On 24 September 2021, the European Securities and Markets Authority (ESMA) published Final report of the Guidelines on methodology, oversight function and record keeping under the Benchmarks Regulation.

These guidelines apply to the competent authorities designated under Article 40(2) and (3) of the Benchmarks Regulation and administrators as defined in Article 3(1)(6) of the Benchmarks Regulation.

The objectives of these guidelines are to establish consistent, efficient and effective supervisory practices within the European System of Financial Supervision (ESFS) and to ensure the common, uniform and consistent application of the requirements related to material changes to the methodology, the use of an alternative methodology in exceptional circumstances and the oversight function. In particular, these guidelines achieve those objectives by setting out a transparent framework for administrators of critical and significant benchmarks when consulting on material changes to the methodology or using an alternative methodology in exceptional circumstances, together with an adequate oversight function. Furthermore, the guidelines aim at ensuring the common and consistent application of the record-keeping requirements related to the use of an alternative methodology for all benchmark administrators.

On 23 September 2021, European Securities and Markets Authority (ESMA) published a letter to the European Commission supporting a delay of mandatory buy-ins and asking for urgent clarification.

Anneli Tuominen, interim Chair of ESMA, has written an open letter to Commissioner McGuiness, copying representatives from the European Parliament and Council, supporting a postponement of the mandatory buy-in regime and requesting urgent action to provide a signal that a modification of the current implementation timeline is considered. The letter asks for clarification of a delay, ideally, by the end of October 2021.

On 24 September 2021, the European Securities and Markets Authority (ESMA) published the Final Report of the Guidelines on Settlement Fails Reporting under Article 7 of CSDR.

These Guidelines apply to competent authorities designated under Article 11 of CSDR and to CSDs as defined in Article 2(1)(1) of CSDR. 

These Guidelines apply in relation to Article 7(1) of CSDR and Articles 14 and 39 of the RTS on settlement discipline and apply from the date of entry into force of the RTS on settlement discipline.

The objective of these Guidelines is to clarify the scope of the data to be reported by CSDs, the representation and valuation of financial instruments, as well as how to report settlement fails based on the reason (cause) of the settlement fails.

On 7 September 2021, the European Commission (EC) adopted an independently evaluated Green Bond framework, thus taking a step forward towards the issuance of up to €250 billion green bonds, or 30% of NextGenerationEU's total issuance. 

The framework provides investors in these bonds with confidence that the funds mobilised will be allocated to green projects and that the Commission will report on its environmental impact. The Commission will soon proceed with the first green bond issuance in the month of October, subject to market conditions.

This move will:

• Bring a new highly rated and liquid green asset to the market, allowing a wide range of investors access to green investments;
• Enable the European Commission to access a wider range of investors;
• Allow investors to diversify their portfolio of green investments with a highly rated liquid asset, thereby potentially accelerating a virtuous circle of sustainable investments;
• Confirm the European Commission's commitment to sustainable finance;
• Further boost the green bond market and serve as an inspiration to other issuers;
• Strengthen the role of the European Union (EU) and of the euro in the sustainable finance markets.

On 8 September 2021, the Commission Delegated Regulation (EU) 2021/1456 of 2 June 2021 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council by specifying the conditions under which the commercial terms for clearing services for OTC derivatives are to be considered to be fair, reasonable, non-discriminatory and transparent was published in the Official Journal of the European Union (OJ).

This Regulation applies to clearing members and clients which provide clearing services in the Union, whether those services are provided directly or indirectly (‘clearing service providers’), where those services are provided in relation to OTC derivative contracts that are subject to the clearing obligation pursuant to Article 4(1) of Regulation (EU) No 648/2012 (EMIR).

Commercial terms for clearing services agreed before 9 September 2021 shall be reviewed and, where necessary to meet the requirements laid down in the Annex, modified by 9 September 2022.

On 15 September 2021, the European Securities and Markets Authority (ESMA) published the list of third-country markets considered as equivalent to a regulated market under EMIR.

On 16 September 2021, nine industry associations (AFME, AIMA, EAPB, EBF, EFAMA, FIA, ICI Global, ISDA, SIFMA AMG) – representing the broadest group of market participants – have written to European Commissioner Mairead McGuinness, respectfully requesting that the European Commission (EC) extend the EC equivalence decision for UK CCPs.

This equivalence decision is set to expire on 30 June 2022, although the associations request the EC to provide clarity as soon as possible and well in advance of March 2022 in order to prevent negative financial, commercial, operational and level playing field effects on EU counterparties and clearing members and to enable continued access to global pools of liquidity after 30 June 2022.

On 30 September 2021, the European Securities and Markets Authority (ESMA) updated its Q&As on EMIR implementation.

The updates concern following aspects:

• Reporting valuations: it is not required for the counterparties to send valuation update on the last day of a derivative and for intraday derivatives (i.e. derivatives that are concluded and terminated on the same day)
• LEI changes due to mergers and acquisitions. Update of identification code to LEI: TR(s) should inform the relevant reporting counterparties, report submitting entities, entities responsible for reporting (to the extent that they are participants to the TR) as well as third parties which have been granted access to information under Article 78(7) of Regulation (EU) No 648/2012, as applicable, involved in the derivatives contracts concerned by the LEI change.

On 27 September 2021, the European Securities and Markets Authority (ESMA) published its 2022 Annual Work Programme (AWP), setting out its priority work areas for the next 12 months to deliver on its mission to enhance investor protection and promote stable and orderly financial markets.

ESMA will focus on its objectives of enhancing investor protection and promoting stable and orderly financial markets through the following workstreams:

1. Cross-Cutting Themes – ESMA will focus on contributing to the EU’s priorities including:

• Capital Markets Union – Contribute to developments in the regulatory and supervisory framework supporting the development of European capital markets, notably through its work on the European single access point (ESAP), on the retail investment strategy, and EC initiatives to facilitate SMEs access to public markets;
• Sustainable finance – develop rules on environmental, social and governance (ESG) disclosures and risk identification methodology for ESG factors, contribute to the work on non-financial reporting, and work with national authorities to prevent the risk of greenwashing; and
• Innovation and digitalisation – contribute to the implementation of the Digital Operational Resilience Act (DORA), the Markets in Crypto Assets Regulation (MiCA) and the regulation on a pilot regime for market infrastructures based on distributed ledger technology, further our understanding of the impact of financial innovation on capital markets and foster a co-ordinated approach, and work with NCAs and market participants to counter cyberthreats and other operational risks.

2. Supervisory Convergence – priorities include contributing to a risk-based, consistent and coordinated approach to supervision in the EU, focused on assessing the results of Union Strategic Supervisory Priorities and reviewing its supervisory convergence toolkit.   

3. Risk Assessment – strengthen its risk identification work and co-operation with NCAs and EU and international public authorities, support stress-testing for risk identification and supervisory responses to financial stability risks. 

4. Single Rulebook – priority areas include contributing to the reviews of the Prospectus and Transparency Directives, MiFID II/MiFIR, PRIIPS, the Short Selling Regulation, and CSDR, as well as maintaining a high degree of transparency when developing regulatory provisions. 

5. Direct Supervision – ESMA will continue to prioritise the areas where it has been entrusted with supervisory responsibilities notably for Credit Rating Agencies and Securitisation and Trade Repositories. 

On 3 September 2021, the European Securities and Markets Authority (ESMA) updated the list of AIFMD MoUs signed by the EU authorities.

On 30 September 2021, the European Securities and Markets Authority (ESMA) updated its Q&As on MiFID II and MiFIR transparency topics.

1. Equity transparency

• CDR 2017/567 provides that the determination of a liquid market for an equity or equity-like instrument should initially be based on estimates during the first six weeks of trading commencing on the first trading day following the first admission of a share to trading on a regulated market or an MTF. After that and, until the application of the annual transparency calculations, the determination of a liquid market for an equity or equity-like instrument should be based on calculations related to the first 4-weeks of trading. The same timeline applies to the application of the LIS and SMS transparency parameters. 
• For this purpose, the first trading day used to determine the period of application of estimates, first 4-weeks of trading calculations and annual calculations should be the earliest “Date of admission to trading or date of first trade” (Field 11 of RTS 23) reported across the different trading venues (MICs) on which the instrument is admitted to trading or first traded as published in the Financial Instruments Reference Data System (FIRDS)

2. Non-equity transparency: How Field 25 in Table 2 of Annex IV of RTS 2, the “IR Term of contract”, should be populated

• Field 25 in Table 2 of Annex IV of RTS 2, the “IR Term of contract”, should be populated with the term of the underlying interest rate, expressed in days, weeks, months or years. The population of term for field 25 is limited to integers and can be populated using different time units. In general, the less granular time unit should be used.
• However, in the latter case, where it is not possible to populate field 25 with the correct number of days due to the restriction of a maximum of 999 days, the term should be calculated with the next time unit (i.e. weeks) using a standard week of 7 days. If this still exceeds the maximum number of weeks to populate (i.e. 999 weeks) then the term should be calculated in the next time unit (i.e. months) using a standard 30-day month method. 
• In both cases the remainder should then be rounded up or down based on the following methodology: (i) if the term is calculated in weeks, the remainder should be rounded up if >= to 4 days (otherwise rounded down) and (ii) if the term is calculated in months, the remainder should be rounded up if >= to 15 days (otherwise rounded down). By way of example, a contract has a term of 19 years 11 months and 6 days = 19*12 + 11 months with remainder of 6 days, which should be rounded down. Therefore, the term to be populated in field 25 is 239 months.

On 7 September 2021, the European Commission (EC) adopted Commission Delegated Regulation (EU) amending the RTS as regards the underpinning methodology and presentation of performance scenarios, the presentation of costs and the methodology for the calculation of summary cost indicators, the presentation and content of information on past performance and the presentation of costs by PRIIPs offering a range of options for investment and alignment of the transitional arrangement for PRIIP manufacturers offering units of funds as underlying investment options with the prolonged transitional arrangement.

This delegated regulation:

(1) amends Delegated Regulation (EU) 2017/653 on regulatory technical standards by setting out, in particular: 

• new methodologies underpinning the calculation of appropriate performance scenarios and a revised presentation of these scenarios, to ensure that retail investors do not have inappropriate expectations about the potential return on investment they may receive;
• revised summary cost indicators and changes to the content and presentation of information on the costs of PRIIPs to help retail investors better understand the different types of cost structures, as well as to facilitate the use of this information by persons selling or advising about PRIIPs;
• a modified methodology underpinning the calculation of transaction costs to address practical challenges that have arisen when applying the existing rules and issues regarding the application to certain types of underlying investments;
• modified rules for PRIIPs that offer a range of options for investment to ensure more clarity of the information on their cost implications.

(2) lays down RTS for information on past performance, which is to be provided by certain types of UCITS, retail AIFs, and insurance-based investment products.

On 9 September 2021, the European fund and Asset Management Association (EFAMA) published EFAMA and several other financial industry associations, raised concerns in response to a consultation conducted by the European Commission on planned changes to the Packaged Retail and Insurance-based Investment Products (PRIIPs) framework. 

The unexpected delay to the adoption of the revised PRIIPs RTS cuts the implementation period for the industry by more than two months. This leaves PRIIPs manufacturers and distributors with a too short period instead of the original timeframe of 12 months to implement the new rules.

The currently proposed implementation period is too short, especially for new rules that relate to communication with investors and potential investors. It will be important, if we are to achieve the desired outcomes of better trust and understanding among investors and potential investors, to ensure that manufacturers have adequate time to adapt to these changes. This will avoid the need for them to make subsequent adjustments, which would only cause more confusion and would be to the detriment of consumers and Europe’s wider economy.

To ensure an orderly implementation, the financial sector associations called for a 12-month implementation period beginning after the adoption of the RTS by the College of Commissioners, as this is the minimum time needed for all products and all market participants. A reasonable, synchronised application date for both the Level 1 and Level 2 amendments will be key. 

Here are three Commission Delegated Regulation concerning the Prudential Requirements for Investment Firms  Directive & Regulation (IFD / IFR) published on 24 September 2021.

1. Draft Commission Delegated Regulation (EU) supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of that Regulation

All activity carried out by an investment firm should be captured by K-factors in order to adequately reflect the risks. Taking into account that a tied agent is a natural or legal person who acts only on behalf of a certain investment firm and under the full and unconditional responsibility of that investment firm, there is a need to ensure that any activity of a tied agent is included in AUM, ASA, CMH and COH K-factors of an investment firm.

