On 14 November 2024, the European Commission published a first draft of General-Purpose Artificial Intelligence (AI) Code of Practice.

This first draft is based on the contributions from a multi-stakeholder consultation organised by the AI Office, as well as a dedicated workshop that brought together providers of general-purpose AI models. The document will be further discussed in the four working groups taking place in November 2024. The final document is expected to be published in May 2025. The rules governing general-purpose AI models under the AI Act will come into application in August 2025. The Code of Practice aims to facilitate the proper implementation of these rules and will play a crucial role in guiding the future development and deployment of trustworthy and safe general-purpose AI models in the EU. It should detail transparency and copyright-related rules for providers of general-purpose AI models. For a small number of providers of most advanced general-purpose AI models that could pose systemic risks, the Code should also detail a taxonomy of systemic risks, risk assessment measures, as well as technical and governance mitigation measures.

On 28 November 2024, the European Union published a Commission Implementing Regulation (EU) 2024/2902 laying down implementing technical standards (ITS) for the application of Markets in Crypto-assets Regulation (Regulation 2023/1114 – MiCA) with regard to reporting related to asset-referenced tokens and to e-money tokens denominated in a currency that is not an official currency of a Member State.

For the purposes of the reporting referred to in Article 22(1), point (a), issuers should provide the number of holders with a breakdown by the holders’ location and within that location the number for custodial wallet holders and the number for non-custodial wallet holders or holders of any other types of distributed ledger addresses that are used for settlement purposes and are not controlled by the holder or by a crypto asset service provider. Within those two categories of wallet holders, namely, custodial and non-custodial, issuers should provide, with an additional breakdown, the number of retail holders. All those breakdowns are necessary for the competent authorities, as information on the concentration of holders and on the volumes for the retail holders are relevant for the supervisors to meet the objectives of MiCA and ensure the proper functioning of markets in crypto-assets, market integrity and financial stability in the Union, as well as the protection of holders of crypto-assets, in particular retail holders. The information provided with the breakdown by location of the holders should also be used to determine which competent authorities will qualify to be members of a college under Article 119(2), point (l), following the criteria set out in Commission Delegated Regulation [C(2024)6911].

For the purposes of the reporting referred to in Article 22(1), point (b), and to ensure proper supervision of the requirements on reserve of assets under Articles 36 and 38, Commission Delegated Regulation establishing RTS adopted pursuant to Article 36(4), and Commission Delegated Regulation establishing RTS adopted pursuant to Article 38(5), issuers should provide the size of the reserve of assets in a broken-down manner to reflect the value and the composition of the reserve of assets, including liquidity management measures. The reporting framework should include reporting reference dates and remittance dates ensuring proper and timely sharing of data so that the data relates to the same period and is submitted at the same time for all reporting entities, and to allow the comparability of data across the issuers and competent authorities, while using standardised formats and templates. Continuity of reporting should be ensured in cases where temporary changes in the issue value of the tokens would make that value go below the threshold referred to in Article 22(1). Therefore, it is necessary to require reporting for extra time so as to confirm whether the drop below the threshold is temporary. That would not have an impact on the issuers, as they will already have their reporting systems in place.

For the purposes of the reporting requirement referred to in Article 22(3), some information which CASPs should provide to the issuers could include personal data when it relates to natural persons. That includes full names accompanied by national identification numbers, official tax registration numbers, or passport numbers. The collection of such personal data in that case is necessary in order to achieve the objectives of MiCA as, without that information, the issuers could not determine the precise number of holders of an asset-referenced token and they would be double counting holders having multiple accounts with different CASPs. Such imprecise data would distort the information reported to the competent authorities about the number of holders of an asset-reference token and would therefore hinder proper supervision by the competent authorities. As a result, there is no other way to accurately reflect the information on the holders of asset-referenced tokens in the reporting and the usual measures for limiting or protecting personal data sharing, such as pseudonymisation, cannot be applied in that case. CASPs should also provide to the issuer the public distributed ledger addresses they use for making transfers on behalf of their clients. Such information is necessary for issuers to be able to identify which transactions registered on the distributed ledger take place between non-custodial wallets and to report the transactions in scope of the reporting obligations. To ensure that the information reported to the competent authority is correct and complete, issuers should have systems and procedures in place that allow the issuer to reconcile the data received from the CASP pursuant to Article 22(3). Such systems and procedures should also allow the issuer to reconcile the data reported by crypto-asset service providers with the data available to the issuer from other sources, including, where applicable, transactional data available on the distributed ledger. Issuers should implement in their internal policies a maximum retention period for the personal data of the individual holders shared by CASPs. Considering the objective of ensuring compliance with the reporting obligations pursuant to Article 22(1), that maximum retention period should not exceed 5 years from the date of obtaining the personal data.

The Regulation enters into force on 18 December 2024, and applies from 1 January 2025.

On 20 November 2024, the European Union published the Cyber Resilience Act.

This Regulation aims to set the boundary conditions for the development of secure products with digital elements by ensuring that hardware and software products are placed on the market with fewer vulnerabilities and that manufacturers take security seriously throughout a product’s lifecycle. It also aims to create conditions allowing users to take cybersecurity into account when selecting and using products with digital elements, for example by improving transparency with regard to the support period for products with digital elements made available on the market. This Regulation lays down:

• rules for the making available on the market of products with digital elements to ensure the cybersecurity of such products;
• essential cybersecurity requirements for the design, development and production of products with digital elements, and obligations for economic operators in relation to those products with respect to cybersecurity;
• essential cybersecurity requirements for the vulnerability handling processes put in place by manufacturers to ensure the cybersecurity of products with digital elements during the time the products are expected to be in use, and obligations for economic operators in relation to those processes;
• rules on market surveillance, including monitoring, and enforcement of the rules and requirements referred to in Article 1.

This Regulation applies to products with digital elements made available on the market, the intended purpose or reasonably foreseeable use of which includes a direct or indirect logical or physical data connection to a device or network. The application of this Regulation to products with digital elements covered by other Union rules laying down requirements that address all or some of the risks covered by the essential cybersecurity requirements set out in Annex I may be limited or excluded where:

• such limitation or exclusion is consistent with the overall regulatory framework that applies to those products; and
• the sectoral rules achieve the same or a higher level of protection as that provided for by this Regulation.

Products with digital elements that have been placed on the market before 11 December 2027 shall be subject to the requirements set out in this Regulation only if, from that date, those products are subject to a substantial modification.

The Regulation enters into force on 10 December 2024 and shall apply from 11 December 2027. However, Article 14 shall apply from 11 September 2026 and Chapter IV (Articles 35 to 51) shall apply from 11 June 2026.

On 20 November 2024, the European Securities and Markets Authority (ESMA) published a Consultation on the conditions of the Active Account Requirement (AAR) under European Market Infrastructure Regulation (EMIR 3).

The amending Regulation introduces a new requirement for EU counterparties active in certain derivatives to hold an operational and representative active account at a Central Counterparty (CCP) authorised to offer services and activities in the EU. ESMA is seeking stakeholder input on several key aspects of the AAR, including the:  

• three operational conditions to ensure that the clearing account is effectively active and functional, including stress-testing; 
• representativeness obligation for the most active counterparties; and 
• reporting requirements to assess their compliance with the AAR.

Section 5 specifies the details of the representativeness obligation under condition (d) of Article 7a(3), including the relevant classes of derivatives, the different trade size and maturity ranges, the number of most relevant subcategories per class of derivatives, as well as the duration of reference periods. Section 6 details the reporting requirements for counterparties subject to the AAR under Article 7b.

ESMA will consider the feedback received to this consultation by 27 January 2025 and aims to submit the final draft RTS to the European Commission within 6 months following the entry into force of EMIR 3.

On 2 December 2024, the European Union published the Commission Implementing Regulation (EU) 2024/2956 of 29 November 2024 laying down implementing technical standards (ITS) for the application of DORA with regard to standard templates for the register of information.

Financial entities shall assign a rank to each ICT third-party service provider. The rank shall be any natural number higher or equal to ‘1’ where the lower the natural number assigned to the rank, the closer the arrangement is to the financial entity. The rank of the direct ICT third-party service provider in the ICT service supply chain shall always be ‘1’. The rank of the subcontractor in the ICT service supply chain shall always be higher than ‘1’.

Financial entities shall use the templates set out in Annex I to IV to maintain and update the register of information in accordance with Article 28(3) of DORA, at entity level, or at sub-consolidated and consolidated level. Financial entities shall ensure that the templates include all of the following:

(a) the relevant information in relation to all the ICT services provided by direct ICT third-party providers;

(b) information on all subcontractors that effectively underpin ICT services supporting critical or important functions or material parts thereof.

Financial entities shall review the information contained in the templates regularly and shall promptly correct any errors or discrepancies detected. In case of groups, financial entities responsible for maintaining and updating the register of information at sub-consolidated and consolidated level shall ensure that information in relation to entity level in the consolidation is correct and consistent with the information at the sub-consolidated and consolidated level.

Financial entities shall use a valid and active legal entity identifier (LEI) or the European Unique Identifier (‘EUID’), and where available both of these identifiers, to identify all of their ICT third-party service providers that are legal persons, except for individuals acting in a business capacity.

Unless otherwise specified in the instructions, each template composing the register of information shall be a table with a predefined number of columns and an indefinite number of rows. Financial entities shall complete each data element with a single value. Where more than one value is valid for a specific data element, financial entities shall add an additional row in the corresponding template for each valid value.

Financial entities shall include in the register of information, in accordance with the instructions set out in Annex I, the following information:

(a) general information on the financial entity maintaining and updating the register of information at entity, sub-consolidated and consolidated level, respectively, as specified in template B_01.01 of Annex I;

(b) general information on the entities in the consolidation as specified in template B_01.02 of Annex I;

(c) identification of the branches of financial entities located outside the home country listed in template B_01.02, where applicable, as specified in template B_01.03 of Annex I;

(d) general information on the contractual arrangements as specified in template B_02.01 of Annex I;

(e) specific information on the contractual arrangements as specified in template B_02.02 of Annex I;

(f) information on the links between intra-group contractual arrangements and contractual arrangements with ICT third-party service providers which are not part of the group using the contractual reference numbers when part of the ICT service supply chain is intra-group as specified in template B_02.03 of Annex I;

(g) information on the entities signing the contractual arrangements with the direct ICT third-party service providers for receiving ICT services or on behalf of the entities using the ICT services as specified in template B_03.01 of Annex I;

(h) identification of the ICT third-party service providers signing the contractual arrangements for providing ICT services as specified in template B_03.02 of Annex I;

(i) identification of the entities signing the contractual arrangements for providing ICT services to other entities in the consolidation as specified in template B_03.03 of Annex I;

(j) information on the entities making use of the ICT services provided by the ICT third-party service providers as specified in template B_04.01 of Annex I;

(k) information on the direct ICT third-party service providers and subcontractors, as specified in template B_05.01 of Annex I;

(l) information on the ICT service supply chain, as specified in template B_05.02 of Annex I;

(m) information on the identification of functions as specified in template B_06.01 of Annex I;

(n) information on the assessment of the ICT services provided by ICT third-party service providers supporting a critical or important function or material parts thereof as specified in template B_07.01 of Annex I;

(o) information on the terminology used by financial entities and the terms included in the closed lists and classification systems used when filling in the templates as specified in template B_99.01 of Annex I.

Where relevant for their risk management or contract management purposes, financial entities may include into the register of information additional information in the format that is most appropriate for the purposes of such additional information.

In the case of groups, the parent undertakings shall take into account the relevant sectorial Union legislation when determining which entities to be included in the register of information. A register of information maintained and updated at sub-consolidated and consolidated levels shall include all financial entities and ICT intra-group service providers, which are part of the sub-group and group.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union, meaning on 22 December 2024.

On 18 November 2024, the European Securities and Markets Authority (ESMA) published a Report on the assessment of the shortening of the settlement cycle in the EU.

The Report highlights that the increased efficiency and resilience of post-trade processes that should be prompted by a move to T+1 would facilitate achieving the objective of further promoting settlement efficiency in the EU, contributing to market integration and to the Savings and Investment Union objectives. ESMA recommends that the migration to T+1 occurs simultaneously across all relevant instruments and that it is achieved in Q4 2027. Considering the different elements assessed by ESMA, in particular the difficulties linked to the go-live of such a big project in November and December, and the challenges linked to the first Monday of October (just after the end of a quarter), ESMA recommends 11 October 2027 as the optimal date for the transition to T+1 in the EU. ESMA also suggests following a coordinated approach with other jurisdictions in Europe.    

Regarding the quantification of the costs and benefits, the elements assessed by ESMA suggest that the impact of T+1 in terms of risk reduction, margin savings and the reduction of costs stemming from the misalignment with other major jurisdictions globally, will represent important benefits for the EU capital markets. However, this change will also imply some challenges, including amending the Central Securities Depositories Regulation (CSDR) and the settlement discipline framework, in order to have legal certainty and foster the necessary improvements in post-trading processes to move successfully to T+1. Additionally, all actors of the financial system will need to work on harmonisation, standardisation, and modernisation to improve settlement efficiency. This will require some level of investment. The complexity of a trading and post-trading environment such as the EU capital markets means that this project will require a specific governance to be put in place.   

Following the publication of this report, ESMA will continue its regulatory work related to the revision of rules on settlement efficiency, and addressing the T+1 governance together with the European Commission (EC) and the European Central Bank (ECB).

On 15 November 2024, the European Supervisory Authorities (ESAs) published a Decision on the information that competent authorities must report for the designation of critical ICT third-party service providers under DORA.

The Decision requires competent authorities to report by 30 April 2025 the registers of information on contractual arrangements of the financial entities with ICT third-party service providers. Following the entry into force of DORA on 17 January 2025, the ESAs, together with competent authorities, will start the oversight of critical ICT third-party service providers (CTPPs) offering services to financial entities in the EU. The first oversight activity is the designation of CTPPs. The Decision provides a general framework for the annual reporting to the ESAs of the information necessary for the CTPP designation, including: timelines, frequency and reference dates, general procedures for the submission of information, quality assurance and revisions of submitted data, as well as confidentiality and access to information. As the deadline for the first submission of the registers of information to the ESAs is set for 30 April 2025, the ESAs expect competent authorities to collect the registers of information from the financial entities under their supervision in advance, following their own timelines.

To support the industry preparations, the ESAs have shared the draft templates, data point model and reporting technical package in May 2024 and have carried out a voluntary Dry Run exercise on reporting of registers of information with participation of around 1000 financial entities across the financial sector in the EU. The ESAs also published a list of validation rules that will be used when analysing the registers of information and the visual representation of the data model. These rules are included in the updated reporting technical package (including updated data point model, taxonomy and validation rules), which was published on 2 December 2024.

On 13 November 2024, the European Union published the Commission Implementing Regulation (EU) 2024/2861 laying down implementing technical standards (ITS) for the application of Markets in Crypto-Assets Regulation (Regulation (EU) 2023/1114 -MiCA) with regard to the technical means for the appropriate public disclosure of inside information and for delaying the public disclosure of that information.

Since the publication of inside information as referred to in Article 87 of MiCA should reach as many investors as possible and be verifiable, issuers, offerors and persons seeking admission to trading should disseminate that information via media and publish it on their websites. To promote its effective distribution, the inside information published on the website of issuers, offerors, and persons seeking admission to trading should be downloadable to permit local storage and facilitate further dissemination of that information by third parties.

To facilitate access to information, the website should enable users to access the inside information on a non-discriminatory basis and free of charge and to locate the inside information in an easily identifiable dedicated section. To enable users to easily verify the whole history of disclosures of inside information, each publication on the website should indicate the date and time of the disclosure, and publications should be organised in a chronological order. Given the cross-border nature of crypto-asset trading, it is essential that language barriers do not limit the access to the published information. Issuers, offerors, and person seeking admission to trading should therefore publish the inside information on their website in the language or languages in which the crypto-asset white paper is drawn up and, where feasible, a language customary in the sphere of international finance. To facilitate the active distribution of the inside information, the website of the issuer, the offeror, or the person seeking admission to trading should enable investors to receive push notifications or alerts on any new publication relating to inside information on an opt-in basis.

Given the increasing importance of social media and web-based platforms in conveying information in relation to crypto assets, issuers, offerors and persons seeking admissions to trading may also use social media or web-based platforms to disseminate inside information when they appear to be the media which are reasonably relied upon by the public. Issuers, offerors, or persons seeking admission to trading should consider disseminating the information through more than one medium or type of medium whenever dissemination via only a single medium is not sufficient. When assessing whether a medium is reasonably relied upon by the public, issuer, offerors, or persons seeking admission to trading should consider that the use of only one medium or type of medium with a limited reach should not be considered as reasonably relied upon by the public. This could be, for example, the case of dissemination through a social media platform with a limited number of users.

Any publication of that information on social media or the web-based platforms should contain a link to the website where the inside information is published. Publication on social media and on web-based platforms should occur in line with the requirements for the publication of that information the website of the issuer, offeror, or person seeking admission to trading, including access to information on a non-discriminatory basis. Only those platforms that are open to the public should be considered to ensure access on a non-discriminatory basis for disclosures in social media and web-based platforms. While registration requirements are acceptable, invitation-only media would not qualify as non-discriminatory.

Inside information relating to issuers or offerors whose crypto-assets are traded on a trading platform may also be posted on the website of the trading platform, when the trading platform allows to do so. To ensure consistency with the disclosure made by the issuer, the offeror, or the person seeking admission to trading, the publication on the trading platforms website should include a link to the webpage of the website of the issuer, the offeror, or the person seeking admission to trading where the information was originally disclosed.

To ensure that issuers, offerors, and persons seeking admission to trading are able to comply with their obligation to inform their competent authorities that the disclosure of the inside information is delayed, as laid down in Article 88(3), the technical means for delaying the public disclosure of inside information should ensure that key information about the process for delaying the disclosure of the inside information is recorded.

The Regulation entered into force on 3 December 2024.

On 8 November 2024, the European Union published a Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of the EU Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets.

The Regulation on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation) has created a unified EU classification system for environmentally sustainable economic activities (referred to as ‘Taxonomy-aligned activities’) and imposed transparency obligations on certain non-financial and financial undertakings with respect to those activities. While the previous Commission notices and staff documents focussed mainly on non-financial undertakings, the purpose of this Notice is to provide further interpretative and implementation guidance to financial undertakings in the form of replies to Frequently Asked Questions (FAQs) on the reporting of their KPIs under the Disclosures Delegated Act. Through this Notice, the Commission intends to facilitate the compliance of stakeholders with the regulatory requirements in a cost-effective way and to ensure the usability and comparability of the reported information for scaling up sustainable finance. The Commission may update these FAQs where appropriate. The replies to FAQs clarify the rules already contained in the applicable legislation. They neither extend the rights and obligations deriving from such legislation, nor introduce any additional requirements for the operators and competent authorities. They are rather merely intended to help financial undertakings implement the relevant legal rules. 

On 12 November 2024, the Financial Services and Markets Authority (FSMA) adopted the Guidelines on fund names containing environmental, social and governance (ESG) or sustainability-related terms.

