July 2024 Regulatory Roundup

INVESTMENT SERVICES & CAPITAL MARKETS

MIFID and MIFIR

European Commission consults on draft Delegated Regulation as regards OTC derivatives identifying reference data under MIFIR

On 12 June 2024, the European Commission published for consultation a draft Delegated Regulation supplementing MIFIR as regards OTC derivatives identifying reference data to be used for the purposes of the transparency requirements laid down in Article 8a(2), and Articles 10 and 21 of MIFIR.

Following the MIFIR Review, MIFIR now clarifies that the pre- and post-transparency requirements for non-equity instruments applies to both exchange-traded and OTC derivatives. The post-trade disclosure obligation for investment firms was also amended. Now the obligation no longer applies to derivatives “traded on a trading venue”, but it does apply to OTC derivatives traded either on their own account or on behalf of clients, although the transaction reporting obligation applies to both types of derivatives.

The draft Delegated Regulation sets out the identifying reference data to be used for OTC interest rate swaps and OTC credit default swaps for the transparency requirements. It also provides the full set of relevant identifying reference data that needs to be assigned to a given ISO 6166 ISIN for OTC interest rate swaps and OTC credit default swaps.

In addition, the draft Delegated Regulation defers the date of application to 1 September 2025. The deferral is intended to allow enough time for the revision of the ISIN template and the implementation of the necessary adjustments to IT systems, while taking into consideration the timeline prescribed by the MIFIR review for the launch of the OTC derivatives consolidate tape tender process.

The European Commission consulted on the appropriate identifying reference data to be used for the transparency reporting of OTC derivatives within the scope of Article 8a(2) MIFIR in November. After reviewing the responses received, the European Commission explains that the Delegated Regulation seeks to strike a balance between allowing for the use of the same identifier for transparency and transaction reporting purposes, ensuring continuity of use for identifying reference data for the purposes of transaction reporting.

The deadline for comments is 10 July 2024. Subject to no objections from the Council or European Parliament, the draft Delegated Regulation will enter into force on the twentieth day following its publication in the Official Journal and apply from 1 September 2025.

MIFIR Reporting new ESMA website

On 18 June 2024, ESMA launched a new website page on MIFIR reporting. 

The new webpage includes section on:

• MIFID/MAR reference data
• MIFIR transparency requirements
• MIFIR double volume cap mechanism
• MIFIR transaction reporting
• Databases and registers

Artificial intelligence

ESMA provides guidance to firms using artificial intelligence in investment services

On 30 May 2024, ESMA issued a Statement providing initial guidance to firms using Artificial Intelligence technologies (AI) when they provide investment services to retail clients.

When using AI, ESMA expects firms to comply with relevant MIFID II requirements, particularly when it comes to organisational aspects, conduct of business, and their regulatory obligation to act in the best interest of the client.

Although AI technologies offer potential benefits to firms and clients, they also pose inherent risks, such as:

• Algorithmic biases and data quality issues;
• Opaque decision-making by a firm’s staff members;
• Overreliance on AI by both firms and clients for decision-making; and 
• Privacy and security concerns linked to the collection, storage, and processing of the large amount of data needed by AI systems.

Potential uses of AI by investment firm which would be covered by requirements under MIFID II include customer support, fraud detection, risk management, compliance, and support to firms in the provision of investment advice and portfolio management. 

ESMA and the National Competent Authorities (NCAs) will keep monitoring the use of AI in investment services and the relevant EU legal framework to determine if further action is needed in this area.

European Commission consults on AI in the financial sector

On 18 June 2024, the European Commission launched a consultation on the use of AI in the financial sector.

The consultation aims to aid the European Commission in developing guidance for the financial sector across all market areas in preparation for the expected adoption of the AI Act in July. The survey covers three aspects: (i) general questions on development of AI, (ii) specific use cases in finance, and (iii) the AI Act in relation to the financial sector, focusing on the industry’s needs in order to implement the upcoming AI framework. The European Commission has specifically requested input from those financial services companies that are actively providing or developing AI technology.

The deadline for comments is 13 September 2024. Alongside the consultation, the ESAs will run a series of workshops providing a platform for stakeholders to exchange knowledge about the latest industry developments and present their progress on ongoing projects. The workshops will take place during the Autumn with registration closing on 26 July 2024.  If sufficient progress is made, the European Commission intends to publish a report on the findings and analysis of main trends and issues arising with the use of AI applications in financial services.[/vc_column_text][/vc_column][/vc_row][/vc_section][vc_section css=”.vc_custom_1609007282200{margin-bottom: 20px !important;}”][vc_row css=”.vc_custom_1609007241176{padding-right: 15px !important;padding-left: 15px !important;}”][vc_column css=”.vc_custom_1612794217189{margin-bottom: 20px !important;padding-top: 3px !important;padding-right: 20px !important;padding-bottom: 3px !important;padding-left: 20px !important;background-color: #283a66 !important;}”][vc_column_text]

OPERATIONAL RESILIENCE

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]DORA

ESAs publish templates and tools for voluntary dry run exercise to support the DORA implementation

On 31 May 2024, the European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) published templates, technical documents and tools for the dry run exercise on the reporting of registers of information in the context of Digital Operation Resilience Act (DORA) announced in April 2024.