The draft RTS specify the methods for measuring the K-factors to the extent that these are not fully detailed in the Regulation. In particular, they specify the methods for measuring Risk-to Client and Risk-to-Firm K-factors, whereas Risk-to-Market K-factors are already detailed enough in the IFR and requires no further specification.

For the purpose of calculation of Risk-to-Client K-factors the following elements have been further specified in the draft RTS.

When investment firms use tied agents, any investment services, activities or ancillary services carried out by tied agents which act on investment firm’s behalf shall be included in the relevant K-factors.

When measuring K-AUM in case of non-discretionary advisory arrangements of an on-going nature, the amounts related to ancillary advisory services shall not be included in the AUM, while amounts of assets that relate to non-discretionary advisory arrangements of an on-going nature to another financial sector entity that undertakes discretionary portfolio management shall be included.

The draft RTS provide further specifications for measuring K-AUM, K-CMH, K-ASA and K-COH including requirements to avoid double counting, specifications for the calculation of orders’ reception, transmission, and execution, distinguishing the cases for cash trades and derivatives.

For the purpose of calculation of Risk-to-Firm K-factors, the draft RTS further specify the methods for measuring DFT K-factors for cash trades and derivatives.

2. European Commission (EC) published the text of Commission Delegated Regulation supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards specifying the notion of segregated accounts to ensure client money’s protection in the event of an investment firm’s failure

As regards the conditions that ensure the protection of client money in the event of failure of an investment firm, the notion of segregated accounts shall mean that: 

(a) records and accounts are kept in a way that enables investment firms at any time and without delay to distinguish funds held for one client from funds held for any other client and from their own funds; 

(b) records and accounts are maintained in a way that ensures their accuracy, and in particular their correspondence to the funds held for clients, and that they may be used as an audit trail; 

(c) reconciliations are conducted on a regular basis between the internal accounts and records of investment firms and those of any third parties by whom those funds are held; 

(d) necessary steps have been taken to ensure that client funds deposited are held in an account or accounts identified separately from any accounts used to hold funds belonging to the investment firm; 

(e) adequate organisational arrangements have been introduced to minimise the risk of the loss or diminution of client funds, or of rights in connection with those funds, as a result of misuse of the funds, fraud, poor administration, inadequate record-keeping or negligence.

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

3. Delegated Regulation supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards specifying the amount of total margin for the calculation of the K-factor “clear margin given” (K-CMG)

The Delegated Act specify the calculation of the amount of the total margin required for the calculation of K-factor ‘clearing margin given’ (K-CMG) on a portfolio basis, and the conditions for the fulfilment of the provisions regarding regulatory arbitrage avoidance. 

• For the purpose of the calculation the amount of the total margin required by the clearing member from the investment firm, the Delegated Act specify that the amount of total margin shall be the required amount of collateral (comprising initial margin, variation margins and other financial or non-financial collateral), in accordance with the clearing member’s margin model. 
• When an investment firm uses multiple clearing members, the Delegated Act prescribe that the K-CMG is measured by calculating on a daily basis the sum of the total margins required by each clearing member over the preceding three months, then determining the third highest amount, and then multiplying the outcome by the 1.3 coefficient prescribed in the Regulation.
• Furthermore, the Delegated Act specify a set of criteria that the competent authority has to assess when determining if the choice of the portfolios for which the K-CMG is used has been made with a view to engaging in regulatory arbitrage.

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

On 30 September 2021, the European Securities and Markets Authority (ESMA) published its opinion on improving access to and use of credit ratings in the European Union.

In the Opinion ESMA, highlights the difficulties experienced by users of credit ratings and recommends that the legislators amend the CRA Regulation or take alternative legislative action to address these.

Credit ratings are published on Credit Rating Agencies’ (CRAs’) websites as well as on the European Rating Platform (ERP). However, the usability of these credit ratings is severely limited as they cannot be accessed in a machine-readable format or downloaded in sufficient numbers to be used for regulatory purposes.

In practice, users mainly access and use credit ratings and related research reports through licences for data feeds and platform services offered by other companies in CRAs’ groups. These companies are not currently subject to regulation and their licencing practices and the high fees charged raise both investor protection and competitiveness concerns.

Users of credit ratings have reported that the terms of the licence agreements they must enter into to use credit ratings are subject to frequent changes and that they often need to enter into additional licences in order to maintain a consistent level of data usage over time. Users also report an inability to negotiate the terms of access to data feeds and a lack of transparency in price increases.

ESMA concludes that legislative changes are needed to improve access to and use of credit ratings and highlights that these could be implemented through changes to the CRA Regulation or through the adoption of alternative legislation.

The Opinion has been prepared by ESMA of its own initiative and submitted to the EU institutions for consideration by the legislators. The Opinion is the culmination of ESMA’s thematic work on Fees Charged by CRAs and Accessibility and Use of Credit Ratings. It draws on the findings of ESMA’s 2018 Thematic Report, 2019 Follow-up Report and 2020 Call for Evidence.

On 29 September 2021, the European Commission published a Draft Commission Delegated Regulation amending the Annex to Regulation (EU) 2019/452 of the European Parliament and of the Council establishing a framework for the screening of foreign direct investments into the Union. 

The regulation provides in Article 1 the definitions of identity data, equal and transliteration. 

Article 4 provides information on the common identity repository and .the logs.

The cases where identity data may be considered as the same are set out in Annex I.

The cases where identity data may be considered as similar are set out in Annex II.

On 27 September 2021, the European Commission published the Draft Commission Delegated Regulation (EU) amending Regulation (EU) No 236/2012 of the European Parliament and of the Council as regards the adjustment of the relevant threshold for the notification of significant net short positions in shares.

A relevant notification threshold is a percentage that equals 0,1 % of the issued share capital of the company concerned and each 0,1 % above that.

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

On 30 September 2021, the European Securities and Markets Authority (ESMA) updated its Q&As on SFTR data reporting.

The updates concern LEI changes due to mergers and acquisitions:

a) Which data fields should be updated in case of corporate restructuring events affecting the LEI?

TR should identify all the outstanding SFTs where the entity is identified with the old identifier in any of the following fields: Reporting counterparty (fields 1.3, 3.4, 4.4), Other counterparty (fields 1.11, 3.6), Entity responsible for the report (fields 1.10, 3.5, 4.5), Report submitting entity ID (fields 1.2, 3.3, 4.3), Beneficiary (field 1.13), Tri-party agent (field 1.14), Broker (field 1.15), Clearing member (field 1.16), Central Securities Depository (CSD) participant or indirect participant (field 1.17), Agent lender (field 1.18), CCP (field 2.7) and LEI of the issuer (fields 2.54 and 2.93), and replace the old identifier with the new LEI.

b) To which entities the information on the LEI update should be broadcasted?

TRs should inform the relevant report submitting entities, entities responsible for reporting (to the extent that they are participants to the TR) as well as third parties which have been granted access to information under Article 78(7) of Regulation (EU) No 648/20124 , as applicable, involved in the SFTs concerned by the LEI change.

On 24 September 2021, the European fund and Asset Management Association (EFAMA) published its position paper on the scope of CSRD and the interplay with SFDR.

In this position paper, the EFAMA outlines the rationale for excluding financial products under the scope of CSRD and for enabling a waiver/cross-reference of asset managers' SFDR disclosures under their entity-level CSRD disclosures;

• With SFDR being the appropriate regime for financial products' sustainability reporting and CSRD for company's reporting, the EFAMA called on the co-legislators to exempt financial products/funds from CSRD.
• The CSRD should ensure that a firms´ separate ESG report would be eligible, instead of requiring all CSRD reporting in the consolidated management report in the annual report.
• The EFAMA also called on the co-legislators to introduce a waiver/cross-reference possibility under asset managers' CSRD disclosures to the extent that they already submit such information under SFDR at the entity level.

On 15 and 23 September 2021, the two Corrigendum to Commission Delegated Regulation (EU) 2021/1255 of 21 April 2021 amending Delegated Regulation (EU) No 231/2013 as  regards the sustainability risks and sustainability factors to be taken into  account by Alternative Investment Fund Managers were published on the European Council website and in the Official Journal.

1. Corrigendum to Commission Delegated Regulation (EU) 2021/1255 of 21 April 2021 amending Delegated Regulation (EU) No 231/2013 as  regards the sustainability risks and sustainability factors to be taken into  account by Alternative Investment Fund Managers

On page 12, in Article 1(2), in the amendment to Article 18 of Delegated Regulation (EU) No 

231/2013 for: '(2) in Article 18, the following paragraphs 5 and 6 are added:

‘5. AIFMs shall take into account sustainability risks when complying with the requirements 

set out in paragraphs 1 to 3.

6. Where AIFMs consider principal adverse impacts of investment decisions on sustainability factors as described in Article 4(1), point (a) of Article 4 of Regulation (EU) 2019/2088, or as required by paragraphs 3 or 4 of Article 4 of that Regulation, those AIFMs shall take into account such principal adverse impacts when complying with the requirements set out in paragraphs 1 to 3 of this Article.’;'

read: '(2) in Article 18, the following paragraphs 5 and 6 are added:

‘5. AIFMs shall take into account sustainability risks when complying with the requirements 

set out in paragraphs 1 to 3.

6. Where AIFMs consider principal adverse impacts of investment decisions on sustainability factors as described in Article 4(1), point (a) of Regulation (EU) 2019/2088, or as required by paragraphs 3 or 4 of Article 4 of that Regulation, those AIFMs shall take into account such principal adverse impacts when complying with the requirements set out in paragraphs 1 to 3 of this Article.’;'

2. Corrigendum to Commission Delegated Regulation (EU) 2021/1255 of 21 April 2021 amending Delegated Regulation (EU) No 231/2013 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers 

for: ‘(2) in Article 18, the following paragraphs 5 and 6 are added: “5. AIFMs shall take into account sustainability risks when complying with the requirements set out in paragraphs 1 to 3. 6. Where AIFMs consider principal adverse impacts of investment decisions on sustainability factors as described in Article 4(1), point (a) of Article 4 of Regulation (EU) 2019/2088, or as required by paragraphs 3 or 4 of Article 4 of that Regulation, those AIFMs shall take into account such principal adverse impacts when complying with the requirements set out in paragraphs 1 to 3 of this Article.”;’, 

read: ‘(2) in Article 18, the following paragraphs 5 and 6 are added: “5. AIFMs shall take into account sustainability risks when complying with the requirements set out in paragraphs 1 to 3. 6. Where AIFMs consider principal adverse impacts of investment decisions on sustainability factors as described in Article 4(1), point (a) of Regulation (EU) 2019/2088, or as required by paragraphs 3 or 4 of Article 4 of that Regulation, those AIFMs shall take into account such principal adverse impacts when complying with the requirements set out in paragraphs 1 to 3 of this Article.”;’.

On 15 September 2021, the Order of 9 September 2021 defining the reference framework for the fight against fraud, money laundering and terrorist financing was published in the Official Journal.

The reference framework for the fight against fraud, money laundering and terrorist financing is defined in the Annex to this Order.

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Le 15 septembre 2021, l'Arrêté du 9 septembre 2021 définissant le cadre de référence pour la lutte contre la fraude et contre le blanchiment de capitaux et le financement du terrorisme a été publié au Journal officiel.

Le cadre de référence de la lutte contre la fraude, le blanchiment de capitaux et le financement du terrorisme est défini en annexe de cet arrêté.

On 22 September 2021, the Autorité des marchés financiers (AMF) published a Decision of 7 September 2021 to modify the operating rules on the CDSClear segment as part of the extension of eligible bond securities as collateral.

The amendments to the Operating Rules of LCH SA as annexed to this decision are approved. They shall enter into force on the date determined by LCH SA.

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Le 22 septembre 2021, l'Autorité des marchés financiers (AMF) a publié la Décision du 7 septembre 2021 de modification des règles de fonctionnement sur le segment CDSClear dans le cadre de l’extension des titres obligataires éligibles au titre de collatéral.

Sont approuvées les modifications des règles de fonctionnement de LCH SA telles qu’annexées à la présente décision.

On 16 September 2021, the Order No. 2021-1189 of 15 September 2021 creating the National Register of Companies was published in the Official Journal.