The Guidelines, published on 21 August 2024 by the European Securities and Markets Authority (ESMA), are addressed to UCITS management companies, including UCITS that have not designated a management company, AIFMs, including internally managed UCITS, managers of European venture capital funds (EuVECA), European social entrepreneurship funds (EuSEF), European long-term investment funds (ELTIFs) and money market funds (MMFs), and clarify the circumstances under which the naming of funds that contain ESG or sustainability-related terms are considered inaccurate or misleading and aim to avoid greenwashing.

The FSMA integrates the Guidelines into its supervisory practice. They apply from 21 November 2024. This means that UCIs (sub-funds) created on or after that date must comply with the Guidelines. For all funds existing before that date, the transition period ends on 21 May 2025.

On 6 November 2024, the Financial Services and Markets Authority (FSMA) published an industry report on due diligence in the distribution of insurance, savings and investment products.

In recent years, the FSMA has carried out a series of inspections of insurance brokers on compliance with the rules of conduct relating to due diligence in the distribution of savings and investment insurance products to retail clients. This sector report provides an overview of the main findings, best practices and recommendations that the FSMA has made as a result of these inspections.

The sector report is divided into seven sections:

• executive summary (Section 1);
• description of the FSMA's inspection approach (Section 2);
• overview of the applicable legal framework (Section 3);
• FSMA's findings on compliance with due diligence (Section 4);
• best practices issued by the FSMA (Section 5);
• FSMA's recommendations (Section 6);
• example of a declaration of adequacy (section 7).

This sector report does not address the materials not covered during these inspections. This is particularly the case for obligations relating to sustainability preferences. These obligations were not yet in force when the on-site inspections were conducted.

Most brokers gather information about the client's requirements and needs, knowledge and experience, financial situation and investment objectives before providing advice. In a limited number of cases, there is little or no collection or documentation of customer information. Sometimes, brokers collect or document the collection of information from customers after the insurance contract is concluded. Some brokers assign their clients an investor profile based on clients' responses to their questionnaire. The use of investor profiles involves a process of standardization and does not always capture all the relevant information for the suitability assessment. Brokers assess the suitability of buy recommendations, but do not routinely do so for sell recommendations or recommendations for changes to underlying assets. When advising on changes in the underlying assets, brokers do not always carry out an analysis of the expected costs and benefits. Some brokers use unclear clauses, which can create confusion about the broker's responsibility for suitability assessment. Some clauses are unsuitable because they consist of transferring to the client a responsibility that falls to the broker.

On 21 November 2024, the Banco Central do Brasil (BCB) published the Resolution No. 5,185 that amends Resolution No. 4,818, of 29 May 2020, which consolidates the general criteria for the preparation and disclosure of individual and consolidated financial statements by financial institutions and other institutions authorized to operate by the BCB.

The amendments are as follows:

• Paragraph 3: I - institutions that are not registered as a publicly-held company;
• Article 5: For the purpose of preparing and disclosing financial statements, the financial statements are considered intermediate relating to periods other than those provided for in Article 2.
• Article 12-A: Institutions mentioned in Articles 9 and 10 must prepare and disseminate, as an integral part of the annual consolidated financial statements, the report of financial information related to the sustainability, adopting the following technical pronouncements of the Committee Brazilian Sustainability Pronouncements (CBPS).

This Resolution enters into force on 1 January 2025.

On 6 November 2024, the Banco Central do Brasil (BCB) published the Normative Instruction No. 544 that amends the Filling Instructions of Code Document 2300 - Fundraising Abroad, which is dealt with by BCB Normative Instruction No. 264, of 31 March 2022.

The new version of the Filling Instructions is now in force for fundraisings carried out as of 2 January 2025. The following modifications were made to the Filling Instructions:

I - in Section 2 "FUNDRAISING" ("Captac" tag):

a) item 2.18 - Modality of origin ("CodModOrigem" tag): update of the Cosif accounts related to debt instruments eligible for equity and subordinated debt;

b) item 2.20 – Cosif Account ("CtCosif" tag): update of the breakdown of the level and number of numeric characters of the Cosif account;

II – in Section 4 "MONTHLY STOCKS" (tag "Stock"): update of the table of account groupings.

It is now possible to send the information related to the "CtCosif" tag to the files ALCR001 sent between 2 January 2025 and 31 March 2025. This Normative Instruction therefore enters into force on 2 January 2025.

On 7 November 2024, the Banco Central do Brasil (BCB) published the Normative Instruction No. 545 that amends the Instructions for Calculating and Filling in the Information of the Market Risk Statement (DRM) - Code Document 2060, which are dealt with by BCB Resolution No. 84, of 31 March 2021, and the Normative Instruction No. 101, of 26 April 2021.

The new version will come into force as of the base date of January 2025. The Market Risk Statement (DRM) aims to present in a synthetic way, on the base date of calculation, the exhibitions the various market risk factors associated with the operations held by the financial institutions and other institutions authorized to operate by the BCB classified in Segment 1 (S1), Segment 2 (S2), Segment 3 (S3) or Segment 4 (S4), pursuant to article 2 of Resolution No 4,553, of 30 January 2017. 

It was published in the Official Gazette of 8 November 2024, Section 1, p. 120 and enters into effect on 1 January 2025.

On 12 November 2024, the Banco Central do Brasil (BCB) advised for the independent audit of the financial statements for FY 2024.

The BCB considers it important that the independent audit work assertively contributes to supervised entities (ESs) disclosing the estimated impacts of the implementation of the accounting regulation established by these standards. In this sense, it is necessary that this independent audit work devote special attention to the disclosure of the quantitative impacts on the financial position (equity items), since such information must be reflected in the balance sheets (4010 documents) referring to the base date January 2025. In relation to the estimated impacts on the result, it is possible to present qualitative information if the ESs do not have quantitative data.

Examples of estimated impacts for disclosure, provided that are relevant, in addition to others that are understood to be useful for FDs users, are:

I - classification of financial assets

II - provision for expected losses associated with credit risk, in view of the potential effects arising from the floors and/or the application of internal models

III - effective interest rate considering that the prospective application of accounting criteria, so that the transaction costs and amounts received that have already been appropriated to the result by 31 December 2024 shall not be incorporated into financial assets and liabilities

IV - cessation of interest recognition (stop accrual), noting that, for financial assets that were in stop accrual on 31 December 2024, but that do not meet the condition of problematic assets, it is admitted that the ESs promote the remeasurement of such equity items with a view to incorporating the income from contracts in return to the accumulated profit and loss account. This view leads to a consideration of operational aspects in the implementation of controls by institutions and the only transitory effect.

Another critical aspect is the mention of any material impacts on deferred tax assets and liabilities. In this case, the projection of the tax results presented in the technical studies must consider both the provisions in the new regulation and the deductibility criteria provided for in Law No. 14,467, of 16 November 2022.

On 28 November 2024, the Banco Central do Brasil (BCB) published the Resolution No. 435 that amends Resolution No. 2, of 12 August 2020, which provides for the general criteria for the preparation and disclosure of individual and consolidated financial statements by consortium administrators, payment institutions, securities brokerage companies, securities distribution companies and exchange brokerage companies authorized to operate by the BCB and on the procedures for preparation, disclosure and remittance of financial statements that must be observed by financial institutions and other institutions authorized to operate by the BCB.

Article 6: For the purposes of preparing and disclosing individual financial statements, the financial statements relating to periods other than those provided for in article 2 are considered intermediate.

Article 12-A. The institutions mentioned in Articles 10, 10a and 11 shall prepare and disclose, as part of the annual consolidated financial statements referred to in Chapter II, the financial information report related to sustainability, adopting the following technical pronouncements of the Brazilian Committee on Sustainability Pronouncements – CBPS.

Paragraph 6 - If the institution uses the option mentioned in paragraph 5, the disclosure of comparative information on its risks and opportunities related to sustainability is waived, except for its related risks and opportunities to the climate, in the first year in which the institution ceases to use this faculty.

Paragraph 7 - The institution, when implementing the disclosure requirements referred to in the caput, must consider the economic essence of the operations carried out, and not exclusively their form.

Paragraph 8 - The institutions mentioned in the caput must declare, explicitly and without reservation, that the report of financial information related to sustainability is in compliance with the regulations issued by the National Monetary Council and the BCB.

Article 12-B. The institutions mentioned in article 1, caput, item I, paragraphs "a" to "e", which disclose a report of financial information related to sustainability, voluntarily or by virtue of legal, regulatory, statutory or contractual provisions, as of the date of entry into force of this Resolution, shall prepare and disclose this report as an integral part of their financial statements, in accordance with the provisions of article 12-A.

Article 16-A. It is authorized, in the first year of preparation and disclosure of the report of financial information related to sustainability referred to in arts. 12-A and 12-B, the disclosure of financial statements in a segregated manner Financial.

Article 18-A. The provisions of Chapters I, II, III and IV of this Title shall not apply to the consolidated annual financial statements referred to in Arts. 10, 10-A and 11.

Article 19, paragraphs 3 and 4, of BCB Resolution No. 2, published in the Federal Official Gazette of 13 August 2020, is hereby revoked.

This Resolution enters into force on 1 January 2025.

On 28 November 2024, the Brazilian Financial and Capital Markets Association (ANBIMA) published OF. DIR. 50/2024 on Informational transparency of service providers' remuneration rates in RCVM 175.

It requests additional governance guidance from market participants when using the Remuneration Summary and on the possibility of its use by FIIs, FIDCs, and FIagros. In this document, ANBIMA share their perceptions regarding the unintended consequences arising from the new dynamics of remuneration of the funds' service providers. They highlight the main points put forward for evaluation: 

• Proliferation of subclasses: possibility of using subclasses to differentiate commercial agreements between managers and distributors, and not, as originally expected, to differentiate aspects of the same product, such as: different benchmarks, terms and conditions of application and redemption, and/or manager's remuneration. 
• Portability process: relevant operational impact given that today portability occurs by the mere change in the registration of quotaholders and, with the new structure of RCVM 175, the process becomes much more complex, resembling, from an operational point of view, a spin-off/merger event, in view of the need for:
  - probable change in the number of shares of the investor and
  - migration of the history of quotas and tax conditions of the respective shareholder.
• Complexity generated for the investor: due to the proliferation of subclasses, the investor could be allocated into several different subclasses depending on the date of the investment depending on the volume distributed. Likewise, it could have its position transferred to another subclass only to accommodate the receipt of new remuneration by the distributor, due to the change in the financial amount defined in the agreement. 

The decision process also gains nuances of complexity since the investor will have several subclasses with their respective appendices to evaluate, and such subclasses may not be distinguished by specific characteristics such as terms and conditions of application and redemption, for example, but merely to accommodate the various commercial agreements signed between the manager and the distributors of the same product.

On 13 November 2024, the Banco Central do Brasil (BCB) published the Resolution No. 431 that amends BCB Resolution No. 260, of 22 November 2022, which provides for the internal control systems of consortium administrators, payment institutions, securities brokerage companies, securities distribution companies and exchange brokerage companies authorized to operate by the BCB.

Article 5 is modified as per below:

g) Tests security journals for information and technology systems;

(i) Measures to ensure the provision of correct documents, data and information, in accordance with the deadlines and conditions established in legal norms and regulatory frameworks, including through the implementation of a verification process (testing) of the quality of the information provided.

The Resolution enters into force on 1 January 2025.

On 4 November 2024, the Brazilian Financial and Capital Markets Association (ANBIMA) launched a Structured Funds Guide.

ANBIMA launched the e-book "Guide to Structured Funds – Resolution 175", which addresses the annexes to the rule referring to FIDCs (Receivables Investment Funds), FIIs (Real Estate Investment Funds) and FIPs (Private Equity Investment Funds). The guide provides clarifications on the structure, composition and dynamics of FIDCs, including the attributions of essential service providers, with details on the manager's performance. It highlights the new attributions of the manager when the fund is constituted only with this figure as an essential service provider, lists the changes introduced by CVM Resolution 200, explains the articles that deal with the types of FIPs, their limits and terms, allocation abroad, among others. The e-book also provides an overview of the fund industry and clarifies points of the general rule of the regulatory framework, such as the new structure of classes and subclasses, the responsibilities of essential service providers (with a focus on the manager's obligations), remuneration, liquidity rules (redemption barriers and side pocket), Negative equity and insider trading. Episodes of the special series of the Vai Fundo podcast, from ANBIMA, on Resolution 175, are recommended allowing the monitoring of discussions pertinent to the topics addressed.

On 25 November 2024, the Comissão de Valores Mobiliários (CVM) announced that the Agroindustrial Chains Investment Fund (FIAGRO) grew 124.3% in one year.

The document brings data on market evolution with the base date of September 2024, and one of the highlights of the period is the FIAGRO industry, which has grown 124.3% since September 2023. Shareholders' equity reached R$ 42 billion, well above the average market growth. The data highlight the importance of agribusiness in the Brazilian Capital Market. The expressive and constant growth of FIAGRO demonstrates its potential, both to boost the financing of Brazilian agribusiness and to expand investment diversification options for the general public. The Agribusiness Receivables Certificate (CRA) market also grew above the market average in the last 12 months: 47.4%. Shareholders' equity reached R$147.4 billion.

The CVM remains committed to strengthening the presence of agribusiness in the Capital Market. The Authority published the CVM Resolution 214, which establishes the definitive regulation for Investment Funds in Agribusiness Production Chains (FIAGRO). This new standard defines specific guidelines, focusing on conduct, transparency and governance. With the regulation of FIAGRO, the CVM seeks to:

• Facilitate the access of the Brazilian agricultural sector to public savings resources through investment funds;
• Ensure that FIAGROs operate under high standards of conduct, transparency and governance, ensuring investor protection.

On 27 November 2024, the Comissão de Valores Mobiliários (CVM) published the Circular Letter CVM/SSE/SNC 3/2024 with complementary guidelines on the distribution of Real Estate Investment Funds (FII)' results.

This Circular Letter complements three other guidelines already released by the CVM on the subject: Joint Circular Letters SIN/SNC 1/2014 and 1/2015, and SSE/SNC 1/2024. In addition, it also recalls the resolution of Collegiate 17/2022, of 5/17/2022. The objective is to disseminate complementary guidelines from the technical areas of the Authority regarding topics of doubts from market participants about the system of calculation and distribution of income from Real Estate Investment Funds (FII).

In the document, the technical areas highlight the possibility of use, by the administrator/manager of the fund, of both the Cash Profit and Accounting Profit models for the purpose of controlling the calculation and distribution of income, provided that a single model is chosen and provided that the minimum of 95% of the Cash Profit calculated in an accumulated manner is respected.

Once one of the two income distribution methods (Cash Profit or Accounting Profit) has been adopted, it will not be possible to change it later. The FII administrator must control the system adopted in a diligent and transparent manner in all subsequent periods of calculation of results. And the managers must disclose a Notice to the Market, in the Fundos.Net System, indicating the income distribution method adopted by the respective FII.

On 19 November 2024, the Brazilian Financial and Capital Markets Association (ANBIMA) published a Technical Guide on exchanging information from non-resident investors.

The Guide provides best practices for collecting and reporting positions of this audience to the CVM. Prepared based on CMN 4373/2014 and CVM 13/2020 resolutions, it bears recommendations for collecting and reporting positions of this type of investor to the CVM. To facilitate consultation, the Guide is divided into three parts:

1) Identification of the representative of the non-resident investor;

2) Format and frequency of submission of information;

3) Procedures for requests for specific information.

On 28 November 2024, the Banco Central do Brasil (BCB) published the Resolution No. 5,187 that provides for the process of planning the recovery and resolution of financial institutions and other institutions authorized to operate by BCB.

This Resolution provides for the process of planning the recovery and resolution of financial institutions and other institutions authorized to operate by the BCB, with the objective of contributing to the maintenance of soundness, the stability and regular functioning of the National Financial System (SFN), the Brazilian Payment System (SPB) and the real economy. The provisions of this Resolution, except for the guidelines embodied in the definitions referred to in Chapter II, do not apply to payment institutions, securities brokerage firms, brokerage firms and securities distribution companies, which must comply with the regulations issued by the BCB, in the exercise of their legal duties.

Institutions that meet the criteria set forth in the specific regulations for classification in Segment 1 – S1 must:

I - implement recovery and resolution planning to respond to scenarios that compromise its viability; and

II - to prepare and submit to the Central Bank of Brazil the Recovery and Organized Exit Plan (PRSO).

Recovery and resolution planning and the preparation of the PRSO should cover:

I - all entities that are part of the same prudential conglomerate; and

II - the entities that perform main business lines, essential services, critical functions or critical services, belonging to the economic group of the institution covered by the caput.

The BCB may determine the execution, in whole or in part, of the recovery and resolution planning and the preparation of the PRSO by financial institutions and other institutions authorized by it to operate that are not included in the PRSO in the criterion established in article 2, caput, if it considers that they perform critical functions.

Recovery and resolution planning must be integrated with the information management, risk management and capital management processes.The institution must have management information systems capable of providing accurate and timely information, in periods of operational normality and in periods of crisis, including in the course of the resolution regime eventually decreed. within the scope of the prudential conglomerate and the entities covered by the scope of recovery planning and resolution that compose it, which are essential to properly implement the strategies and measures provided for in the PRSO.

The monitoring program must include, at least, indicators and other quantitative and qualitative information that:

I - allow adequate monitoring of the risks incurred by the institution;

II - reflect the magnitude and speed of change in the institution's economic, financial and liquidity situation;

III - allow the timely adoption of recovery and resolution strategies;

IV - consider the horizon necessary for the recovery and resolution strategies to produce effects; and

V - consider the business model, nature, complexity and risk profile of the institution.

The planning of the recovery must be guided by the preservation of the viability of the institution and that of the resolution by the operational continuity of its critical functions. Stress scenarios must be comprehensive and contemplate events that may threaten the continuity of the business and the viability of the institution. The BCB may determine the performance of stress tests that contemplate alternative stress scenarios, considered relevant to the recovery and resolution planning process. The institution should provide for a comprehensive set of recovery strategies, in response to different stress scenarios, with a view to preserving its viability. The adoption of recovery strategies, an initiative of the institution, must be associated with the achievement of critical levels defined in the monitoring program and the potential materialization of a stressful situation. The institution should provide for a comprehensive set of resolution strategies, in response to different stress scenarios leading to resolution, with a view to ensuring the operational continuity of its critical functions.

In order to preserve the continuity of the critical functions performed by entities falling within the scope of recovery planning and resolution, the institution shall be able to ensure the continuity of critical services in context materialization of the scenarios that lead to recovery or resolution. The institution must maintain mechanisms and instruments to enable, at any time, its operations that may result in settlement, centralized deposit or registration in a financial market system or payment in a payment arrangement are transferred to a bridge institution or to an outright acquirer that is a participant in the same financial market system or payment arrangement. The institution must carry out, on an ongoing basis, a self-assessment of the capacity for recovery and resolvability. The institution shall develop an Action Plan for the Elimination or Mitigation of Barriers and Risks to Recovery and Resolution and adopt measures to eliminate or mitigate the barriers and risks identified in its self-assessment of recovery capacity and resolvability.

