU) 2021/2261 of the European Parliament and of the Council of 15 December 2021 amending Directive 2009 /65/EC with regard to the use of key information documents by management companies of undertakings for collective investment in securities (UCITS) was published in the Official Gazette of the Kingdom of the Netherlands. 

The Decree on the Supervision of the Conduct of Financial Undertakings Wft (BGfo) stipulates that a UCITS manager draws up the key information document for each UCITS in which it offers participation rights to non-professional investors. The key information document must comply with the PRIIPs regulation. Managers that offer units in an investment institution to retail investors must also prepare the key information document instead of the key investor information and provide this information document to non-professionals, smart investors. In this way, retail investors can compare the information about UCITS and collective investment schemes and make an investment decision on that basis. A UCITS manager offering units in a UCITS to professional investors only prepares key investor information and provides that investor information to professional investors. However, the manager may choose to prepare and provide the key information document to professional investors. In that case, the manager is not required to prepare key investor information.

This Decree shall enter into force on 1 January 2023.

On 18 July 2022, the Autoriteit Financiële Markten (AFM) informed on the communication between participants of pension funds.

Pension funds that increase pensions in anticipation of the pension transition must explain the consequences thereof correctly, in a timely manner, clearly and in a balanced way to all participants. The AFM conducts an ongoing investigation into the communication to participants, and can also request communication about increases from pension funds.

Pension funds may grant participants a supplement in 2022, in other words: they may index if they have a policy funding ratio of at least 105% and are expected to enter the market. They must calculate the effects per year of birth and provide insight into the financial consequences for each age group. The precise conditions are set out in the Supplement in Special Circumstances Decree, which entered into force on 1 July 2022, and are also explained in more detail in the DNB factsheet: Temporary regulation for supplements in 2022 due to the intended transition. With the relaxed rules, an advance is made for the change in the pension system. 

Animation-people-money

Pension funds that increase pensions in anticipation of the pension transition must explain the consequences thereof correctly, in a timely manner, clearly and in a balanced way to all participants. The AFM conducts an ongoing investigation into the communication to participants, and can also request communication about increases from pension funds.

Consequences per year of birth

Pension funds may grant participants a supplement in 2022, in other words: they may index if they have a policy funding ratio of at least 105% and are expected to enter the market. They must calculate the effects per year of birth and provide insight into the financial consequences for each age group. The precise conditions are set out in the Supplement in Special Circumstances Decree , which entered into force on 1 July 2022, and are also explained in more detail in the DNB factsheet: Temporary regulation for supplements in 2022 due to the intended transition . With the relaxed rules, an advance is made for the change in the pension system. 

Informing participants is mandatory

Increasing the pension accrual or benefit has financial consequences for generations who retire later. In fact, there is redistribution. It is important to communicate transparently about this with your participants and pensioners. The explanatory memorandum to the decision states which information the fund must make available or provide in a timely and active manner:

• information on how to use the decision
• the substantiation thereof
• insight into the effects at cohort level (in principle per year of birth)

On 20 July 2022, De Nederlandsche Bank (DNB) drawed attention to the importance of operational agility in pension administration organizations.

DNB surveyed pension administration organizations (PUOs) with the aim of forming a picture of the operational agility of PUOs related to the new pension scheme. This shows that PUOs have generally made an energetic start with the transition preparations. DNB calls on pension fund boards and boards of PUOs to pay attention to:

• the transition planning
• the often far-reaching system transitions
• the possibilities to reduce the complexity of pension schemes (in consultation with social partners).

According to DNB, the following observations are important for pension fund boards and management boards of PUOs:

• PUOs have made a good start in preparing for the transition, but a shortage of resources is imminent
• Insight into all risks and dependencies is crucial for good transition planning
• Contractual discussions between pension funds and PUOs are still in full swing
• Reducing complexity eases the transition
• The transition to the new pension system also means a complex system transition
• Improving data quality requires effort from across the industry

On 5 July 2022, the De Nederlandsche Bank (DNB) informed on conducting survey on liquidity requirements under IFD/IFR.

Since the entry into force of the IFR and the IFD, a liquidity requirement also applies to investment firms and certain managers of investment institutions. In response to this, DNB examines all investment firms and managers of investment institutions with a liquidity requirement by means of a survey to what extent and how the liquidity risk is managed.

In order to gain insight into how they manage this risk, DNB is expected to send a survey to all investment firms and managers of investment institutions subject to a liquidity requirement in mid-July 2022. The topics in this request are based on the (draft) EBA & ESMA SREP Guidelines for investment firms.

The request will be available in the Digital Supervision Desk (DLT) during the second week of July. DNB therefore advises to keep an eye on the DLT portal.

On 5 July 2022, the De Nederlandsche Bank (DNB) and AFM discussed the obligation to set up a risk committee and a remuneration committee in line with IFD/IFR.

Pursuant to Article 28(4) of the Investment Firm Directive (IFD), class 2 investment firms with a balance sheet total of more than EUR 100 million are required to establish a risk committee. This obligation has been implemented in the Netherlands through Article 23b(1)(b) of the Decree on Prudential Rules under the Wft. DNB has been designated as the competent supervisor for the obligations relating to the risk committee. In this article, the AFM and DNB discuss this obligation in more detail, partly in relation to the remuneration committee, and the questions that the regulators have received from the sector about this.

The risk committee must consist of members of the management body who do not have executive functions, and thus covers the non-executive directors. In the traditional Dutch company law model, a company has a management board and a supervisory board. The members of the risk committee must then consist of members of the supervisory board. When a so-called one-tier board is used, the risk committee must consist of non-executive directors. The members of the risk committee may not hold any executive function at the investment firm. The European Banking Authority (EBA)'s internal governance guidelines for investment firms also provide more information on the risk committee.

The fact that the risk committee must be composed of members of the management body who do not have executive functions also means that those officers must be appointed if they are not currently present at the investment firm. This means that the investment firm must establish a supervisory board or a non-executive board. The AFM and DNB are aware of the impact of this on investment firms concerned, but the supervisors have no discretionary margin to interpret this in a different way.

If the holding company of the investment firm is also supervised on a consolidated basis pursuant to Article 7 of the Investment Firm Regulation, pursuant to Article 24(4) of the IFD, a risk committee must also be set up at consolidated level. This means that a risk committee composed of non-executive directors must be set up at both investment firm and consolidated level. According to Article 24(4) of the IFD, this is different if the group capital criterion as included in Article 8 of the IFR is used with DNB's consent. In that case, there is no obligation to establish a risk committee on a consolidated basis and there is only the obligation to establish a risk committee at investment firm level.

Under Article 33 of the IFD, the investment firms that are required to establish a risk committee also have the obligation to establish a remuneration committee. The AFM has been designated as the competent supervisor for the obligations relating to the remuneration committee. This remuneration committee must also consist of non-executive directors. What has been said about this with regard to the risk committee applies mutatis mutandis to the remuneration committee. However, Article 33 of the IFD explicitly states that the remuneration committee may be set up at group level. In that case, investment firms are not obliged to set up a remuneration committee at investment firm level if this is set up at group level.

As supervisors, the AFM and DNB monitor compliance with the obligation to set up a risk committee and a remuneration committee. If an investment firm, or an investment firm group on a consolidated basis, does not yet comply with this obligation, the AFM and DNB expect these obligations to be met as soon as possible. It is up to the investment firms, and possibly to its holding company, to fulfill these obligations in an appropriate and proportionate manner. The AFM and DNB are prepared to discuss sufficiently (legally) substantiated plans for meeting these obligations with the relevant institutions. Exceptions are not given.

On 19 July 2022, the Detailed Regulation on PEPP Supervisory Reporting was published in the Official Gazette of the Kingdom of the Netherlands.

These detailed rules are an elaboration of the EIOPA Guidelines on PEPP Oversight Reporting, EIOPA-21/260 of 31 March 2021, published on 4 June 2021 (the EIOPA Guidelines).

These detailed rules and the EIOPA guidelines complement Commission Implementing Regulation (EU) 2021/897 of 4 March 2021 laying down implementing technical standards for the application of Regulation (EU) 2019/1238 of the European Parliament and of the Council as regards concerns the format of the supervisory reporting to the competent authorities and the cooperation and exchange of information between competent authorities themselves and with the European Insurance and Occupational Pensions Authority, which implementing regulation was consulted on 20 February 2020. Due to previous consultations, these detailed rules will not be renewed separately publicly consulted.

Where in these guidelines the AFM is the recipient of supervisory reports and data and these are relevant for the supervision of De Nederlandsche Bank NV (DNB) on the basis of the law, the AFM will ensure that these reports are forwarded to DNB.

On 5 August 2022, the Comisión Nacional Bancaria y de Valores (CNBV) published a joint statement on the agreement to strengthen investigations and verifications of asset evolution. 

It establishes the bases and collaboration mechanisms to guarantee the reserve and confidentiality of the shared information. 

The Ministry of Public Administration (SFP) and the National Banking and Securities Commission (CNBV) signed a collaboration agreement that will allow, through the exchange of information, to strengthen investigations for administrative offenses and verification of the evolution of assets of people public servants of the Federal Public Administration (APF).

The agreement establishes the general bases and coordination mechanisms to guarantee the reservation and confidentiality of the information that is shared. With the agreement, the SFP will be able to request from the competent authorities, in terms of the regulations, information to carry out investigations on facts that may constitute administrative responsibilities, in accordance with the provisions of article 95 of the General Law of Administrative Responsibilities.

Within the framework of the National Program to Combat Corruption and Impunity, and to Improve Public Management 2019-2024, the SFP investigates and sanctions the probable administrative faults that public servants comment on in order to consolidate an honest and effective government.

On 22 August 2022,  the Secretaría de Hacienda y Crédito Público (SHCP) publishes a communication on a new investment alternative incorporation in cetesdirecto. 

The Mexican authorities have established and updated a National Policy for Financial Inclusion, which includes a diagnosis with objectives, strategies and lines of action that aims to promote the inclusion and financial capabilities of the saving population in an environment of protection and certainty.

In this sense, actions have been contemplated to promote that small and medium-sized savers can access and invest in the government securities market through the cetesdirecto platform, which since its creation has expanded its offer through new instruments and which currently It has more than 969 thousand investors.

Cetesdirecto users will be able to enter purchase instructions for the Savings Protection Bonds with a maturity term of seven years, also known as BPA182, issued by the Institute for the Protection of Bank Savings (IPAB). ), which are auctioned weekly.

With this action, the investment alternatives available on the cetesdirecto platform are once again expanded, which includes different types of instruments that have the support of the Government of Mexico, such as:

• Certificates of the Treasury of the Federation (Cetes);
• Fixed Rate Development Bonds (Bonos M);
• Floating Rate Development Bonds (Bondes F);
• Fixed-rate Development Bonds denominated in Investment Units (Udibonos), and
• Savings Protection Bonds (BPAG28, BPAG91 and, from now on, BPA182).