It aims to establish, as of 1 January 2023, a national register of companies with which each company carrying out an activity on national territory is obliged to register and to provide, throughout its existence, all the information and documents relating to its situation. This register replaces all existing company registers, with the exception of the national register of companies and their establishments kept by the National Institute of Statistics and Economic Studies and the registers kept by the clerks of the commercial courts and the clerks of the judicial courts in the departments of Bas-Rhin, Haut-Rhin and Moselle or the courts of first instance ruling on commercial matters in the local authorities covered by Article 74 of the Constitution.

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Le 16 septembre 2021, l'Ordonnance no.2021-1189 du 15 septembre 2021 portant création du Registre national des entreprises a été publiée au Journal Officiel.

Elle vise à instaurer, à compter du 1er janvier 2023, un registre national des entreprises auprès duquel chaque entreprise exerçant une activité sur le territoire national a l'obligation de s'immatriculer et de renseigner, tout au long de son existence, l'ensemble des informations et pièces relatives à sa situation. Ce registre se substitue à l'ensemble des registres d'entreprises existants, à l'exception du répertoire national des entreprises et de leurs établissements tenu par l'Institut national de la statistique et des études économiques et des registres tenus par les greffiers des tribunaux de commerce et les greffes des tribunaux judiciaires dans les départements du Bas-Rhin, du Haut-Rhin et de la Moselle ou des tribunaux de première instance statuant en matière commerciale dans les collectivités relevant de l'article 74 de la Constitution.

On 22 September 2021, the Order of 16 September 2021 approving amendments to the General Regulation of the Autorité des marchés financiers was published in the Official Journal.

The amendments to the General Regulation of the Autorité des marchés financiers, the text of which is annexed to this order, are approved. 

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Le 22 septembre 2021, l'Arrêté du 16 septembre 2021 portant homologation de modifications du règlement général de l’Autorité des marchés financiers a été publié au Journal Officiel.

Les modifications du règlement général de l’Autorité des marchés financiers, dont le texte est annexé au présent arrêté, sont homologuées.

On 27 September 2021, the Autorité des marchés financiers (AMF) updated its investigation and inspection charters.

The regulator publishes a new version of its investigation and inspection charters taking into account the format of SPOT inspections, the evolution of practice and the dematerialization of exchanges. In particular for educational purposes, these are given to the persons contacted during an investigation or an inspection initiated by the AMF.

The main changes made to the investigation and inspection charter are as follows:

• emphasis on the dematerialization of exchanges is recorded in the conduct of investigations and inspectiond (for example, the sending of the mission order in dematerialized version, the delivery by email of the charter or the communication of documents via secure electronic messaging);
• the procedures for convening hearings have been extended to allow sending not only by letter with acknowledgment of receipt or hand delivery against receipt or bailiff's certificate, but also by any other means enabling them to be received;
• electronic messaging media collected during an investigation or inspection will be destroyed and no longer returned to the interviewee, with the exception of messaging media seized during home visits for which restitution remains applicable;
• the people interviewed for facts likely to be reproached to them in a personal capacity during an investigation or inspection will be informed of the absence of prosecutions against them after decision of the College and no longer at the end of the pronouncement of the decision of the Sanctions Commission. However, it is recalled that the rapporteur appointed by the President of the Sanctions Commission to examine the case may refer the matter to the College if he considers that grievances are likely to be notified to one or more persons other than those implicated;
• clarifications have been provided regarding the expected cooperation with the AMF: documents sent to the AMF must be complete, undistorted and consistent, and responses must be provided as soon as possible.

The inspection charter also takes into account all the existing inspection formats, including SPOT inspections (short thematic inspections), which now allows inspectors to send a single document when opening an inspection.

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Le 27 septembre 2021, l'Autorité des marchés financiers (AMF) a mis à jour ses chartes de l'enquête et du contrôle.

Le régulateur publie une nouvelle version de ses chartes de l’enquête et du contrôle tenant compte du format des contrôles SPOT, de l’évolution de la pratique et de la dématérialisation des échanges. A vocation notamment pédagogique, celles-ci sont remises aux personnes sollicitées lors d'une enquête ou d'un contrôle initié par l'AMF.

Les principales modifications apportées à la charte de l’enquête et du contrôle sont les suivantes :

• l’accentuation de la dématérialisation des échanges est actée dans la conduite des enquêtes et des contrôles (à titre d’exemple, l’envoi de l’ordre de mission en version dématérialisée, la remise par courriel de la charte ou la communication de documents via messagerie électronique sécurisée) ;
• les modalités de convocation aux auditions sont étendues pour permettre un envoi non seulement par lettre avec accusé de réception ou remise en main propre contre récépissé ou acte d’huissier, mais aussi par tout autre moyen permettant d’assurer leur réception ;
• les supports de messageries électroniques collectés lors d’une enquête ou d’un contrôle seront détruits et non plus restitués à la personne auditionnée, à l’exception des supports de messageries saisis lors de visites domiciliaires pour lesquels la restitution demeure applicable ;
• les personnes auditionnées pour des faits susceptibles de leur être reprochés à titre personnel lors d’une enquête ou d’un contrôle seront informées de l’absence de poursuites à leur encontre après décision du Collège et non plus à l’issue du prononcé de la décision de la Commission des sanctions. Il est toutefois rappelé que le rapporteur désigné par le président de la Commission des sanctions pour instruire le dossier peut saisir le Collège s'il estime que des griefs sont susceptibles d'être notifiés à une ou plusieurs personnes autres que celles mises en cause ;
• des précisons ont été apportées en matière de coopération avec l'autorité : il est ainsi rappelé que les documents communiqués à l’AMF doivent être complets, non dénaturés et cohérents et que les réponses doivent être apportées dans les meilleurs délais.

La charte du contrôle prend, par ailleurs, en compte l’ensemble des formats de contrôles existants, y compris les contrôles SPOT (contrôles thématiques courts), ce qui permet désormais aux contrôleurs de transmettre un document unique lors de l’ouverture d’un contrôle.

On 22 September 2021, the Order of 10 September 2021 on foreign investment in France was published in the Official Journal.

The notification form required under Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for screening foreign direct investment in the European Union, published on the European Commission website, where an entity in the investor's chain of control is a national of a non-EU state.

Requests for authorisation or opinion and declarations shall specify the status and identity of the person or persons with the power to represent the investor or the company that is the subject of the investment in the implementation of Chapter I of Title V of Book I of the regulatory part of the Monetary and Financial Code, and shall include any document attesting to this power.

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Le 22 septembre 2021, l'Arrêté du 10 septembre 2021 relatif aux investissements étrangers en France a été publié au Journal Officiel.

Le formulaire de notification nécessaire au titre du règlement (UE) 2019/452 du Parlement européen et du Conseil du 19 mars 2019 établissant un cadre pour le filtrage des investissements directs étrangers dans l’Union européenne, publié sur le site de la Commission européenne, dès lors qu’une entité de la chaîne de contrôle de l’investisseur est ressortissante d’un Etat tiers à l’Union européenne.

Les demandes d’autorisation ou d’avis et les déclarations précisent le statut et l’identité de la ou des personnes ayant le pouvoir de représenter l’investisseur ou la société objet de l’investissement dans la mise en œuvre du chapitre I er du titre V du livre I er de la partie réglementaire du code monétaire et financier, et comportent tout document attestant de ce pouvoir.

On 17 September 2021, the Association Française des Marchés Financiers (AMAFI) presented a consolidated documentation of the transposition of IFD.

The purpose of this document is to present in consolidated form the new provisions introduced by these texts, including: 

• Order 2021-796 transposing Directive (EU) 2019/2034 on the prudential supervision of investment firms (Annex 1); 
• the Order of 20 July 2021 amending the Order of 3 November 2014 on capital buffers for banking services providers and IAs other than asset management companies (Annex 2); 
• the Order of 20 July 2021 amending the Order of 4 December 2017 on the authorisation, changes in status, withdrawal of authorisation and deregistration of investment firms and similar institutions (Annex 3); 
• the Order of 20 July 2021 amending the Order of 5 September 2007 on activities other than investment services and related services that may be carried out by IAs other than asset management companies (Annex 4); 
• the Order of 20 July 2021 amending the Order of 19 December 2014 on the publication of information on encumbered assets (Annex 5); 
• the Order of 20 July 2021 amending the Order of 19 December 2014 on the publication requirements for systemic measurement indicators (Annex 6); 
• the Order of 20 July 2021 amending the Order of 23 December 2013 on the application of Art. 493 (3) of Regulation (EU) N°575/2013 of 26 June 2013 on prudential requirements applicable to credit institutions and IOs (Annex 7); 
• the Order of 28 July 2021 amending the Order of 3 November 2014 on the internal control of undertakings in the banking, payment services and investment services sector subject to supervision by the Autorité de contrôle prudentiel et de résolution (Annex 8); 
• the Order of 28 July 2021 amending the Order of 3 November 2014 on the prudential supervision and risk assessment process for banking services providers and investment firms other than portfolio management companies (Annex 9);
•  the Order of 28 July 2021 amending the Order of 3 November 2014 on prudential supervision on a consolidated basis (Annex 10); 
• the Order of 28 July 2021 amending the Order of 6 September 2017 on the ring-fencing of client funds of investment firms (Annex 11); 
• the Order of 28 July 2021 amending Regulation 86-21 of 24 November 1986 on non-banking activities (Annex 12)
• the Order of 28 July 2021 amending Regulation 98-05 of 7 December 1998 on credit transactions by investment firms (Annex 13); 
• the Order of 28 July 2021 repealing Regulation 97-04 of 21 February 1997 on management standards applicable to investment firms other than portfolio management companies, Order of 20 February 2007 on capital requirements applicable to credit institutions and investment firms, Regulation 93-05 of 21 December 1993 on the control of large exposures, and Regulation 90-02 of 23 February 1990 on own funds (this order is not the subject of an appendix, since it merely repeals various texts).

Version française

Le 17 septembre 2021, l'Association Française des Marchés Financiers (AMAFI) a présenté une synthèse de la documentation sur la transposition de la directive IFD.

Le présent document a pour objet de présenter sous forme consolidée les nouvelles dispositions apportées par ces textes dont : 

• l’ordonnance n°2021-796 portant transposition de la Directive (UE) 2019/2034 concernant la surveillance prudentielle des entreprises d’investissement (Annexe 1) ; 
• l’arrêté du 20 juillet 2021 modifiant l’arrêté du 3 novembre 2014 relatif aux coussins de fonds propres des prestataires de services bancaires et des EI autres que des SGP (Annexe 2) ; 
• l’arrêté du 20 juillet 2021 modifiant l’arrêté du 4 décembre 2017 relatif à l’agrément, aux modifications de situation, au retrait de l’agrément et à la radiation des entreprises d’investissement et des établissements assimilés (Annexe 3) ;
• l’arrêté du 20 juillet 2021 modifiant l’arrêté du 5 septembre 2007 relatif aux activités autres que les services d’investissements et les services connexes pouvant être exercées par les EI autres que les SGP (Annexe 4) ; 
• l’arrêté du 20 juillet 2021 modifiant l’arrêté du 19 décembre 2014 concernant la publication d’informations relatives aux actifs grevés (Annexe 5) ; 
• l’arrêté du 20 juillet 2021 modifiant l’arrêté du 19 décembre 2014 relatif aux obligations de publication des indicateurs de mesure de caractère systémique (Annexe 6) ; 
• l’arrêté du 20 juillet 2021 modifiant l’arrêté du 23 décembre 2013 relatif à l’application de l’art. 493 (3) du Règlement (UE) N°575/2013 du 26 juin 2013 concernant les exigences prudentielles applicables aux établissements de crédit et aux EI (Annexe 7) ;
• l’arrêté du 28 juillet 2021 modifiant l’arrêté du 3 novembre 2014 relatif au contrôle interne des entreprises du secteur de la banque, des services de paiement et des services d’investissement soumises au contrôle de l’Autorité de contrôle prudentiel et de résolution (Annexe 8) ; 
• l’arrêté du 28 juillet 2021 modifiant l’arrêté du 3 novembre 2014 relatif au processus de surveillance prudentielle et d’évaluation des risques des prestataires de services bancaires et des entreprises d’investissement autres que les sociétés de gestion de portefeuille (Annexe 9) ;
• l’arrêté du 28 juillet 2021 modifiant l’arrêté du 3 novembre 2014 relatif à la surveillance prudentielle sur base consolidée (Annexe 10) ; 
• l’arrêté du 28 juillet 2021 modifiant l’arrêté du 6 septembre 2017 relatif au cantonnement des fonds de la clientèle des entreprises d'investissement (Annexe 11) ; 
• l’arrêté du 28 juillet 2021 modifiant le règlement n° 86-21 du 24 novembre 1986 relatif aux activités non bancaires (Annexe 12) ; 
• l’arrêté du 28 juillet 2021 modifiant le règlement n° 98-05 du 7 décembre 1998 relatif aux opérations de crédit des entreprises d'investissement (Annexe 13) ; 
• l'arrêté du 28 juillet 2021 abrogeant le règlement n° 97-04 du 21 février 1997 relatif aux normes de gestion applicables aux entreprises d'investissement autres que les sociétés de gestion de portefeuille, l'arrêté du 20 février 2007 relatif aux exigences de fonds propres applicables aux établissements de crédit et aux entreprises d'investissement, le règlement n° 93-05 du 21 décembre 1993 relatif au contrôle des grands risques et le règlement n° 90-02 du 23 février 1990 relatif aux fonds propres (cet arrêté ne fait pas l’objet d’une annexe étant donné qu’il ne fait qu’abroger différents textes).