The board of directors and the board of directors, if any, shall:

I - ensure the timely identification of those responsible for the execution of the PRSO's strategies and measures;

II - have a comprehensive and integrated understanding:

III - to ensure the elaboration of feasible and effective recovery strategies, including those involving other entities that are part of the economic group;

IV - to ensure the elaboration of feasible and effective resolution strategies, including those involving other entities that are part of the economic group;

V - to ensure the effectiveness of the process of self-assessment of the capacity for recovery and resolvability; and

VI - to ensure the compatibility of the Action Plan for the Elimination or Mitigation of Barriers and Risks to Recovery and Resolution with the institution's strategic planning and its timely execution.

The executive board and the board of directors, if any, are responsible for adopting the strategies provided for in the PRSO, except for those that are executed under a resolution regime. The brief description of the PRSO must be available in the specific section of the institution's website that contains information regarding risk management, as defined by the BCB under the terms of the regulations in force. Lists what must be subject to timely communication to the BCB.

The institutions mentioned in article 2, caput, and article 3, caput, must appoint an officer responsible for meeting the requirements established in this Resolution.

The following are hereby repealed:

I - Resolution No. 4,502, published in the Federal Official Gazette of 4 July 2016; and

II - Resolution No. 4,704, published in the Federal Official Gazette of 21 December 2018.

This Resolution enters into force:

I - on 1 January 2028, in relation to article 14, paragraphs 1 and 2, for contracts entered into before the date of publication of this Resolution; and

II - on 1 January 2025, in relation to the other provisions, including article 14, paragraphs 1 and 2, for contracts entered into as of the date of publication of this Resolution.

On 13 November 2024, the Banco Central do Brasil (BCB) published the Resolution No. 432 that provides for the remuneration policy of managers of securities brokerage companies, securities distribution companies, exchange brokerage companies, consortium administrators, and payment institutions authorized to operate by the BCB.

The institutions that are not required to constitute a committee of remuneration must prepare an annual report, within 90 days, for the base date of 31 December, containing, at least, the information indicated in Article 20, caput, items III and IV.

The BCB will be able to:

I - request information in addition to that provided for in the reports

II - request that the institutions demonstrate that the incentives provided under its remuneration system of managers properly consider risk management aspects, capital and liquidity adequacy

III - determine the measures necessary to offset any additional risk resulting from the inadequacy of the management remuneration policy implemented by institution, including the revision of the policy or the extension of the capital requirements.

The institutions that, on the effective date of this Resolution, were not required to implement the remuneration policy of administrators must carry out the necessary procedures to comply with the provided for in this Resolution until 31 December 2025. This Resolution enters into force on 1 January 2025.

On 8 November 2024, the Banco Central do Brasil (BCB) published the Normative Instruction No. 546 that amends the Filling Instructions and the Layout of Code Document 2061 - Statement of Operational Limits (DLO), which is dealt with by BCB Normative Instruction No. 81, of 23 February 2021.

The Statement of Operational Limits reflects the prudential regulation issued by the CMN and the BCB, and presents, in a synthetic way, the information regarding the details of the calculation of the limits monitored by the BCB, on the base date of counting.

The purpose of this Normative Instruction is:

I - include accounts related to the calculation of the installment of the RWA related to the capital required for operational risk – RWAOPAD, according to the methodology defined in BCB Resolution No. 356;

II - to make adjustments to the wording of the Instructions for Completion of document 2061 – Statement of Operational Limits – DLO, which aim to process the information for the calculation of the RWAOPAD;

III - delete accounts related to the approaches provided for in Circular No. 3,640, of 2013, revoked by BCB Resolution No. 356, of 2023, relating to the calculation of the RWAOPAD

It entered into force on the date of its publication, 8 November 2024.

On 14 November 2024, the Ministerio de Hacienda y Crédito Público published the Pension Reform Decree.

Decree 2555 of 2010 is modified and Book 43 is added to Part 2 in relation to the rules applicable to the Administrators of the Complementary Component of Individual Savings of the Contributory Pillar related to the authorization, administration and rules of corporate governance.  

The Complementary Individual Savings Component of the Contributory Pillar may be administered, with prior authorization from the Financial Superintendence of Colombia, by the following entities:

1. The pension fund management companies of the Individual Savings Regime with Solidarity of the General Pension System provided for in Law 100 of 1993
2. Trust companies
3. Life insurance companies
4. Stock brokerage companies
5. The Colombian Administrator of Colpensiones Pensions or the entity that acts in its place
6. Non-profit entities authorized to do so and supervised by the Financial Superintendence of Colombia

The Pension Fund Administrator companies of the Individual Savings Regime with Solidarity, which are under the supervision of the Financial Superintendency of Colombia on the date of issuance of this Decree, are deemed authorized with the referral to the Financial Superintendency of Colombia of the written declaration of participating as ACCAI, accompanied by the following documents:

1. Certification signed by the Legal Representative and the president of the Board of Directors or body that acts in his place, regarding compliance with the requirement referred to in literal c) of Article 59 of Law 2381 of 2024.
2. Project of modification to the corporate statutes for the development of the new activity, which must be protocolized, at the latest, within 6 months following the authorization issued by the Financial Superintendence of Colombia.

The ACCAI must establish policies for the administration and disclosure of situations that generate conflicts of interest. These policies must incorporate limits, materiality criteria, information barriers between the lines of business that may generate conflicts of interest, as well as guidelines on the relevant information associated with said conflicts that must be presented to the competent bodies, define policies of situations that generate conflicts of interest.

On 6 November 2024, the Autorité des marchés financiers (AMF) published a press release on the framework and regulatory adjustments necessary for the administration and intermediation of financial securities admitted to operations within a market infrastructure based on Distributed Ledger Technology (DLT). 

Regulatory Framework:

• Regulation (EU) 2022/858: Establishes a pilot regime for market infrastructures utilizing DLT.
• Loi n° 2023-171: Adapts domestic law to align with EU regulations across several sectors, including the economic and financial domains.
• Ordonnance n° 2017-1674: Governs the use of shared electronic recording systems for representing and transmitting financial securities.
• Decree n° 2023-421: Updates regulatory provisions to accommodate the European pilot regime and clarifies the use of DLT-registered securities.
• AMF Instruction DOC-2024-07: Provides guidelines for the administration of financial securities on DLT-based market infrastructures.
• AMF General Regulation: Outlines the responsibilities and obligations of intermediaries involved in administrating financial securities within DLT frameworks, ensuring alignment with MiFID2 directives.

Key highlights include:

• Intermediaries are responsible for administration rather than custody of DLT-registered securities.
• Administrators must diligently manage access and rights pertaining to financial securities listed on DLT.
• Intermediaries must be properly licensed and comply with specific conditions set forth by the AMF and European regulations.
• Administrators bear the responsibility for damages resulting from loss or unavailability of access means, barring force majeure, and are required to assist in mitigating such impacts.
• Adjustments to the French legislative and regulatory framework are continuously being made to align with DLT-based market infrastructure requirements, ensuring efficient representation and transfer of financial titles.

Version française

Le 6 novembre 2024, l'Autorité des marchés financiers (AMF) a publié un communiqué sur le cadre et les adaptations réglementaires nécessaires à l'administration et à l'intermédiation des titres financiers admis aux opérations au sein d'une infrastructure de marché basée sur la Technologie du Grand Livre Distribué (DLT). 

Cadre réglementaire :

• Règlement (UE) 2022/858 : établit un régime pilote pour les infrastructures de marché utilisant le DLT.
• Loi n° 2023-171 : adapte le droit national pour l'aligner sur la réglementation de l'UE dans plusieurs secteurs, y compris les domaines économiques et financiers.
• Ordonnance n° 2017-1674 : encadre l'utilisation de systèmes d'enregistrement électronique partagé pour la représentation et la transmission de titres financiers.
• Décret n° 2023-421 : actualise les dispositions réglementaires pour s'adapter au régime pilote européen et précise l'utilisation des titres nominatifs DLT.
• Instruction AMF DOC-2024-07 : donne des lignes directrices pour l'administration de titres financiers sur les infrastructures de marché basées sur le DLT.
• Règlement général de l'AMF : décrit les responsabilités et obligations des intermédiaires impliqués dans l'administration des titres financiers dans les cadres DLT, garantissant l'alignement avec les directives MiFID2.

Les principaux points saillants comprennent :

• les intermédiaires sont responsables de l'administration plutôt que de la garde des titres enregistrés au DLT.
• les administrateurs doivent gérer avec diligence l'accès et les droits relatifs aux titres financiers cotés sur DLT.
• les intermédiaires doivent être dûment agréés et respecter les conditions spécifiques fixées par l'AMF et la réglementation européenne.
• les administrateurs supportent la responsabilité des dommages résultant de la perte ou de l'indisponibilité des moyens d'accès, sauf cas de force majeure, et sont tenus de contribuer à atténuer ces impacts.
• des ajustements du cadre législatif et réglementaire français sont continuellement apportés pour s'aligner sur les exigences en matière d'infrastructure de marché basées sur le DLT, garantissant ainsi une représentation et un transfert efficaces des titres financiers.

On 6 November 2024, the Autorité des marchés financiers (AMF) published the Instruction DOC-2024-07 on the administration of financial securities recorded in a distributed ledger admitted to the operations of a DLT market infrastructure.

The documents describe a model mandate applicable to financial securities registered in a distributed ledger and admitted to operations of a DLT market infrastructure. This mandate can be concluded by any suitable means and is made between the holder of the financial securities and the authorized custodian or DLT market infrastructure.

The role of the custodian or market infrastructure includes performing all acts of administration such as payment of income and other administrative acts. However, acts of disposal such as exercising rights to capital increases require explicit instructions from the registered financial security holder. Account statements and operation notices regarding these financial securities will be addressed according to the service agreements between the holder and the custodian or market infrastructure.

The document emphasize the establishment and maintenance of operational business continuity plans. These ensure the safeguarding and timely recovery of essential data and functions in case of interruptions, as required by the AMF regulations.

Version française

Le 6 novembre 2024, l'Autorité des marchés financiers (AMF) a publié l'instruction DOC-2024-07 relative à l'administration des titres financiers inscrits dans un grand livre distribué admis aux opérations d'une infrastructure de marché DLT.

Les documents décrivent un modèle de mandat applicable aux titres financiers enregistrés dans un grand livre distribué et admis aux opérations d'une infrastructure de marché DLT. Ce mandat peut être conclu par tout moyen approprié et est conclu entre le détenteur des titres financiers et le dépositaire agréé ou l'infrastructure de marché DLT.

Le rôle du dépositaire ou de l'infrastructure de marché comprend l'exécution de tous les actes d'administration tels que le paiement des revenus et d'autres actes administratifs. Toutefois, les actes de cession tels que l'exercice des droits à l'augmentation de capital nécessitent des instructions explicites de la part du détenteur des titres financiers inscrits. Les relevés de compte et les avis d'opération concernant ces titres financiers seront adressés selon les conventions de prestations intervenues entre le titulaire et le dépositaire ou l'infrastructure de marché.

Le document met l'accent sur l'établissement et le maintien de plans de continuité des activités opérationnelles. Ceux-ci assurent la sauvegarde et la récupération dans les délais des données et fonctions essentielles en cas d’interruption, comme l’exige la réglementation de l’AMF.

On 29 November 2024, the Autorité des marchés financiers (AMF) published a press release on the French funds liquidity management tools.

The press release discusses the efforts of the AMF to enhance the adoption of liquidity management tools among French investment funds. Historically, French funds had limited mechanisms like redemption gates and anti-dilution tools (e.g., swing-pricing). To address this, the AMF introduced a transitional period allowing easier implementation of these tools, which ended on 31 December 2023. As a result, 66% of the net assets of UCITS and general-purpose investment funds had gates by the end of 2023, compared to 17% at the end of 2022, and 45% had anti-dilution tools, up from 23%. These measures have significantly prepared French funds for upcoming European regulatory requirements, which mandate at least 2 liquidity management tools by 2026 for all UCITS and open-ended AIFs.

Version française

Le 29 novembre 2024, l'Autorité des marchés financiers (AMF) a publié un communiqué sur les outils de gestion de la liquidité des fonds français.

Le communiqué revient sur les efforts de l'AMF pour renforcer l'adoption d'outils de gestion de la liquidité par les fonds d'investissement français. Historiquement, les fonds français disposaient de mécanismes limités tels que des portes de rachat et des outils anti-dilution (par exemple, le swing-pricing). Pour y remédier, l'AMF a instauré une période transitoire permettant une mise en œuvre plus aisée de ces outils, qui a pris fin le 31 décembre 2023. Ainsi, 66% de l'actif net des OPCVM et fonds d'investissement généralistes disposaient de gates à fin 2023, contre 17 % fin 2022, et 45 % disposaient d’outils anti-dilution, contre 23 %. Ces mesures ont considérablement préparé les fonds français aux prochaines exigences réglementaires européennes, qui imposent au moins 2 outils de gestion de liquidité d'ici 2026 pour tous les OPCVM et FIA ouverts.

On 26 November 2024, the Federal Financial Supervisory Authority (BaFin) published a consultation on a draft Crypto Markets Communication Regulation (Kryptomärktemitteilungs-Verordnung - KMMV) in the Crypto Markets Supervision Act (Kryptomärkteaufsichtsgesetz - KMAG-E).

The KMAG-E is the national accompanying law for MiCAR. The planned KMMV on the basis of the authorisation basis of § 36 (2) KMAG-E serves the further implementation of the KMAG, MiCAR and the ITS adopted pursuant to Article 88(4). It specifies the transmission of published inside information to BaFin (section 36 (2) no. 1 KMAG-E) and the notification to BaFin of the postponement of the disclosure of inside information (section 36 (2) no. 2 KMAG-E). The draft KMMV concerns issuers, providers or applicants who are obliged to publish inside information under Article 88 (1) and for whom the Federal Republic of Germany is the home Member State pursuant to Article 3 (1).

The consultation is subject to the adoption of the Financial Market Digitalisation Act (which contains the KMAG-E) in the parliamentary procedure and subject to the subdelegation of the Federal Ministry of Finance's authorisation to issue ordinances to BaFin. Comments on the draft can be submitted until 13 December 2024.

On 27 November 2024, the Bundesregierung published a press release on the Cabinet's adoption of the second Future Financing Act.

Mobilising more private capital and facilitating investments in growth companies: this is the aim of the second Future Financing Act adopted by the Cabinet. With the draft law, the Federal Government wants to strengthen the competitiveness of Germany as a financial centre and improve the financing options for young, dynamic companies. Specifically, it is about simpler tax law framework conditions. In addition, companies will have easier access to the capital market to mobilise private growth and investment capital. More capital funds will be invested in infrastructure and renewable energies. The new regulations in the Investment Tax Act and the Capital Investment Code create a legally secure framework that remove previous obstacles to such investments.

Specifically, the draft law provides for the following measures, among others:

• Investments in venture capital funds are made easier. Selling investments in corporations and then reinvesting the proceeds will become easier.
• In order to make the framework conditions for top earners in the financial sector more flexible, protection against dismissal for those on very high incomes in the financial sector will be relaxed. Corresponding regulations, which have only existed for managers in systemically important banks, are to apply to smaller financial institutions, insurance companies, securities institutions and investment companies in the future.
• Numerous inspection, reporting and notification obligations will be abolished to reduce the bureaucratic burden.

All measures of the second Future Financing Act are foreseen to relieve the burden on the economy by around 45 million euros per year.

On 7 November 2024, the Federal Financial Supervisory Authority (BaFin) updated its notification letter based on section 331 of the German Investment Code (Kapitalanlagegesetzbuch – KAGB).

The notification letter relates to the electronic notification procedure for marketing units or shares of EU AIFs or domestic AIFs managed by an AIFM to professional investors in other Member States of the EU or in signatories to the Agreement on the EEA pursuant to section 331 of the KAGB.

The notification letter contains the following parts:

Part 1- Information on the AIFM or internally managed AIF:

• Section 1. Identification of the AIFM or internally managed AIF. 
• Section 2. Facilities to retail investors (where relevant).

Part 2- Information on the AlFs to be marketed in the host Member State:

• Section 1. Identification of the AlFs. 
• Section 2. Arrangements made for marketing of units or shares of AlFs.
• Section 3. Attachments.

On 6 November 2024, the Federal Financial Supervisory Authority (BaFin) updated the notifications of an AIFM concerning section 321 of German Investment Code German Investment Code (Kapitalanlagegesetzbuch – KAGB).

The notification contains the following structure:

• Part 1- Information on the AIFM or internally managed AIF.
• Part 2- Information on the AIFs to be marketed in the home Member State of the AIFM.
  Section 1. Identification of the AIFs.
  Section 2. Arrangements made to prevent marketing to retail investors.
  Section 3. Attachments.

This notification letter should also be used for AIF that also qualify as ELTIF and are marketed under Article 31 of ELTIF Regulation (EU) 2015/760 (OJ L 123, 19.5.2015, p. 98) in conjunction with Article 31(2) of Directive 2011/61/EU (AIFMD).

On 5 November 2024, the Federal Financial Supervisory Authority (BaFin) updated its document under Article 5(1) of Regulation (EU) 2019/1156 (CBDF), marketing requirements in Germany.

This information refers to the national laws, regulations and administrative provisions governing the marketing requirements of funds in Germany.

On 27 November 2024, the Federal Financial Supervisory Authority (BaFin) published example letters to be submitted by EU AIFs to the competent authority of their home Member State.

They constitute:

• Model notification letter to be submitted by an EU AIFM to the competent authority of its home Member State to manage EU AIFs established in other Member States under Article 33(2) of AIFMD or to establish a branch in other Member State under Article 33(3) of AIFMD, containning the following elements:
  
  Part 1: Information on the AIFM.
  
  Part 2: Information to be notified pursuant to Article 33(2) of Directive 2011/61/EU.
  - Section 1. Programme of operations.
  - Section 2. Information on the AIFs to be managed in the host Member States.
  
  Part 3: Information to be provided by the AIFM pursuant to Article 33(3) of Directive 2011/61/EU to carry out its activities in the host Member State(s) through a branch.
  - Section 1. Information on the branch.
  - Section 2. Programme of operations of the branch.
  - Section 3. Operational structure of the branch.
  - Section 4. Termination of the branch.
  
  
• Model notification letter regarding persons responsible for a branch to be submitted by EU AIFM to the competent authority of its home Member State intending to establish a branch in other Member States under Article 33(3), letter (c), of AIFMD.

On 26 November 2024, the Federal Financial Supervisory Authority (BaFin) published example letters on the communication by the competent authorities of a management company’s home Member State to the competent authorities of the management company’s host Member State.