In this way, the public is offered a wide spectrum of investment options with different characteristics and terms, in order to provide alternatives that encourage savings and favor investment diversification, in a practical and safe environment to generate returns without being exposed to large risks.

The BPA182 have the backing of the Government of Mexico, which makes them safe investment instruments. These instruments have the following characteristics:

• They have a term of up to seven years and pay interest every 182 days, calculated on a face value of 100 pesos.
• Its interest rate is variable throughout its term of life and is determined each semester, as the maximum rate between the accumulated inflation in the period and the interest rate of the 182-day Cetes at the beginning of the period.

This option allows access to yields greater than or equal to inflation throughout the life of the instrument, which generates investor protection and allows the purchasing value of their investment to be preserved in periods of high inflation.

They are auctioned weekly, in accordance with the placement calendar published quarterly by the Ministry of Finance and Public Credit and the IPAB.

Until today, investors could only acquire BPA182 through stock brokers that have access to the stock markets under some restrictions of minimum investment amounts and paying certain commissions for said services.

With these actions, the Government of Mexico continues to promote and encourage formal savings, favoring economic development and thereby contributing to the well-being of the population.

For more information, the interested public can access the platform www.cetesdirecto.com , and the IPAB website available at www.gob.mx/ipab .

On 7 July 2022, Spain published Resolution of 5 July 2022, of the General Secretariat of the Treasury and International Financing, which updates Annex 1 of the Resolution of 4 July 2017, of the General Secretariat of the Treasury and Financial Policy, which defines the principle of financial prudence applicable to debt and derivative operations of the autonomous communities and local entities.

The Resolution of 4 July 2017 of the General Secretariat of the Treasury and Financial Policy, which defines the principle of financial prudence applicable to the debt and derivative operations of autonomous communities and local entities, establishes in its third section that "the maximum total cost of the debt operations, including commissions and other expenses, except for the commissions mentioned in annex 3, may not exceed the cost of financing the State at the average term of the operation, increased by the corresponding differential as established in annex 3 of this resolution. 

The autonomous communities and local entities that have their own valuation tools or independent external advice may determine at the time of the transaction the Treasury's financing cost on the basis of the methodology contained in annex 2 of this resolution. 

The rest of the Administrations, in order to ascertain the State's financing cost at each average term, shall use the table of fixed rates or the maximum spreads applicable to each reference published monthly, by resolution, by the Directorate General of the Treasury and Financial Policy. The maximum costs published will remain in force as long as no new costs are published. 

In accordance with this obligation to update the monthly cost of financing of the State for each maturity, a new Annex 1 is published. 

Considering the current State financing costs, in the case of loan transactions, if the maximum total cost referred to in section three of the Resolution of July 4, 2017 of the General Secretariat of the Treasury and Financial Policy, were negative, loans may be formalized at a rate of 0 %. 

On 6 August 2022, Spain published Resolution of 4 August 2022 of the General Secretariat of the Treasury and International Financing which updates Annex 1 included in the Resolution of 4 July 2017 of the General Secretariat of the Treasury and Financial Policy defining the principle of financial prudence applicable to debt and derivative operations of the autonomous communities and local entities.

The Resolution of 4 July 2017 of the General Secretariat of the Treasury and Financial Policy, which defines the principle of financial prudence applicable to the debt and derivative operations of autonomous communities and local entities, establishes in its third section that: 

"The maximum total cost of borrowing operations, including commissions and other expenses, except for the commissions mentioned in Annex 3, may not exceed the cost of financing of the State at the average term of the operation, increased by the corresponding differential as established in Annex 3 of this Resolution. 

The Autonomous Communities and Local Entities that have their own valuation tools or independent external advice may determine at the time of the transaction the Treasury's financing cost based on the methodology contained in Annex 2 of this Resolution. 

The rest of the Administrations, in order to know the State's financing cost at each average term, shall use the table of fixed rates or the maximum spreads applicable to each reference published monthly, by Resolution, by the Directorate General of the Treasury and Financial Policy. The maximum costs published will remain in force as long as no new costs are published". 

Pursuant to said obligation of monthly updating of the State's financing cost at each maturity, a new Annex 1 is published.  

Considering the current State funding costs, in the case of loan transactions, if the maximum total cost referred to in section three of the Resolution of 4 July 2017 of the General Secretariat of the Treasury and Financial Policy were negative, loans may be formalized at a rate of 0%.

On 5 July 2022, the Ministry of Economic Affairs and Digital Transformation published a communication on the Government update of the the Digital Spain Agenda for the 2026 horizon and acceleration of the deployment of its investments.

Main ideas:

• The Digital Spain Agenda has been updated to adapt it to the 2026 horizon, align with the Recovery Plan and take stock two years after its implementation.
• Two new transversal axes have been incorporated referring to strategic projects (PERTE) and the Retech initiative.
• Some of the most outstanding programs to date are the Unico Banda Ancha program and the launch of the first call for aid of the Digital Kit for companies with between 10 and 49 workers, from which more than 65,000 applications have been received and more than 11,000 bonuses of 12,000 euros have been granted.
• A total of 13 universities and research centers have received grants for R&D in advanced 5G 6G and the first quantum supercomputing ecosystem in southern Europe, Quantum Spain, has been launched.
• Highlights include the launch of the Cybersecurity Shock Plan to strengthen cybersecurity capacities of citizens, SMEs and professionals and the beginning of the implementation of the Cybersecurity Operations Center of the General State Administration. One of the objectives in this field is to reach 20,000 new specialists in cybersecurity and Artificial Intelligence, among others.
• The investments of the Digital Spain Agenda will be reinforced with the new resources of the addendum of the Recovery Plan

On 18 July 2022, the Comicion Nacional del Mercado del valores (CNMV) published a communication on the forthcoming implementation of the amendment to Delegated Regulation 2017/565 regarding the consideration of customers' sustainability preferences in the suitability assessment.

The CNMV stresses to the entities that the new obligations are applicable as of 2 August 2022. Therefore, entities must have adapted their systems and processes so that they are able to ask relevant questions to their clients to identify their preferences in relation to sustainability, when they must carry out a suitability test. That is, for new clients to whom they start providing advisory or portfolio management services or when the test needs to be updated. In any case, previously assessed clients should have the option to update the information for the suitability assessment including their sustainability preferences at their own initiative at any time. 

Entities could take as a general reference the ESMA Guidelines on certain aspects of MiFID II suitability requirements put out for public consultation, although it should be noted that the content of the final Guidelines is expected to be different in some aspects that cannot be specified at this stage. 

Given the novelty of the matter, it is essential that the staff of the entities collecting information from customers have sufficient knowledge to be able to explain to them in simple language and in an understandable manner the different aspects on which their preferences are collected. 

Along the same lines, and in addition to the effort that institutions will have to make to inform their customers of these new developments, the CNMV considers it very important to contribute to investors' knowledge of the matter and will prepare various resources within the framework of financial education. 

The CNMV conveys to the subject entities the importance of an adequate implementation of the new obligations on suitability assessment in relation to the consideration of sustainability preferences in order to comply with the ultimate goal of the European Commission in its Action Plan on Sustainable Growth Financing of redirecting capital flows towards sustainable investments and achieving sustainable growth.

On 4 July 2022, Spain published Comicion Nacional del Mercado del valores (CNMV) Circular 3/2022 of 21 on the prospectus of collective investment undertakings (CIIs) and the registration of the key information document (KID) for the investor.

The main objectives of the new Circular are to:

• Align the national CII regulation regarding the content, form and cases of updating the document with the key investor information with the PRIIPs Regulation for which the references to such issues are removed from the Circular, since said Regulation is directly applicable. 
• Regulate, among other aspects, the form, content and presentation of the CII prospectus, the causes and ways of updating it, as well as the way of sending to the CNMV, for registration, both the prospectus and the document with the fundamental data for the investor regulated in the aforementioned Regulation.
• Simplify the content of the CII prospectus, avoiding repetitions with other documents provided for in the regulations and aligning it with that of other countries in our environment. To this end, information that is not required by the UCITS Directive and that is already included in the PRIIPs key data document, such as the current expenses indicator, the structured CIS return scenarios or the synthetic risk indicator, is eliminated.

This Circular will apply on 1 January 2023. However, a period of one month is established, from that date, for the entities to send the CNMV the document with the key information for the investor. The technical instructions for sending the document are already available to the entities through the CNMV's electronic headquarters, CIFRADOC area, in the "CII Prospectus" (FOI) procedure.

On 21 July 2022, SI 2022 No 860 - The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 was published in the UK legislation.

These Regulations amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692) (the “MLRs”).

Regulation 3 is a minor consequential provision to remove an outdated reference to certain provisions of the Terrorist Asset-Freezing etc. Act 2010 (c. 38).

Regulation 4 widens the meaning of a trust or company service provider (“TCSP”) by amending regulation 12 of the MLRs so that it covers the formation of all forms of business arrangement, not just companies and other legal persons. By extending this to the formation of a ‘firm’, which is defined in regulation 3 of the MLRs, this will also now cover limited partnerships which are registered in England and Wales or Northern Ireland. A related change is made to regulation 4 of the MLRs so that TCSPs conduct customer due diligence when they are providing the services outlined in regulation 12(2)(a), (b) or (d).

Regulation 5 implements, in respect of cryptoasset transfers, a recommendation of the Financial Action Task Force and inserts a new Part 7A (cryptoasset transfers) into the MLRs. Regulation 64C of Part 7A (information accompanying an inter-cryptoasset business transfer) requires a cryptoasset business to include with the transfer of a cryptoasset to another cryptoasset business, specified information about the originator and beneficiary of the transfer. Regulation 64D (missing or non-corresponding information: the cryptoasset business of a beneficiary) includes obligations on the cryptoasset business of a beneficiary in such a transfer if required information is missing or does not correspond with information it verified as part of the customer due diligence duties. Regulation 64E (missing information: intermediaries) imposes similar obligations on an intermediary cryptoasset business in receipt of a cryptoasset transfer containing missing information.

Under regulation 64F (retention of information with an inter-cryptoasset business transfer: intermediaries) an intermediary cryptoasset business must ensure required information is retained with an onward transfer by it.

Regulation 64G (requesting information: unhosted wallet transfers and cryptoasset businesses) requires a cryptoasset business involved in an unhosted wallet transfer to consider whether to request from its customer certain information in relation to the originator and the beneficiary, and provides that, should the business not receive requested information, it must not make the cryptoasset available to the beneficiary.

Chapter 4 (provision of information to law enforcement authorities) obliges cryptoasset businesses to respond fully and without delay to a written request by a law enforcement authority for any information held under Part 7A reasonably required in connection with the authority’s function; and makes a change to regulation 74A of the MLRs (reporting requirements: cryptoasset businesses) such that a cryptoasset business will be required to provide to the Financial Conduct Authority (“FCA”) requested information about its compliance with Part 7A. An amendment to Schedule 6 (relevant requirements) makes the requirements of Part 7A “relevant requirements”, contravention of which is an offence and may lead to a civil penalty.