On 22 September 2021, the Autorité des marchés financiers (AMF) informed issuers about the phased application of reporting requirements of Taxonomy Article 8.

To promote sustainable investment, the Taxonomy Regulation (Regulation (EU) 2020/852) establishes a European Union-wide classification system to identify economic activities that are considered sustainable. Pursuant to Article 8 of this regulation, companies will have to publish sustainability indicators from 1 January 2022. A delegated regulation published by the European Commission on 6 July 2021 determines the content, calculation methodology and presentation of these indicators. To help issuers prepare for the upcoming application of this new regulation, the AMF would like to remind issuers of its main provisions and draw their attention to the ambitious implementation schedule.

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Le 22 septembre 2021, l'Autorité des marchés financiers (AMF) a informé les émetteurs sur l’entrée en application progressive des obligations de reporting.

Pour favoriser les investissements durables, le Règlement Taxinomie (règlement (UE) 2020/852) établit un système de classification commun à l’Union européenne permettant d’identifier les activités économiques considérées comme durables. En application de l’article 8 de ce règlement, les sociétés vont devoir publier à compter du 1er janvier 2022 des indicateurs de durabilité. Un règlement délégué publié par la Commission Européenne le 6 juillet 2021 fixe le contenu, les modalités de calcul et la présentation de ces indicateurs. Afin d’accompagner les émetteurs dans l’application prochaine de cette nouvelle réglementation, l’AMF souhaite en rappeler les principales dispositions et attirer l’attention des sociétés sur son calendrier d’application ambitieux.

On 27 September 2021, the Autorité des marchés financiers (AMF) published a study on the readability of information on responsible investments.

This qualitative study conducted by the AMF questioned savers about their knowledge and perceptions of responsible investment. They gave their opinion on the readability of the pre-contractual documentation of several responsible products.

Version française

Le 27 septembre 2021, l'Autorité des marchés financiers (AMF) a publié une étude sur la lisibilité des informations sur les placements responsables.

Cette étude qualitative conduite par l'AMF a interrogé des épargnants sur leurs connaissances et leurs perceptions de l’investissement responsable. Ils ont donné leur avis sur la lisibilité de la documentation précontractuelle de plusieurs produits responsables.

On 1 September 2021, the Banque nationale de Belgique (BnB) published a Circular NBB_2021_19 on the ECB IMAS portal: digitisation of forms concerning qualifying holdings as well as freedom to provide services and freedom of establishment.

The aim of the circular is to :

• inform institutions and applicant shareholders of the digitisation process, established by the European Central Bank, of the submission by applicant shareholders of a notification concerning the acquisition or increase of a qualifying holding in a credit institution, a financial company governed by Belgian law or a mixed financial company included in a Belgian banking group; 
• informs the institutions of the digitisation process, introduced by the European Central Bank, which applies to the notification procedure to be followed by credit institutions governed by Belgian law in the context of the European passport.

On 3 September 2021, the  Financial Services and Markets Authority (FSMA) announced that the modified market rules of the regulated markets organized by Euronext NV/SA (namely Euronext Brussels and the Euronext Brussels Derivative Instruments Market) were approved on 22 June 2021 in accordance with Article 34, §1, of the Law of 21 November 2017 on the market infrastructures for financial instruments and transposing Directive 2014/65/EU. These market rules enter into force as of 6 September 2021.

On 3 September 2021, the Financial Services and Markets Authority (FSMA) announced that on 22 June 2021, in accordance with Article 2 of the Royal Decree of 21 August 2008 on the rules for certain multilateral trading facilities, it approved the modified market rules of Alternext Brussels (Euronext Growth).

These market rules enter into force as of 6 September 2021 and are available on Euronext’s website.

On 7 September 2021, the German Federal Government proposed amendments to the Money Laundering Act.

The Federal Council notes that considerable amounts of criminal money are laundered in the Federal Republic of Germany, especially in the real estate sector and in transactions under company law. Notaries are almost always involved in the underlying transactions, but they themselves are only entitled to report suspicions of money laundering to a very limited extent. For an effective fight against money laundering, it is therefore necessary to strengthen money laundering supervision, especially in the notarial sector, and to extend the reporting obligations of notaries.

With regard to possible concerns that exist with regard to the fundamental duty of notaries to maintain secrecy (§ 18 Paragraph 1 Federal Code of Notaries), it must be taken into account that, unlike lawyers, for example, they are not party representatives, but rather holders of a public office. In this respect, the purpose of the protection of confidentiality differs, which is also not taken into account in the justification.

The Federal Council requests the Federal Government to enable the Federal Ministry of Finance, in agreement with the Federal Ministry of Justice and Consumer Protection, to issue a statutory instrument according to which certain facts in connection with the procurement of the funds required for the establishment, operation or administration of companies as well as the establishment, operation or administration of trusts, companies or similar structures must always be reported by the obligated parties to the Central Financial Transaction Investigation Authority pursuant to section 2 (1) numbers 10 and 12 AMLA.

On 29 September 2021, the Bundesfinanzministerium (Federal Ministry of Finance) publishes the final text of the Ordinance on increased duties of care in the transfer of crypto values (KryptoWTransferverordnung - KryptoWTransferV).

Due to the increased risk of money laundering and terrorist financing in transactions with crypto assets, the corresponding application of the Money Transfer Ordinance (GTVO) is ordered. This means that crypto value service providers who transfer crypto values on behalf of a contractor provide the crypto value service provider who acts on the recipient's side with information on the name, address and account number of the client and the name and account number of the beneficiary must be transmitted securely and at the same time. 

The cryptocurrency service provider who acts for the beneficiary must ensure that it receives and stores the information on the client and beneficiary. The complete traceability of those involved in the transmission of crypto values serves to prevent, detect and investigate money laundering and terrorist financing as well as to monitor sanction circumvention. The ordinance also stipulates that an obligated party must ensure that information on the beneficiary or client of a transfer is collected if the transfer takes place from or to an electronic wallet that is not managed by a crypto-value service provider, even if the data is transferred in this Case is out of the question.

This Ordinance regulates enhanced due diligence requirements for obligated parties under section 2(1)(1) and (2) of the Money Laundering Act who carry out transfers of crypto assets within the meaning of section 1(29) of the Money Laundering Act.

On 6 September 2021, the Bundesfinanzministerium (Federal Ministry of Finance) published the Draft ordinance on crypto fund shares (KryptoFAV).

On June 4, 2021, the law on the introduction of electronic securities came into force. This law also created the option of issuing electronic unit certificates in investment funds in the legal form of a special fund, which are entered in a central register, by amending the Capital Investment Code. In order to further promote Germany as a fund location, the regulation on crypto fund shares (KryptoFAV) is to give the providers of investment funds the opportunity to also issue crypto fund shares.

The new regulation enables the providers of investment funds to issue electronic unit certificates as so-called crypto fund units by entering them in a crypto securities register. The ordinance regulates the basic possibility of issuing crypto fund shares and extends the provisions of the law for electronic securities to electronic share certificates. It is ensured that the registrar of a crypto securities register in which crypto fund shares are entered is always the custodian of the investment fund itself. This ensures that the depositary can carry out its duties in relation to the investor.

Comments can be submitted until October 1, 2021.

On 27 September 2021, the BaFin announced it applies ESMA guidelines on marketing advertisements. These are intended to ensure that advertisements are recognizable as such and, among other things, fair, clear and not misleading.

The ESMA has the guidelines under the Regulation developed for cross-border distribution of investment funds. In doing so, it aims to ensure that the member states apply the specified requirements in a uniform and coherent manner.

The guidelines specify the requirements laid down in the regulation for marketing advertisements within the European financial system. They give examples of documents classified as marketing advertisements aimed at investors or potential investors in UCITS ( Undertakings for Collective Investment in Transferable Securities) and AIFs (Alternative Investment Funds).

On 6 September 2021, the Federal Ministry of Finance launched a consultation on the Ordinance on crypto fund shares (KryptoFAV). Comments can be submitted until October 1, 2021.

On 4 June  2021, the law on the introduction of electronic securities came into force. With this law, the amendment of the Capital Investment Code also created the possibility of issuing electronic unit certificates in investment funds in the legal form of special funds, which are entered in a central register. In order to further promote Germany as a fund location, the regulation on crypto fund shares (KryptoFAV) is to give the providers of investment funds the opportunity to also issue crypto fund shares.

The new regulation enables the providers of investment funds to issue electronic unit certificates as so-called crypto fund units by entering them in a crypto securities register. The ordinance regulates the basic possibility of issuing crypto fund shares and extends the provisions of the law for electronic securities to electronic share certificates. It is ensured that the registrar of a crypto securities register in which crypto fund shares are entered is always the custodian of the investment fund itself. This ensures that the depositary can carry out its duties in relation to the investor.

The present draft regulation declares the provisions of the Electronic Securities Act mentioned in § 95 (5) KAGB applicable to electronic fund units. This creates the legal basis for the introduction of crypto fund units. The special features of the legal position of the depositaries are taken into account by the fact that, in deviation from § 16 (2) eWpG, in the case of crypto fund units the depositary must be the register-keeping body. This enables the depositary to fulfil its duties in accordance with Sections 68 et seq. and 80 et seq. KAGB in relation to the investor.

On 20 September 2021, the BaFin published a Leaflet on suspension of trading on non-stock exchanges in the context of settlement (MeHNB).

The guidance notice covers the suspension or cessation of trading by systematic internalisers, as well as multilateral and organised trading systems that are not operated by an exchange within the meaning of section 2 of the German Stock Exchange Act (Börsengesetz). The guidance notice is addressed to all legal entities in Germany which (i) operate multilateral and/or organised trading systems that are not part of an exchange and/or (ii) have a license as a systematic internaliser.

On 22 September 2021, the BaFin published a statement on MiFID II : Exemption for ancillary activities.

Due to the amended Markets in Financial Instruments Directive II (MiFID II), an adjustment to the ancillary activity exemptions in section 2 (1) no. 9, section 2 (6) sentence 1 no. 11 and section 32 (1a) sentence 3 no. 3 of the German Banking Act (Kreditwesengesetz – KWG) will come into force on 28 November 2021.

As of this date, it is therefore no longer necessary to notify BaFin of the use of an ancillary activity exemption.

On 15 September 2021, the Securities and Futures Commission (SFC) released consultation conclusions on proposed amendments to its anti-money laundering and counter-financing of terrorism (AML/CFT) guidelines.

The amendments aim to align the guidelines with the Financial Action Task Force’s (FATF) AML/CFT standards, which include additional guidance to facilitate the implementation of risk-based AML/CFT measures by securities industry participants.

While the proposals received broad support, a considerable number of comments were made on the requirements for cross-border correspondent relationships. In response, the revised guidelines provide greater clarity and additional flexibility in meeting the requirements.

The revised AML/CFT guidelines will become effective upon gazettal on 30 September 2021, with the exception of the new cross-border correspondent relationships requirements, which will take effect on 30 March 2022.

On 13 September 2021, the Securities and Futures Commission (SFC) published a Circular which aims to provide guidance to licensed corporations (LCs) and registered institutions (RIs) subject to the investor identification regime at trading level for the securities market in Hong Kong (HKIDR) and over-the-counter securities transactions reporting regime for shares listed on the Stock Exchange of Hong Kong (OTCR) (being “Relevant Regulated Intermediaries”) on their main obligations under the HKIDR and the OTCR, and a roadmap and timeline for the implementation of the HKIDR and the OTCR. 