The letters are as follows:

• Model letter to be submitted by a management company to the competent authorities of the UCITS home Member State under Article 20(1) of UCITSD:
  Part 1: Information on the management company,
  Part 2: Identification of the delegate and the delegated functions,
  Part 3: Attachments.
• Model for the communication by the competent authorities of a management company’s home Member State to the competent authorities of the management company’s host Member State of information under Article 17(2) or Article 18(1) of UCITSD:
  Part 1: Information on the management company
  Part 2: Information to be provided by the management company pursuant to Article 17(1) and (2) of UCITSD to conduct its activities in the host Member State(s) through a branch
  Section 1. Information on the branch
  Section 2. Programme of operations of the branch
  Section 3. Organisational structure of the branch
  Section 4. Termination of the branch
  Part 3: Activities to be conducted under the freedom to provide services
• Model for the communication by the competent authorities of a management company’s home Member State to the competent authorities of the management company’s host Member State under Article 17(2) letter (d) of UCITSD.

On 29 November 2024, the Federal Financial Supervisory Authority (BaFin) published information on the submission of prospectuses, supplements, investment information sheets (VIB) and securities information sheets (WIB) in accordance with the Act on the Drawing up, Approval and Publication of the Prospectus to be published when securities are offered to the public or admitted to trading on an organised Market (Wertpapierprospektgesetz - WpPG) and the German Capital Investment Act (Vermögensanlagengesetz – VermAnlG).

The documents must be prepared by issuers or providers as well as other authorized persons (e.g., lawyers) and be submitted electronically to BaFin. For the electronic submission, BaFin provides for the electronic specialist procedure "Prospectuses (EU-VO/WpPG/VermAnlG)" via the MVP Portal.

From 4 December 2024, documents for depositing an Annex IX document within the meaning of Article 1 para. 4 subpara. 1 letter da) (iii) or db) (iii) and Article 1 para. 5 subpara. 1 letter ba) (iii) of the Regulation can be submitted electronically via the specialist procedure "Prospectuses (EU Regulation/WpPG/VermAnlG)".

From 21 December 2024, information pursuant to Article 15 para. 4 of the European Securities and Exchange Commission Regulation can be provided electronically via the specialist procedure "Prospectuses (EU Regulation/WpPG/VermAnlG)".

The electronic submissions can only be made from the time the applicant is activated for this specialist procedure. Depending on the type of submission and the type of prospectus, entries for various reporting and metadata must be completed completely via the MVP Portal at the lates by the time the prospectus is approved. The metadata of the securities prospectuses are governed by RTS 2019/979 (Annex VII - Machine-readable data to be transmitted to ESMA). 

On 27 November 2024, the Federal Financial Supervisory Authority (BaFin) updated its webpage on technical implementation of DORA.

From 17 January 2025, DORA will apply. This means that the following applies to financial companies:

• the obligation to report serious ICT-related incidents in accordance with Article 19 para. 1,
• the possibility of voluntarily reporting significant cyber threats in accordance with Article 19 para. 2, and
• the obligation to submit the information register with all contractual agreements on the use of ICT services provided by third-party ICT service providers in accordance with Article 28 para. 3 subpara. 4.

In order to be able to make these reports or submissions from 17 January 2025, the responsible persons must act as reporters in the BaFin portal to the reporting and publication platform (MVP portal) and are also activated for the correct specialist procedure. BaFin strongly recommends that companies that did not participate in the first round of the initial detector activation to participate in the second round, as no further possibilities for activation are planned before 17 January 2025. Financial companies that want to participate in the second round of the initial detector activation for the DORA specialist procedure and want to have their own employees activated as detectors must:

• first of all, make sure that all the reporters they want to have activated are already registered in the MVP portal; otherwise, this registration must be carried out by the reporters before BaFin initiates the activation of these detectors for the DORA specialist procedure;
• complete the Excel form, which provides information on the financial company and the reporters to be activated, and take into account that every reporter who is an employee of a financial company can only be activated for one financial company. Subsequently, the name of this reporter may only be listed in an Excel form;
• send the completed Excel form by 15 December 2024 exclusively by e-mail to BaFin.

On 12 November 2024, the Houses of the Oireachtas (Ireland's National Parliament) published the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024.

The Act focuses significantly on strengthening corporate governance within companies, including providing clearer guidelines and consequences for non-compliance. Companies can now conduct and participate in general meetings virtually. Companies are also required to provide information on the composition of their boards by gender when delivering annual returns, and to disclose details publicly on their websites or in their annual reports. Furthermore, the Act establishes the situations under which a company is not entitled to an audit exemption and introduces an offence for obstructing, interfering with, or impeding an officer of the Corporate Enforcement Authority. Finally, it provides the Irish Auditing and Accounting Supervisory Authority the power to issue interim directions to protect the public, and amends several sections of the Companies Act 2014.

On 14 November 2024, the Houses of the Oireachtas (Ireland's National Parliament) published the European Union (Markets in Crypto-Assets) Regulations 2024.

This Statutory Instrument designates the Central Bank of Ireland (CBI) as the National Competent Authority. For Regulated Financial Service Providers, the CBI can impose administrative penalties and other administrative measures including public statements, orders to cease conduct, disgorgement of profits and temporary bans on management functions, fines up to €1,000,000 for natural persons, and €5,000,000 or 3 to 12.5% of the total annual turnover for legal persons depending on the type of infringement.

Firms that provided crypto services before 30 December 2024 may continue their operations until 30 December 2025 or until they are granted or refused authorization pursuant to Article 63 of the MiCA Regulation, whichever is sooner. It came into operation on 8 November 2024.

On 25 November 2024, the Central Bank of Ireland (CBI) published a Guidance Note for Crypto-Asset Service Providers (CASPs) – Key Facts Document (KFD).

The KFD provides the CBI with high-level information in respect of the applicant CASP proposed business and operational model and associated risks, including details in respect of the applicant firm’s background, ownership, number and type of clients, capital projections, governance and staff resourcing arrangements and outsourcing arrangements. The KFD stage does not constitute the formal assessment (which commences once a formal application is submitted). The purpose of this Guidance Note is to set out the CBI’s expectations regarding the content of the KFD to be submitted.

Authorisation assessments are conducted on a case-by-case basis, with the nature, scale and complexity of an application being a major consideration both in the focus of the assessment, and the overall application of proportionality within the assessment. For existing authorised/registered firms seeking a MiCAR authorisation, the CBI will, as part of its assessment, utilise its supervisory knowledge of the firm. However, there are no predetermined authorisation assessments and all applicant firms currently providing crypto services in Ireland will need to clearly demonstrate to the CBI that they meet all of the new requirements under MiCAR. Through the authorisation process, the CBI is seeking to establish whether an applicant firm can meet the supervisory expectations if authorised. Key areas of focus for the CBI, in terms of the authorisation and supervision of CASPs, are:

• Independence and Autonomy of the applicant firm (within a group structure);
• Governance and Accountability;
• Protection of Client Assets;
• Business Model and Financial Resilience;
• Operational Resilience;
• Ownership of the applicant firm;
• Conflicts of Interest;
• Crisis Management;
• Conduct and Transparency;
• Anti-Money Laundering (‘AML’)/Countering the Financing of Terrorism.

The CBI expects that the potential applicant firm takes under consideration all items discussed and feedback provided during the pre-application engagement, making any changes required to meet the CBI's expectations prior to submitting the KFD. During the KFD process, potential applicant firms should expect engagement with the CBI to address any questions and provide any clarifications sought on the proposal. The CBI expects applicant firms to engage constructively and in a timely manner with the CASP Authorisation Team during this process.

For each section, the applicant firm should provide any information or documentation requested. In the event that a section does not apply, the applicant firm must provide an explanation as to why it considers this to be the case. Where possible, information provided should be in Microsoft Word (or equivalent) format rather than scanned versions. All documentation should be submitted using Kiteworks, a secure file sharing mechanism used by the CBI. When submitting any documentation, please contact the CASP Authorisation Team at CASPAuthorisations@centralbank.ie to request Kiteworks access. The KFD information requirements are organised per the following sections:

1. Background
2. Business Model
3. Capital Requirements
4. Governance
5. Detection and prevention of money laundering and terrorist financing
6. Conduct and Conflicts of Interest
7. Business Continuity & Wind-down
8. ICT Systems and Security Arrangements
9. Client Assets
10. Providing the Service of Custody and Administration of Crypto-assets on Behalf of Clients
11. Operation of a Trading Platform for Crypto-assets
12. Providing the Service of Exchanging Crypto-assets for Funds or other Crypto-assets
13. Providing the Service of Executing Orders for Crypto-assets on Behalf of Clients
14. Providing Advice on Crypto-assets or Portfolio Management of Crypto-assets
15. Providing Transfer Services for Crypto-assets on Behalf of Clients

On 20 November 2024, the Central Bank of Ireland (CBI) addressed an ESAs consultation to UCITS and AIFs falling within the scope of the initial margin model authorisation under the revised European Market Infrastructure Regulation (EMIR).

This information will guide the EBA in the setup of its central validation function for pro-forma margin models (such as ISDA SIMM) and inform the EBA’s response to the EU Commission’s Call for advice on a possible Delegated Act on fees, which the EBA has to deliver by Q2 2025. In addition, it will be used to develop proportionate requirements for entities within the scope of IM model authorisation in particular for smaller entities (Phase 5 and Phase 6 entities). 

This represents a key opportunity for entities falling within the scope of IM model authorisation to raise with EBA, ESMA and EIOPA potential issues linked to their specific situation that should be taken into account as part of the development of upcoming regulatory products. The deadline for submitting responses is 29 November 2024.

On 1 November 2024, the Central Bank of Ireland (CBI) updated its information about an ELTIF authorisation to reflect the coming into force of RTS relating to the ability to establish open-ended ELTIFs. 

Where an AIFM wishes to establish either a Professional Investor ELTIF or a Qualified Investor ELTIF which are open-ended with limited liquidity and avail of the 24-hour authorisation process it must make a pre-submission to fundsauthorisation@centralbank.ie in good time prior to the requested authorisation and which addresses the following:

(i) the possibility of redemptions during the life of the ELTIF, 

(ii) (where relevant) the possibility of redemptions which are more frequent than quarterly, and 

(iii) (where relevant) the provision of a notice period of less than 3 months.

Once cleared, such an ELTIF can proceed to authorisation in the normal course. Retail Investor ELTIFs should include details noted at (i)-(iii) in their initial filing with the CBI.

On 1 November 2024, the Central Bank of Ireland (CBI) updated its UCITS Q&A.

The 41st Edition revises QA ID 1012, ID 1016, and ID 1088 to encompass changes enabling the ETF naming requirement at the share class level.

1012:

A UCITS ETF is defined as a UCITS where at least one unit or share class is traded on at least one regulated market or multilateral trading facility with at least one market maker which takes action to ensure that the stock exchange value of its units does not significantly vary from its NAV and where applicable its indicative NAV. The CBI will not authorise a UCITS ETF share class, unless arrangements are put in place to ensure that information is provided daily regarding the identities and quantities of portfolio holdings. The arrangements must be disclosed in the prospectus. 

1016:

 Where an umbrella UCITS has some sub-funds which are UCITS ETFs and some which are not, the “UCITS ETF” identifier should be used at sub-fund level. Accordingly, any references in the constitutional document to a sub-fund which is a UCITS ETF should include the identifier “UCITS ETF”. However, where a UCITS wishes to establish a UCITS ETF share class, the identifier “UCITS ETF” should be used in the name of the share class.

1088:

Where a UCITS has both UCITS ETF share classes and unlisted share classes, both must be clearly identified so that investors can easily distinguish between the listed and unlisted share classes. The Responsible Person for a UCITS ETF must ensure the prospectus clearly sets out, in tabular format, the differences between investing in a listed share class and in an unlisted share class, and addresses (at least) risk factors relating to the liquidity profile of unlisted share classes and the difference in price of UCITS ETF share classes and unlisted share classes.

On 1 November 2024, the Central Bank of Ireland (CBI) updated its Streamlined Filing Process for UCITS and AIFs following its compliance with ESMA’s guidelines on funds’ names using ESG or sustainability-related terms.

The Guidelines set out recommendations for UCITS management companies and AIFMs on the use of ESG and sustainability terms in the name of a UCITS or an AIF. The Guidelines were published on 21 August 2024 and will apply from 21 November 2024 for new UCITS and AIFs. For UCITS and AIFs existing prior to 21 November 2024, the Guidelines will apply from 21 May 2025.

To facilitate orderly implementation of the Guidelines, the CBI has established a streamlined filing process for UCITS and AIFs seeking a change of name and for updates to fund prospectuses, supplements and SFDR annexes based on the requirements set out within the Guidelines.

Fund managers will be required to certify compliance with the Guidelines via an attestation that must be submitted to the CBI with the request seeking a change of name of the UCITS or AIF and/or minor updates to disclosures in the prospectus, supplements and SFDR annexes. Such minor changes to disclosures should not represent a material change to either of the investment objective, investment policy, strategy or risk profile of the fund and be made solely for the purpose of bringing the fund into compliance with the Guidelines. Any material changes to disclosures will be subject to review under standard post-authorisation processes. 

The CBI will carry out a sample review of the submissions noted via the streamlined filing process. Changes may therefore be required to fund documentation at a later date notwithstanding the noting issued. 

For changes to fund name only, the Manager shall attest that the amendments made are in accordance with the Guidelines, and that no other amendments have been made to the fund documentation. For minor changes to SFDR-related disclosures, which may also include a change to fund name, the Board of the fund shall attest that the amendments made do not represent a material change to either of the investment objective, investment policy, strategy or risk profile of the fund and that the amendments have been made solely to bring the fund into compliance with the Guidelines. The legal advisor to the fund shall also attest to the foregoing.

The relevant attestations, along with the revised final dated documents (prospectus/supplement/SFDR annex) for UCITS and AIFs, should be submitted to the dedicated mailbox, SFDR@centralbank.ie, by close of business on the relevant date for automated noting by the CBI. Documents should be dated as at the submission date. The subject line in the email must follow the following format: ESMA Guidelines [Article X] [Name of Management Company] [Name of Umbrella Fund/Standalone/Sub-Fund(s)]. The subject line should also state if the filing is in respect of a name change, a disclosure update or both.

If the Central Bank is already in receipt of a submission which is in relation to a change of fund name or minor disclosure updates on foot of the Guidelines, the submission may be included in the streamlined process. The Funds Post-Authorisation team should be notified of the intention to move this submission to the streamlined process via fundspostauthorisation@centralbank.ie. Where a fund is seeking to reclassify, the submission should be made via the Portal in line with the existing process. Where a new fund/sub-fund application has been filed with the CBI, the fund name and disclosures will be considered as part of the standard review process by the Fund Authorisations team. Where an application for a change of name or minor update to disclosures is submitted after 21 May 2025, the name change and pre-contractual disclosures will be reviewed as part of the normal review process. For funds availing to the streamlined process, a period of 10 business days should be allowed before an attestation is requested in respect of the name change. 

On 8 November 2024, the Central Bank of Ireland (CBI) took enforcement action against Waystone Fund Management (IE) Limited (WFM) for breaches of the Alternative Investment Fund Managers Regulations.

The CBI gave a fine of €393,512 for breaching requirements of the AIFMD between May 2018 and August 2020 at safeguarding investors. The breaches arose from WFM’s failings in relation to due diligence, conflicts of interest, delegate oversight, risk management, valuation procedures, treating investors fairly and acting in their best interests.

WFM delegated the investment management of a Fund to an Investment Manager. Between October 2018 and February 2019, the Investment Manager invested €17.7 million on behalf of the Fund in illiquid, hard to value private assets (the Loan Notes). In November 2019, during the annual audit of the Fund, serious concerns were identified by the auditor in relation to the investment in the Loan Notes and the reliability of the valuation of the Loan Notes.  WFM took steps to seek the return of the funds invested in the Loan Notes by the Investment Manager. Despite numerous attempts between December 2019 and July 2020 to recover the funds, the Fund was suspended in August 2020 with €10.2 million of the Fund’s assets still outstanding, resulting in a loss to the investors. WFM was later party to a settlement reached with the Fund’s investors relating to the loss of their investment. Pursuant to the settlement reached, investors recovered their initial investment in the Loan Notes.

The CBI was notified of the Fund’s suspension and subsequently commenced an investigation, which identified eight breaches of the AIFM Regulations when it failed to:

• conduct adequate due diligence and monitor delegated activity;
• identify and manage conflicts of interest;
• ensure adequate risk management systems were in place;
• ensure that appropriate and consistent procedures were established to allow for the proper valuation of the Fund’s assets;
• disclose a description of valuation procedures and pricing methodology to investors prior to investment;
• notify the CBI of potential breaches of the AIFM Regulations;
• act in the best interests of investors;
• treat all investors fairly.

On 25 November 2024, the Senato della Repubblica published a Bill on the establishment of the National Authority for Artificial Intelligence and Neurotechnology, based in Genoa. 

The Authority will operate in full independence of judgment and evaluation, with complete organizational and financial autonomy, even in derogation from the rules of public accounting, in order to address the rules, technical, ethical, regulatory and safety issues related to artificial intelligence and to operate promptly and precisely to protect citizens, work and economic initiative, in compliance with the principles, criteria and rules of the European Union on the regulation of artificial intelligence. 

The Authority is a collegial body composed of the President and two members. Candidates are included in a special list from which the names of the President of the Authority and the two members of the Board are drawn by random drawing of lots. Candidates for membership of the Authority may be submitted by persons of undisputed morality and independence and of proven professionalism and competence in the sectors in which the Authority operates. No members may be appointed if they have held elected political positions in the five years prior to their appointment or who, in relation to the offices held in the three years prior to their appointment in regulated or supervised companies, have interests in conflict with the exercise of their regulatory or supervisory functions, as well as those who have been members of the board of directors of another independent authority. The members of the Authority are appointed for a period of five years. In the event of the resignation or impediment of the Chairman or a member of the Authority, they shall be replaced in accordance with the procedures of the random draw, for their duration in office and for the non-renewal of their mandate. Rules on incompatibilities subsequent to the termination of the mandate are also introduced.

The Authority will have organisational, accounting and administrative autonomy. In terms of internal organisation, a distinction is made between the functions of guidance and control of the Board of Directors and the management tasks of the administration, headed by the Secretary General. 

The Authority shall report to the Chambers on the results of its activities by submitting an annual report.

On 11 November 2024, the Senato della Repubblica published a Draft Decree adapting the national legislation to the provisions of Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets and amending Directive (EU) 2015/849, and for the implementation of Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, as amended by Article 38 of Regulation (EU) 2023/1113 (TFR).

The decree amends the Decree No. 231 of 21 November 2007 (the so-called Anti-Money Laundering Decree) and the Decree-Law of 28 June 1990. 

The changes introduced are as follows:

• CASPs are now included under the category of financial intermediaries, ensuring they are subjected to the same AML regulations and oversight as other financial market operators. 
• The references to non-financial operators related to virtual currencies and digital wallet services are removed from the existing decree-law as these services are now encompassed within the broader category of financial and banking intermediaries 
• New obligations are introduced for CASPs, facilitating the traceability and transparency of crypto-asset transfers. 
• Definitions within the AML decree are updated to reflect the integration of CASPs, including the addition of terms like "crypto-asset" in relevant sections. 
• The initiative extends the transparency requirements applicable to the transfer of funds by payment service providers to include transfers of crypto assets. This change mandates compliance with specific anti-money laundering measures, enhancing protection for users and the integrity of the financial system .