Regulation 6 implements a recommendation of the Financial Action Task Force. The Treasury is required to make arrangements to assess the risks of proliferation financing affecting the United Kingdom and relevant persons have associated obligations to undertake their own assessments of proliferation financing risk and maintain policies, controls and procedures to mitigate such risk. The provisions broadly align with existing provisions of the MLRs in relation to money laundering and terrorist financing risks.

Regulation 7 makes provision to clarify that the definition of art market participant in the MLRs does not apply to artists who sell their own works of art over the EUR 10,000 threshold.

Regulation 8 is an amendment to ensure alignment between the categories of relevant persons in regulation 8 of the MLRs and the extent of exclusions in regulation 15.

Regulation 9 amends regulation 30A of the MLRs to extend the obligation on relevant persons to report discrepancies to the registrar of companies between information they hold on the beneficial ownership of a customer and information on the register. The obligation to report is an ongoing one in line with the duty in the MLRs to undertake customer due diligence and ongoing monitoring. The provision also limits the duty to report to ‘material’ discrepancies, not just any discrepancy. Regulations 16 and 17 are consequential changes to primary legislation to update the law to align with new regulation 30A and give the registrar clear powers to deal with a material discrepancy in the register.

Regulation 10 removes from the MLRs the requirements in Part 5A for a centralised automated mechanism to identify persons holding or controlling bank accounts or safe deposit boxes through a bank account portal.

Regulation 11 makes provision to widen information and intelligence sharing gateways, to make provision as to the powers of certain authorities, including enforcement authorities, and to cover certain functions undertaken by the Department for Business, Energy and Industrial Strategy and Companies House within the meaning of ‘relevant authority’ for the purposes of regulation 52 of the MLRs.

Regulation 12 adds a new regulation 60B of, and Schedule 6B to, the MLRs to allow the FCA to object to an acquisition or change in control of a registered cryptoasset business before the acquisition takes place, and to publish notices relating to such objection. The regulation also makes provision for the FCA and HMRC to publish notices of refusals to register applicants for registration.

Regulation 13 amends regulation 66 of, and Schedule 4 to, the MLRs to make clear that supervisory authorities can request suspicious activity reports from their members, to assist in meeting their supervisory functions.

Regulation 14 applies regulations 74A to 74C of the MLRs (with appropriate modification) to Annex 1 financial institutions. This extends the FCA’s powers to get reports, for example, about compliance by Annex 1 institutions with requirements imposed under the MLRs.

Regulation 15 removes account information service providers (or AISPs) from the scope of the MLRs.

Unless otherwise stated, the Regulations come into force on 1 September 2022.

On July 2022, the UK Government published outcome of the consultation on Central Counterparties (CCP) and Central Securities Depositories (CSD). 

In January 2022, HM Treasury published the consultation document, ‘Future Regulatory Framework Review: Central Counterparties and Central Securities Depositories’. The consultation proposed giving the Bank of England (the Bank) a general rule-making power over two types of financial services firm, central counterparties (CCPs) and central securities depositories (CSDs). It also proposed the introduction of an updated set of statutory objectives and principles for the Bank to follow when regulating these firms, as well as strengthening the mechanisms which govern the Bank’s accountability to Parliament, its relationship with HM Treasury and its engagement with stakeholders.

The government received 12 responses to the consultation. The outcome of consultation provides a breakdown of the key themes raised by respondents in response to the questions posed. The government is legislating for these reforms through the Financial Services and Markets (FSM) Bill and further detail is available in the accompanying Bill documents.

BACKGROUND

On 27 July 2022, the Financial Conduct Authority (FCA) published finalised guidance FG22/5 Final non-Handbook Guidance  for firms on the Consumer Duty.

WHAT'S NEW?

The Consumer Duty (‘the Duty’) sets the standard of care that firms should give to customers in retail financial markets.  It sets expectations that can apply flexibly and dynamically to new products, services and business models as they continue to emerge and develop in a changing and increasingly digital environment. So, it better protects consumers from current and new/emerging drivers of harm, and gives firms more certainty of our expectations to support innovation, competition and new ways of serving customers.

The Duty is comprised of the following components.

• A Consumer Principle which reflects the overall standard of behaviour we  want from firms and which is defined further by the other elements of the Consumer Duty.
• The ‘cross-cutting rules’ which:
  a) develop our expectations for behaviour through three overarching requirements that explain how firms should act to deliver good outcomes and apply across all areas of firm conduct
  b) inform and help firms interpret the four outcomes
• The ‘four outcomes’ which are a suite of rules and guidance setting more detailed expectations for firm conduct in four areas that represent key elements of the firm-consumer relationship:
  a) the governance of products and services
  b)  price and value
  c) consumer understanding, and
  d) consumer support

The Consumer Duty is underpinned by the concept of reasonableness. This is an objective test and means that the rules and guidance must be interpreted in line with the standard that could reasonably be expected of a prudent firm:

• carrying on the same activity in relation to the same product or service, and
• with the necessary understanding of the needs and characteristics of the  customers in the relevant target market. 

What is expected of firms under the Duty will be interpreted in light of what is  reasonable given the circumstances, including:

• the nature of the product or service being offered or provided (for example the risk  of harm to customers)
• the characteristics of the retail customer(s) (for example their degree of financial  capability)
• The firm’s role in relation to the product or service (including the firm’s role in the  distribution chain). 

All firms have the same responsibility to act to deliver good outcomes for retail customers, but there will clearly be differences in the capabilities of a firm depending on its size and activities. One question all firms can ask themselves is whether they are applying the same standards and capabilities to delivering good customer outcomes as they are to generating sales and revenue in comparable areas. For example:

• are communications focused on supporting customers as clear as those used to sell the product?
• is the quality of any post-sale support as good as the pre-sale support?

Firms should consider whether they may be carrying out the same activities to a higher standard or more quickly when it benefits the firm, than when it benefits the customer.

Where relevant, the FCA has included further guidance on it. 

WHAT'S NEXT?

The key milestones: 

• October 2022 – Board or management bodies have to agree on the implementation plan. The Board or equivalent body is expected to be fully engaged in preparation. 
• April 2023 - Manufacturers should aim to complete all the reviews necessary to enable them to meet the four outcomes rules; 
• 31 July  2023: Entry into force for new and existing products/services that are open to sale or renewal; 
• 31 July 2024: Entry of the force for closed products and services

On 3 August 2022, the Financial Reporting Council (FRC) published recommendations to improve digital security disclosure.

The FRC Lab (Lab) published a report on digital security risk disclosure to help companies improve the disclosure of digital security strategies, risks and governance. 

With the continued digitisation of the economy, digital security risk is increasingly becoming fundamental for an investor's understanding of a business. However, the FRC's research showed that disclosures are not meeting investor needs effectively and companies need to improve to address this. Companies often provide limited useful information on digital security and don't connect to the wider strategic direction of the business or respond sufficiently to geo-political or cyber events. 

Companies can improve disclosures by focusing on aspects of strategy, governance, risk and events. In addition, the Lab report provides details about how to optimise disclosure for investors. It also includes practical examples of developing practice.

On 12 July 2022, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) launched joint consultation on margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251. 

The Consultation Paper (CP) sets out the PRA and FCA proposals to update the list of instruments as eligible collateral for bilateral margin, to introduce fall-back transitional provisions for certain firms who come into scope of the requirements for the first time, and to update the application of the requirements to central counterparties (CCPs).

The proposals in this CP would result in changes to the UK version of Commission Delegated Regulation (EU) 2016/2251 of 4 October 2016, the regulatory technical standards for risk-mitigation techniques for over-the-counter (OTC) derivative contracts not cleared by a central counterparty (hereafter Binding Technical Standards (BTS) 2016/2251). This BTS supplements Article 11(15) of Regulation (EU) No 648/2012 on OTC derivatives, central counterparties, and trade repositories (UK EMIR) (Appendix 1).

The purposes of these proposals are to:

• specify the treatment of third-country funds as eligible collateral, including European Economic Area (EEA) Undertakings for Collective Investment in Transferable Securities (UCITS);
• provide a fall-back transition period to address practical issues where firms face immediate application of the bilateral margining requirements; and
• update the criteria for a CCP to be excluded from the requirements.

The PRA and FCA do not expect firms to incur material additional costs as a direct result of these proposals. Costs for the PRA, FCA and for the firms in implementing these requirements are expected to be minor, as they do not impose any new mandatory requirements on firms.

The PRA considered the interaction between its primary and secondary objectives and the ‘have regards’. Overall, the PRA considers its proposals to be necessary to advance its objectives, while having regard to proportionality, competitiveness, and competition. The FCA considers that the proposals will advance its strategic objective of protecting and enhancing the integrity of UK financial markets. 

By updating the list of eligible collateral and introducing a fall-back transition period where the margin requirements would otherwise become applicable immediately in some cases, the proposals ensure that the margin requirements would be applied proportionately and that they would promote the competitiveness of UK firms. By updating the criteria for a CCP to be exempted from the requirements, the proposal provides transparency on the requirements.

The deadline for consultation is on 12 October 2022.

On 24 August 2022, the Bank of England (BoE) published a policy statement on derivatives clearing obligation – modifications to reflect USD interest rate benchmark reform: Amendment to BTS 2015/2205. 

The Policy Statement contains the BoE's final policy on the proposal to add overnight index swaps (OIS) that reference the Secured Overnight Funding Rate (SOFR) to the scope of contracts subject to the derivatives clearing obligation (DCO) and to remove contracts referencing USD Libor. This BoE's proposed policy was set out in the consultation paper published on 9 June 2022 titled ‘Derivatives clearing obligation – modifications to reflect USD interest rate benchmark reform: Amendments to BTS 2015/2205’. 

The BoE's final policy maintains the proposal in the June consultation paper to add SOFR OIS contracts with an original maturity between 7 days and 50 years to the DCO from 31 October 2022 and to subsequently remove contracts referencing USD Libor. In the June consultation paper, the BoE proposed to align the date on which USD Libor contracts will be removed from the DCO with central counterparties’ (CCPs) contractual conversions of those contracts (which the BoE anticipated would occur in Spring 2023). Consistent with that proposal, contracts referencing USD Libor will be removed from the DCO on 24 April 2023.

The BoE's final policy has been implemented via amendments 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 over-the-counter (OTC) derivatives, central counterparties and trade repositories with regard to regulatory technical standards on the clearing obligation (hereafter Binding Technical Standards (BTS) 2015/2205).

The policy statement also provides the BoE’s feedback to the responses to the June consultation paper.