Subject to the market readiness, 

• the HKIDR will be implemented tentatively during the second half of 2022 at the earliest. 
• the OTCR will be implemented tentatively during the first half of 2023.

On 13 September 2021, the Securities and Futures Commission (SFC) published Circular to intermediaries on obtaining client consent under the Hong Kong Investor Identification Regime (HKIDR) and Over-the-counter Securities Transactions Reporting Regime (OTCR).

This circular sets out the requirements to be observed for obtaining express consent from individual clients as required under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct) for the transfer of their personal data to the Stock Exchange of Hong Kong (SEHK) and/or the Securities and Futures Commission (SFC) under the HKIDR and OTCR. 

Such consent may be obtained by written and signed acknowledgement on paper, or by electronic means (which may include, for example, by instant messaging application) or by phone. The HKIDR and OTCR will be implemented tentatively in the second half of 2022 and the first half of 2023 respectively.

On 6 September 2021, the Securities and Futures Commission (SFC) published a Circular on the Questionnaire on asset management activities relating to private funds (other than hedge funds) and managed accounts.

The questionnaire will collect data and information about the business activities of non-hedge fund managers, the types of private funds and managed accounts they manage and their sizes, investments, types of investors, leverage and risk management. This information is important for the SFC to identify industry trends and risks in the private funds and managed accounts sector.

The questionnaire will cover the period from 1 October 2020 to 30 September 2021. In late September 2021, selected licensed corporations will receive an email from the SFC with the questionnaire and guidance notes for completion. The completed questionnaire should be returned to the SFC by 1 November 2021.

On 3 September 2021, the Houses of the Oireachtas (Ireland's national parliament) initiated the Companies (Corporate Enforcement Authority) Bill 2021.

Bill entitled an Act to amend the Companies Act 2014 to:

• establish a body to be known as An tÚdarás um Fhorfheidhmiú Corparáideach (Corporate Enforcement Authority) to replace and perform the functions previously performed by the Director of Corporate Enforcement. 
• make provision for certain other amendments to that Act relating to the share capital of companies or the corporate governance of companies

Therefore, the Bill will make consequential amendments to that Act and the Irish Collective Asset-management Vehicles Act 2015, and to provide for related matters.

On 22 September 2021, the Central Bank of Ireland (CBI) published Notice of Intention - Amendments to the List of Pre-Approval Controlled Functions (PCFs).

The Central Bank of Ireland proposes to amend the PCF list as follows: 

1. Expand PCF-16 to include branch managers in non-EEA countries; 
2. Introduce stand-alone PCFs in respect of: Independent Non-Executive Directors; The Head of Anti-Money Laundering and Counter-Terrorist Financing; and 
3. Remove PCF-31 Head of Investment.

Comments should be submitted no later than 20 October 2021.

On 28 September 2021, the S.I. No. 487 of 2021 - Central Bank Act 1942 (Section 32D) Regulations 2021 was published in the Irish Statute Book.

The purpose of these Regulations is to prescribe levies pursuant to section 32D of the Central Bank Act 1942.

All regulated entities are liable to pay to the Bank a levy contribution and where applicable in accordance with the Schedule of this Instrument, one or more supplementary levy contributions in respect of each authorisation held during a relevant levy period on or before the due date.

On 10 September 2021, the Central Bank of Ireland (CBI) issued the 41st Edition of the Central Bank AIFMD Q&A, which includes new Q&As, ID1146 and ID 1147.

The new Q&A, ID 1146, sets out the Central Bank’s position with respect to an AIFM whereby its respective AIF is of the view that it no longer meets the criteria of an AIF as per Regulation 5(1) of the AIFM Regulations.

Q&A, ID 1147 sets out the Central Bank’s expectations in relation to an AIFM operating or planning to operate in the manner of a third party management company.

On 10 September 2021, the Central Bank of Ireland (CBI) issued the 33rd edition of the Central Bank AIFMD Q&A, which includes a new Q&A, ID 1101.

The new Q&A, ID 1101, sets out the Central Bank’s expectations in relation to a UCITS management company operating or planning to operate in the manner of a third party management company. 

On 30 September 2021, the Houses of the Oireachtas (Ireland's national parliament) published Companies (Emission Reporting) Bill 2021.

The Bill would require the disclosure of audited statements of greenhouse gas emissions by companies over 50 employees to the Minister for Enterprise and a number of other important provisions. 

It is tabled in the spirit of ensuring that the burden of responding to climate change falls equitably and proportionally between those who make the greatest contribution, in keeping with the polluter-pays principle and to support climate justice and a just transition.

On 24 September 2021, CONSOB announced it will comply with the "Guidelines on the activity aimed at implementing the rules on financial reporting "of ESMA (the" Guidelines "), integrating them into their supervisory practices. 

These guidelines aim at implementing financial reporting rules under the Transparency Directive in order to ensure that financial reporting contained in harmonized documents provided by issuers whose securities are admitted to trading on a regulated market, complies with the obligations deriving from the Transparency Directive.

The Guidelines became effective on 23 January 2021 with the exception of revision of guidelines 5, 6, 6-bis and 6-ter which will become effective on 1st January 2022.

On 2 August 2021, ESMA published on its website the "Guidelines on marketing communications under the Regulation on cross-border distribution of funds" (hereinafter, also, "the Guidelines" or "The Guidelines"), adopted by the European Authority, pursuant to article 16 of Regulation (EU) no. 1095/2010 [1] (so-called "ESMA Regulation"), on May 27, 2021.

They provide operational guidelines regarding the criteria for the preparation of marketing communications considering criteria such as the representation of information concerning costs, risks, past and expected returns and aspects relating to sustainability.

In compliance with paragraph 3 of the aforementioned article 16 of the ESMA Regulation, it was communicated to the European Authority that CONSOB complies with the guidelines in question, integrating them into its supervisory practices.

According to the terms established by paragraph 1 of these Guidelines, with effect from 2 February 2022, the diffusion of marketing communication in Italy on UCITS will be required to comply with the guidelines provided by the European Authority through the Guidelines subject of this notice.

On 24 September 2021, the Commission de Surveillance du secteur financier (CSSF) published Circular 21/782 concerning the adoption of the revised guidelines, by EBA, on money laundering and terrorist financing risk factors.

The purpose of this circular is to draw attention to the adoption by the European Banking Authority (“EBA”) of the Revised Guidelines on customer due diligence and the factors credit and financial institutions (“the professionals”) should consider when assessing the money laundering and terrorist financing (“ML/TF”) risk associated with individual business relationships and occasional transactions (“the Guidelines”).

The CSSF summarized the new elements of the revised Guidelines as followings:

• The revised Guidelines take account of the new and emerging risks related for example with the use of RegTech solutions for CDD purposes or terrorist financing, and contains more guidance on the identification of beneficial owners and enhanced customer due diligence related to high-risk third countries.
• The revised Guidelines stress that professionals enhance in particular their understanding of (risks related to) tax crimes as there are substantial similarities between the techniques used to launder the proceeds of crimes and to commit tax crimes. Professionals should notably consider other relevant reports of EBA and/or ESMA, particularly the reports and Action plan on dividend arbitrage trading schemes (‘Cum-Ex/Cum-Cum schemes’). 
• The revised Guidelines also specify that an effective risk-based approach should not result in systematically exiting or discontinuing to offer services to certain categories of customers associated with higher ML/TF risk (“de-risking” approach) and that professionals should also carefully balance the need for financial inclusion with the need to mitigate ML/TF risk.

As to the scope of application of the Guidelines, professionals need to apply the changes to future business relationships and also to existing customers at appropriate times as risk assessment and mitigation is an ongoing process and professionals must make sure that any new controls apply to both categories of customers (existing and new). 

This circular repeals and replaces circular CSSF 17/661.

On 28 September 2021, the Chambre des députés - Luxembourg (ChD) published draft law 7890 amending Labor Code to introduce a mechanism related to the right to disconnect, in terms of teleworking.

This draft proposes to complete the list of subjects on collective negotiations which must necessarily cover by introducing a new section 8 in Chapter II, the Title one, Book III of the Labor Code entitled “Respect for the right to disconnect” including administrative sanctions that may be imposed:

• When employees use digital tools for professional purposes, a regime ensuring respect for the right to disconnect outside of working time adapted to the particular situation of the company or the sector must be defined at the level of the company or the sector.
• This specific regime may particularly be defined by means of a collective labor agreement or a subordinate agreement.  In the absence of a collective labor agreement or a subordinate agreement, the specific regime is to be defined at the level of the company, while respecting the competences of the staff delegation.
• Any violation of the provisions of this section is punishable by an administrative fine of 251 to 25,000 euros pronounced by the Direction de l'inspection du travail who sets the amount taking into account the circumstances and the seriousness of the breach.

On 23 September 2021, the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 21/781 on the Mandatory use of the IMAS Portal for banking qualifying holding and passporting notifications.

Early this year the European Central Bank (ECB) and the national competent authorities (NCAs) launched the IMAS Portal. From 27 January 2021, the IMAS Portal became mandatory in Luxembourg for processing the fit and proper applications for all significant banks/groups under the Single Supervisory Mechanism.

As of 27 September 2021, the IMAS Portal will be extended to the processing of passporting notifications from significant banks/groups (SIs) and less significant banks/groups (LSIs) and applications for the acquisition or increase of a qualifying holding in an SI or LSI. Those new modules will be open for receiving submissions from SIs, LSIs or other applicants. 

Proposed acquirers shall use the IMAS Portal to submit their applications for banking qualifying holding assessments, track the status of these assessments and exchange related information with supervisors. 

Supervised entities shall also use the IMAS Portal for submitting their passporting notifications (new notification, change of notification or cancellation of notification).

On 7 September 2021, the Commission de Surveillance du secteur financier (CSSF) updated form for the application in case of outsourcing of administration tasks for UCI.

On 10 September 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Form on the Declaration for a fully licensed AIFM.

On 10 September 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Periodical report from the liquidator on the progress of the liquidation.

A periodical liquidator's report must be sent to the CSSF twice a year, for the reference period covering 1 January to 30 June and 1 July to 31 December, unless specified otherwise. The report must be submitted within 90 days after the end of the reference period.

Here are two communications from the CSSF on the AML/CFT Market Entry Form.

1. On 13 September 2021, the Commission de Surveillance du secteur financier (CSSF) published a FAQ regarding the AML/CFT Market Entry Form (Funds and IFMs).

The CSSF added the following question : 

• Q1. When should a Market Entry Form be completed?

2. On 14 September 2021, the Commission de Surveillance du secteur financier (CSSF) updated the eDesk – Market Entry Form – User Guide.

The aim of this application is to collect standardised key information in relation to money laundering and terrorist financing risks (“ML/FT risk”) to which the professionals supervised by the CSSF for AML/CFT purposes are exposed to and in relation to the measures they put in place to mitigate these risks. 

The Market Entry Form must be renewed when requesting approval of an additional sub-fund in a Fund to add sub-Fund related information and in the same time to update any information previously submitted which is no longer valid as from the last Market Entry Form. 

On 14 September 2021, the Commission de Surveillance du secteur financier (CSSF) updated the Form on the AIFS under management quarterly list.

BACKGROUND

On 3 April 2020, the European Securities and Markets Authority (ESMA) published its final guidance on performance fees in investment funds – applicable to Undertakings for the Collective Investment in Transferable Securities (UCITS) and certain types of Alternative Investment Funds (AIFs).

The guidelines provide comprehensive guidance to fund managers when designing performance fee models for the funds they manage, including the assessment of the consistency between the performance fee model and the fund’s investment objective, policy and strategy, particularly when the fund is managed in reference to a benchmark.

ESMA’s guidelines aim at harmonising the way fund managers charge performance fees to retail investors, as well as the circumstances in which performance fees can be paid. The common requirements will allow convergence in how NCAs supervise performance fees models and disclosure across the European Union (EU). The guidelines are applicable to both UCITS and certain types of AIFs, in order to ensure a level playing field and a consistent level of protection to retail investors. 

On 5 November 2020, the ESMA issued the official translations of its guidelines on performance fees in UCITS and certain types of AIFs and the Commission de Surveillance du secteur financier (CSSF) published Circular CSSF 20/764 - Guidelines on performance fees in UCITS and certain types of AIFs, on 18 December 2020.

The purpose of this circular is to inform that the CSSF, in its capacity as competent authority, applies the Guidelines of ESMA (Ref. ESMA34-39-992). Consequently, the CSSF integrated the Guidelines into its administrative practices and regulatory approach with a view to promoting supervisory convergence in this field at European level as of the date of application of the Guidelines.

