Financial Services Regulation and Compliance - Investment Firms Feb 2022
Amendments to the reporting requirements for investment firms enter into force
On 21 February 2022, the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) (Amendment) Regulations 2022 (the regulations) came into operation.
The regulations amend the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2017. The reporting requirements have been updated to align with the classification of investment firms under the Investment Firm Regulations, which came into effect in September 2021.
ESMA publishes supervisory briefing on the use of tied agents under MiFID II
On 2 February 2022, ESMA published a supervisory briefing to ensure convergence across the EU in the supervision of firms using tied agents, in particular those based outside the EU.
The supervisory briefing sets out ESMA and National Competent Authorities’ (NCAs) common understanding on the supervision of firms using tied agents to provide investment services and/or activities. ESMA’s monitoring of the activities of market participants from the United Kingdom in the EU has shown that such a briefing will contribute to the development of a convergent EU supervisory culture. It will also foster improved investor protection.
The publication details the supervisory expectations in the following instances:
- when firms appoint tied agents
- when firms use tied agents in their on-going activities
The content of the supervisory briefing is not subject to any ‘comply or explain’ mechanism for NCAs and it is not binding.
EBA publishes its Opinion on the European Commission's amendments to the final RTS for own funds requirements for investment firms based on fixed overheads
On 11 February 2022, the EBA issued its Opinion on the European Commission's amendments to the final regulatory technical standards (RTS) for own funds requirements for investment firms based on fixed overheads. On 16 December 2020, the EBA submitted the final draft RTS on own funds requirements for investment firms based on fixed overheads in accordance with Article 13(4) of Regulation (EU) No 2019/2033. With its letter of 29 November 2021, the European Commission informed the EBA of its intention to endorse the draft RTS with amendments and submitted to the EBA a modified version of the draft RTS with its envisaged changes.
The EBA have considered the amendments by the European Commission to be substantive in nature and therefore warrant a formal opinion as set out in Article 10 of the EBA Regulation. Despite being substantive, the EBA agrees with the proposed amendments, opining that they find a good balance between the flexibility and risk sensitivity required for the calculation of the fixed overheads requirement and the need for a harmonised regulatory framework.
The substantive change concerns investment firms that are market makers and targets fees that would be incurred by the firm in the context of a wind-down. The non-substantive change involved several drafting amendments meant to ease the reading of the draft RTS and that follow the EBA’s proposed wording.
ESMA publishes final reports on CCP recovery regime
On 31 January 2022, ESMA published its final reports on the central counterparties (CCPs) recovery regime, as mandated under the CCP Recovery and Resolution Regulation (CCPRRR).
The seven final reports cover proposals for regulatory technical standards (RTS) on the methodology for calculation and maintenance of the additional amount of pre-funded dedicated own resources, on the factors to be taken into account by the competent authority and the supervisory college when assessing the recovery plan and on the recompense mechanism for non-defaulting clearing members. It also covers guidelines on the consistent application of the triggers for the use of early intervention measures, on the CCP’s recovery plan indicators and scenarios and on the restrictions of dividends in case of a significant non-default event.
ESMA has submitted the final reports concerning the RTS to the European Commission, which now has three months to decide whether to endorse the proposed standards under a delegated regulation. ESMA has submitted the guidelines for translation and once translated into all official languages of the EU.
Sanctions imposed in response to the crisis in the Ukraine
Over the course of February, 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: 13 March 2022