The policy statement is relevant to financial and non-financial counterparties that are subject to the DCO under the on-shored European Market Infrastructure Regulation (EMIR), and to CCPs.

On 16 August 2022,  the Financial Conduct Authority (FCA) published  an encouragement market participants to continue transition of LIBOR-linked bonds. 

The statement is for issuers and bondholders of outstanding LIBOR-linked bonds. The FCA is strongly encouraging issuers and bondholders of outstanding LIBOR-linked bonds to consider this information and take the necessary action to transition outstanding LIBOR-linked bonds to fair alternative rates.

On 1 August 2022, the Financial Conduct Authority (FCA) published a policy statement PS22/10 on strengthening the FCA's financial promotion rules for high risk investments and firms approving financial promotions. 

The policy statement sets out the FCA's final policy position and Handbook rules, which are designed to strengthen the regime for how high-risk investments (HRIs) can be promoted. At this stage, the final rules apply to those HRIs which are already subject to marketing restrictions. 

The following changes were made: 

• The FCA's classification of high-risk investments. The FCA is rationalising its rules in COBS 4 under the terms ‘Restricted Mass Market Investments’ and ‘Non-Mass Market Investments’.  
• The consumer journey into high-risk investments. The FCA is implementing a package of measures to strengthen the consumer journey such as: strengthening risk warnings, banning inducements to invest, introducing positive frictions, improving client categorisation and introducing stronger appropriateness tests.  
• Strengthening the role of firms approving and communicating financial promotions. The FCA is introducing a package of measures to strengthening the role of a section 21 (s21) approver. The FCA is also introducing a rule that firms communicating financial promotions must have the relevant competence and expertise in the product being promoted. 

Rules related to the FCA's main risk warnings for financial promotions of high-risk investments will have effect from 1 December 2022. All other rules will have effect from 1 February 2023.

Firms will need to comply with these rules from the applicable dates. The FCA will closely monitor implementation of these rules and will act where the FCA sees firms breach them.

Cryptoasset promotions are currently outside this policy remit. 

On 5 July 2022, the Financial Conduct Authority (FCA) published finalised guidance FG22/4 on the FCA's approach to compromises for regulated firms. 

The FCA saw an increase in the number of regulated firms proposing compromises to deal with significant liabilities to consumers, in particular redress liabilities.

This guidance clarifies how the FCA approaches compromises in line with our statutory objectives to protect consumers and the integrity of markets. The FCA's aim is to help firms understand what information the FCA needs and the factors it will consider when deciding if and what actions we will take. Ultimately, it will help firms to avoid proposing compromises that are unacceptable to us because they threaten or adversely affect the FCA's statutory objectives.

On 17 July 2022, the Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 was published in in UK Legislation. 

The primary purpose of this instrument is to make amendments to legislation that are consequential on changes made by sections 1 to 5 of, and Schedules 1 to 4 to, the Financial Services Act 2021 (c. 22). These provisions relate to the prudential regulation of credit institutions and investment firms.

This instrument also addresses failures of retained EU law to operate effectively, and other deficiencies arising from the withdrawal of the United Kingdom from the European Union.

Part 2 of this instrument makes amendments to primary legislation, Scottish legislation and Northern Ireland legislation. In particular, regulation 7 amends the definition of “investment firm” in the Banking Act 2009 such that specified liabilities owed to PRA-regulated and FCA-regulated investment firms are kept within the exclusion from the bail-in power.

Part 3 of this instrument makes amendments to secondary legislation.

Part 4 of this instrument makes amendments to retained direct EU legislation.

Part 5 of this instrument makes transitional provision in respect of certain securitisations relating to the retention of a material net economic interest by the originator, sponsor or original lender.

The instrument will come into force on 17 August 2022.

On 21 July 2022, SI 2022 No 854 - The Financial Services and Markets Act 2000 (Consequential Amendments of References to Rules and Miscellaneous Amendments) Regulations 2022 was published  in the UK legislation.

This instrument is made under section 141A(2) of the Financial Services and Markets Act 2000 (c. 8) and section 45(1) and (3) of the Financial Services Act 2021 (c. 22).

Part 2 of this instrument makes amendments to update references in legislation to rules made by the Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”). These amendments relate to changes to the prudential regulation of credit institutions and investment firms in the Financial Services Act 2021. In particular, regulation 2(1) amends the Financial Conglomerates and Other Financial Groups Regulations 2004 (S.I. 2004/1862) so that the legislation reflects changes made by the Financial Services Act 2021.

Part 3 of this instrument makes amendments to retained EU law.

This instrument also makes amendments to legislation that are consequential on changes made by sections 1 to 5 of, and schedules 1 to 4 to, the Financial Services Act 2021.

The Rulebook made by the PRA is available on www.prarulebook.co.uk and copies of the rules referred to can be obtained from the Prudential Regulation Authority, 20 Moorgate, London, EC2R 6DA, where copies are also available for inspection.

The Handbook made by the FCA is available on www.handbook.fca.org.uk and copies of the rules referred to can be obtained from the Financial Conduct Authority.

The Regulation is coming into force on 17 August 2022. 

On 29 July 2022, the Financial Conduct Authority (FCA) updated notification and disclosure of net short positions.

The update entail information changed UK sovereign debt thresholds.

On 3 August 2022, the Financial Conduct Authority (FCA) published a policy statement PS22/11 on improving the appointed representatives regime. 

The appointed representatives regime is set in primary legislation. It allows self-employed representatives to engage in regulated activities without having to be authorised. While the regime has benefits, the FCA has identified a wide range of harm across all the sectors where principals and appointed representatives operate.  Where harm occurs, it is often because principals do not undertake adequate due diligence before appointing an appointed representatives, and/or due to poor on-going control and oversight.

The FCA's proposals focused on two main areas of change aimed at addressing the harms identified and protecting consumers. These were:

• collecting additional information on appointed representatives and strengthening reporting requirements for principals; 
• clarifying and strengthening the responsibilities and expectations of principals. 

The Policy Statement  summarises and responds to feedback received to Chapters 3 and 4 of the FCA's consultation paper. The FCA also provides an overview of the responses to the  discussion chapter (Chapter 5). 

The changes will take effect on 8 December 2022. Principals should read the FCA's updated rules and expectations and take any necessary steps to be ready to comply. As part of the FCA's enhanced reporting requirements, principal firms should expect to receive a request for data (this will be through a Section 165 request – the FCA's power to require information and documents from firms) about their appointed representatives later in 2022.

On 11 August 2022, UK Parliament published the Bank of England's (BoE) letter on future regulatory framework for financial services. 

In the letter, the BoE welcomes and supports the proposals for regulators to have increased responsibility for setting regulatory requirements, acting within a strong policy and accountability framework set and overseen by Parliament.

BoE welcomes the increased accountability mechanisms set out in the Bill, which strike an appropriate balance between the desire for independent regulators to be more responsive to new risks and opportunities and the need for Parliament,  stakeholders, and the public at large to hold regulators to account fully. 

In the letter, BoE highlights that PRA expects to publish a discussion paper in September, setting out our vision for implementing the framework as it currently stands in terms of strong standards; accountability to Parliament, stakeholders, and the public at large; responsiveness; and accessibility.

On 12 August 2022,  the Financial Conduct Authority (FCA) updated he temporary permissions regime webpages. 

The updates entails the following: 

• Considerations for firms leaving the TPR – In the section, "Firms that previously passported into the UK under schedule 3 or schedule 4 to FSMA", the FCA has added the following text:
  "All firms in the TPR that we are expecting to apply for full authorisation in the UK should now have received a formal direction confirming their ‘landing slot’. If we are not expecting your firm to apply for full authorisation in the UK, you may not have received a landing slot direction. If your firm does intend to apply for full UK authorisation and will be solo-regulated by us but has not received a landing slot direction, your firm can still apply but any application must be received by us before the end of 31 December 2022. All firms in the TPR that intend to apply for full UK authorisation must do so by the end of 31 December 2022.  An application from a firm in the TPR which submitted after this date will be treated as invalid."

The page can be found here: www.fca.org.uk/brexit/temporary-permissions-regime-tpr/considerations-firms-leaving

• TPR firms that do not meet our expectations: The FCA has added a new section, ‘FSMA firms that miss their landing slot or do not apply by 31 December 2022’ and added the following text: "We expect firms to take regulation seriously and submit their application for authorisation when asked to do so. A FSMA firm that misses its landing slot, (or otherwise fails to apply by 31 December 2022) will have failed to meet our expectations and, as a result, we will expect it to voluntarily apply to cancel its temporary permission and either, enter SRO to run-off its UK business (if eligible) or leave the UK perimeter. Where firms do not take either of these steps promptly, we will look to take action to cancel their temporary permission."

The  page can be found here: www.fca.org.uk/brexit/temporary-permissions-regime-tpr/firms-do-not-meet-our-expectations

On 14 July 2022, the Financial Conduct Authority (FCA) updated on disclosure requirements for EEA UCITS.

In the UK, the exemption from the requirement for EEA UCITS to produce a PRIIPs KID lasts until 31 December 2026. The FCA confirmed this exemption applies to both EEA UCITS recognised under s272 FSMA and those recognised under temporary marketing permissions regime (TMPR). This means, when being marketed to retail investors in the UK, EEA UCITS that are recognised under either s.272 Financial service market act or the temporary marketing permissions regime (TMPR) must produce a UCITS KIID.   

The FCA also noted that the TMPR is due to end on 31 December 2025. The FCA is engaging with the Treasury on the disclosure requirements that would apply in the event of an equivalence decision under the Overseas Funds Regime. 

On 1 August 2022, the Financial Conduct Authority (FCA) published CP22/14 on broadening retail access to the long-term asset fund (LTAF). 

Some retail investors seek out non-traditional investments in a search for diversification or higher returns. The LTAF may enable such diversified investment propositions, managed to appropriately high standards. On the other hand, there is a risk that retail investors may be overly reassured by the fund’s authorised status or not fully understand the illiquid nature and corresponding risk of the underlying assets.

The FCA designed robust governance requirements around the LTAF satisfying appropriate regulatory standards to enable investors who understand the risks of investing in long-term illiquid assets to invest with confidence. Given the regulatory standards that LTAFs must meet, and following consultation feedback, the FCA does not want to impose unnecessary restrictions on where consumers can invest. The FCA wants investors to be able to access suitable investments that match their attitude to risk. The FCA is therefore consulting on proposals to allow retail access to the LTAF.

The consultation sets the FCA's proposals for broadening the retail distribution of the LTAF to more categories of retail investors, whilst including further investor protections. The FCA  sets out proposals to treat the LTAF as a Restricted Mass Market Investment (RMMI), in line with PS22/10 (Strengthening the FCA's financial promotion rules for high-risk investments). This will enable a broader range of retail investors to access the LTAF whilst ensuring investors understand the risks involved.

The deadline to submit the feedback is by 10 October 2022. 