This circular shall apply to:

• performance fees in UCITS.
• AIFs managed by an AIFM, when the AIFM markets the AIF to retail investors, except for closed-ended AIFs and open-ended AIFs that are EuVECAs (or other types of venture capital AIFs), EuSEFs, private equity AIFs or real estate AIFs.
• all funds marketed in Luxembourg to retail investors in accordance with Article 46 the Law of 12 July 2013 and CSSF Regulation N° 15-036, as well as to funds marketed to retail investors in Luxembourg under Article 100(1) of the Law of 17 December 20107, subject to some exceptions.

WHAT'S NEW?

On 22 September 2021, the Commission de Surveillance du secteur financier (CSSF) reminded Investment Fund Managers to declare the performance fee models applicable to Luxembourg UCITS or AIF they manage via the new dedicated eDesk application.

The CSSF would like to emphasise that proper disclosures to investors of performance fee models in compliance with the Guidelines are mandatory.

The list of funds and sub-funds concerned by the declaration and data collection is provided in the performance fee dashboard of the eDesk module on performance fee:

• as from 30 September 2021, all funds whose financial year is ending between July 2021 and December 2021 will be available in the performance fee dashboard and IFM shall transmit the performance fee declaration and the confirmation of compliance with the Guidelines.
• as from January 2022, the performance fee declaration and the confirmation of compliance will be requested for the funds whose financial year is ending between January 2022 and June 2022.

Moreover, on 30 September 2021, the Commission de Surveillance du secteur financier (CSSF) published the eDesk - Performance fees declaration - User Guide.

The application is only accessible to IFM users having an account in the eDesk platform (please refer to the eDesk Authentication user guide to find all the necessary information on how to create/manage accounts).  The Performance Fee Questionnaire as well as subsequent updates must be completed and submitted by an eDesk user linked to the IFM. An eDesk user guide dedicated to this questionnaire will be available in eDesk to provide additional assistance to complete the questionnaire.

WHAT'S NEXT?

Aiming at ensuring compliance with the ESMA Guidelines on proper disclosures and collecting standardised key information in relation to performance fees, IFMs are requested for Luxembourg based UCITS or AIFs they manage to complete a dedicated questionnaire on performance fees via the launch of a new eDesk module on performance fees as from 30 September 2021.

The deadline for submission of the initial declaration will be at the latest before the corresponding closing date of each fund as further specified in the IFM corresponding performance fee eDesk dashboard.

On 2 September 2021, the Commission de Surveillance du secteur financier (CSSF) published communication on the entry into force of the new regulatory provisions applicable to investment firms.

In order to provide investment firms with a dedicated framework, which is better suited and harmonised, the IFD package introduces a new classification methodology, defines new prudential requirements and a new reporting framework and reforms certain rules regarding governance.

With this communication, the CSSF provides Guidance on the entry into application of these provisions.

On 1 October 2021, the Federal Council initiated the consultation on amendments to the Anti-Money Laundering Ordinance and other ordinances. The proposed amendments provide more detail on the measures in the revised Anti-Money Laundering Act and improve the integrity of the Swiss financial centre.

Parliament approved the revision of the Anti-Money Laundering Act on 19 March 2021. This strengthens Switzerland's toolkit to combat money laundering and terrorist financing, and includes the most important recommendations from the Financial Action Task Force's (FATF) mutual evaluation report on Switzerland of 2016. The measures require implementing provisions, specifically in the area of the reporting system for money laundering, the introduction of a licencing requirement for purchasing precious metal scrap, the appointment of the Central Office for Precious Metal Control as the new money laundering oversight authority, and the transparency of associations that carry a greater risk of terrorist financing.

The proposed ordinance amendments serve mainly to provide more detail on the adopted measures. In addition, it is planned to use this opportunity to transpose relevant disclosure provisions from the money laundering ordinances of the supervisory authorities and the Federal Department of Justice and Police (FDJP) into the Federal Council's money laundering ordinance.

The Federal Council is proposing amendments not just to the Anti-Money Laundering Ordinance, but also to the Ordinance on the Money Laundering Report Office Switzerland, the Commercial Register Ordinance, the Precious Metals Control Ordinance and the Ordinance on Fees for Precious Metal Control. At the same time, the Federal Customs Administration (FCA) has launched the consultation on its new Anti-Money Laundering Ordinance, which likewise provides more detail on the measures in the revised Anti-Money Laundering Act. The consultation will last until 17 January 2022.

Version française

Le 1 octobre 2021, le Conseil fédéral a ouvert la procédure de consultation relative à la modification de l'ordonnance sur le blanchiment d'argent et d'autres ordonnances. Les modifications proposées précisent les mesures prévues par la loi révisée sur le blanchiment d'argent et améliorent l'intégrité de la place financière suisse.

Le 19 mars 2021, le Parlement a adopté la révision de la loi sur le blanchiment d'argent. Cette révision renforce le dispositif permettant à la Suisse de lutter contre le blanchiment d'argent et le financement du terrorisme, et tient compte des principales recommandations du rapport d'évaluation mutuelle de décembre 2016 sur la Suisse rédigé par le Groupe d'action financière (GAFI). Les mesures prévues requièrent des dispositions d'exécution, notamment en ce qui concerne le système de communication des soupçons de blanchiment d'argent, l'introduction d'une obligation d'obtenir une autorisation pour acheter des métaux précieux usagés, la désignation du Bureau central du contrôle des métaux précieux comme nouvelle autorité de surveillance en matière de blanchiment d'argent et la transparence des associations présentant un risque accru de financement du terrorisme.

Les présentes modifications d'ordonnances visent surtout à concrétiser les mesures retenues. Elles ont aussi pour but de transférer dans l'ordonnance du Conseil fédéral sur le blanchiment d'argent des dispositions importantes sur le système de communication figurant actuellement dans les ordonnances des autorités de surveillance et du Département fédéral de justice et police relatives au blanchiment d'argent.

Le Conseil fédéral propose non seulement des modifications dans l'ordonnance sur le blanchiment d'argent, mais aussi dans l'ordonnance sur le Bureau de communication en matière de blanchiment d'argent, dans l'ordonnance sur le registre du commerce et dans l'ordonnance sur les émoluments pour le contrôle des métaux précieux. En parallèle, l'Administration fédérale des douanes ouvre la procédure de consultation concernant sa nouvelle ordonnance sur le blanchiment d'argent qui, elle aussi, concrétise des mesures prévues dans le cadre de la révision de la loi sur le blanchiment d'argent. La consultation se terminera le 17 janvier 2022.

On 16 September 2021, the FINMA published a Guidance 03/2021 on LIBOR transition: progress and best practices.

This year, to allow it to carry out risk-based supervision, FINMA required the top 20 banks and securities firms most impacted by the LIBOR transition in terms of volume to complete a monthly self-assessment. The data submitted up to 31 July 2021 show that the majority of supervised institutions have adhered to the milestones of the roadmap set out in Guidance 10/2020 up to now. For instance, the banks have reduced the number of contracts without robust fallback clauses for the period after the cessation of LIBOR by almost 90% since the beginning of 2020. Nevertheless, such type of contracts with a volume of around CHF 40 billion still remained on the banks’ books at the end of July, the majority of those in Swiss francs. Time is now running out for bringing outstanding negotiations with the counterparties to a successful conclusion as quickly as possible and before end-2021 at the latest. 

FINMA sees the greatest need for action in the area of syndicated loans, i.e. loans where at least two lenders work together to provide funds. In this area, the number of contracts without robust fallback clauses has only been reduced by 28% since the start of 2021. FINMA is therefore repeating its appeal to the banks to actively contact the syndicate banks and borrowers in order to amend the relevant credit agreements and achieve legal certainty for the future.

Best practices for LIBOR transition

To counteract inadequate preparations by the financial institutions, FINMA set out clear expectations and concrete milestones in its Guidance 10/2020. FINMA is calling once again on all financial market participants to press ahead with their preparations for the LIBOR transition as a matter of the highest priority. To this end, in its Guidance 03/2021 published today, FINMA has set out best practices to help the institutions overcome the residual risks. FINMA will continue to closely monitor the LIBOR transition. If banks continue to enter into new business transactions referencing LIBOR except in strictly limited and documented exceptional cases, this can be regarded as a violation of the supervisory requirements with regard to adequate risk management. If FINMA discovers that certain institutions are insufficiently prepared for the LIBOR transition, it will take institution-specific measures.

Version française

Le 16 septembre 2021, la FINMA a publié une Communication sur la surveillance 03/2021: état des lieux et meilleures pratiques.

Dans le cadre d’une surveillance fondée sur les risques, la FINMA a réclamé, durant l’année en cours, une autoévaluation mensuelle auprès de 20 banques et maisons de titres fortement concernées en termes de volume par l’abandon du LIBOR. Les données ainsi collectées jusqu’au 31 juillet 2021 montrent que la majorité des assujettis ont jusqu’ici respecté les étapes de la feuille de route de la communication sur la surveillance 10/2020. Ainsi, depuis le début de l’année 2020, les banques ont par exemple réduit de presque 90 % le nombre de contrats sans solide clause de réversion pour la période suivant l’abandon du LIBOR. Cependant, à fin juillet, de tels contrats représentent encore un volume de quelque 40 milliards de francs dans les comptes des banques, la majorité étant en francs suisses. Le temps presse maintenant pour mener à bien, aussi vite que possible et au plus tard avant fin 2021, les négociations encore ouvertes avec les contreparties.

La FINMA constate que c’est surtout le secteur des crédits syndiqués qui accuse le plus grand retard, c’est-à-dire les crédits garantis de concert par au moins deux établissements de crédit. Dans ce secteur, la part des contrats sans solide clause de réversion n’a été réduite que de 28 % depuis le début de l’année 2021. Par conséquent, la FINMA réitère son appel aux banques de contacter activement les banques impliquées dans des crédits syndiqués et les emprunteurs afin d’adapter les contrats de crédit correspondants et d’ainsi garantir à l’avenir une certaine sécurité juridique.

Meilleures pratiques pour l’abandon du LIBOR

Afin de remédier à une préparation insuffisante des établissements financiers, la FINMA a formulé des attentes claires et des jalons concrets dans sa communication sur la surveillance 10/2020. La FINMA demande de nouveau à tous les acteurs des marchés financiers d’accorder la plus haute priorité à cette préparation de l’abandon du LIBOR. En ce sens, la FINMA a résumé, dans sa communication sur la surveillance 03/2021 de ce jour, des manières de procéder qui ont fait leurs preuves et grâce auxquelles les établissements peuvent faire face aux risques restants. La FINMA continuera de suivre très étroitement les préparatifs en vue de l’abandon du LIBOR. Si des banques concluent de nouveaux contrats en LIBOR en dehors de cas exceptionnels strictement limités et documentés, cela pourra être considéré comme une violation des exigences prudentielles en matière de gestion appropriée des risques. Si la FINMA constate, chez certains assujettis, une préparation insuffisante à l’abandon du LIBOR, elle prendra des mesures spécifiques à l’établissement.

On 14 September 2021, the FINMA published a Guidance on Reporting on collective investment schemes.

FINMA plans per end of 2021 to collect data on funds. The data collection will affect all financial intermediaries according to Article 2 of the Financial Institutions Act (FinIA) managing foreign funds with alternative investment strategies. For Swiss collective investment schemes, the data is collected directly from the fund management companies (Art. 2 para. 1 let. d FinIA). 

In the course of data collection, the financial intermediaries are required to provide data on exposures, leverage, liquidity and counterparty risks of the managed funds on an annual basis. The data is intended to improve the quality of supervision in the area of fund management and to better identify systemic risks. In addition, the data will allow a better assessment of the inherent risks of the financial intermediaries and their funds. International standards and regulations will also be taken into account.

The data collection is risk based. FINMA has set a threshold of CHF 500 million for Swiss funds and CHF 500 million plus alternative investment strategy for foreign funds above which the data is requested. This means that smaller funds with no impact on system stability will not be included in the data collection.

Version française

Le 14 septembre 2021, la FINMA a publié Guide sur le Reporting sur les placements collectifs de capitaux.

La FINMA prévoit de recueillir pour fin 2021 des données sur les fonds. Cette collecte de données concernera tous les intermédiaires financiers au sens de l’art. 2 de la loi fédérale sur les établissements financiers (LEFin) qui gèrent des fonds étrangers avec des stratégies d’investissement alternatives. S’agissant des fonds de placement collectif suisses, les données sont recueillies directement auprès des directions de fonds (art. 2 al. 1 let. d LEFin). 

