Financial Services Regulation and Compliance - Investment Firms Aug 2021

DOMESTIC

The CBI issue Feedback Statement in relation to enhancements to the CBI Client Asset Requirements

On 3 December 2020, the CBI published a consultation on enhancements to the CBI's Asset Requirements, which are contained in the Central Bank Investment Firms Regulations. The CBI outlined in the Feedback Statement that it wishes to proceed with the proposal to extend the scope of the Client Asset Requirements (CAR) to credit institutions undertaking MiFID investment business.

The CBI also stated that in addition to the proposed enhancements, credit institutions who wish to hold client funds on behalf of a client (rather than relying on the MiFID 'banking exemption') must disclose to the client in writing:

  1. that their money will be held as client funds in accordance with the CAR and the MiFID Regulations, rather than as a deposit; and
  2. the circumstances, if any, in which that money will cease to be held as client funds and will instead be held as a deposit (in accordance with the EU Capital Requirements Directives).

Additionally, in recognition of the technology implementation challenges, the CBI stated that the proposed transitional period of 18 months should be sufficient for credit institutions to update client agreements/reporting.

EUROPEAN

The EBA publishes its review on the prudential assessment of qualifying holdings

​The EBA has published its review on the prudential assessment of qualifying holdings. The purpose of the review was to assess the application by competent authorities of the joint ESAs Guidelines on the prudential assessment of the acquisition of qualifying holdings. The findings indicate that competent authorities have either broadly or fully applied the Guidelines resulting in a more unified approach to assessment practices across the EU.

The report is based on the results of self-assessments conducted by competent authorities as to how they apply the Guidelines in areas such as acting in concert, significant influence, indirect qualifying holdings, assessment of completeness of the notification and time limits and assessment criteria on ML/TF risk.

The report also highlights areas where the Guidelines could be updated to provide additional guidance including:

  • The fifth assessment criteria regarding ML/TF risk;
  • The assessment of large and complex acquisitions;
  • The proportionality principle; and
  • The content of application documents. 

ESMA makes new bond liquidity data available

On 30 July 2021, ESMA made new data for bonds available, which are subject to the pre- and post-trade requirements of MiFID II and MiFIR through its data register. At present, 568 liquid bonds are subject to MiFID II transparency requirements. The transparency requirements for bonds that have been deemed liquid will apply from 16 August 2021 to 15 November 2021.

ESMA publishes latest edition of its newsletter

On 2 August 2021 ESMA published its Newsletter "Spotlight on Markets". This Newsletter discusses the Public Statements on the prospectus disclosure and investor protection issues that were raised by special purpose acquisition companies (SPACs), the launch of seven public consultations on CCP recovery regime; the MiFID II II/MiFIR Annual Review Report on RTS 2; and the Joint Annual Report on Prospectus Activity.

ESMA publishes its report on the use of FinTech by CSDs

On 6 August 2021, ESMA published its Report on the use of Fintech by Central Securities Depositories (CSDs). This Report has collated the views of national competent authorities (NCAs) and other market participants on the planned future use of FinTech and Distributed-ledger Technology (DLT) and whether the current regulatory framework creates a barrier for NCAs to begin projects that involve DLT.  The report suggests amendments to the Central Securities Depositories Regulation and its recommendations will inform the EU Commission's targeted review of that legislation.

The EBA updates the mapping between the ITS on Pillar 3 disclosures and the ITS on supervisory reporting

On 6 August 2021, the EBA published an updated tool, which specifies the mapping between relevant supervisory reporting data points and quantitative disclosure data points. The objective of this updated tool is to facilitate institutions compliance with disclosure requirements and improving the consistency and quality of the information disclosed. Additionally, the updated tool applied to the reporting framework 3.0 and the ITS on institutions'' Pillar 3 public disclosures.

ESMA consults on suitability assessments of DRSP management body members

On 24 August 2021, ESMA launched a consultation on draft Regulatory Technical Standards (RTS) under MiFIR in relation to suitability assessments of management body members of Data Reporting Service Providers (DRSP). This consultation adds to the existing ESMA Guidelines in relation to the management body of market operators and DRSPs. ESMA wishes to include requirements covering the following:

  • Good repute, honesty and integrity;
  • Sufficient time commitment;
  • Knowledge, skills and experience;
  • Independence;
  • Induction and training;
  • Diversity; and
  • Record-keeping.

This consultation will run until 24 September 2021.

For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team.

Date published: 7 September 2021