On 9 August 2022, the Financial Conduct Authority (FCA) published a letter  to a financial industry on its alternatives supervisory strategy. 

The FCA takes a strategic view towards sectors or ‘portfolios’ of firms with similar business models and regulatory permissions. The FCA reviews these strategies on a rolling basis and seek to be transparent with the industry about what it intends to focus on. The FCA supervises firms in the ‘Alternatives’ portfolio’, alongside firms that are predominantly active in the alternative investment sector. This letter outlines the FCA's updated supervisory strategy and priorities for portfolio firms as well as stating areas where the FCA believes improvements can be made.

The following priorities were disclosed in the letter: 

• Consumer protection: The FCA reminds that firms should consider the appropriateness or suitability of the investments they offer for their target customers, be they retail or elective professionals. Firms can reduce the risk to consumers with limited investment knowledge or risk appetite being exposed to inappropriate investment strategies by conducting thorough investor assessments. 
• Conflicts of interest: Firm boards should carefully review their procedures to ensure conflicts are avoided, managed, or disclosed in a  way that minimises harm to investors and markets.  Firms should also consider the impact of their shareholder structure and the potential  implications this has on the effective governance of their organisation. 
• Market integrity and disruption: Firm Boards should ensure that risk functions are appropriately resourced, contemporaneous, and commensurate with the levels of portfolio and business risk being taken.
• Market abuse:  the FCA expects firms to have strong prevention cultures and effective systems and controls to enable them to discharge their obligations under the UK Market Abuse Regulation (UK MAR). Firms must ensure UK MAR controls are tailored to their individual business models. Where firms do not comply, the FCA will consider the need for criminal, civil or supervisory sanctions to provide effective deterrents.

• Culture: the FCA will look at how senior managers and firm policies influence an organisation’s culture. Evidence of staff being unable to speak up is an area of particular concern. Furthermore, the FCA is interested to understand how healthy cultures are embedded in firms where founders or other senior individuals occupy a dominant role. A further aspect of a healthy culture is diversity and inclusion. Firms should consider the steps they can take to provide an environment where diverse talent can flourish, and diversity of thought is encouraged. 
• ESG: The FCA continues to assess authorised fund applications with an ESG or sustainability focus  and firms should note that ESG remains a priority area in the Asset Management department. Firms offering such products should expect to be subject to review to ensure marketing materials accurately describe their product, with funds offering clear and consistent disclosure.

On 16 August 2022, the Financial Conduct Authority (FCA) published a statement on IFPR and eligibility for enhanced  Senior Managers & Certification Regime status as a significant SYSC firm. 

When introducing the Investment Firm Prudential Regime (IFPR) in January 2022, the FCA renamed and moved the definition of ‘Significant IFPRU firm’ used as one of the criteria for identifying Enhanced Firms under the Senior Managers & Certification Regime (SM&CR). This was to retain the definition in the FCA's rules following deletion of the IFPRU sourcebook. A number of stakeholders have since highlighted that this new definition of ‘Significant SYSC firm’ could result in more firms being brought into Enhanced scope than under the previous definition as it had been understood and applied.

The FCA plans to consult shortly to make changes necessary to clarify that only firms that would have been both Significant IFPRU firms and IFPRU investment firms under the pre-IFPR arrangements fall within the new definition of ’Significant SYSC firm’ for the purposes of the Enhanced Scope SM&CR regime. In the meantime, the FCA wishes to make clear that firms that have unintentionally come under the Enhanced Scope SM&CR Regime under the new version of Significant SYSC, need take no action. 

On 21 July 2022,  the Financial Conduct Authority (FCA) published discussion paper DP22/3: Operational resilience: critical third parties to the UK financial sector. 

The discussion paper is issued jointly by the PRA, the FCA, and the Bank of England in its capacity as supervisor of FMIs (collectively the supervisory authorities).

The purpose of the discussion paper is to share and obtain views on potential measures to manage the systemic risks to the supervisory authorities’ objectives, including financial stability, market integrity and consumer protection, posed by certain third parties to the UK financial sector. These third parties, which would be designated by HMT via secondary legislation, are referred to as CTPs in the discussion paper.

Implementing the potential measures discussed in the discussion paper would require changes to UK legislation (in particular, the Financial Services and Markets Act 2000 (FSMA) and the Banking Act 2009). The Financial Services and Markets Bill (FSM Bill) contains the relevant proposed statutory measures. They include a framework for the designation of certain third parties as ‘critical’ by HMT; and new powers for the supervisory authorities to make rules for, gather information from, and take enforcement action against CTPs in respect of the services that they provide to firms and FMIs. The discussion paper should be read alongside the relevant clauses in the version of the FSM Bill that was introduced to Parliament on 20 July 2022, and the ‘Critical third parties to the finance sector: policy statement published by HMT on 8 June 2022. The potential measures in the discussion paper are conditional on the relevant clauses in the FSM Bill being enacted in a substantially similar form.

Subject to the FSM Bill’s passage, the supervisory authorities plan to consult on proposed rules and guidance for CTPs, based on their new statutory powers. Therefore, this discussion paper refers to the measures that the supervisory authorities are considering introducing for CTPs as ‘potential’ to highlight that they may evolve and will be informed by responses to the discussion paper. 

The supervisory authorities’ work in the area of operational resilience, including the potential measures examined in the discussion paper, seeks to contribute to the UK Government’s ambitions to ensure that the UK remains at the global cutting edge of technology and innovation in financial services. These ambitions were announced in the former Chancellor’s written statement on the UK Government's response to the Kalifa Review of UK FinTech. The supervisory authorities’ work also seeks to contribute to the resilience objectives in the UK Government’s National Cyber Strategy 2022. 

The feedback can be provided by 23 December 2022. 

On 20 July 2022, the SI 2022 No 825 - The Occupational Pension Schemes (Governance and Registration) (Amendment) Regulations 2022 was published in the UK legislation.

The Regulations amend the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (S.I. 1996/1715) (“the 1996 Regulations”) and the Register of Occupational and Personal Pension Schemes Regulations 2005 (S.I. 2005/597) (“the 2005 Regulations”). These amendments are made to transpose, into pensions legislation, Parts 3 and 7, and related provisions of Parts 9 to 11, of the Investment Consultancy and Fiduciary Management Market Investigation Order 2019 made by the Competition and Markets Authority on 10th June 2019.

Part 2 of these Regulations inserts a new Part 6 into the 1996 Regulations. The new Part 6 of the 1996 Regulations:

(a)sets out the duties of the trustees of occupational pension schemes which are relevant trust schemes in connection with the provision of fiduciary management services and investment consultancy services (Chapters 2 and 3 of Part 6 of the 1996 Regulations), and

(b)makes provision for enforcement of those duties by the Pensions Regulator (Chapter 4 of Part 6 of the 1996 Regulations).

For these purposes “relevant trust scheme” has the meaning given in new regulation 30 of the 1996 Regulations, “investment consultancy services” has the meaning given in new regulation 34 of the 1996 Regulations, and “fiduciary management services” has the meaning given in paragraph 3 of the new Schedule to the 1996 Regulations. Such services do not include high-level commentary provided by an actuary or certain advice given to the trustees of a relevant trust scheme by the scheme’s legal adviser acting in that capacity.

The trustees of relevant trust schemes will be required to set objectives for persons who provide them with investment consultancy services, and review the performance of those providers against those objectives annually (new regulations 35 and 36 of 1996 Regulations).

The trustees of relevant trust schemes will also be required to carry out a qualifying tender process in respect of arrangements they have made, or make in future, for a person to provide them with fiduciary management services or for such a person to manage an additional amount of the scheme’s assets which such a person manages.

Part 3 of these Regulations amends regulation 3 of the 2005 Regulations so that information concerning persons who provide fiduciary management services or investment consultancy services to the trustees of a relevant trust scheme is “registrable information”. “Registrable information” is information which must be entered in the register of occupational and personal pension schemes compiled and maintained under section 59 of the Pensions Act 2004 (c. 35).

Part 3 of the Regulations also makes minor amendments to regulation 3 of the 2005 Regulations to remove from the registrable information requirements certain information which is no longer needed by the Pensions Regulator.

Part 4 of these Regulations imposes a duty on the Secretary of State to review the operation of the provisions of the new Part 6 of the 1996 Regulations.

On 25 July 2022, the SI 2022 No 855 - The Pensions Act 2004 (Code of Practice) (Authorisation and Supervision of Collective Defined Contribution Schemes) Appointed Day Order 2022 was published in the UK legislation.

This Order appoints 1st August 2022 as the day for the coming into effect of the Pensions Regulator’s Code of Practice: Authorisation and supervision of collective defined contribution schemes.

Part 1 of the Pension Schemes Act 2021 makes provision in relation to collective money purchase schemes (the legislative term for collective defined contribution schemes), including provision concerning the Pensions Regulator’s role in authorising and supervising such schemes. Further provision as to this role is made by the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022 (S.I. 2022/255).

On 2 August 2022, the Financial Conduct Authority (FCA) published a consultation paper CP22/15 on calculating redress for non-compliant pension transfer advice.

The consultation paper is about calculating redress for consumers who have suffered financial loss because of non-compliant advice to transfer from a defined benefit (DB) pension scheme to a defined contribution (DC) pension scheme.

The FCA has  carried out a periodic review of our methodology for calculating redress for consumers in this position. The methodology aims to put them, so far as possible, back in the position they would have been in if they had been given compliant advice and remained in their DB scheme. This is the basic objective of redress.   

The FCA's review concluded that the current methodology remains appropriate and fundamental changes are not necessary. However, the review identified some areas where the FCA could improve or clarify the methodology to ensure it continues to provide appropriate redress. The consultation paper sets out proposals for these improvements, including: 

• consolidating the methodology as rules and guidance in the FCA Handbook;
• changing the approach to determining the consumer’s retirement date;
• payment of redress and how it is explained to consumers; 
• how the FCA's proposals affect the proposed British Steel Penshion Scheme (BSPS) redress scheme.

The deadline to submit  a response to this consultation is 20 September 2022. 

It is expected that any BSPS redress scheme to come into force in early 2023, with most members who are eligible receiving compensation later in 2023 or in early 2024.

Any changes to the methodology will apply to all cases that have not been settled when the changes come into effect. In the meantime, we expect firms to continue to calculate and offer redress in line with existing requirements. Until changes take effect, firms will need to explain to their customers how they have arrived at a figure, and how this puts them back in the position they would have been in, if they had not received unsuitable advice. Firms will also need to explain that customers have the option of waiting for the outcome of this consultation to settle their case. 

On 8 July 2022,  the Financial Conduct Authority (FCA) published levy calculation notes 2022/23 final rates. 

The Financial Services Compensation Scheme (FSCS) levy is made up of two elements:

• Management expenses; and
• Compensation costs.