On 4 November 2024, the Commissione Nazionale per le Società e la Borsa (CONSOB) published the division of competences between CONSOB and the Bank of Italy in the application of MiCAR in the field of crypto-assets.

On 29 October 2024, CONSOB and the Bank of Italy published a document summarising the competences of the two Authorities with regard to the application of the new regulation.

The document recalls the competences attributed to CONSOB:

• supervision in terms of transparency, fairness of conduct, orderly conduct of trading and protection of holders of crypto-assets/customers, with reference to issuers of ART (Asset Related Tokens) and CASPs (Crypto Asset Service Providers);
• supervision of the requirements of the MiCAR, relating to the management of a crypto-asset trading platform, carried out by anyone, as well as the related organization and outsourcing profiles;
• supervision of the public offering and admission to trading of other-than crypto;
• product intervention on ART and other-than crypto, when necessary to ensure investor protection, the orderly functioning and integrity of crypto-asset markets;
• on the prevention and prohibition of market abuse relating to crypto-assets;
• on the subject of combating the provision of services on crypto-assets without authorization and the offer of crypto-assets other than in the absence of a notified white paper.

Similarly, the document summarises the responsibilities of the Bank of Italy:

• prudential supervision and crisis management, with reference to issuers of ARTs, issuers of EMTs and CASPs;
• supervision of transparency, fairness of conduct and protection of holders of EMTs with reference to issuers of such crypto-assets;
• Supervisory Assistance for the Fight against Money Laundering and Terrorist Financing with reference to CASPs and banking and financial intermediaries acting as issuers of ART and EMT;
• product intervention on EMTs as well as – when necessary to ensure the stability of the whole or part of the financial system – on ARTs and crypto-assets other than EMTs and ARTs.

It is also worth mentioning the exclusive powers of the Bank of Italy relating to the supervision function of the payment system, pursuant to Article 146 of the Consolidated Banking Act.

On 21 November 2024, the Jersey Financial Services Commission (JFSC) announced that the Government of Jersey published a sustainable finance action plan.

Jersey’s action plan follows government’s consultation in H1 2024. The JFSC will play a key role in considering and delivering new or amended regulation where this is appropriate and proportionate. Over the next few years, JFSC will work together with various stakeholders to build capacity, and allow time for the embedding of the enhanced regime. Next year, JFSC will consult on three main areas:

1. Sustainability disclosures – to gain an understanding of what impact disclosure regimes may have on businesses;
2. Sustainable risk – concerning, for example, the physical risk businesses might face due to climate change;
3. ESG integrity risk – a slightly broader concept than anti-green washing where mandatory Codes for funds already exist, considering the benefits of expanding the regulation to capture other types of businesses.

On 11 November 2024, the Commission de Surveillance du secteur financier (CSSF) updated their guidelines on UCITS and AIFs cross-border marketing notifications.

In order to meet its obligations in relation to the reporting of cross-border marketing of AIFs and UCITS in accordance with Article 13 of Regulation (EU) 2019/1156 on facilitating cross-border distribution of funds (CBDF), the CSSF would like to inform the supervised entities that new information (predominant AIF type and contact point(s) concerning the notification letter, invoices and facilities for investors) will be collected through marketing notification and de-notification requests from 11 November 2024.

Consequently, the eDesk CBDF module and S3 API channel will be adapted. All the modifications, in particular concerning the JSON schema used for transmissions through the API channel, are listed in the new version of the user guide dedicated to cross-border marketing.

Version française

Le 11 novembre 2024, la Commission de Surveillance du secteur financier (CSSF) a mis à jour ses lignes directrices sur les notifications de commercialisation transfrontalière des OPCVM et FIA.

Afin de répondre à ses obligations en matière de reporting sur la commercialisation transfrontalière de FIA ??et d'OPCVM conformément à l'article 13 du Règlement (UE) 2019/1156 visant à faciliter la distribution transfrontalière de fonds (CBDF), la CSSF souhaite informer les entités surveillées que de nouvelles informations (type de FIA ??prédominant et point(s) de contact concernant la lettre de notification, les factures et les facilités pour les investisseurs) seront collectées par le biais de demandes de notification de commercialisation et de dé-notification à partir du 11 novembre 2024.

Par conséquent, le module eDesk CBDF et le canal API S3 seront adaptés. Toutes les modifications, notamment concernant le schéma JSON utilisé pour les transmissions via le canal API, sont répertoriées dans la nouvelle version du guide utilisateur dédié au marketing cross-border.

On 15 November 2024, the Commission de Surveillance du secteur financier (CSSF) updated its reminder on the new mode of transmission for Key Information Document (KID) and official documents.

Starting from 15 November 2024, the collection procedures have shifted exclusively to two methods: the eDesk procedure and automated submission via API (S3 protocol). Submissions through external channels will no longer be processed. A user guide for submission procedures is available online, and queries can be directed to edesk@cssf.lu.

Version française

Le 15 novembre 2024, la Commission de Surveillance du secteur financier (CSSF) a mis à jour son rappel sur le nouveau mode de transmission des Documents d'Informations Clés (DIC) et des documents officiels.

À compter du 15 novembre 2024, les procédures de collecte sont passées exclusivement à deux méthodes : la procédure eDesk et la soumission automatisée via API (protocole S3). Les soumissions via des canaux externes ne seront plus traitées. Un guide d'utilisation des procédures de soumission est disponible en ligne et les demandes peuvent être adressées à edesk@cssf.lu.

On 15 November 2024, the Commission de Surveillance du secteur financier (CSSF) updated its reminder on the new U1.1 reporting transmission procedures.

Effective from 15 November 2024, U1.1 reports can be transmitted using either a dedicated eDesk procedure or an API solution for submitting XML reports via the S3 protocol. External transmission channels will remain an option until 28 February 2025. A user guide on the submission procedures is available, and any questions can be addressed to edesk@cssf.lu. The document has been updated multiple times in 2024, with version 5.1 including new information particularly regarding the XML format and the incorporation of eDesk and API transmission channels. This update follows the announcement made on 5 April 2024 and includes updates from 12 September, 31 October, and 15 November 2024.

Version française

Le 15 novembre 2024, la Commission de Surveillance du secteur financier (CSSF) a mis à jour son rappel sur les nouvelles modalités de transmission du reporting U1.1.

À compter du 15 novembre 2024, les rapports U1.1 peuvent être transmis soit via une procédure eDesk dédiée, soit via une solution API de soumission de rapports XML via le protocole S3. Les canaux de transmission externes resteront possibles jusqu'au 28 février 2025. Un guide d'utilisation sur les modalités de soumission est disponible, et toute question peut être adressée à edesk@cssf.lu. Le document a été mis à jour à plusieurs reprises en 2024, la version 5.1 incluant de nouvelles informations notamment concernant le format XML et l'incorporation des canaux de transmission eDesk et API. Cette mise à jour fait suite à l'annonce faite le 5 avril 2024 et inclut les mises à jour du 12 septembre, du 31 octobre et du 15 novembre 2024.

On 20 November 2024, the Commission de Surveillance du secteur financier (CSSF) updated its user guide on Key Information Documents (KID).

The user guide provides practical and technical information regarding the submission of KIDs to CSSF. This document advises entities to use a specific nomenclature for a streamlined process and to ensure annual document submissions even if there have been no updates. The guide breaks down the submission process into several steps, including entity selection, document upload, updating KID information, and final submission. Users are required to have an eDesk account for this process, with authentication facilitated through LuxTrust. The eDesk dashboard allows users to manage their entities and monitor their submissions.

Notably, the latest version of the user guide has been updated on 19 November 2024, providing refined instructions to users. This includes detailed steps on entity selection, document uploading, where users must select their KIDs in PDF format with a 2MB size limit, and updating document details like date, language, and PRIIPs status. The final stage of the submission process involves summarizing the uploaded KIDs and sending them for publication. Users are reminded to check the feedback file from CSSF before submitting a new file for the same entity to avoid duplication.

Version française

Le 20 novembre 2024, la Commission de Surveillance du secteur financier (CSSF) a mis à jour son guide d'utilisation des Documents d'Information Clés (DIC).

Le guide utilisateur fournit des informations pratiques et techniques concernant la transmission des DIC à la CSSF. Ce document conseille aux entités d'utiliser une nomenclature spécifique pour un processus rationalisé et d'assurer la soumission annuelle des documents même s'il n'y a pas eu de mises à jour. Le guide décompose le processus de soumission en plusieurs étapes, notamment la sélection de l'entité, le téléchargement des documents, la mise à jour des informations DIC et la soumission finale. Les utilisateurs doivent disposer d'un compte eDesk pour ce processus, avec une authentification facilitée via LuxTrust. Le tableau de bord eDesk permet aux utilisateurs de gérer leurs entités et de surveiller leurs soumissions.

Notamment, la dernière version du guide d'utilisation a été mise à jour le 19 novembre 2024, fournissant des instructions affinées aux utilisateurs. Cela comprend des étapes détaillées sur la sélection des entités, le téléchargement des documents, où les utilisateurs doivent sélectionner leurs DIC au format PDF avec une limite de taille de 2 Mo, et la mise à jour des détails du document tels que la date, la langue et le statut des PRIIP. La dernière étape du processus de soumission consiste à résumer les DIC téléchargés et à les envoyer pour publication. Il est rappelé aux utilisateurs de vérifier le fichier de feedback de la CSSF avant de soumettre un nouveau fichier pour la même entité afin d'éviter les duplications.

On 20 November 2024, the Commission de Surveillance du secteur financier (CSSF) updated its user guide on regulatory documents and reporting.

The user guide provides detailed instructions on the procedures for submitting and tracking regulatory documents, specifically articles of incorporation (AI) and management regulations (MRs). It emphasizes the importance of compliance with specific naming conventions for document files. Each report must follow the format DOCREP-ENNNNNNNN-YYYY-MM-DD-AI/-LL.pdf for AIs and DOCREP-ENNNNNNNN-YYYY-MM-DD-MR-LL.pdf for MRs. The guide outlines the submission process through the eDesk platform, where users can upload documents in PDF format, ensuring they adhere to the maximum size of 2MB. Once uploaded, documents can be transmitted, and users will receive confirmation of successful submissions. The guide also specifies the technical requirements for uploading ZIP files containing the reports and details the reporting file formats and monitoring responsibilities assigned to the IT expert.

The most recent update to the guide was on 19 November 2024, which marked Version 1.1. This update included additional details on the delegation feature, allowing users to delegate the submission of AIs/MRs to other natural persons. It also provided more clarity on the submission and follow-up procedures via the eDesk system. Users can monitor their submissions through the dashboard, which displays the status of each document from the most recent to the oldest date, ensuring efficient management of regulatory requirements.

Version française

Le 20 novembre 2024, la Commission de Surveillance du secteur financier (CSSF) a mis à jour son guide d'utilisation des documents et reporting réglementaires.

Le guide utilisateur fournit des instructions détaillées sur les procédures de soumission et de suivi des documents réglementaires, notamment les statuts (AI) et les règlements de gestion (MR). Il souligne l'importance du respect de conventions de dénomination spécifiques pour les fichiers de documents. Chaque rapport doit suivre le format DOCREP-ENNNNNNNN-YYYY-MM-DD-AI/-LL.pdf pour les AI et DOCREP-ENNNNNNNN-YYYY-MM-DD-MR-LL.pdf pour les MR. Le guide décrit le processus de soumission via la plateforme eDesk, où les utilisateurs peuvent télécharger des documents au format PDF, en s'assurant qu'ils respectent la taille maximale de 2 Mo. Une fois téléchargés, les documents peuvent être transmis et les utilisateurs recevront une confirmation des soumissions réussies. Le guide précise également les exigences techniques pour le téléchargement des fichiers ZIP contenant les rapports et détaille les formats de fichiers de rapport et les responsabilités de suivi assignées à l'expert informatique.

La mise à jour la plus récente du guide date du 19 novembre 2024, il s'agissait de la version 1.1. Cette mise à jour comprenait des détails supplémentaires sur la fonctionnalité de délégation, permettant aux utilisateurs de déléguer la soumission des AI/MR à d'autres personnes physiques. Il a également apporté plus de clarté sur les procédures de soumission et de suivi via le système eDesk. Les utilisateurs peuvent suivre leurs soumissions via le tableau de bord, qui affiche l'état de chaque document de la date la plus récente à la plus ancienne, garantissant une gestion efficace des exigences réglementaires.

On 12 November 2024, the Commission de Surveillance du secteur financier (CSSF) updated the Circular CSSF 22/821 on the Long Form Report (as amended by Circular CSSF 24/845).

The Circular CSSF 24/865 aims to further align the content of the self-assessment questionnaire (SAQ) with supervisory points of focus. The revised SAQ now includes two new thematic sections:

• Dora preparednes;
• Circular on Delegated Act on Liquidity Coverage Requirement Article 23(2) requiring an assessment and declaration of potential liquidity outflows in relation to products and services.

Additionally, some of the existing sections have been slightly modified to better suit supervisory needs. The revised version eliminates the requirement for Agreed Upon Procedure reports, leaving the Réviseurs d'Entreprises Agréés (REA) responsible only for the annual separate report on the protection of financial instruments and funds belonging to clients, as well as the annual separate AML/CFT report. 

The revised Circular applies from 31 December 2024.

Version française

Le 12 novembre 2024, la Commission de Surveillance du secteur financier (CSSF) a mis à jour la Circulaire CSSF 22/821 relative au compte rendu analytique (telle que modifiée par la Circulaire CSSF 24/845).

La circulaire CSSF 24/865 vise à aligner davantage le contenu du questionnaire d’auto-évaluation (SAQ) sur les points centraux de la surveillance. Le SAQ révisé comprend désormais deux nouvelles sections thématiques :

• Dora se prépare ;
• Circulaire relative à l'acte délégué relatif à l'exigence de couverture de liquidité, article 23, paragraphe 2, exigeant une évaluation et une déclaration des sorties potentielles de liquidités liées aux produits et services.

De plus, certaines sections existantes ont été légèrement modifiées pour mieux répondre aux besoins de supervision. La version révisée élimine l'exigence de rapports de procédure convenue, laissant les Réviseurs d'Entreprises Agréés (REA) responsables uniquement du rapport annuel séparé sur la protection des instruments financiers et des fonds appartenant aux clients, ainsi que du rapport annuel distinct LAB/CFT. rapport. 

La Circulaire révisée s’applique à partir du 31 décembre 2024.

On 15 November 2024, the Commission de Surveillance du secteur financier (CSSF) published a press release on the issue of greenwashing in the finance sector and provided guidelines for investors to protect themselves against deceptive practices. 

Greenwashing occurs when companies falsely present their products or services as more sustainable than they are, potentially misleading investors who seek to invest in environmentally friendly and socially responsible ventures.

Key points highlighted in the article include:

• Investors are encouraged to critically evaluate green financial products and not rely solely on labels or promises. The CSSF emphasizes the importance of scrutinizing sustainability claims.
• The CSSF advises against accepting general commitments without concrete proof. Companies should provide detailed descriptions of how they intend to meet their sustainability goals.
• While certified labels can be indicators of genuine commitment, investors should verify these certifications independently to avoid being misled by self-created, non-credible certifications.
• A diversified investment portfolio can mitigate the risk associated with dependence on a single company or sector, thus providing better protection against greenwashing.
• Consulting advisers who specialize in sustainable investment can help investors define their sustainability goals and distinguish between genuine and deceptive green opportunities.

The press release also mentions the CSSF’s platform, www.letzfin.lu, which provides more information on greenwashing and how to avoid being misled by it.

Version française

Le 15 novembre 2024, la Commission de Surveillance du secteur financier (CSSF) a publié un communiqué de presse sur la question du greenwashing dans le secteur financier et a fourni des lignes directrices aux investisseurs pour se protéger contre les pratiques trompeuses. 

L’écoblanchiment se produit lorsque des entreprises présentent à tort leurs produits ou services comme étant plus durables qu’ils ne le sont, ce qui peut induire en erreur les investisseurs qui cherchent à investir dans des entreprises respectueuses de l’environnement et socialement responsables.

Les points clés soulignés dans l’article comprennent :

• les investisseurs sont encouragés à évaluer de manière critique les produits financiers verts et à ne pas se fier uniquement aux labels ou aux promesses. La CSSF souligne l’importance d’examiner attentivement les allégations de durabilité.
• la CSSF déconseille d'accepter des engagements généraux sans preuves concrètes. Les entreprises doivent fournir des descriptions détaillées de la manière dont elles entendent atteindre leurs objectifs de développement durable.
• même si les labels certifiés peuvent être des indicateurs d'un véritable engagement, les investisseurs doivent vérifier ces certifications de manière indépendante pour éviter d'être induits en erreur par des certifications auto-créées et non crédibles.
• un portefeuille d'investissement diversifié peut atténuer le risque lié à la dépendance à l'égard d'une seule entreprise ou d'un seul secteur, offrant ainsi une meilleure protection contre le greenwashing.
• les conseillers-conseils spécialisés dans l'investissement durable peuvent aider les investisseurs à définir leurs objectifs en matière de développement durable et à faire la distinction entre les opportunités vertes réelles et trompeuses.

Le communiqué mentionne également la plateforme de la CSSF, www.letzfin.lu, qui fournit davantage d’informations sur le greenwashing et comment éviter d’être induit en erreur par celui-ci.

On 19 November 2024, the Commission de Surveillance du secteur financier (CSSF) published a press rekease on the 2024 ESMA data collection on costs linked to investments in AIFs and UCITS.

The press release announced that on 14 November 2024, the ESMA initiated a data collection exercise. This effort is part of the AIFMD/UCITSD Review Directive, requiring ESMA to produce a report by 16 October 2025, which will be submitted to the European Parliament, the Council, and the European Commission. This report will assess and explain the costs charged by UCITS management companies and AIFMs to investors, including the differences in costs based on the nature of the UCITS/AIFs.

The CSSF has requested from selected Luxembourg-based UCITS mangement companies and AIFMs, as well as distributors, to complete a questionnaire via the CSSF's eDesk Portal. Technical details and deadlines were communicated directly to the selected entities.

Version française

Le 19 novembre 2024, la Commission de Surveillance du secteur financier (CSSF) a publié un communiqué de presse sur la collecte de données 2024 de l'ESMA sur les coûts liés aux investissements dans les FIA et les OPCVM.

Le communiqué annonce que l'ESMA a lancé le 14 novembre 2024 un exercice de collecte de données. Cet effort s'inscrit dans le cadre de la directive de révision AIFMD/UCITSD, exigeant que l'ESMA produise un rapport d'ici le 16 octobre 2025, qui sera soumis au Parlement européen, au Conseil et à la Commission européenne. Ce rapport évaluera et expliquera les frais facturés par les sociétés de gestion d'OPCVM et les gestionnaires de fonds alternatifs aux investisseurs, y compris les différences de coûts en fonction de la nature des OPCVM/FIA.

