Financial Services Regulation and Compliance - Investment Firms Oct 2021
Domestic
CBI Markets Update, Issue 13 2021
On 1 October 2021, the CBI issued its latest markets update, Issue 13 2021. In domestic news, Issue 13 2021 focuses on the update to the CBI website to include references to the recently published Irish UCITS and AIFM Statutory Instruments, the updated Q&A on the payment of distributions and variable remuneration by investment firms and market operators, the partial transposition of the Investment Firms Directive (Directive (EU) 2019/2034) into Irish law, the publication of the 42nd edition of the CBI AIFMD Q&A, the publication the 34th edition of the CBI UCITS Q&A and the CBI clarifying expectations as regards reporting requirements for MiFID investment firms under Article 54 of IFR. Internationally, Issue 13 2021 covers, among other topics, the European Securities and Markets Authority's (ESMA) call for legislative changes to improve access to and use of credit ratings, the ESMA MiFID II review report on algorithmic trading, ESMA's focus on supervision, sustainability, digitalisation, the Capital Markets Union in 2022 and ESMA consultations on the Short Selling Regulation. Separately, it also covers proposals for a review of the MiFID II best execution reporting regime.
European
ESMA seeks stakeholder input on shaping advice on retail investor protection
On 1 October 2021, ESMA published a call for evidence on a number of retail investor protection topics under MiFID II. These views will feed into ESMA’s technical advice to the European Commission on the development of its strategy for retail investment. ESMA is requesting information from stakeholders on three topics; disclosures, digital disclosures, and digital tools and channels.
The call for evidence is open until 2 January 2022 and seeks feedback from all interested stakeholders. ESMA will then consider the information received when drafting its advice to the Commission which will be delivered by 30 April 2022.
NextGenerationEU: European Commission issues first green bond to finance the sustainable recovery
On 12 October 2021, the European Commission issued the first NextGenerationEU green bond, thus raising €12bn to be used exclusively for green and sustainable investments across the EU, the largest ever such bond. The 15-year bond due on 4 February 2037 was more than 11 times oversubscribed, with books exceeding €135bn, representing a strong start to the NextGenerationEU green bond programme of up to €250bn by end-2026. This strategy relies on a mix of long- and short-term issuances via syndicated and auction formats to enable the Commission to raise funds flexibly and on the most advantageous terms under prevailing market conditions.
The funds from the NextGenerationEU green bond issuances will be used to finance green and sustainable expenditure under the recovery and resilience facility. Eligible investments from the already approved plans include a research platform for energy transition in Belgium and the construction of wind power plants on land in Lithuania. A minimum of 37% of every recovery and resilience plan has to be devoted to the green transition, with many Member States striving to do more.
Verena Ross appointed Chair of the European Securities and Markets Authority
On 15 October 2021, ESMA announced that Verena Ross would be the next ESMA Chair, after the appointment was confirmed by the Council of the European Union. Ms Ross started in her new position on 1 November 2021.
Ms. Ross replaces Steven Maijoor and is appointed for a five year term, renewable once. A German national, Ms Ross was Executive Director at ESMA from 2011 to 2021, having previously held regulatory and supervisory roles in London. Anneli Tuominen, Vice Chair of ESMA and Director-General at the FIN-FSA of Finland, who had acted as Interim Chair since 1 April 2021 relinquished this position on 31 October 2021.
EBA publishes final draft regulatory technical standards on disclosure of investment policy by investment firms
On 19 October 2021, the EBA published new regulatory technical standards (RTS) on disclosure of investment policy by investment firms. The final draft RTS put forward comparable disclosures that should help stakeholders understand investment firms’ influence over the companies in which they hold voting rights and the impact of investment firms’ policies on aspects such as the governance or management of those companies. These disclosure requirements apply to class 2 investment firms with total assets above €100m.
These final draft RTS were submitted to the European Commission for adoption. The first disclosure date will be 31 December 2021.
ESAs propose new rules for taxonomy-related product disclosures
On 22 October 2021, the ESAs delivered a final report with draft RTS to the European Commission regarding disclosures under the Sustainable Finance Disclosure Regulation (SFDR) (as amended by the Taxonomy Regulation). The disclosures relate to financial products that make sustainable investments contributing to environmental objectives.
The draft RTS aims to:
- provide disclosures to end investors regarding the investments of financial products in environmentally sustainable economic activities, providing them with comparable information to make informed investment choices
- establish a single rulebook for sustainability disclosures under the SFDR and the Taxonomy Regulation
The European Commission will scrutinise the draft RTS and decide whether to endorse them within three months of their publication.
For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team.
Date published: 11 November 2021