The management expenses levy limit for 2022/23 was consulted on in the joint FCA/PRA consultation paper CP1/22 (January 2022).

All participant firms are required to contribute to base costs. Specific costs and compensation costs are not payable by FSCS exempt firms or newly authorised firms in their first authorised year.

Firms who are dual regulated will pay FSCS Base Costs towards both their FCA and PRA fee-blocks. 

On 5 July 2022, the Financial Conduct Authority (FCA) launched consultation on improving equity secondary markets.

The FCA consults on proposals that are intended to improve how UK-based equity markets operate. The proposals change aspects of trade reporting, waivers from pre-trade transparency and the tick size regime. They intend to maximise execution quality for investors. They also aim to improve the content and the efficient consolidation of post-trade reports. 

The FCA also proposes to remove or amend some provisions that impose material operational and compliance costs on firms but have not delivered material benefits to end users or to market functioning. In particular, the FCA proposes: 

1) Improve the content of post-trade transparency by enabling market participants to better identify transactions that contribute to the price discovery process and to improve the consolidation of trade reports from multiple sources.

2) Simplify the reporting of over the counter (OTC) transactions for all classes of financial instruments by removing the systematic internaliser status as a criterion for establishing when an investment firm is required to report transactions. The FCA proposes to adopt a new regime based on designated reporting firms.

3) Improve choice and competition by allowing UK trading venues to use reference prices from overseas venues, where those prices are robust, reliable and transparent. The FCA also proposes to remove size thresholds for orders benefiting from the order management facility waiver by allowing trading venues to calibrate them according to the characteristics of their markets.

4) Improve the quality of execution by removing restrictions preventing trading venues from using the same tick size used by trading venues established overseas where the overseas venues are the primary markets in a financial instrument.

5) Enhance market resilience by consulting on what future guidance should cover in relation to the operation of markets before and during an outage.

This consultation paper is part of the Wholesale Markets Review (WMR), the review of UK wholesale financial markets the FCA has been conducting with the Treasury. 

The deadline to submit response is 16 September 2022. 

On 7 July 2022,  the Financial Conduct Authority (FCA) published a policy statement PS22/8 on protecting investors in authorised funds following the Russian invasion of Ukraine. 

The Policy Statement sets out the FCA's response to the feedback it received to  Consultation Paper CP22/08, proposing to allow authorised fund managers to take steps to protect investors in funds affected by the Russian invasion of Ukraine. It also details the final rules and guidance that we are introducing following the consultation.

With regards the Ukraine and Russia conflict,  the United Kingdom and other jurisdictions have imposed financial sanctions, and the Russian government has applied trading restrictions. Some securities, including some Ukrainian assets, have become illiquid or untradeable. Normal mechanisms for determining accurate and reliable valuation for some securities have stopped operating. 

Authorised fund managers (AFMs) who have these affected investments in their funds are faced with the challenge of how to treat them, especially given the AFM’s responsibility to ensure its actions do not breach any relevant sanctions regimes.

The FCA consulted  on rules to give AFMs of UK authorised investment funds a way to deal with this situation by allowing the AFM to structure the fund differently, using separate new classes of units to hold the affected investments. 

Side pockets would give AFMs the option to separate affected investments from the fund’s other investments. The fund’s existing classes of units would no longer reflect the value of these affected investments, but the value of units in a new unit class would be  determined only by reference to the affected investments. The existing unitholders at  the time the side pocket is created would receive units in the side pocket class, giving them  the right to a portion of the affected investments. Side pockets therefore could allow:

• new investors to enter the fund without sharing in the exposure to the affected  investments
• existing investors to sell the units which relate to assets that are not affected  investments
• some funds to end their current suspension of dealing. 

The AFM would manage the side pocket class with the aim of terminating it as and  when this could be done in investors’ best interests. There is no certainty that the  affected investments will ever recover their lost value but, if this happens, investors holding units in the side pocket class would benefit.

On 12 August 2022, the US Commodity Futures Trading Commission (CFTC)  issued final rule modifying the swap clearing requirement in support of the transition from LIBOR and other interbank offered rates to alternative reference rates. 

The final rule removes the requirement to clear interest rate swaps referencing the London Interbank Offered Rate (LIBOR) and certain other interbank offered rates and replaces them with requirements to clear interest rate swaps referencing overnight, nearly risk-free reference rates. The final rule updates the swaps required to be submitted for clearing to a derivatives clearing organization (DCO) or an exempt DCO and the compliance dates for such swaps.

The final rule amends CFTC Regulation 50.4(a) as follows:

1) Effective 30 days after publication in the Federal Register:

• Removes the requirement to clear swaps referencing British pound (GBP) LIBOR, Swiss franc (CHF) LIBOR, Japanese yen (JPY) LIBOR, and euro (EUR) Euro Overnight Index Average (EONIA) in each of the fixed-to-floating swap, basis swap, forward rate agreement (FRA), and overnight index swap (OIS) classes, as applicable.
• Adds a requirement to clear OIS referencing CHF Swiss Average Rate Overnight (SARON) (with a stated termination date range of seven days to 30 years), JPY Tokyo Overnight Average rate (TONA) (seven days to 30 years), and EUR Euro Short-Term Rate (€STR) (seven days to three years).
• Extends the stated termination date range for GBP Sterling Overnight Index Average (SONIA) OIS required to be cleared to include seven days to 50 years.

2) Effective October 31, 2022:

• Adds a requirement to clear OIS referencing U.S. dollar (USD) Secured Overnight Financing Rate (SOFR) (seven days to 50 years) and Singapore dollar (SGD) Singapore Overnight Rate Average (SORA) (seven days to 10 years).

3) Effective July 1, 2023:

• Removes the requirement to clear interest rate swaps referencing USD LIBOR and SGD Swap Offer Rate (SOR-VWAP) in each of the fixed-to-floating swap, basis swap, and FRA classes, as applicable.

On 17 August 2022,  the US Commodity Futures Trading Commission (CFTC) extended temporary no-action letter regarding capital and financial reporting for certain non-U.S. nonbank swap dealers. 

CFTC announced it has issued a temporary no-action letter extending CFTC Staff Letter No. 21-20 to nonbank swap dealers (SDs) domiciled in foreign jurisdictions that are the subject of a pending CFTC review for comparability determinations regarding capital and financial reporting requirements.

As part of the capital and financial reporting requirements for nonbank SDs, the Commission adopted a substituted compliance framework that permits covered nonbank SDs to rely on compliance with home country capital and financial reporting requirements in lieu of meeting all or parts of the Commission’s capital adequacy and financial reporting requirements, provided the Commission finds the home country requirements comparable to the CFTC’s requirements.

Through CFTC Staff Letter No. 22-10, CFTC staff is extending a no-action position to provisionally-registered nonbank SDs domiciled in Japan, Mexico, the United Kingdom, and the European Union, conditioned upon the nonbank SDs remaining in compliance with existing home-country capital and financial reporting requirements and submitting certain financial reporting information to the Commission.

The Commission recently published for public comment a proposed substituted compliance determination for nonbank SDs domiciled in Japan and continues to engage with foreign counterparts on the review of other comparability requests. MPD is extending the no-action position previously issued in Staff Letter 21-20 to provide regulatory certainty to nonbank SDs that are the subject of pending capital comparability applications.

No-action letter was issued in response to a joint request received from the Securities Industry and Financial Markets Association, the Institute of International Bankers, and the International Swaps and Derivatives Association on behalf of their respective non-bank SD members who would otherwise be required to comply with the Commission’s capital and financial reporting requirements on October 6, 2022. The no-action position will expire on the earlier of October 1, 2024 or if the Commission issues a final Capital Comparability Determination with respect to each jurisdiction.

On 27 July 2022, the US Commodity Futures Trading Commission (CFTC) approved a proposed rule on governance requirements for derivatives clearing organizations and a proposed order and request for comment on an application for capital comparability determination submitted by the FSA of Japan.

Notice of Proposed Rulemaking on Governance Requirements for Derivatives Clearing Organizations: The Commission is proposing several amendments to Regulation 39.24 that enhance the Commission’s DCO governance standards and are consistent with recommendations from the Central Counterparty Risk and Governance Subcommittee of the Market Risk Advisory Committee.  Specifically, the proposed regulations require a DCO to establish one or more risk management committees (RMCs) and one or more risk advisory working groups (RWGs). The proposed regulations also prescribe standards related to the composition, activities, and policies and procedures of RMCs and RWGs. In the notice of proposed rulemaking, the Commission invites comment on any aspect of the proposed rules, and also poses questions related to other topics for the Commission’s consideration and potential use in a future rulemaking. These questions involve topics such as consulting market participants prior to DCOs submitting rule changes pursuant to Part 40 of the Commission’s rules; the ability of RMC members to share information with others at their employer to obtain additional expert opinions; and governance related to the introduction of new products.

Notice of Proposed Order and Request for Comment on an Application for a Capital  Comparability Determination from the Financial Services Agency of Japan: In response to an application submitted by the Japan Financial Services Agency (JFSA), the Commission is requesting comment on a proposed comparability determination that would permit substituted compliance of Japan’s capital and financial reporting requirements for nonbank swap dealers as compared to the capital and financial reporting requirements adopted by the Commission pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Commission is inviting public comment on its analysis and proposed comparability determination order, including its proposed conditions, as well as on the JFSA Application and relevant Japanese laws.

Both proposals will be available for comment for 60 days post publishing in the Federal Register. Comments may be submitted via the CFTC Comments Portal at: comments.cftc.gov.

On 25 August 2022, the U.S. Securities and Exchange Commission (SEC) adopted  pay versus performance disclosure rules. 

Specifically, the amendments require registrants to provide a table disclosing specified executive compensation and financial performance measures for their five most recently completed fiscal years. With respect to the measures of performance, a registrant will be required to report its total shareholder return (TSR), the TSR of companies in the registrant's peer group, its net income, and a financial performance measure chosen by the registrant. Using the information presented in the table, registrants will be required to describe the relationships between the executive compensation actually paid and each of the performance measures, as well as the relationship between the registrant’s TSR and the TSR of its selected peer group. A registrant will also be required to provide a list of three to seven financial performance measures that it determines are its most important performance measures for linking executive compensation actually paid to company performance. Smaller reporting companies will be subject to scaled disclosure requirements under the rules.

The adopting release will be published on SEC.gov and in the Federal Register. The final rules will become effective 30 days following publication of the release in the Federal Register. Registrants must begin to comply with the new disclosure requirements in proxy and information statements that are required to include Item 402 executive compensation disclosure for fiscal years ending on or after December 16, 2022.

On 8 August 2022, the U.S. Securities and Exchange Commission (SEC) proposed rules to improve clearing agency governance and to mitigate conflicts of interest. 