Dans le cadre de la collecte des données, les intermédiaires financiers sont tenus de fournir annuellement des données sur les expositions, l'effet de levier, les risques de liquidité et de contrepartie des fonds gérés. Ces données sont destinées à améliorer la qualité de la surveillance dans le domaine de la gestion des fonds et à mieux identifier les risques systémiques. En outre, les données permettront une meilleure évaluation des risques inhérents aux intermédiaires financiers et à leurs fonds. Les normes et réglementations internationales seront également prises en compte.

La collecte des données est basée sur les risques. La FINMA a fixé un seuil de 500 millions de francs suisses pour les fonds suisses et de 500 millions de francs suisses plus une stratégie de placement alternative pour les fonds étrangers au-delà duquel les données sont demandées. Cela signifie que les petits fonds n'ayant aucun impact sur la stabilité du système ne seront pas inclus dans la collecte de données.

On 16 September 2021, FINMA published a communication recommending portfolio managers and trustees submit licence applications in good time.

Portfolio managers and trustees now require a licence. Some 2,400 of those already operating prior to 1 January 2020 have so far registered with FINMA. Out of these, only around 180 have hitherto submitted a licence application to FINMA. This is approximately equivalent to just seven percent of all portfolio managers and trustees (as at 1 September 2021) required by the Financial Institutions Act (FinIA) to submit their application by 31 December 2022.

Before portfolio managers and trustees can submit a licence application to FINMA, they must obtain the confirmation of a supervisory organisation (SO) for a possible affiliation. This step in the process should also be taken into account in the time planning. The SOs are set to be confronted with a high number of applications in 2022. If large quantities of applications are submitted simultaneously, this will naturally slow down the processing of each individual case.

Version française

Le 16 septembre 2021, la FINMA a publié une communication recommandant aux gestionnaires de fortune et trustees d’envoyer leurs demandes d’autorisation suffisamment tôt.

Les gestionnaires de fortune et les trustees doivent désormais obtenir une autorisation. Environ 2 400 d’entre eux qui exerçaient déjà leur activité à titre professionnel avant le 1er janvier 2020 se sont enregistrés auprès de la FINMA. Toutefois, seulement 180 environ ont jusqu'à présent transmis leurs demandes d’autorisation à la FINMA. Cela correspond à environ 7 % de tous les gestionnaires de fortune et trustees (état au 1er septembre 2021) devant transmettre leurs demandes d’ici au 31 décembre 2022 selon la loi sur les établissements financiers (LEFin).

Avant de pouvoir transmettre une demande d’autorisation à la FINMA, les gestionnaires de fortune et trustees doivent obtenir la confirmation d’un organisme de surveillance (OS) quant à une possible affiliation. Cette étape du processus requiert aussi une certaine planification. Les OS seront confrontés en 2022 à un grand nombre de demandes. Si de nombreuses demandes arrivent en même temps, cela prolongera inévitablement la durée de traitement de chacun des dossiers.

On 28 September 2021, the FINMA recognised the adjustments to the Asset Management Association Switzerland’s self-regulation as a minimum standard. They largely reflect the new rules of the FinIA and FinSA. The adjusted self-regulation enters into force on 1 January 2022.

Owing to the entry into force of the Financial Institutions Act (FinIA) and the Financial Services Act (FinSA), the Asset Management Association Switzerland (AMAS, formerly Swiss Funds & Asset Management Association, SFAMA) has adjusted its self-regulation. At the request of AMAS, FINMA has recognised the latter’s revised self-regulatory norms as a minimum standard. It has applied the Ordinance to the Financial Market Supervision Act to the recognition process and conducted an interdepartmental consultation. 

The revised rules of conduct and the revised guidelines concerning real estate funds, fund performance, asset valuation, money market funds and total expense ratio will enter into force on 1 January 2022. The two existing guidelines on distribution and KIID will be withdrawn following expiry of the statutory transitional periods as their content is covered by the FinSA. The existing transparency guideline has been integrated into the rules of conduct. 

As part of its revision, AMAS has in particular deleted the rules of conduct at the point of sale from its self-regulation as these are now included in the FinSA and apply generally. As well as minor adjustments in the areas of liquidity risk management, business continuity management and investor complaint management, the mandating of a legal entity as a valuation expert for real estate funds was incorporated. 

As the industry organisation of the fund and asset management sector in Switzerland, AMAS has in recent years had various self-regulatory standards recognised by FINMA as a minimum standard. These create rules where laws and ordinances contain no provisions or merely provide the framework and in doing so contribute to ensuring legal certainty in the fund and asset management sector. As the recognition of self-regulatory standards creates binding minimum standards for an entire sector, such standards must be broadly supported.

Version française

Le 28 septembre 2021, l’Autorité fédérale de surveillance des marchés financiers (FINMA) a reconnu comme standard minimal l’autorégulation adaptée de l’AMAS. Celle-ci intègre principalement les nouvelles règles de la LEFin et de la LSFin. L’autorégulation adaptée entrera en vigueur au 1er janvier 2022.

Suite à l’entrée en vigueur de la loi sur les établissements financiers (LEFin) et de la loi sur les services financiers (LSFin), l’Asset Management Association Switzerland (AMAS, anciennement Swiss Funds & Asset Management Association, SFAMA) a adapté son autorégulation. La FINMA a reconnu comme standard minimal l'autorégulation révisée de l’AMAS à la demande de cette dernière. Quant à la procédure de reconnaissance, la FINMA a appliqué l’ordonnance relative à la loi sur la surveillance des marchés financiers et a procédé à une consultation des unités administratives intéressées. 

Les versions remaniées des règles de conduite ainsi que les directives adaptées sur les fonds de placement immobiliers, sur la performance des fonds, sur l'évaluation de la fortune, sur les fonds du marché monétaire et sur le total expense entreront en vigueur le 1er janvier 2022. Les deux directives sur la distribution et sur les KIID, actuellement en-vigueur, seront abrogées à l’expiration des délais transitoires légaux, leur contenu étant réglé dans la LSFin. L’actuelle directive sur la transparence a été intégrée dans les règles de conduite.

Dans le cadre de ce remaniement, l’AMAS a notamment supprimé de l’autoréglementation les règles de conduite au point de vente, celles-ci figurant désormais dans la LSFin et s’appliquant de manière générale. Outre des adaptations ponctuelles dans les domaines de la gestion des risques de liquidité, de la gestion de la continuité des affaires et de la gestion des plaintes des investisseurs, l’attribution d’un mandat à une personne morale comme expert chargé de l’estimation a été intégrée à l’autorégulation pour les fonds immobiliers. 

En tant qu’organisation professionnelle représentative de l'industrie suisse de l'asset management, l’AMAS avait fait reconnaître par la FINMA différentes autorégulations comme standards minimaux au cours des dernières années. Celles-ci édictaient des règles là où tant les lois que les ordonnances ne prévoyaient aucune disposition légale ou prévoyaient simplement un cadre d’exécution. Elles contribuaient ainsi à créer une certaine sécurité juridique dans la branche de l'asset management. La reconnaissance d’autorégulations créant des standards minimaux contraignants pour l’ensemble d’une branche, celles-ci doivent bénéficier d’un large soutien.

On 30 September 2021, the Autoriteit Financiële Markten (AFM) announced it will continue the  investigation into the obligation to report incidents in the asset management sector. The reason is the lack of an increase in the number of incident reports despite repeated incentives.

The AFM has decided to conduct a follow-up survey among a number of companies in the near future. This involves looking at the way in which companies have implemented policy and measures in their business operations with regard to incidents and the way in which companies actually comply with the incident reporting obligation. The companies to be selected will be approached individually for this.

On 21 September 2021, the Autoriteit Financiële Markten (AFM) announced it started an investigation into pension fund complaints procedures.

In this study, AFM assess, on the basis of public information, how pension funds report on complaints, which definitions are used and to what extent the procedures are clear and findable for participants. In addition, a number of pension funds will receive an invitation in the short term for a meeting about their procedures or they will be asked to make complaint files available. AFM expects to be able to publish the results of our research in early 2022.

On 21 September 2021, the UK Government launched a consultation on draft legislation for a new levy on the anti-money laundering (AML) regulated sector.

At Budget 2020, the government announced a new levy to raise £100 million per year from the AML-regulated sector to help fund ambitious reforms outlined in the government’s 2019 Economic Crime Plan.

AML-regulated entities with over £10.2 million in UK revenue will be liable to pay the levy, which will first be collected in 2023/24 (April 2023 – March 2024). The levy will be collected by the three public sector AML statutory supervisors: the Financial Conduct Authority, HM Revenue & Customs, and the Gambling Commission.

The government is now holding a technical consultation on the ECL draft legislation ahead of its inclusion in the 2021-22 Finance Bill, to ensure the legislation operates as intended. This consultation will run until 15 October 2021.

On 8 September 2021, the UK published Critical Benchmarks (References and Administrators' Liability) Bill.

The Bill will support the orderly wind-down of critical benchmarks, protecting both users of these benchmarks and the integrity of the UK’s financial markets. 

The Bill will support the effective operation of the powers granted to the Financial Conduct Authority (FCA) under the Financial Services Act 2021 to oversee the wind-down of a critical benchmark. In particular, this Bill will provide legal certainty as to how contractual references to a critical benchmark should be treated where the FCA exercises powers under the Benchmarks Regulation (BMR) to provide for the continuity of an unrepresentative critical benchmark.

The Bill will also grant an immunity to the administrator of a critical benchmark that is designated under Article 23A of the BMR where the administrator acts in accordance with specific requirements imposed upon it by the FCA.

On 23 September 2021, the  S.I. 2021 No. 1074 - The Markets in Financial Instruments, Benchmarks and Financial Promotions (Amendment) (EU Exit) Regulations 2021 was published in the UK legislation.

These Regulations are made in order to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the United Kingdom from the European Union:

• amending the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 to provide that UK markets that meet the criteria in new Part A1 of Schedule 3 are covered by the exemptions in that Order from the prohibition on financial promotions in section 21 of the Financial Services and Markets Act 2000. 
• amending Regulation (EU) No 600/2014 on markets in financial instruments and Commission Delegated Regulation (EU) 2017/581 supplementing Regulation (EU) No 600/2014 with regard to regulatory technical standards on clearing access in respect of trading venues and central counterparties, to provide that the requirement for trading venues and central counterparties to grant each other non-discriminatory access does not apply in relation to exchange traded derivatives and to make consequential amendments, as that requirement does not operate appropriately in a UK-only context. 
• amending Commission Delegated Regulation (EU) 2020/1816 and Commission Delegated Regulation (EU) 2020/1818 on low carbon benchmarks. The amendments correct deficiencies in the Delegated Regulations as they form part of retained EU law, removing inappropriate references to EU institutions or provisions of EU law.

On 14 September 2021, the Bank of England (BoE) published its approach to monitoring of third-country systems designated under the UK’s Settlement Finality Regulations.

Once a system, not subject to UK law, has been designated under the UK Settlement Finality Regulations (SFR), the Bank will monitor that the system continues to meet the requirements for designation. The requirements are:

1. A system must:

a. have at least three institutions participating in the system, unless otherwise determined by the Bank in any case where there are two institutions participating in the system and the Bank considers that designation is required on the grounds of systemic risk; and

b. be a system through which transfer orders are effected.

2. A system must have adequate arrangements for the effective monitoring and enforcement of compliance with its rules.

3. A system operator must have financial resources sufficient for the proper performance of its functions.

4. A system operator must be able and willing to co-operate with the relevant UK supervisory and administrative authorities.

5. The rules of the non-UK law system must:

a. specify the point at which a transfer order takes effect as having been entered into the system;

b. specify the point after which a transfer order may not be revoked by a participant or any other party; and

c. prohibit the revocation by a participant or any other party of a transfer order from the point specified in accordance with paragraph (b).

6. The system must have default arrangements, which are appropriate for that system in all the circumstances.

Pursuant to Regulation 12 of the SFR, this note sets out the Bank’s approach to the ongoing monitoring of third-country designated systems. In line with the Bank’s approach to co-operation with overseas authorities, this takes account of the equivalence of home state regulation. If the Bank identifies any areas of concern, the BoE will, in the first instance, engage with the relevant home state regulator (where one exists) to resolve any issues.