La CSSF a demandé à certaines sociétés de gestion d'OPCVM et AIFM basées au Luxembourg, ainsi qu'à des distributeurs, de remplir un questionnaire via le portail eDesk de la CSSF. Les détails techniques et les délais ont été communiqués directement aux entités sélectionnées.

On 7 November 2024, the Bank Negara Malaysia (BNM) launched the InvestMalaysia Portal as a one-stop gateway for investors to obtain information on Malaysia.

The portal consolidates key information required for sound and timely investment decisions for investors, and aims to strengthen Malaysia’s position as a competitive and attractive investment destination by highlighting and promoting attractive investment opportunities in Malaysia’s financial markets to both domestic and foreign investors. Specifically, the Portal offers:

• Comprehensive insights into Malaysia's economic outlook, national policies, business landscape, sector-specific market information and tailored investment facilitation
• Highlighting investment opportunities by showcasing the diverse range of product offerings tailored for domestic and global investors in the public and private sphere
• Improving access to the Malaysian market by serving as a centralised hub to connect existing and potential investors to relevant Government agencies

The launch of the InvestMalaysia portal is anticipated to enhance investor relations practices and stimulate inflows of high-quality portfolio investments into the country. These inflows would contribute towards deepening the financial markets, lifting economic growth, and helping achieve the MADANI Economic aspiration to advance Malaysia towards high-income status.

On 8 November 2024, the Banco de México (Banxico) announced the Recognition of Derivatives Service Bureau Limited (DSB) as a Unique Product Identifier (UPI) provider.

In order to continue promoting the healthy development of the financial system, in consideration of the relevance of adopting various global identifiers applicable to derivative transactions in over-the-counter markets that facilitate an adequate identification of exposures and risks, as well as the proposal of the international association that brings together financial authorities from various jurisdictions, called the Financial Stability Board (FSB), to use the UPI as an element that contributes to compliance with the reforms proposed by G-20, of which Mexico is a member, to improve the transparency of the derivatives market, and likewise, comply with the provisions of Rule 4.2 of Circular 19/2022, regarding the Rules applicable to the UPI and the Unique Transaction Identifier (UTI), published in December 2022, on this date this Central Institute has resolved to recognize DSB as a provider of the Unique Product Identifier.

As a result of the recognition made by Banxico, all derivative transactions that institutions subject to compliance with these provisions carry out in over-the-counter markets as of the date that corresponds to 360 calendar days from this date of publication, must have a UPI, issued by DSB, as well as comply with the obligations of identification of the product in the report of derivative transactions, contained in Circular 4/2012.

On 29 November 2024, the Comision Nacional del Sistema de Ahorro para el Retiro (CONSAR) Governing Board authorized Afores commissions for 2025.

The Governing Board of CONSAR authorizes the commissions that the Afores will charge the following year. For the benefit of workers, the level of commissions for 2025 will be lower than in 2024. The reduction of commissions by 2025 will represent an additional saving for workers of 9 billion pesos by 2030, which are added to the 166 billion pesos due to the decreases of previous years.

In accordance with the Law on Retirement Savings Systems (LSAR), in its Fourth Extraordinary Session of 2024 held on 27 November, the Governing Board of CONSAR, with representation from the labor, employer and government sectors, evaluated the requests for authorization of commissions that the Afores will charge for the year 2025. with the following results:

• Nine Administrators will charge a commission of 0.55% on the balances managed, while PENSIONISSSTE will have a commission of 0.52%.
• The level of commissions authorized for 2025 in all Administrators is lower than in 2024, benefiting the worker, as it translates into additional savings and a higher pension balance.
• The average commission of the System goes from 0.566% to 0.547%.

CONSAR reaffirms its commitment to give priority to the future well-being of workers, through lower costs that will improve their pension, without affecting the financial stability of the Afores.

On 7 November 2024, the Autoriteit Persoonsgegevens (Dutch Data Protection Authority (DPA)) issued its final recommendation on AI supervision.

The recommendation describes how the use of AI can effectively be supervised through an integrated approach. The RDI and the DPA recommend ensuring that supervision of AI in the different sectors and domains is in line with regular supervision as much as possible. 

Products such as machines, lifts or toys already have to comply with various European (safety) rules. Consumers can recognise this by the CE marking. If AI is used in products such as these, the requirements of the AI Act must be met as well. The supervision of these products can remain with the same supervisory authority. In this way, the best possible use is made of knowledge, expertise and capacity of the sectoral supervisory authorities, and their mandates remain intact.

When organisations integrate AI applications in products and services without the current mandatory CE marking, supervision of this can also be in line with existing supervisory roles. It concerns, for example, applications where AI systems are used for making decisions about people, such as with recruitment and selection, assessments in education, or risk selection by governmental organisations. 

To provide further explanation about the recommendation on supervision of the AI Act, the RDI and the DPA are organising a meeting in Utrecht on Monday 18 November 2024 from 10:00 to 12:00. At this meeting, the supervisory authorities will explain the recommendation and there will be room for asking questions or providing points for attention. Interested parties on behalf of representative organisations can register through dca@autoriteitpersoonsgegevens.nl quoting 'Explanatory meeting about Final recommendation on supervision of AI Act'. Please note that there is only limited seating capacity.

On 4 November 2024, the Banco de España adopted the Guidelines on recovery plans under Articles 46 and 55 of Markets in Crypto-assets Regulation (Regulation (EU) 2023/1114 – MiCA) (EBA/GL/2024/07).

The Guidelines set out that recovery plans should comprise four elements:

• a summary of the key elements of the recovery plan,
• the information on governance,
• the description of the applicable recovery options, and
• a communication and disclosure plan.

As part of the information on governance, issuers should include in the recovery plan a minimum set of categories of recovery plan indicators. Among these categories, issuers should identify and calibrate the most relevant recovery plan indicators based on their specific risk profile and operating environment. When assessing what type of indicators will be included in the recovery plan, issuers should consider carefully the type of events that may lead to a breach of the regulatory requirements applicable to the reserve of assets. Recovery plan indicators should be of both quantitative and qualitative nature. Moreover, all issuers should include a de-pegging risk indicator, aimed to keep track of the alignment between the market price of the token and the market value of the referenced asset(s). The guidelines also provide guidance on the steps to take in case of breaches of recovery plan indicator thresholds.

The Executive Commission of the Banco de España, in its role of competent authority for the supervision of issuers of asset-referenced token and e-money tokens within the framework of powers established by MiCA and by Law 6/2023, of 17 March, on Securities Markets and Investment Services, adopted these Guidelines as their own on 4 November 2024. The Guidelines apply from 13 November 2024.

On 18 November 2024, the Banco de España adopted the Guidelines on the minimum content of the governance arrangements for issuers of asset-referenced tokens.

The Guidelines specify the minimum content of the governance arrangements for issuers of asset-referenced tokens regarding the monitoring tools for the operational risk, the business continuity plans to ensure the preservation of data or the timely recovery of such data, internal control mechanisms and effective procedures for risk management and regular audits of issuers of asset-referenced tokens, as well as other general aspects of the internal governance of those issuers.

These Guidelines have been developed by the EBA, were published in English on 6 June 2024 (the Spanish version was released on 20 September 2024), and apply from 20 December 2024.

Where the issuer of ARTs is a credit institution, it should comply with Title I, Title V Sections 12, 12.1, 12.2 and 12.3, Title VI and Title VII of the Guidelines, in conjunction with the requirements set out under Directive 2013/36/EU (CRD) and the EBA guidelines on internal governance (EBA/GL/2021/05) as adopted by Banco de España. These Guidelines will neither apply to specialised lending institutions nor the Instituto de Crédito Oficial.

On 25 November 2024, Spain published the Resolution of 18 November 2024, of the Executive Committee of the Banco de España, amending that of 4 July 2022, approving the uniform conditions of participation in TARGET-Banco de España.

On 4 July 2022, the Executive Board of the Banco de España approved the Resolution approving the uniform conditions for participation in TARGET-Banco de España, the Spanish payment system that is part of the new generation trans-European automated express transfer system for real-time gross settlement (TARGET). The purpose of that resolution is, inter alia, to implement the uniform conditions for participation in TARGET set out in Annex I to Guideline (EU) 2022/912 of the ECB of 24 February 2022 on the trans-European automated express transfer system for next-generation real-time gross settlement (TARGET) (ECB/2022/8).

On 30 July 2024 the Governing Council of the ECB approved the Guideline (EU) 2024/2616, which aims to update the abovementioned Guideline (EU) 2022/912 with effect from 1 December 2024. In particular, in addition to making some editorial adjustments and changes to some of the definitions (e.g., extending the definition of the term 'almost instant payment' to include a reference to the European Payments Council's SEPA One-Leg Out Instant Transfer Scheme (OCT Inst)), Guideline (EU) 2024/2616 updates the uniform conditions for participation in TARGET to, inter alia, on the one hand, amending the provisions applicable to the remuneration of accounts opened with TARGET, replacing them with references to the relevant provisions of Decision (EU) 2024/1209 of the ECB of 16 April 2024 on the remuneration of non-monetary policy deposits held with national central banks and with the ECB (ECB/2024/11); and, on the other hand, update the various business day phases in TARGET and the operationally relevant events affecting the different accounts, the fees applicable to TIPS DCA holders and those applicable to linked systems (SVs) for using the TIPS AS settlement procedure, as well as TARGET's compensation scheme.

Such changes make it necessary to amend the Resolution of 4 July 2022, approving the uniform conditions of participation in TARGET-Banco de España, to also reflect them in those uniform conditions. Likewise, the technical applications have been updated, which include, on the one hand, the fees applicable for the services related to TARGET-Banco de España and, on the other hand, the calendar and hours of operation of TARGET-Banco de España. The modifications and rules are applicable from 1 December 2024.

In November 2024, the Banco de España published a Technical Application No. 6/2024 on TARGET – Calendar and Opening hours.

On the occasion of the adoption of Guideline (EU) 2024/2616 of the ECB of 30 July 2024 amending the Guidelines (EU) 2022/912 on the new generation trans-European automated express transfer system for real-time gross settlement (TARGET) (ECB/2022/8) (ECB/2024/20), it is necessary to approve a new technical application corresponding to the calendar and hours of operation of the TARGET-Banco de España system to reflect the changes introduced in this regard by the aforementioned Guideline. Specifically, this new Technical Application has included modifications in some phases of the working day in TARGET and in the events relevant from an operational point of view.

This Technical Application entered into force on 1 December 2024.

In November 2024, the Banco de España published a Technical Application No. 7/2024 on TARGET – Fees.

On the occasion of the adoption of Guideline (EU) 2024/2616 of the ECB of 30 July 2024 amending the Guideline (EU) 2022/912 on the next-generation trans-European automated real-time gross settlement express transfer system (TARGET) (ECB/2022/8) (ECB/2024/20), it is necessary to approve a new technical application corresponding to the fees applicable to the services provided by TARGET-Banco de España to collect the changes introduced in this regard by the aforementioned Guideline. Specifically, this new Technical Application has included modifications related to the fees applicable to holders of TIPS DCAs and related systems (SVs) that use the TIPS AS settlement procedure. The following services are not included among those offered by the Banco de España and will be charged by their corresponding suppliers in accordance with their conditions:

• the services offered by PSR,
• T2S services not related to cash.

A participant who wishes to change the chosen pricing structure shall notify the Banco de España no later than the twentieth calendar day of the month, so that the following month can be taken into account.

The terms of this Technical Application shall be interpreted in accordance with the provisions of Annex I of the uniform conditions of participation in TARGET-Banco de España approved by resolution of the Executive Committee of the Banco de España of 4 July 2022, as they are in force at any given time. Technical Application 9/2023 is repealed with effect from 1 December 2024. From that date onwards, any reference to Technical Applications 4/2008, 14/2008, 15/2008, 4/2010, 8/2012, 8/2015, 2/2016, 5/2017, 10/2017, 6/2018, 6/2019, 6/2021, 4/2022 and 9/2023, in any legal instruments or other documents, shall be deemed to be made to Technical Application 7/2024. The Technical Application entered into force on 1 December 2024.

On 11 November 2024, the Eidgenössische Finanzmarktaufsicht (FINMA) published a new Ordinance and fully revised its Circular on Auditing.

This update fulfills the format compliance requirements as per Article 7 paragraph 1 of the Financial Market Supervision Act (FinMASA). The majority of the rules that were previously set out in the Circular 2013/3 "Auditing" have been transferred to the new ordinance, while a portion of the content remains in the revised Circular. The previous annexes related to risk analysis and standard audit strategy of audit firms will now serve as templates, allowing for more flexible and rapid adaptation. FINMA ensures stakeholders can comment on any changes to these templates. This revision, however, does not address improvements to the legal basis for regulatory auditing discussed during the assessment of the Credit Suisse crisis.

Version française

Le 11 novembre 2024, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié une nouvelle ordonnance et révisé entièrement sa circulaire sur le contrôle.

Cette mise à jour répond aux exigences de format conformément à l'article 7, paragraphe 1, de la loi sur la surveillance des marchés financiers (FinMASA). La majorité des règles qui étaient auparavant énoncées dans la circulaire 2013/3 « Contrôle » ont été transférées dans la nouvelle ordonnance, tandis qu'une partie du contenu reste dans la circulaire révisée. Les annexes précédentes relatives à l'analyse des risques et à la stratégie d'audit standard des cabinets d'audit serviront désormais de modèles, permettant une adaptation plus flexible et plus rapide. La FINMA veille à ce que les parties prenantes puissent commenter toute modification apportée à ces modèles. Cette révision ne concerne toutefois pas les améliorations de la base juridique du contrôle réglementaire évoquées lors de l'évaluation de la crise du Credit Suisse.

On 22 November 2024, the Eidgenössische Finanzmarktaufsicht (FINMA) published a Circular on rules of conduct under the Financial Services Act (FinSA).

FINMA has issued a new Circular to delineate its supervisory practice concerning key aspects of the FinSA. This Circular aims to foster transparency, legal certainty, and a comparable level of investor protection amongst supervised institutions and will come into effect on 1 January 2025. It outlines the necessary practices for informing clients, enabling them to make well-informed investment decisions by providing details on the type of financial services, associated risks, and third-party compensations. Additionally, it addresses how to handle conflicts of interest regarding the use of the bank’s own financial instruments. The Circular was extensively discussed during the consultation phase. While consumer protection organizations, several law firms, supervisory bodies, universities, and other interested entities welcomed the clarity and specificity it brought to FinSA’s rules of conduct, banks and industry-related organizations largely opposed it. Despite this opposition, FINMA proceeded with the Circular and incorporated various feedback points from the consultation phase into the final document. 

The circular will enter into force on 1 January 2025.

Version française

Le 22 novembre 2024, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié une circulaire sur les règles de conduite en vertu de la loi sur les services financiers (FinSA).

La FINMA a publié une nouvelle circulaire pour définir sa pratique de surveillance concernant les principaux aspects de la LSFin. Cette circulaire vise à favoriser la transparence, la sécurité juridique et un niveau comparable de protection des investisseurs parmi les établissements surveillés et entrera en vigueur le 1er janvier 2025. Elle décrit les pratiques nécessaires pour informer les clients, leur permettant de prendre des décisions d'investissement éclairées en fournissant des détails sur le type de services financiers, les risques associés et les compensations de tiers. En outre, il explique comment gérer les conflits d’intérêts liés à l’utilisation des propres instruments financiers de la banque. La circulaire a été longuement discutée lors de la phase de consultation. Alors que les organisations de protection des consommateurs, plusieurs cabinets d’avocats, organismes de surveillance, universités et autres entités intéressées ont salué la clarté et la spécificité qu’il apporte aux règles de conduite de la FinSA, les banques et les organisations liées au secteur s’y sont largement opposées. Malgré cette opposition, la FINMA a poursuivi l'élaboration de la circulaire et a intégré dans le document final différents retours d'information issus de la phase de consultation. 

La circulaire entrera en vigueur le 1er janvier 2025.

On 13 November 2024, the Eidgenössische Finanzmarktaufsicht (FINMA) published its strategic goals for the period from 2025 to 2028.

These goals focus on long-term guidance for the authority and are designed to address current supervisory challenges and risks:

• The first key area of focus is supervision. The objective is to protect depositors, insured persons, and clients, while ensuring the proper functioning of financial markets. To achieve this, FINMA will develop supervisory instruments and procedures for preventive action, refine its supervisory approach for systemic institutions like UBS, and ensure compliance with AML and Financial Services Act (FinSA) requirements.
• The second focus area is financial and operational resilience. FINMA aims to strengthen the financial resilience of supervised institutions. This will involve monitoring the management of market, credit, liquidity, and actuarial risks, ensuring that institutions maintain adequate capital and liquidity, and focusing on operational risks such as outsourcing and cyber risks.
• The third area involves framework conditions. FINMA seeks to create effective financial market regulatory conditions. It will actively contribute to regulatory framework development, adapt to technological advancements, and apply regulation in a transparent and technology-neutral manner.
• The organisational aspect is also crucial. FINMA aims to increase its effectiveness and efficiency as a supervisory authority. It will organise itself efficiently, utilising internal synergies, and advance its digital transformation. Additionally, it plans to increase direct supervision through on-site reviews and enhance communication and reporting on activities.

The Federal Council approved FINMA’s strategic goals on 13 November 2024. FINMA will align its actions with these goals to fulfill its legal mandate, enhancing the stability and integrity of the Swiss financial system. These strategic goals are designed to increase confidence in Switzerland as a financial center, ensure institutions' robust governance, and address both financial and operational risks.

Version française

Le 13 novembre 2024, l'Eidgenössische Finanzmarktaufsicht (FINMA) a publié ses objectifs stratégiques pour la période 2025 à 2028.

Ces objectifs se concentrent sur les orientations à long terme de l’autorité et sont conçus pour répondre aux défis et risques actuels en matière de surveillance :

• le premier domaine d'intervention clé est la supervision. L’objectif est de protéger les déposants, les assurés et les clients, tout en assurant le bon fonctionnement des marchés financiers. Pour y parvenir, la FINMA développera des instruments et des procédures de surveillance pour des actions préventives, affinera son approche de surveillance pour les institutions systémiques comme l'UBS et garantira le respect des exigences en matière de LBC et de la loi sur les services financiers (LSFin).
• le deuxième domaine d'intervention est la résilience financière et opérationnelle. La FINMA vise à renforcer la résilience financière des établissements assujettis. Cela impliquera de surveiller la gestion des risques de marché, de crédit, de liquidité et actuariels, de veiller à ce que les institutions maintiennent un capital et des liquidités adéquats et de se concentrer sur les risques opérationnels tels que l'externalisation et les cyber-risques.
• le troisième domaine concerne les conditions-cadres. La FINMA cherche à créer des conditions réglementaires efficaces pour les marchés financiers. Il contribuera activement à l’élaboration du cadre réglementaire, s’adaptera aux progrès technologiques et appliquera la réglementation de manière transparente et technologiquement neutre.
• l'aspect organisationnel est également crucial. La FINMA entend accroître son efficacité et son efficience en tant qu'autorité de surveillance. Elle s'organisera efficacement, en utilisant les synergies internes, et fera progresser sa transformation numérique. En outre, il prévoit d'accroître la supervision directe grâce à des examens sur place et d'améliorer la communication et les rapports sur les activités.