The proposed rule would establish new governance requirements on board composition, independent directors, nominating committees, and risk management committees. The proposed rule would also require new policies and procedures regarding conflicts of interest, board obligations to oversee relationships with service providers for critical services, and a board obligation to consider stakeholder viewpoints. As it relates to clearing agencies that clear security-based swaps, the proposed rule would advance the policy objectives of the Dodd-Frank Act by establishing new requirements for policies and procedures that require such clearing agencies to identify, mitigate, or eliminate conflicts of interest and document those actions.

If adopted, the proposed rules would increase transparency of the decision-making process on clearing agency boards and committees and improve the alignment of incentives between clearing agency participants and owners. In particular, the proposed rule would reduce conflicts of interest, increase the role of independent directors in board decision-making processes, and help promote fair representation of owners and participants in the selection of directors.

The Commission previously proposed, but did not adopt, rules regarding clearing agency governance in two separate releases between 2010 and 2011: proposed Regulation MC, proposed Rule 17Ad-25, and proposed Rule 17Ad-26. Given the multiple changes that the Commission has made to its regulatory framework for clearing agencies in the interim, the Commission is withdrawing these previously proposed rules.

The proposing release will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days following publication of the proposing release on the SEC’s website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.

On 11 July 2022, the U.S. Securities and Exchange Commission (SEC) published a statement on single-stock ETFs.

In 2019, the Commission adopted Rule 6c-11 under the Investment Company Act of 1940. In combination with changes to the listing standards at stock exchanges, that rule created a framework that allowed exchange-traded funds (ETFs) meeting certain criteria to come directly to market without first obtaining permission, through what is called an exemptive order, from the SEC.

Nowhere in Rule 6c-11 is there a discussion of single-stock ETFs; there is no indication that the rule contemplated such products.  However, single-stock ETFs are nonetheless coming to market under the auspices of that rule.  And, in addition to presenting a high level of risk by virtue of their leveraged and inverse exposure to a single stock, these ETFs rebalance on a daily basis, like most existing leveraged and inverse ETFs.  The daily rebalancing and effects of compounding may cause returns to diverge quite substantially from the performance of the, in this case, one underlying stock, especially if these products are held over multiple days or more.

In other words, investors’ returns over a longer period of time might be significantly lower than they would expect based on the performance of the underlying stock.  These effects are likely to be especially pronounced in volatile markets.

Because of the features of these products and their associated risks, it would likely be challenging for an investment professional to recommend such a product to a retail investor while also honoring his or her fiduciary obligations or obligations under Regulation Best Interest. However, retail investors can and do access leveraged and inverse exchange-traded products through self-directed trading.  While investors can gain similar upside and downside exposures to an equity security through the use of options and other derivatives, single-stock ETFs are likely to be uniquely accessible and convenient for self-directed retail investors, in particular.

As with other complex exchange-traded products, single-stock ETFs may be useful to certain investors who understand their unique features.  However, they are risky products for investors and potentially for the markets, as well.  The arrival and proliferation of these products on the market underscores the importance of addressing the investor protection concerns and market risks that these and other exchange-traded products can entail.

On 11 July 2022, the U.S. Securities and Exchange Commission (SEC) published a statement on Single-Stocked levered and/ or inverse ETFs.

Holding a levered and/or inverse single-stock ETF is not the same as holding the underlying stock, a traditional ETF, or even a non-single stock levered and/or inverse ETF. It is riskier for several reasons. Importantly, like many other complex exchange-traded products, levered and/or inverse single-stock ETFs aim to provide returns over extremely short time periods (in some cases even a single day). New risks may emerge for investors who hold these products for longer than that. Investors should be aware that if they were to hold these funds for longer than a day, the performance of these funds may differ significantly from the levered and/or inverse performance of the underlying stock during the same period of time.

Additionally, unlike traditional ETFs, or even other levered and/or inverse ETFs, these levered and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Because levered single-stock ETFs in particular amplify the effect of price movements of the underlying individual stocks, investors holding these funds will experience even greater volatility and risk than investors who hold the underlying stock itself.

Though these products will be listed and traded on an exchange, they are not right for every investor. Levered and/or inverse single-stock ETFs pose risks that are unique and complex. We encourage all investors to consider these risks carefully before deciding to invest in levered and/or inverse single-stock ETFs.

On 13 July 2022, the U.S. Securities and Exchange Commission (SEC) adopted amendments to proxy rules governing proxy voting advice. 

The Securities and Exchange Commission voted to adopt amendments to its rules governing proxy voting advice as proposed in November 2021. The final amendments aim to avoid burdens on proxy voting advice businesses that may impair the timeliness and independence of their advice. The amendments also address misperceptions about liability standards applicable to proxy voting advice while also preserving investors’ confidence in the integrity of such advice.

The final amendments rescind two rules applicable to proxy voting advice businesses that the Commission adopted in 2020. Specifically, the final amendments rescind conditions to the availability of two exemptions from the proxy rules’ information and filing requirements on which proxy voting advice businesses often rely. Those conditions require that: (1) registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner; and (2) clients of proxy voting advice businesses are provided with a means of becoming aware of any written responses by registrants to proxy voting advice. Institutional investors and other clients of proxy voting advice businesses have continued to express concerns that these conditions could impose increased compliance costs on proxy voting advice businesses and impair the independence and timeliness of their proxy voting advice.

The final amendments also delete the 2020 changes made to the proxy rules’ liability provision. Although the 2020 changes were intended to clarify the application of this liability provision to proxy voting advice, they instead created a risk of confusion regarding the application of this provision to proxy voting advice, undermining the goal of the 2020 changes. The final amendments address the confusion while affirming that proxy voting advice generally is subject to liability under the proxy rules.

Finally, the adopting release rescinds guidance that the Commission issued in 2020 to investment advisers regarding their proxy voting obligations.

The adopting release will be published on SEC.gov and in the Federal Register, and the final amendments and rescission of the guidance will become effective 60 days after publication in the Federal Register.

On 10 August 2022,  the U.S. Securities and Exchange Commission (SEC) proposed  to enhance Private Fund reporting. 

Through the SEC’s experience with Form PF, the agency identified situations where revised information would improve its understanding and regulation of the private fund industry. The SEC also identified instances where more detailed information would provide better empirical data for the FSOC to use in determining the extent to which the activities of private funds or their advisers pose systemic risks. 

Among other things, the proposed amendments would:

• Enhance Reporting by Large Hedge Fund Advisers on Qualifying Hedge Funds. The proposal would enhance how large hedge fund advisers report investment exposures, borrowing and counterparty exposure, market factor effects, currency exposure reporting, turnover, country and industry exposure, central clearing counterparty reporting, risk metrics, investment performance by strategy, portfolio correlation, portfolio liquidity, and financing liquidity to provide better insight into the operations and strategies of these funds and their advisers and improve data quality and comparability.
• Enhance Reporting on Basic Information About Advisers and the Private Funds they advise. The proposal would require additional basic information about advisers and the private funds they advise including identifying information, assets under management, withdrawal and redemption rights, gross asset value and net asset value, inflows and outflows, base currency, borrowings and types of creditors, fair value hierarchy, beneficial ownership, and fund performance to provide greater insight into private funds’ operations and strategies, assist in identifying trends, including those that could create systemic risk, improve data quality and comparability, and reduce reporting errors.
• Enhance Reporting Concerning Hedge Funds. The proposal would require more detailed information about the investment strategies, counterparty exposures, and trading and clearing mechanisms employed by hedge funds, while also removing duplicative questions, to provide greater insight into hedge funds’ operations and strategies, assist in identifying trends, and improve data quality and comparability.     

The proposal will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days after the date of issuance and publication on SEC.gov or 30 days after publication in the Federal Register, whichever period is longer.

On 26 August 2022, the U.S. Securities and Exchange Commission (SEC) amended Whistleblower rules. 

Specifically, the SEC amended Rule 21F-3 to allow the Commission to pay whistleblower awards for certain actions brought by other entities, including designated federal agencies, in cases where those awards might otherwise be paid under the other entity's whistleblower program. The amendments allow for such awards when the other entity’s program is not comparable to the Commission’s own program or if the maximum award that the Commission could pay on the related action would not exceed $5 million.

Further, the amendments affirm the Commission's authority under Rule 21F-6 to consider the dollar amount of a potential award for the limited purpose of increasing the award amount, and it would eliminate the Commission’s authority to consider the dollar amount of a potential award for the purpose of decreasing an award.

The SEC’s whistleblower program was established in 2010 to encourage individuals to report high-quality tips to the Commission and help the agency detect wrongdoing and better protect investors and the marketplace. The program has made significant contributions to the effectiveness of the agency’s enforcement of the federal securities laws. Since the program’s inception, enforcement matters brought using original information from meritorious whistleblowers have resulted in orders for more than $5 billion in total monetary sanctions. The Commission has awarded more than $1.3 billion to meritorious whistleblowers under the program.

The whistleblower rule amendments will become effective 30 days after publication in the Federal Register.

On 22 July 2022, the Law No. 1.528 of 7 July 2022 amending various digital provisions and regulating the activities of service providers on digital assets or crypto-assets was published in the Journal de Monaco – Bulletin Officiel de la Principauté.

With this new law, Monaco, first, amends various provisions, such as:

• the law for a digital principality;
• the law for fixing stamp duties; and
• the law relating to token offers.

The law then provides that the activity of service provider on digital assets or on crypto-assets may only be carried out on the territory of the Principality under the conditions provided for under title II of the law.

On 11 July 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) updated  AML guide. 

The document was updated in order to clarify concepts and interpretations of the rules published by regulators about two years ago, including CVM Resolution 50 and BC Circular 3,978.

Now, in the body text, there are recommendations applicable to all market agents to combat money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction. The specific steps of each regulated entity are separated into seven annexes. They are: trustee; custodian; distributor; bookkeeper; resource manager; non-resident investor representative; and securitizers.

The content of the annexes was developed by working groups created by our PLD/FTP Commission, a transversal organization that has participants from all sectors represented by ANBIMA.

The guide does not replace the standard nor is it part of our self-regulation. 

In addition to the guide, we have also released a Due Diligece Quiz for PLD/FTP. Materials are available in Portuguese and English.

On 12 July 2022, Comissão de Valores Mobiliários (CVM) published FATF communication on high risk jurisdiction countries. 

The statement refers to the plenary meeting held in June 2022 and was translated on the website of the Council for Control of Financial Activities (COAF). 

The monitoring by the obligated persons of the FATF/FATF communications on jurisdictions with strategic deficiencies in the PLD/FTP is an integral part of the requirements provided for in CVM Resolution 50.

On 19 August 2022, Comissão de Valores Mobiliários (CVM) approved new update of Resolution 874 publishing Resolution 883.

Update

The changes implemented are mostly depending on the entry into force of CVM Resolution 88, which revoked CVM Instruction 588, on 7/1/2022.