These requirements will be applied to each designated system when its application for permanent designation is approved.

On 9 September 2021, the Financial Conduct Authority (FCA) published CP21/28: New cancellation and variation power: Changes to the Handbook and Enforcement Guide.

The changes will help to prevent scams and to ensure the FS Register presents a clearer picture of the permissions firms hold. Firms are required to confirm that the information on the FS Register is accurate on an annual basis.

The new power, granted to the FCA via the Financial Services Act 2021, will streamline and shorten the process of removing firm permissions. The FCA will be able to start the cancellation process as soon as it considers permissions are not being used, by serving 14 days’ notice on a firm. The FCA will then be able to vary or cancel permissions after 1 month.

Changes affect only firms authorized by the FCA under Part 4A of FSMA, excludes payments and e-money firms and firms authorized by the PRA.

The consultation will run until 29 October 2021. 

On 15 September 2021, the Financial Conduct Authority (FCA) published a new strategy aimed at giving consumers the confidence to invest, supported by a high-quality, affordable advice market, which should lead to fewer people being scammed or persuaded to invest in products too risky for their needs. The FCA will publish metrics to assess whether these outcomes are being met.  

By 2025, the FCA will:

• Reduce by 20% the number of consumers who could benefit from investment earnings but are missing out. There are nearly 8.6m consumers holding more than £10,000 of investible assets in cash.
• Halve the number of consumers who are investing in higher risk products that are not aligned to their needs. 6% of consumers increased their holdings of higher risk investments during the pandemic, with 45% of self-directed investors saying they did not realise the risks.
• Reduce the money consumers lose to investment scams perpetrated or facilitated by regulated firms. Consumers lost nearly £570m to investment fraud in 2020/21 – this has tripled since 2018.
• Stabilise the £833m compensation bill for the Financial Services Compensation Scheme, and target a year-on-year reduction in the Life Distribution and Investment Intermediation (LDII) funding classes from 2025 to 2030.

On 16 September 2021, the Financial Conduct Authority (FCA) informed on the joint discussion paper on developing a common framework for measuring value for money (VFM) in defined contribution (DC) pension schemes, together with the Pensions Regulator (TPR).

The common framework will also allow trustees and independent governance committees to compare their scheme’s costs and charges, investment performance and service standards with similar offerings from other providers.

Disclosures alone will not address the difficult issues surrounding VFM in pensions. Improving data disclosures will be a starting point and the regulators will continue to work with stakeholders to improve saver outcomes over the longer term.

The FCA and TPR will use the feedback received in further work towards creating a framework to assess VFM.

The FCA and TPR are inviting comments on the discussion paper by 10 December 2021 and will publish a feedback statement setting out next steps in 2022.

On 24 September 2021, the S.I. 2021 No. 1070 - The Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations 2021 was published in the UK legislation.

These Regulations amend the law relating to the administration of occupational pension schemes. Regulation 2 amends the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (S.I. 1996/1715) to require trustees and managers to report on the return on investments their funds have achieved as part of the annual statement required on governance. It also requires the trustees and managers of schemes holding assets worth less than £100 million to compare the charges and transaction costs and the return on investments of their schemes with three other schemes and to assess the extent to which their schemes satisfy administration and governance criteria as part of their value for members assessment.

On 15 September 2021, the S.I. 2021 No. 1046 - The Financial Services and Markets Act 2000 (Prudential Regulation of FCA Investment Firms) (Definitions for the purposes of Part 9C) Regulations 2021 was published in the UK legislation.

This instrument is made under section 143B(2) of the Financial Services and Markets Act 2000 (c. 8) and provides definitions of the terms “parent undertaking” and “group” for the purposes of Part 9C of that Act. Part 9C, which includes section 143B(2), was introduced into FSMA by the Financial Services and Markets Act 2021 (c. 22).

On 29 September 2021, the U.S. Securities and Exchange Commission (SEC) proposed amendments to Form N-PX to enhance the information mutual funds, exchange-traded funds, and certain other funds report about their proxy votes. The proposed rulemaking would require funds to tie the description of each voting matter to the issuer’s form of proxy and to categorize each matter by type to help investors identify votes of interest and compare voting records. The proposal also would prescribe how funds organize their reports and require them to use a structured data language to make the filings easier to analyze. Funds would also be required to disclose how their securities lending activity impacted their voting.

Further, the rulemaking would require institutional investment managers to disclose how they voted on executive compensation, or so-called “say-on-pay” matters, which would fulfill one of the remaining rulemaking mandates under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Managers generally would be subject to the same Form N-PX reporting requirements as funds with respect to their say-on-pay votes.

Since 2003, funds have been required to file Form N-PX reports disclosing how they voted on proxy proposals relating to investments they hold, but investors may face difficulties analyzing these reports. For example, funds may report their votes in an inconsistent manner or in a format that is not machine readable. This can make it more difficult for investors to analyze the reported data. The proposal would make funds’ proxy voting records more usable and easier to analyze, improving investors’ ability to monitor how their funds vote and compare different funds’ voting records.

The proposal will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days after publication in the Federal Register.

On 22 September 2021, the U.S. Securities and Exchange Commission (SEC) published a sample comment letter concerning climate disclosures made by US-listed public companies in quarterly and annual reports. The DCF selectively reviews filings made under the Securities Act and the Exchange Act to monitor and enhance compliance with applicable disclosure requirements. The sample letter contains comments that the DFC may issue to companies regarding their climate-related disclosure or the absence of such disclosure.

Depending on the particular facts and circumstances, information related to climate change-related risks and opportunities may be required in disclosures related to a company's description of business, legal proceedings, risk factors, and management's discussion and analysis of financial condition and results of operations. For example, companies may want to include at least the same level of detail about climate-related risks in their SEC filings as they include in any publicly available corporate social responsibility report (CSR).

The sample comments do not constitute an exhaustive list of the issues that companies should consider. Actual comments issued by the SEC staff would likely be tailored to the specific company and industry, and would take into consideration any relevant disclosure that the company has provided in its public filings.

On 30 September 2021, the Banco Central do Brasil (BACEN) published Resolution CMN No. 4.949 -  principles and procedures to be adopted in the relationship with customers and users of products and services.

For the purposes of this Resolution, the relationship with customers and users includes the pre-contracting, contracting and post-contracting phases of products and services.

The institutions, in the relationship with customers and users of products and services, must conduct their activities in compliance with the principles of ethics, responsibility, transparency and diligence, providing for the convergence of interests and the consolidation of an institutional image of credibility, security and competence.

Compliance with these provisions requires, among others, the following actions:

I - promote an organizational culture that encourages cooperative and balanced relationships with customers and users; and

II - provide fair and equitable treatment to customers and users, considering their relationship profiles and associated vulnerabilities.

On 20 September 2021, the Brazilian Financial and Capital Markets Association (ANBIMA) informed on its suggestions to the public hearing of the CVM on the new rules for autonomous investment agents and for transparency in the distribution of financial products.

For draft A, which amends CVM Resolution 16 and deals with autonomous agents, the ANBIMA indicates that these players must follow the suitability (investor profile analysis process) of the intermediary institution to which they are linked. ANBIMA also suggests limiting the responsibilities of the houses in relation to non-exclusive agents. In other words, professionals are responsible for adopting their own controls, as they work with different institutions.

The Draft B brings changes to Resolution 3, which deals with the intermediation of financial products. One of them is the publication, on the websites of the houses, of the forms of remuneration of the distribution agents – ANBIMA'S suggestion is to disclose remuneration intervals or a maximum rate allowed according to the product.

On 30 September 2021, the  Unidad de Proyección Normativa y Estudios de Regulación Financiera (URF) launched a consultation on the 2022 Regulatory Agenda Proposal.

In accordance with the public policy guidelines defined in the Policy Document for the financial sector, prepared in 2020 by the Ministry of Finance and Public Credit, called "Public Policy for further development of the financial system", and the provisions proposed in Bill 413 of 2021, called "Law on the capital market and payment system", the regulatory agenda of the URF for the year 2022 will have the following work fronts, disaggregated according to the strategic objectives defined in the aforementioned policy document:

• Promote efficient transformation of savings and investment; 
• Promote financial inclusion;
• Strengthen financial security and stability; 
• Promote access to the payments system; 
• Strengthen the institutional framework.

The proposal is available for public comment until October 29, 2021. Comments will be received by e-mails daniel.mendez@urf.gov.co and dquinter@urf.gov.co.

On 21 September 2021, the Comisión Nacional Bancaria y de Valores (CNBV) published a preliminary draft of modifications to the general provisions applicable to brokerage firms in matters of better execution.

The initiative published by the National Banking and Securities Commission (CNBV) on the portal of preliminary projects of the National Commission for Regulatory Improvement (CONAMER) to the General Provisions applicable to brokerage houses (Provisions) aims to encourage the operation in the stock exchanges, promote healthy competition, protect the investor and facilitate the operation at the close of the auction session.

It also aims to take advantage of the market infrastructures that are currently available in Mexico. In the same way, it seeks to establish objective criteria to avoid biases both in the submission and in the execution of bids.

As a result of the comments received on the draft amendment to the Provisions regarding better execution presented in CONAMER on February 19, the CNBV undertook the task of constructing a new proposal that would consider them.

For its part, the preliminary draft in article 76 Bis, preserves the objective of protecting the investor, whatever it may be (small or large investor), maintaining price and volume factors as the main elements to close an operation.

On the other hand, a third condition is added in case the price and volume factors are not enough to decide in which exchange to execute the client's instruction, the above derived from the fact that the price is the same on both stock exchanges and the available volume is sufficient to satisfy the client's instruction on any of the stock exchanges. In this case, the brokerage houses must establish the selection criteria of the stock exchange for the execution of the client's instruction, by means of the aforementioned methodology for transmitting passive positions.

Finally, although the participants commented that in their instructions they do not specify to which exchange they should direct their operations, the vast majority expressed their interest that their instructions to carry out a series of operations at the close of the trading session result in a weighted average price close to the “official closing price”.

On 9 September 2021, the Resolution that reforms, adds and repeals various General Provisions referred to in article 212 of the Securities Market Law was published in the Official Journal.

The resolution allows the onboarding process for Brokerage House clients through mobile devices under certain restrictions.

On 9 September 2021, the Resolution that reforms, adds and repeals various of the General Provisions referred to in article 91 of the Investment Funds Law was published in the Official Journal.

The resolution allows the onboarding process for clients of Investment Funds through mobile devices under certain restrictions.

On 22 September 2021, the Circular 6/2021 addressed to Credit Institutions, Brokerage Houses, Investment Funds, Specialized Investment Companies of Retirement Funds, Insurance Institutions, Surety Institutions and the National Financial for Agricultural, Rural, Forestry and Fisheries Development , in their securities lending operations , relative to the Modifications to the Rules to which credit institutions must abide; brokerage houses ; investment companies; investment companies specialized in retirement funds, and Financiera Rural in its securities lending operations was published in the Official Journal.

The Bank of Mexico, in order to continue promoting the healthy development and stability of the financial system, as well as to promote the proper functioning of the payment systems and the protection of the interests of the public, has considered it necessary to update and modernize the regulatory framework of securities lending operations carried out by financial institutions, in accordance with the recommendations of the financial authorities bodies called the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS), in order to strengthen the methodology used to calculate adjustment factors that seek to guarantee the net exposure in operations of securities lending through a procedure tending to avoid procyclicality, and contribute to improving the liquidity, security, depth and development of the markets, as well as including insurance and surety institutions as entities that can carry out securities lending operations in their character of lenders, establish the possibility that all entities provided for in the Rules can clear and settle their operations in a central securities counterparty, and expand the universe of securities that may be the object of securities lending operations.

On 7 September 2021, the International Organization of Securities Commissions (IOSCO) published a guidance for intermediaries and asset managers using Artificial Intelligence and Machine Learning.

The IOSCO guidance consists of six measures that seek to ensure that market intermediaries and asset managers have:

• appropriate governance, controls and oversight frameworks over the development, testing, use and performance monitoring of AI and ML; 
• staff with adequate knowledge, skills and experience to implement, oversee, and challenge the outcomes of the AI and ML; 
• robust, consistent and clearly defined development and testing processes to enable firms to identify potential issues prior to full deployment of AI and ML; and 
• appropriate transparency and disclosures to their investors, regulators and other relevant stakeholders.

In addition to the guidance, the report includes two annexes that describe how regulators are addressing the challenges created by AI and ML and the guidance issued by supranational bodies in this area.