Le 13 novembre 2024, le Conseil fédéral a approuvé les objectifs stratégiques de la FINMA. La FINMA alignera ses actions sur ces objectifs pour remplir son mandat légal et renforcer la stabilité et l’intégrité du système financier suisse. Ces objectifs stratégiques visent à accroître la confiance dans la place financière suisse, à garantir une gouvernance solide des institutions et à faire face aux risques financiers et opérationnels.

On 22 November 2024, the Financial Conduct Authority (FCA) published a Final Guidance FG24/6 for firms that enables a risk-based approach to payments.

On 30 October 2024, the Payment Services (Amendment) Regulations 2024 came into force (Amendment Regulations). They enable Payment Service Providers (PSPs) to slow down the processing of outbound Authorised Push Payment (APP) transactions where they have reasonable grounds to suspect fraud or dishonesty on the part of someone other than the payer (‘reasonable grounds to suspect’). These changes extended the maximum time that payments could be delayed, giving PSPs more time to investigate suspicious payments.

The policy aims to support efforts to tackle APP fraud, where victims are tricked into sending money to fraudsters. The Amendment Regulations were introduced to support the Payment Systems Regulator’s APP fraud reimbursement requirement which came into force on 7 October 2024. The Amendment Regulations enable PSPs to delay payments by up to 4 business days for the purpose of investigating transactions where the ‘reasonable grounds to suspect’ threshold is met. The aim of the revised regulations is to give PSPs the flexibility to prevent APP fraud more effectively while minimising the impact on legitimate payments.To support these regulations, HM Treasury (HMT) asked the FCA to issue guidance to explain how the FCA expects PSPs to apply these legislative changes, taking into account industry feedback.

In GC24/5, the FCA consulted on adding this guidance to ‘Payment Services and Electronic Money – Our Approach’ (Approach Document) together with guidance on delaying inbound payments where a PSP suspects fraud. Our finalised guidance provides detail on:

• requirements for delaying outbound payments and determining whether the threshold for ‘reasonable grounds to suspect’ has been met: the guidance explains PSPs require an objective factual foundation for this threshold to be met. It sets out what PSPs should consider when assessing whether the threshold has been met.
• how PSPs should use the payment delay window: the purpose of the delay is to provide an opportunity for PSPs to contact the payer or other relevant third parties (for example, law enforcement) to establish whether to execute the payment order. The delay should last no longer than is necessary for this purpose and can last no longer than 4 business days.
• delaying suspicious inbound payments: following industry requests, the FCA has set out its views on when the force majeure provisions in the Payment Services Regulations 2017 (PSRs 2017) apply to financial crime legislation. HMT did not amend these provisions. The force majeure provisions provide that where a PSP must breach the execution timescales in the PSRs 2017 (for example, by delaying making incoming funds available to a payee) to comply with other laws (including financial crime laws), the PSP will not be liable for the breach of the PSRs 2017.

In addition, the FCA has updated its Approach Document from 22 November 2024 which sets out its final guidance.

On 21 November 2024, the Bank of England (BoE) published survey results on artificial intelligence (AI) in UK financial services.

Use and adoption:

• 75% of firms are already using AI, with a further 10% planning to use AI over the next three years. This is higher than the figures in the 2022 joint BoE and Financial Conduct Authority (FCA) Machine learning in UK financial services, of 58% and 14% respectively.
• Foundation models form 17% of all AI use cases supporting anecdotal evidence for the rapid adoption of this complex type of machine learning.

Third-party exposure:

• A third of all AI use cases are third-party implementations. This is greater than the 17% we found in the 2022 survey and supports the view that third-party exposure will continue to increase as the complexity of models increases and outsourcing costs decrease.
• The top three third-party providers account for 73%, 44%, and 33% of all reported cloud, model, and data providers respectively.

Automated decision-making:

• Respondents report that 55% of all AI use cases have some degree of automated decision-making with 24% of those being semi-autonomous ie while they can make a range of decisions on their own, they are designed to involve human oversight for critical or ambiguous decisions.
• Only 2% of use cases have fully autonomous decision-making.

Materiality

• 62% of all AI use cases are rated low materiality by the firms that use them with 16% rated high materiality. 

Understanding of AI systems:

• 46% of respondent firms reported having only ‘partial understanding’ of the AI technologies they use versus 34% of firms that said they have ‘complete understanding’. This is largely due to the use of third-party models where respondent firms noted a lack of complete understanding compared to models developed internally.

Benefits and risks of AI:

• The highest perceived current benefits are in data and analytical insights, anti-money laundering (AML) and combating fraud, and cybersecurity. The areas with the largest expected increase in benefits over the next three years are operational efficiency, productivity, and cost base. These findings are broadly in line with the findings from the 2022 survey.
• Of the top five perceived current risks, four are related to data: data privacy and protection, data quality, data security, and data bias and representativeness.
• The risks that are expected to increase the most over the next three years are third-party dependencies, model complexity, and embedded or ‘hidden’ models.
• The increase in the average perceived benefit over the next three years (21%) is greater than the increase in the average perceived risk (9%).
• Cybersecurity is rated as the highest perceived systemic risk both currently and in three years. The largest increase in systemic risk over that period is expected to be from critical third-party dependencies.

Constraints:

• The largest perceived regulatory constraint to the use of AI is data protection and privacy followed by resilience, cybersecurity and third-party rules and the FCA’s Consumer Duty.
• The largest perceived non-regulatory constraint is safety, security and robustness of AI models, followed by insufficient talent and access to skills.

Governance and accountability:

• 84% of firms reported having an accountable person for their AI framework. Firms use a combination of different governance frameworks, controls and/or processes specific to AI use cases – over half of firms reported having nine or more such governance components.
• While 72% of firms said that their executive leadership were accountable for AI use cases, accountability is often split with most firms reporting three or more accountable persons or bodies.

On 12 November 2024, the Bank of England (BoE) published the policy statement PS16/24 (PRA policy statement 16/24, FCA policy statement 24/16) and the supervisory statement SS6/24 on the operational resilience, critical third parties to the UK financial sector.

This policy statement (PS) is issued jointly by the BoE, Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) (collectively ‘the regulators’). It provides feedback to responses the regulators received to consultation paper (CP) 26/23 – Operational resilience: Critical third parties to the UK financial sector. It also contains the regulators’ final policy, as follows:

• The regulators’ final rules for critical third parties (CTPs), which are set out in the following rule instruments:
  Bank of England FMI Rulebook: Critical third parties Instrument 2024 (Appendix 2);
  Bank of England FMI Rulebook: Critical third parties Emergency Provisions Instrument 2024 (Appendix 2a);
  PRA Rulebook: Critical third parties Instrument 2024 (Appendix 3);
  FCA Handbook: Critical third parties Instrument 2024 (Appendix 4); and
  FCA Handbook: Critical Third Parties Statement of Policy relating to Disciplinary Measures Instrument 2024 (Appendix 9)
• The regulators’ joint final supervisory statement (SS) 6/24 – Operational resilience: Critical third parties to the UK financial sector (Appendix 5);
• The Bank/PRA’s final SS 7/24 – Reports by skilled persons: Critical third parties (Appendix 6). The FCA’s equivalent guidance on skilled persons reviews is in the FCA Handbook: Critical third parties Instrument 2024 (Appendix 4);
• The regulators’ approach to the oversight of Critical third parties (‘CTP approach document’) (Appendix 7); and
• The Bank of England’s approach to enforcement: proposed changes to statements of policy and procedure following the Financial Services and Markets Act 2023, (Appendix 8) which has also been published separately on the same date as this PS and should be read in conjunction with it, which contains the ‘Bank’s approach to enforcement in respect of critical third parties: statement of policy and procedure’ (CTP Enforcement SoP). The FCA’s equivalent and substantively identical approach to enforcement in respect of CTPs is in The FCA’s Critical Third Parties Statement of Policy relating to Disciplinary Measures Instrument 2024 (Appendix 9).

The overall objective of the final policy in this PS is to manage risks to the stability of, or confidence in, the UK financial system that may arise due to a failure in, or disruption to, the services (either individually or, where more than one service is provided, taken together) that a CTP provides to one or more authorised persons, relevant service providers and/or financial market infrastructure entities. This PS is primarily relevant to CTPs. As set out in s312L of FSMA as amended by the FSMA 2023,  HM Treasury (HMT) may only designate a third party service provider as a CTP if, in its opinion, a failure in, or disruption to, the services that the third party provides to firms could threaten the stability of, or confidence in, the UK financial system. At the time of publication of this PS, HMT had not designated any CTPs. The CTP regime does not impose additional, explicit requirements or expectations on firms, but complements their existing requirements and expectations relating to operational resilience and third party risk management.

The regulators consider that the fact that a third party has been designated as a CTP by HMT does not mean that it is inherently more resilient or better suited to provide one or more services to a given firm than a non-designated third party providing the same or similar services. Once HMT designates a third party as a CTP, firms and (where applicable) their groups, will remain accountable and responsible for managing the risks in any outsourcing or third party arrangements they have, or may enter into, with that CTP (notwithstanding that some features of the CTP regime, such as the information-sharing requirements on CTPs, may assist firms in managing these risks).

The regulators received 62 responses to CP26/23 from third party service providers, firms, FMIs, trade associations representing the financial services and technology sectors, consultancy firms and law firms. Respondents generally supported the Overall Objective and the regulators’ proposed approach. However, they requested changes and clarifications to various aspects of the proposals, which Chapter 2 of this PS examines in detail. Feedback from third party service providers and firms often diverged, which is in itself significant as it provided a broad spectrum of views. The former were keen to minimise the potential compliance costs of the proposed CTP oversight regime by encouraging the regulators to rely as much as possible on CTPs’ existing assurance mechanisms, recognised industry certifications, internal processes and testing etc. The latter wanted greater accountability and information-sharing from the CTPs they receive services from.

While the regulators do not consider that the changes in the final rules are significant, in response to feedback to CP26/23 the regulators have made the following changes of note:

• provided additional guidance in the CTP approach document on their approach to identifying potential CTPs and recommending them for designation to HMT;
• added a new section to SS6/24 explaining how the disruption or failure of a CTP’s services to firms could impact the stability of, or confidence in, the UK financial system. The new section builds on the analysis in the Macroprudential approach to operational resilience published by the Bank’s Financial Policy Committee (FPC);
• added, amended, clarified and/or deleted several key defined terms in their rules and SS6/24, including but not limited to renaming ‘material services’ ‘systemic third party services’ to better reflect the systemic risk posed by the potential disruption or failure of these services; 
• recognised the ‘shared responsibility model’ in SS6/24 (defined in section 2 of SS6/24) while explaining its limitations when it comes to managing systemic risk;
• limited the scope of CTP Fundamental Rules 1-5 to a CTP’s provision of ‘systemic third party services’ to firms. CTP Fundamental Rule 6 will continue to apply in relation to all the services that a CTP provides to firms;
• clarified in SS6/24, including through non-exhaustive examples, how a CTP should interpret and comply with certain requirements in the CTP Fundamental Rules, such as ‘acting in a prudent manner’, and ‘disclosing to the regulator appropriately anything relating to the CTP of which they would reasonably expect notice’;
• amended and clarified various aspects of the CTP Operational Risk and Resilience Requirements in the rules and SS6/24, including but not limited to: making ‘Requirement 3: Dependency and supply chain risk management’ more proportionate including by limiting the most onerous requirements it imposes on a CTP to its ‘Key Nth Party providers’ ( ie persons that are part of a critical third party’s supply chain and are essential to the delivery of a systemic third party service to one or more firms) and ‘Persons Connected to a CTP’, while continuing to ensure that CTPs adequately consider all risk to their supply chain;
  amended and clarified aspects of ‘Requirement 7: Incident Management’.
• amended the requirements on assurance, information-sharing and self-assessment for CTPs to:
  Distinguish: the self-assessment that a CTP must provide to the regulators within three months of designation (renamed ‘interim self-assessment’); from the self-assessment that it must provide to the regulators and the firms it provides systemic third party services to annually thereafter (‘annual self-assessment’);
• clarified in SS6/24 the regulators’ expectations of how CTPs should comply with the requirements on: scenario-testing; and incident management playbook exercises (as renamed)’
• amended the incident notification (renamed ‘incident reporting’) requirements for CTPs, including by: reviewing the proposed definition of a ‘relevant incident’ (renamed ‘CTP operational incident’); and clarifying and streamlining the information that CTPs will be required to provide in their initial, intermediate and final incident reports;
• replaced the proposed requirement to nominate a UK legal person for a CTP without a UK establishment, with a simpler requirement for all CTPs to provide an address for service in the UK.

The regulators view these changes as beneficial because they make the requirements for CTPs in their final rules, and the accompanying expectations in SS6/24:

• clearer and easier for CTPs to interpret, understand and implement;
• more consistent with the Overall Objective; and
• more proportionate, resource-efficient, and risk-based.

The final rules for CTPs will take effect from 1 January 2025. However, the statutory obligations of a CTP under FSMA, the requirements in the regulators’ rules and the expectations in the SS6/24 and other documents listed in this PS, will only apply to a CTP on the date the designation order made by HMT comes into force. In addition, compliance with certain requirements in the regulators’ rules will be subject to a transitional period that will also start from the date specified by HMT in the designation order.

The following requirements for a CTP in the regulators’ rules are subject to transitional arrangements:

• to submit its initial self-assessment to the regulators, which it must do within three months of the date on which designation takes effect;
• to have completed its initial mapping within twelve months of the date specified by HM Treasury in the designation order;
• to carry out its first round of scenario testing, which the CTP should do within twelve months of the date specified by HM Treasury in the designation order. This includes amending or enhancing existing scenario-testing programmes to meet the regulators requirements;
• to maintain and operate an incident management playbook within twelve months of the date specified by HM Treasury in the designation order. This includes updating and enhancing the CTP’s existing incident management playbook where applicable; and
• to carry out its first incident management playbook exercise, which it must do no later than 12 months from the date specified by HM Treasury in the designation order.

The SS sets out the regulators’ expectations of how a critical third party (CTP) should comply with the duties and obligations placed on it by or under the Financial Services and Markets Act 2000 (FSMA) as amended by the Financial Services and Markets Act 2023 (FSMA 2023), including the requirements in the regulators’ rules (collectively referred to as the ‘CTP duties’). The overall objective of the oversight regime for CTPs is to manage risks to the stability of, or confidence in, the UK financial system that may arise due to a failure in, or disruption to, the services (either individually or, where more than one service is provided, taken together) that a CTP provides to ‘firms’. A CTP should interpret the CTP duties and the accompanying expectations in this SS in light of the Overall Objective.

On 21 November 2024, the United Kingdom published the Securitisation (Amendment) (No. 2) Regulations 2024.

Regulation 12(3) of the Securitisation Regulations 2024 (S.I. 2024/102) (Securitisation Regulations) defines a qualifying EU securitisation which may use the STS (simple, transparent and standardised) designation in the UK. Regulation 12(3)(b) of the Securitisation Regulations requires applicable securitisations to be notified to the European Securities and Markets Authority before the relevant time, stated in regulation 12(5) to be 11 p.m. on 31 December 2024. These Regulations amend regulation 12(5) of the Securitisation Regulations to extend this deadline to 11 p.m. on 30 June 2026.

The Regulations came into force on 22 November 2024.

On 21 November 2024, the United Kingdom published the Consumer Composite Investments (Designated Activities) Regulations 2024.

These Regulations designate activities in relation to consumer composite investments (CCIs) for the purposes of the Financial Services and Markets Act 2000 (c. 8) (FSMA 2000) (Part 5A of FSMA 2000), replacing assimilated law revoked by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023 (c. 29) relating to packaged retail and insurance-based investment products (PRIIPs). The legislation being replaced (PRIIPs legislation) includes:

• the Packaged Retail and Insurance-based Investment Products Regulations 2017;
• Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs Regulation);
• Commission Delegated Regulation (EU) 2016/1904 of 14 July 2016 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council with regard to product intervention;
• Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs) by laying down regulatory technical standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents.

CCIs, formerly PRIIPs, are investments and contracts of insurance (or any interest in an investment or contract of insurance) where the value or amount payable to the investor goes up or down because of exposure to reference values, which track the performance of a group of assets, or to the performance of one or more assets which are not directly purchased by the investor. The activities designated by these Regulations are manufacturing CCIs made available to retail investors located in the United Kingdom, advising retail investors located in the United Kingdom, or their agent, on CCIs and offering or selling CCIs to retail investors located in the United Kingdom (CCI activities). The Regulations define CCIs (as above) and specify products which are excluded from this definition for the purposes of these Regulations. They also establish a temporary exclusion from designated activity rules made by the Financial Conduct Authority (FCA) under section 71N of FSMA 2000 by virtue of regulation 6 (CCI rules) for operators of UK and EEA undertakings for collective investment in transferable securities (UCITS) and non-UCITS retail schemes. The Regulations enable the FCA to make CCI rules and give directions in relation to the carrying on of CCI activities. They include the powers to make temporary CCI rules in certain circumstances. The Regulations apply and modify sections 138M to 138O of FSMA 2000 to establish the procedure for making temporary CCI rules, including exemptions from certain consultation requirements and a requirement for the FCA to issue a statement of its policy with respect to the making of temporary CCI rules. The Regulations establish civil liability for breaches of CCI rules. The Regulations also apply section 384 of FSMA 2000 to contraventions of requirements imposed by CCI rules to empower the FCA to require restitution.The Regulations remove the exemptions for persons advising on or selling PRIIPs from the financial promotion restriction (section 21(1) of FSMA 2000) and the scheme promotion restriction (section 238(1) of FSMA 2000) when providing the key information document, which contains information required by PRIIPs legislation, in accordance with Article 13 of the PRIIPs Regulation. This means that the provision of information required by CCI rules may constitute a financial promotion or scheme promotion. The Regulations also make consequential amendments relating to the coming into force of these Regulations and the revocation of PRIIPs legislation, as well as transitional provision.

The following provisions come into force on the day after that on which these Regulations are made:

• Part 1,
• Part 2 (designated activities and FCA powers), and
• the remaining provisions, for the purposes only of enabling the FCA to: (i)make rules,(ii)give directions or guidance, or (iii)issue statements of policy.

So far as not already in force by virtue of paragraph above, these Regulations come into force on the day on which the revocation of the PRIIPs Regulation by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023 comes into force (main commencement day).

On 1 November 2024, the Financial Conduct Authority (FCA) published its Handbook Notice 123.