New Dispensations

In addition, new exemptions related to:

• to Article 8, §§ 4 and 5, of CVM Resolution 88, for a period of 6 months from the beginning of the validity of Resolution 874, because it is a provision not provided for in CVM Instruction 588, 2017 - in force when the proposals of the participants submit to the CDS; and
• to Article 95, § 1, of CVM Instruction 555, for a period coincident with the authorizations contained in Resolution 874, so that tokens representing securities issued and traded under the project can integrate the portfolio of investment funds regulated by that Instruction.

Attention

The new exemptions provided for in CVM Resolution 874 were conditional on the disclosure of a specific risk factor:

• in the documents of the issuing companies subject to such requirements; and
• investment fund documents that will be invested in these companies in the course of the project.

On 30 August 2022, Banco Central do Brasil (BACEN) published B Normative Instruction No. 299 of 8/30/2022. 

It discloses procedures, documents, deadlines and information necessary for the processing of authorization requests related to the functioning of the institutions dealt with in CMN Resolution No. 4,970 of 25 November 2021.

On 20 July 2022, Brazilian Financial and Capital Markets Association (ANBIMA) published communication on rules for funds that invest in digital assets. 

The elaboration of rules for funds that invest in digital assets is under debate . The requirements seek to provide greater transparency to investors regarding the risk factors of these funds. One of the measures is the mandatory inclusion of a disclaimer in the materials intended for them, making clear the application, or possibility of application, in these assets.

On 23 August 2022, Banco Central do Brasil (BACEN) published BCB Normative Instruction No. 298 of 8/23/2022. 

The Normative Instruction discloses version 4.0 of the Open Finance Customer Experience Manual , which must be complied with by participating institutions, as per Annex.

The manual referred to in the caput , in its most recent version, will be accessible on the Open Finance page on the Central Bank of Brazil's website on the Internet and on the Open Finance Portal in Brazil, maintained by the Structure Responsible for the Governance of Open Finance of that deals with art. 44, § 1, of Joint Resolution No. 1, of May 4, 2020.

The  Normative Instruction enters into force on October 1, 2022.

On 12 July 2022, Brazilian Financial and Capital Markets Association (ANBIMA) published FAQ calculation and disclosure of the reference value.

There are 33 questions divided into topics such as the scope of the rule, ANBIMA pricing, its own pricing methodology (including how to price when there is a transfer of custody, assets in a lock-up period, among others) and disclosure of amounts to customers (with focus on reference value x marking on the curve).

On 13 July 2022, Comissão de Valores Mobiliários (CVM) published a rule on public offerings.

CVM Resolution 160: replaces CVM Instructions 400 and 476 and becomes the general rule applicable to public offerings for the primary or secondary distribution of securities in Brazil. Among other objectives, the standard seeks to bring greater flexibility to the execution of offers.

CVM Resolution 161: provides for the new registration regime for coordinators of public offerings for the distribution of securities. The objective is to enable a more efficient monitoring of these participants in an environment in which the offers will be subject to less prior controls by the CVM. The rule also seeks to facilitate the entry of new agents as coordinators of public offerings, in addition to financial institutions.

CVM Resolution 162: promotes specific changes in other rules in force, with the aim of adapting its terminology and structure to the other Resolutions issued today (7/13).

CVM Resolution 163: relates to the review and consolidation process established by Decree 10,139/19. The rule replaces CVM Instruction 566, which provides for the public offering of promissory notes, and introduces necessary changes in merit due to the concomitant reform of the general framework for public offerings of securities.

On 1 August 2022, Banco Central do Brasil (BACEN) published BCB Normative Instruction No. 292 of 1/8/2022.

It discloses procedures, documents and information necessary for the investigation of applications for authorization for instruments to compose the Principal Capital, Complementary Capital and Level II of Reference Equity (PR), repurchase and redemption of said instruments and addition, amendment and revocation of its subordination, which is addressed by CMN Resolution No. 4,955, 21 October 2021.

On 4 July 2022, the Brazilian Financial and Capital Markets Association (ANBIMA) informed about completion of consultation for Code of Administration of Third-Party Assets. 

The public hearing on the Code of Administration of Third-Party Resources finishes on 13 July 2022. 

The document brings new rules for identifying sustainable FIDCs (Investment Funds in Credit Rights) and FICs (quota funds) and for registering transactions negotiated by the funds . Rules related to cyber security have also been updated.

The code proposes that financial institutions implement and maintain, in a written document, rules and procedures regarding the personal data of customers to which the institutions have access. The file must also include the actions taken to protect the confidentiality of information and the rules applicable to employees for managing this data.

The institution must also establish procedures and controls compatible with its size, risk profile, business model and complexity of the activities developed, in addition to developing business continuity, incident handling and governance plans.

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 may use the term IS (Sustainable Investment) in their name. Those who integrate ESG aspects (environmental, social and governance) into their management process, but do not have sustainable investment as their main purpose, will not be able to use this identification. Even so, they will have a differentiation in the sales materials intended for investors.

Managers of FIDC IS and funds that integrate sustainability issues must also follow some requirements aimed at ESG commitment, diligence and asset transparency.

The public hearing also brought news about the rules for identifying equity and fixed income funds, which have been in effect since January. Equity funds, known as FICs (replicate more than 95% of the portfolio of one or more funds), which invest exclusively in IS funds and/or in funds that integrate ESG issues may also be recognized as sustainable. 

Fund operations with CRIs (Receivable Real Estate Certificates), CRAs (Agribusiness Receivable Certificates), debentures and shares of closed-end funds must be registered in the REUNE System – our pre-registration platform for trading in the secondary market. The requirement applies to transactions traded by funds on stock exchanges and/or organized market management entities. Currently, the system only receives information on transactions closed by treasuries and brokers – as provided for in our Trading Code . With the change, it will also include the data of the operations closed by the resource managers.

On 9 August 2022, , Banco de la República published  draft regulation PR-DOAM 035 "Derivative operations authorized to intermediaries of the exchange market". 

In accordance with numeral 8, of article 8o. of the Code of Administrative Procedure and Administrative Litigation, the foreign exchange regulation project "AUTHORIZED DERIVATIVES OPERATIONS TO EXCHANGE MARKET INTERMEDIARIES" is published for comments for a term of seven (7) calendar days counted from the day of its publication .

Publication date: August 9, 2022
Deadline date and time: August 16, 2022, 5:00 pm

On 1 August 2022, the Unidad de Proyección Normativa y Estudios de Regulación Financiera (URF) published decree 1387 of 2022 by which decree 2555 of 2010 is modified in relation to the minimum amount of shares in the Collective Investment Funds and other provisions are issued. 

In order to continue encouraging the promotion of an increasingly efficient, dynamic and deep capital market, it is appropriate to continue making regulatory amendments that facilitate the operation and access to investment instruments and thus contribute to the creation of alternatives to promote the development of collective investment vehicles.

That the collective investment fund industry in Colombia has a potential for significant development in the region and in this sense, it is necessary to make adjustments to the operating and settlement requirements of such funds.

That in order to promote the regional integration of securities market infrastructures and to contribute to the development of the securities market in the region, it is necessary to market infrastructures and contribute to the development of the capital market, it is necessary to authorise the participation of trust companies and brokerage firms in the capital of national parent companies. the capital of national or international parent companies resulting from the integration of stock exchanges.

That in the processing of the draft decree, the formalities provided for in article 8 of the draft decree were complied with in numeral 8 of article 8 of Law 1437 of 2011 and Decree 1081 of 2015.

On 4 August 2022,   the Unidad de Proyección Normativa y Estudios de Regulación Financiera (URF) published decree 1458 of 2022 by which article 2 of Law 2112 of 2021 is partially regulated and Decree 2555 of 2010 is modified in relation to the investment regime of pension and unemployment fund management companies.

It is necessary to establish the rules that the pension and severance fund management companies must comply with for the application of the minimum investment foreseen in the second paragraph of article 100 of Law 100 of 1993, modified by article 2 of Law 2112 of 2021, for which the regulation scheme by principles and criteria and convergence to international standards, adopted in recent years by the national government for the financial sector. 

It is necessary to specify the scope of the following aspects: 

a) the expression "extractive companies in the mining and energy sector", in order to determine the type of investments that are part of the extractive activities of this sector, and 

b) the infrastructure projects, the infrastructure projects, and the projects that are part of the extractive activities of the sector.

On 18 August 2022,  the Superintendencia Financiera de Colombia (SFC) publishes  its roadmap to incorporate risks and opportunities related to environmental issues into the Colombian financial system. 

SFC presented its green finance and climate change strategy "Towards the greening of the Colombian financial system", a roadmap that provides transparency on the actions it will carry out supervisor for years to come.

The document constitutes a tool that seeks to ensure an organized and progressive implementation of the different actions planned in order not only to promote green financing, but to incorporate into the ADN of the financial system the risks and opportunities of climate change as a strategic imperative.

Thus, in addition to facilitating the mobilization of capital towards the objectives of sustainable growth and facilitating the transition to a low-carbon economy, the strategy presented by the SFC seeks to improve the capacity of the financial system to identify, measure and manage socio-environmental risks and climatic.

The SFC's green finance and climate change strategy “Towards the greening of the Colombian financial system” is developed in five dimensions: green taxonomy; financial innovation; data, metrics and information; incorporation of ESG issues and tools for measuring and supervising climate and nature risks, each of which contains its specific roadmap.

Additionally, it includes specific chapters with the actions planned by the supervisor for the insurance sector and credit institutions for the coming years. Progressively, the SFC will define particular roadmaps for other industries, according to the evolution of the market and the emerging needs of the green finance ecosystem in order to level the management of these.

In the particular case of credit institutions, the aim is to promote innovation in financing and funding products and instruments that facilitate the mobilization of resources for the transformation of the economy and encourage the incorporation of environmental and climate issues in their business decisions.

With regard to the insurance industry, the objective of the SFC's green strategy is to strengthen and enhance its role in resilient development and adaptation to climate change with a view to keeping said risks at tolerable levels for entities, financial consumers and the country, promoting the sustainability of the insurance model against these risks.

As with credit establishments, the actions focused on insurance entities are aimed at innovative development in the supply of products that offer risk transfer solutions that meet the emerging needs of the population and economies in the face of risks related to environmental issues.

International organizations have made various estimates of the economic resources that must be allocated to comply with the global agreements signed in the fight against climate change in the coming years, and they vary between US$3 and US$5 billion annually.

In the case of Colombia, the National Planning Department -DNP- estimated that to achieve a 20% reduction in greenhouse gases by 2030, our previous commitment to the Paris agreement, 3.1 billion pesos will be needed annual.

In this context, the financial sector and the capital market play a fundamental role in allocating resources to meet climate and biodiversity financing commitments.

On 31 August 2022, International Swaps and Derivatives Association (ISDA) published the updated OTC derivatives compliance calendar.

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

New additions/content to the calendar are now highlighted in red.