Financial Services Regulation and Compliance - Investment Firms Mar 2022
Domestic
Central Bank of Ireland and IOSCO report on retail market conduct issues
On 21 March 2022, the International Organization of Securities Commission's (IOSCO) Retail Market Conduct Task Force (RMCTF), co-chaired by the Central Bank of Ireland and the Australian Securities & Investments Commission, published a report on retail market conduct issues.
The report provides a clear picture of the evolving global retail investor trends and their implications for market conduct. The report also considers authorities approaches to disclosure and investor education. The report examines the reasons for regulatory and market implications of increasing gamification, self-directed trading and the influence of social media on retail investor behaviour.
European
Final Report on Guidelines on certain aspects of the MiFID II remuneration requirements
On 31 March 2022, the European Securities and Markets Authority (ESMA) published its Final Report: guidelines on certain aspects of the MiFID II remuneration requirements (the report). The report summarises the responses to the July 2021 consultation paper. The purpose of the report is to enhance clarity and foster convergence in the implementation of certain aspects of the new MiFID II remuneration requirements, replacing the existing ESMA guidelines on the same topic, issued in 2013. The report builds on the text of the 2013 guidelines, which have been substantially confirmed (albeit clarified and refined where necessary). In addition, it takes into account new requirements under MiFID II and the results of supervisory activities conducted by national competent authorities (NCAs) on the topic. The guidelines at Annex IV to the Report will be translated into the official EU languages and published on EMSA's website
ESMA proposes amendments on the review of transparency requirements under MiFIR
On 28 March 2022, ESMA proposed targeted amendments to some of its Regulatory Technical Standards (RTS 1 and RTS 2) which specify the Markets in Financial Instruments Regulation (MiFIR) transparency requirements for equity and non-equity respectively. These amendments aim to clarify, improve and simplify the transparency regime for equity and non-equity instruments. The review of RTS 1 and RTS 2 is carried out in two steps:
- Final report including a first series of proposed amendments to address issues that have received broad support from stakeholders and/or are considered important in the context of establishing a consolidated tape provider (CTP), and
- A second review focused on necessary changes of RTS 1 and 2 in consequence of the MiFIR review and also including the analysis of proposals included in the Consultation Paper published in July 2021 but not covered in this final report.
The EC will consider the reports submitted by the ESMA to decide whether to endorse the proposed amendments to the RTS.
Natasha Cazenave keynote speech at ICI investment management conference 2022 - Key priorities for the asset management industry in 2022: sustainable finance and systemic risk (ESMA34-466-282)
On 24 March 2022, Natasha Cazenave, Executive Director of the European Securities and Markets Authority (ESMA), delivered a keynote speech at the ICI investment management conference 2022.
In her speech, Cazenave highlighted two of the key challenges ESMA will be addressing this year and going forward. First, developing a framework for the asset management industry to positively contribute to the climate transition. Second, strengthening the resilience of investment funds to market, credit and liquidity shocks.
Cazenave welcomed the efforts made by market participants to comply with the detailed rules contained in the "implementing measures" of the European sustainable finance disclosure regulation (SFDR) which will apply from 1 January 2023. Cazenave noted ESMA, EBA and EIOPA are also preparing the review of indicators for principal adverse impacts to ensure the indicators stay relevant in light of key environmental and scientific developments.
ESMA has issued Guidelines in liquidity stress testing and is actively monitoring liquidity risks within open-ended funds.
ESMA published its assessment and recommendations on the EC’s MiFIR review proposal
On 15 March 2022, ESMA published its assessment of the main elements on the EC's MiFIR review proposal. The assessment focused on the establishment of the consolidated tape provider (CTP) but also includes elements such as equity and non-equity transparency, reporting and payment for order flow.
In relation to CTP, ESMA recommended co-legislators to allow for more time for running the selection process of the CTP, to split the selection procedure from the authorisation process, to mandate ESMA with preparing regulatory technical standards on market data to be included by the CTP instead of an EC delegated act and to extend the timeline for triggering the assessment for ESMA to be the CTP fall-back solution.
ESMA also recommended the simplification of the non-equity deferral regime, ensuring a level-playing filed across the Union, addition of a stand-alone suspension mechanism for the derivatives trading obligation and replacing the concept of “traded on a trading venue” to avoid gaps in reporting and transparency publications. The MiFIR review proposal is currently being negotiated by the European Parliament and the Council.
Commission Delegated Regulation (EU) .../... of 11.3.2022 supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards for public disclosure of investment policy by investment firms (C(2022) 1413 final)
On 11 March 2022, the EC published the Commission Delegated Regulation supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards for public disclosure of investment policy by investment firms (the delegated regulation).
The delegated regulation specify uniform disclosure formats and associated instructions for the requirements on investment policy by investment firms referred to in Article 52(1) of the IFR. The disclosure required includes information on the proportion of voting rights attached to the shares held directly or indirectly by the investment firms, information on their voting behaviour, an explanation of votes and the ratio of proposals put forward and approved, information on the use of proxy advisor firms and information on their voting guidelines. The delegated regulation will enter into force on the twentieth day following its publication in the Official Journal of the EU.
Sanctions imposed in response to the crisis in the Ukraine
Over the course of February and March, the EU imposed a number of sanctions in response to the crisis in the Ukraine. Given that the crisis is developing and sanctions are continuing to evolve, the CBI is publishing details of new restrictive measures/sanctions that are adopted in this regard, as well as any associated EU/UN guidance, on their dedicated webpage.
For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team
Date published: 14 April 2022