This Handbook Notice describes the changes to the FCA Handbook and other material made by the FCA Board under their legislative and other statutory powers on 29 and 31 October 2024. The instruments that were approved are:

• Technical Standards (Bilateral Margining) (Amendment) Instrument 2024:
  Following consultation in PRA CP6/24, the FCA Board has made changes to the technical standard: Commission Delegated Regulation (EU) 2016/2251 - Article 30a. In summary, this instrument makes consequential amendments to BTS 2016/2251 to reflect the expected changes to Article 4 and 11 of UK EMIR made in the Securitisation (Amendment) Regulations 2024. This instrument came into force on 1 November 2024.
• Technical Standards (Credit Rating Agencies Regulation) (Amendment) Instrument 2024:
  Following consultation in CP24/11, the FCA Board has made changes to the technical standard: Commission Delegated Regulation (EU) 2015/2 (BTS 2015/2) - Article 5. In summary, this instrument makes a consequential amendment to the UK on-shored version of BTS 2015/2, the regulatory technical standards for the presentation of the information that credit rating agencies make available to the FCA. Specifically, the amendment will update the cross-reference to the definition of ‘securitisation’ to reflect the definition in the Securitisation Regulations 2024. Since the definition of securitisation is equivalent, the amendment will not result in a change for firms in practice. This instrument came into force on 1 November 2024.
• Handbook Administration (No 71) Instrument 2024:
  The FCA Board has made minor changes to the Supervision manual (SUP) and the Dispute Resolution: Complaints (DISP) sourcebook in the FCA Handbook. These changes were not consulted on separately because they are minor amendments which correct or clarify existing provisions that have previously been consulted on. None of these changes represent any change in FCA policy or practice. In summary, the amendments this month: correct an error in SUP 16 Annex 48AR; and correct DISP App 4.4.2R to provide clarity. This instrument came into force on 1 November 2024.

On 15 November 2024, the Financial Conduct Authority (FCA) published a statement on the Chancellor’s Mansion House speech.

In response to the Mansion House speech, the FCA has published updates on specific issues raised in the speech:

• Environmental, social and governance (ESG) ratings
  The FCA welcomes the Government’s publication of their consultation response and the draft legislation on bringing environmental, social and governance (ESG) ratings providers into regulation. This is widely supported by industry. As financial services firms integrate ESG into their activities and expand their products in this space, they are increasingly reliant on third party ESG data and ratings services. The FCA has previously said the FCA supports bringing ESG ratings providers into regulation, to improve transparency and trust in the market. The FCA will continue to work closely with the Government on their next steps as they welcome technical comments on their draft legislation. Once the legislation is finalised by the Government next year, the FCA intend to consult on proposals for the future regulatory regime in 2025. As the FCA develops the future regulatory regime, the will engage widely to inform its approach. This will include all types of ESG ratings providers and users. The FCA supports a level playing field between all firms providing ESG ratings. The FCA will continue engaging with other international authorities, including the EU, to support regulatory alignment.
• Advice Guidance Boundary Review
  The FCA has set out the next steps in its work on closing the advice gap, following feedback on its Discussion Paper (DP23/5). The FCA wants people to be able to make informed decisions about their finances with confidence – and for people to have access to the help, guidance and advice to do so. The FCA wants to support a healthy investment culture, where people have the confidence to invest as well as to save. This will not only benefit consumers but will also provide capital to drive the economy and boost growth. The FCA will first focus on pensions. Consumers increasingly rely on defined contribution (DC) pension savings and must make complex decisions in relation to these, including how to access their pension savings. This is one of the most important financial decisions they will make. In December 2024, the FCA will consult on high-level proposals for targeted support in pensions, which would allow firms the FCA regulate to provide support to pension savers in a new way. Building on its pensions work, in H1 2025, the FCA plans to consult on rules for better support for consumers in retail investments and pensions. On 15 November, the FCA also published a statement with The Pensions Regulator and the Information Commissioner’s Office, giving firms greater clarity on communications they can make to help pensions and retail investments customers.
• National payment strategy
  The FCA shares the vision of an innovative, safe and competitive payments sector, embracing technological change to better serve people and business. The changes announced today will help ensure better coordination and clearer regulatory responsibilities. The FCA will continue to work closely with the Payment Systems Regulator (PSR), the Bank of England and the government to deliver the vision the FCA shares. The FCA looks forward to building on the work the FCA has done in close partnership with the PSR so Open Banking can deliver benefits for consumers and industry. 
• Modernising the redress system
  The FCA and Financial Ombudsman Service have published a joint call for input to seek views on how to modernise the redress system, so it better serves consumers and provides greater stability for firms to invest and innovate. The organisations will also improve how they work together, and with industry and consumer groups through the Wider Implications Framework, to prevent the escalation of issues that can result in mass complaints and create significant redress liabilities for firms. This follows the Chancellor’s calls for greater cooperation between the organisations to give firms a more predictable regulatory environment that supports UK growth and international competitiveness. The FCA will work quickly with the Government, industry, consumer groups and other interested parties as the FCA delivers this important work. Recognising the vital role the FCA plays in enabling new firms to get off the ground, the FCA has improved its authorisation process with 98% of cases now assessed within statutory deadlines, up from 78.9% in Q1 of 2022/23. Its innovation services, such as sandboxes, support firms to test drive and refine their innovative new products while its early and high growth oversight programme helps new firms meet standards so they can grow. And the FCA has been seeking views on how the FCA seizes the opportunity of the Consumer Duty to streamline its rulebook, so the FCA can lower costs for businesses and support the competitiveness and growth of the economy.

On 6 November 2024, the UK Government published a Guidance on Offence of 'failure to prevent fraud'.

Introduced last year as part of the Economic Crime and Corporate Transparency Act (ECCT), the offence is intended to hold large organisations to account if they profit from fraud. Under the offence, which has cross-Parliament support, large organisations may be held criminally liable where an employee, agent, subsidiary, or other “associated person”, commits a fraud intending to benefit the organisation. Examples may include dishonest sales practices, the hiding of important information from consumers or investors, or dishonest practices in financial markets.  

In the event of prosecution, an organisation would have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time that the fraud was committed. The offence is intended to encourage organisations to build an anti-fraud culture, in the same way that failure to prevent bribery legislation has helped reshape corporate culture since its introduction in 2010. The guidance has been developed with input from the Crown Prosecution Service (CPS), Serious Fraud Office (SFO), HM Treasury, HMRC, Ministry of Justice, Cabinet Office, Attorney General’s Office and Financial Conduct Authority (FCA). 

Failure to prevent fraud will come into force on 1 September 2025. With fraud being the most common crime type in the UK, amounting to around 40% of all crime in England and Wales, these new measures are part of a wider government ambition to reduce fraud and protect potential victims, including business victims.  

This guidance sets out procedures that relevant bodies can put in place to prevent persons associated with them from committing fraud offences. In line with the requirements of section 204, the Home Office has consulted the Scottish 

Government and Department of Justice in Northern Ireland on the content of this guidance. This document provides an overview of the offence, illustrated by some theoretical examples in different contexts. It describes the general principles for organisations in developing or enhancing procedures to prevent fraud. When a court is considering a case, adherence to these principles will be taken into account. Each section includes examples of good practice, but, given the large range of organisations subject to the offence, the guidance cannot be prescriptive about all possible scenarios.

On 5 November 2024, the Financial Conduct Authority (FCA) published a Consultation Paper CP24/21 on investment research payment optionality for fund managers.

Investment research plays a crucial role in providing analysis and forecasts to potential and existing investors. Historically, brokerage firms typically ‘bundled’ research costs with execution commissions (i.e. the cost charged to clients to trade in shares). The MiFID II introduced requirements to separate charges for execution and research, thereby ‘unbundling’ these two services. Firms were required to either pay for research themselves from their own resources (P&L model) or agree a separate research payment accounts with their clients (RPA model). In July 2023, the UK Investment Research Review (IRR) set out a series of recommendations to improve the investment research market, including allowing additional optionality for paying for investment research. As a result, the FCA consulted on and implemented rules to enable a joint payment option for firms if they could meet a set of guardrails.

In July 2024, the FCA published Policy Statement ‘Payment optionality for investment research’ (PS24/9) finalising rules for a new option of paying for investment research. The new rules enabled MiFID investment firms who wish to buy research for their segregated mandates to use joint payments for third-party research and execution services, provided firms meet certain requirements. The new option exists alongside those already available, such as payment from an asset manager’s own resources, and payment from a dedicated research payment account, thereby allowing firms additional flexibility.

The FCA's proposals will apply to: 

• UCITS management companies. 
• Full scope UK Alternative Investment Fund Managers (AIFMs). 
• Small authorised UK AIFMs and residual collective investment scheme operators.  
• An investment platform provider.

The IRR concluded existing investment research payment options can be operationally complex particularly for firms who currently purchase research through RPAs. The IRR found that although asset managers are largely getting the research they need, the current regime that determines how research can be paid for is operationally complex and could impede UK asset managers’ ability to purchase investment research produced outside of the UK (most notably in the US).

This CP sets out proposals to take forward the recommendations of the IRR and feedback to the consultation paper on payment optionality for investment research (CP24/7), allowing pooled vehicles to adopt the new payment option, subject to certain guardrails, so pooled vehicles are treated consistently with segregated mandates.

Where fund managers of authorised retail funds decide to take up joint payments, the increase of existing payments from funds to fund managers would be a ‘significant change’ within the FCA's rules, requiring fund managers to give unitholders written notice of at least 60 days before adopting the new payment option. Any significant change to an authorised fund will require FCA approval through the usual process.

Mirroring the requirements for MiFID firms set out in PS 24/9, fund managers who take up the joint payment option will be required to meet several requirements of:

• Having a written policy on the a
• Assessing the price and value of research periodically.pproach of joint payments. 
• Establishing a research budget based on the expected amount of third-party research.
• Having a cost allocation structure among research providers. 
• Allocating the cost of research fairly for the funds they manage. 
• Being responsible for the operation and administration of research payment accounts.
• Providing investors with appropriate disclosure of joint payments.

The consultation lasts until 16 December 2024.

On 25 November 2024, the United Kingdom published the Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024.

These Regulations make amendments to the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (CIS EU Exit Regulations) (S.I. 2019/325), regarding temporary recognition for the purpose of Part 17 of the Financial Services and Markets Act (FSMA) 2000 (c. 8). These Regulations also amend the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (CCP Regulations).

Regulation 2(2) inserts a definition for a money market fund (MMF) into regulation 61 of the CIS EU Exit Regulations, which is relevant for the other amendments made by these regulations.

Regulation 2(3)(a) amends regulation 62(3)(c) of the CIS EU Exit Regulations. Prior to these regulations, regulation 62(3)(c) of the CIS EU Exit Regulations provided that when the FCA directed temporarily recognised funds to apply for recognition under section 272 of FSMA 2000 within a specified time period, a failure to make such an application within that time period would mean that the funds ceased being temporarily recognised. The amendment made by regulation 2(3)(a) ensures that, where applicable, the same effect occurs where the FCA directs temporarily recognised funds to apply for recognition under section 271A of FSMA 2000 within a specified time period. Regulation 2(3)(a) also corrects a defect in regulation 62(3)(c) of the CIS EU Exit Regulations.

Regulation 2(3)(b) amends regulation 62(3)(d) of the CIS EU Exit Regulations, to extend the regime of temporary recognition of funds for the purpose of Part 17 of FSMA 2000, from five to six years.

Regulation 2(4)(a) amends regulation 63(3)(d) of the CIS EU Exit Regulations. Prior to these regulations, regulation 63(3)(d) of the CIS EU Exit Regulations provided that one of the conditions of a new sub-fund being temporarily recognised was that the operator had notified the FCA that it wished the new sub-fund to be so recognised, before the start of the period specified by the FCA for the new sub-fund’s umbrella scheme to apply for recognition under section 272 of FSMA 2000. The effect of the amendment made by regulation 2(4)(a) is to change this condition, by distinguishing between new sub-funds that are MMFs and those that are not. It also ensures that, where applicable, the condition additionally applies where the FCA makes a direction for the purpose of recognition under section 271A of FSMA 2000. The effects of this amendment are subject to the new paragraphs inserted by regulation 2(4)(b) into regulation 63 of the CIS EU Exit Regulations.

Regulation 2(4)(b) inserts two new paragraphs into regulation 63 of the CIS EU Exit Regulations. These new paragraphs qualify the conditions in regulation 63(3)(d) of the CIS EU Exit Regulations, as amended by regulation 2(4)(a). These new paragraphs qualify these amended conditions in circumstances where an umbrella scheme has sub-funds that are all MMFs or that are all not MMFs, at particular points in time.

Regulation 3 removes the first condition under which a central counterparty could cease to be taken to be recognised pursuant to Article 25 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories in accordance with regulation 17 of the CCP Regulations.

The Regulations came into force on 26 November 2024.

On 21 November 2024, the United Kingdom published the Packaged Retail and Insurance-based Investment Products (Retail Disclosure) (Amendment) Regulations 2024.

These Regulations make transitional amendments to assimilated law repealed by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023 (c. 29), subject to commencement, relating to packaged retail and insurance-based investment products. The legislation being amended is:

• Article 2 (products to which the Regulation does not apply) of Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs Regulation), and
• Articles 2 (definitions), 50 (information on costs and associated charges) and 51 (information provided in relation to units in collective investment undertaking or PRIIPs) of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (Commission Delegated Regulation (EU) 2017/565).

Regulation 2 adds closed-ended investment companies that are UK-listed to the list of products excluded from the PRIIPs Regulation and inserts an associated definition. A closed-ended investment company is a public limited company which invests pooled funds in assets seeking to spread investment risk and generate profits for its shareholders. A closed-ended investment company is UK-listed where its shares are admitted to trading on a UK regulated market or a UK multilateral trading facility. Closed-ended investment companies that are UK-listed will no longer be subject to the requirements of the PRIIPs Regulation. Manufacturers, advisors and sellers of shares in a closed-ended investment company that is UK-listed will no longer be required to produce the key information document.

Regulation 3 inserts the definition of a “closed-ended investment company that is UK-listed” into Commission Delegated Regulation (EU) 2017/565. It also excludes costs relating to a closed-ended investment company that is UK-listed from requirements on firms in Commission Delegated Regulation (EU) 2017/565 to aggregate costs disclosed to clients and to provide all other information on costs and charges. Closed-ended investment companies that are UK-listed, and firms investing in them, will no longer be required to aggregate, or otherwise report, the cost of manufacturing or managing shares in closed-ended investment companies that are UK-listed in this way.

The Regulations came into force on 22 November 2024.

On 5 November 2024, the Financial Conduct Authority (FCA) published a policy statement PS24/14 on improving transparency for bond and derivatives markets.

The FCA has established a simpler and more timely post-trade transparency regime based on fewer deferrals for bonds and certain OTC derivatives while ensuring that liquidity providers are sufficiently protected against undue risk. The FCA has specified transparency requirements only for bonds admitted to trading on a trading venue and certain derivatives subject to the clearing obligation.  

The over-the-counter (OTC) trading of non-specified instruments by investment firms will not be subject to public trade reporting. For trading venues, the FCA has set out standards and criteria they should consider when calibrating their transparency requirements. For recognised investment exchanges, the FCA's supervisory approach to transparency will reflect the high standards that apply to them in relation to exchange-traded derivatives such as futures and listed options.

The FCA is removing the requirement to perform transparency calculations which had been used to determine whether an instrument was liquid. The FCA will now rely instead on a set of reliable proxies to determine whether an instrument should be categorised as liquid.

The FCA is discontinuing the use of the Financial Instruments Transparency System (FITRS) for bonds and derivatives, given the new transparency regime does not depend on rigid liquidity calculations based on fixed parameters.

The FCA has updated the definition of an SI from a quantitative to a qualitative definition. The FCA does not expect the new definition will alter which firms are designated as SIs. Existing SIs who have notified us of their status, and who appear on the FCA's register of SIs, will not need to notify us again of their SI status under the new definition.

The changes to the bond and derivatives transparency regime aim to establish a better balance between the needs:

• to support market participants to offer liquidity,
• for better and more timely transparency for the market as a whole.

This PS is relevant to:

• Trading venues which admit to trading, or trade, bonds and derivatives,
• Investment firms dealing in bonds and derivatives,
• UK branches of overseas firms undertaking investment services and activities,
• Systematic internalisers in all types of financial instrument.

Changes to the transparency regime come into force on 1 December 2025.  

Trading venues, investment firms and APAs should:

• familiarise themselves with the rules to ensure they can comply with the relevant requirements,
• assess their current arrangements so they can provide adequate transparency once the rules take effect.

Under transitional provisions:

• Trading venues do not need to apply pre-trade transparency to voice and request-for-quote trading from 31 March 2025,
• SIs in bonds and derivatives do not to need to provide public quotes from 31 March 2025.

The FCA made targeted changes to the proposed approach, following feedback to CP23/32 which closed on 6 March 2024. This includes broadly finalising the rules, with some changes:

• The FCA modified the framework for bonds to have 3, instead of 2, deferral durations. The FCA has also altered the length of, and threshold size for an order to qualify for, those deferrals.
• The FCA refined the grouping criteria for bonds.
• The FCA created longer deferrals for swaps with non-benchmark tenors and lowered the threshold sizes for SONIA (Sterling Overnight Index Average) swaps.
• The FCA removed systems relying on negotiation from the scope of pre-trade transparency, rather than asking requiring trading venues to apply for a waiver from the obligation to provide pre-trade transparency for these systems.
• Firms do not need to report both the Unique Product Identifier (UPI) and International Securities Identification Number (ISIN), but only the UPI where one exists – that is, for OTC derivatives – and an ISIN otherwise.

Given the breadth of changes made through the Financial Services and Markets Act 2023, the FCA is asking discussion paper questions about the future of the SI regime.

The FCA has made changes to:

• reduce instances where transactions that do not contribute to price formation are reported to the public
• improve the content of post-trade reports and the correct identification of derivatives

The FCA will speak to trading venues, investment firms and approved publication arrangements to:

• monitor the implementation of the new rules,
• ensure an orderly implementation of the changes.

The bond consolidated tape will only go live after the changes to the transparency regime take effect. The FCA expects to start the tender to appoint a UK bond consolidated tape provider in December 2024. Firms wishing to take part therefore have some time to familiarise themselves with the new rules. The FCA plans to publish a Consultation Paper on the future of the SI regime in Q2 2025, following responses to the discussion paper. The changes to the substance of the SI regime should take effect alongside the new qualitative approach to determining SIs on 1 December 2025. The FCA will update its Handbook to reflect the finalised transparency regime for bond and derivative markets by 1 December 2025, when the rules in the instrument in the PS are due to come into force.

On 1 November 2024, the Financial Conduct Authority (FCA) published good and poor practices on Sustainability Disclosure Requirements (SDR) and investment labels, pre-contractual disclosure examples.

The SDR and investment labels regime enters into force on 2 December 2024 and firms have been able to use investment labels since 31 July 2024. A key concept of the new regime is that to qualify for a label, specific criteria are required to be met and supported by disclosures. The document contains illustrative examples and approaches across a selection of labels to showcase how applicants can meet these disclosure requirements. Much of practice will be relevant across all investment labels. These examples are based on the FCA’s experience of applications to date and are non-exhaustive but are intended to aid applicants as they prepare their documentation.

The document contains the following tables:

• Table 1 – Sustainability Focus label – good practice.
• Table 2 – Sustainability Focus label – good practice.
• Table 3 – Sustainability Improver label – good practice.