The materials published include:

• templates for the registers of information with example (in Excel);
• draft technical package for reporting, including data point model (DPM), annotated table layout and validation rules;
• optional tool (VBA macro) to assist with the conversion of Excel templates into .csv files and .zip files for their submission;
• frequently asked questions regarding the exercise.

All these materials are available on the dry run exercise webpage.

Financial entities can use these materials and tools to prepare and report their registers of information of contractual arrangements on the use of ICT third-party service providers in the context of the dry run exercise, and to understand supervisory expectations for the reporting of such registers from 2025 onwards.

The participating financial entities are expected to submit their registers of information to the ESAs through their competent authorities between 1 July and 30 August.  The final technical package for the steady-state reporting, which will start in 2025, will be published later in the year.

RTS on classification of ICT-related incidents, contractual arrangements policy and risk management tools under DORA published in the Official Journal

On 25 June 2024, the following Delegated Regulations supplementing DORA were published in the Official Journal:

• Delegated Regulation 2024/1772 setting out RTS specifying the criteria for the classification of ICT-related incidents and cyber threats, setting out materiality thresholds and specifying the details of reports of major incidents;
• Delegated Regulation 2024/1773 setting out RTS specifying the detailed content of the policy regarding contractual arrangements on the use of ICT services supporting critical or important functions provided by ICT third-party service providers; and
• Delegated Regulation 2024/1774 setting out RTS specifying ICT risk management tools, methods, processes and policies and the simplified ICT risk management framework.

The Delegated Regulations will enter into force on 15 July 2024, the twentieth day following their publication in the Official Journal.[/vc_column_text][/vc_column][/vc_row][/vc_section][vc_section css=”.vc_custom_1609007282200{margin-bottom: 20px !important;}”][vc_row css=”.vc_custom_1609007241176{padding-right: 15px !important;padding-left: 15px !important;}”][vc_column css=”.vc_custom_1612794217189{margin-bottom: 20px !important;padding-top: 3px !important;padding-right: 20px !important;padding-bottom: 3px !important;padding-left: 20px !important;background-color: #283a66 !important;}”][vc_column_text]

FINANCIAL CRIME

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”10028″ img_size=”full”][vc_column_text]Anti-money laundering

Directive on cross-border law enforcement access to bank account registries published in Official Journal

On 19 June 2024, Directive (EU) 2024/1654 was published in the Official Journal, amending Directive (EU) 2019/1153 as regards access by competent authorities to centralised bank account registries through the interconnection system and technical measures to facilitate the use of transaction records.

The amending Directive aims to ensure more effective investigations into illicit finance by making it easier to retrieve data across borders from centralised bank registries. It mandates EU Member States to ensure that the information from centralised registries is available through an access point to be developed and operated by the European Commission.

The Directive enters into force on 9 July 2024, that is, 20 days after publication in the Official Journal.

Member states are required to bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 10 July 2027, with the exception of Article 1(4) and (5) which relate to the bank account registers interconnection system, in respect of which member states are required to bring into force the necessary measures by 10 July 2029.

AML Regulation, AMLA Regulation and MLD6 published in Official Journal

On 19 June 2024, the following texts were published in the Official Journal:

• the Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing ((EU) 2024/1624) (AML Regulation),
• the Regulation establishing the Anti-Money Laundering Authority (AMLA) ((EU) 2024/1620) (AMLA Regulation) and
• MLD6, ((EU) 2024/1640)

The AML Regulation enters into force on 9 July, that is, 20 days after publication in the Official Journal. It will apply from 10 July 2027, except in relation to football agents and certain transactions conducted by professional football clubs, to which it will apply from 10 July 2029.

The AMLA Regulation enters into force on 26 June 2024, that is, seven days after publication in the Official Journal. It will apply from 1 July 2025, with the exception of Articles 1, 4, 49, 53 to 55, 57 to 66, 68 to 71, 100, 101 and 107, which will apply from 26 June 2024, and Article 103, which will apply from 31 December 2025.

MLD6 enters into force on 9 July 2024, that is, 20 days after publication in the Official Journal. Member states are required to bring into force the laws, regulations and administrative provisions necessary to comply with MLD6 by 10 July 2027, with the exception of Article 74, for which the transposition deadline is 10 July 2025, Articles 11 to 13 and 15, for which the transposition deadline is 10 July 2026, and Article 18, for which the transposition deadline is 10 July 2029. MLD4 will be repealed with effect from 10 July 2027.

EBA welcomes the entry into force of the framework establishing the anti-money laundering and countering the financing of terrorism authority (AMLA)

On 26 June 2024, the European Banking Authority (EBA) published a press release and a fact sheet welcoming the entry into force of the new EU framework that will transform how Europe tackles money laundering and terrorist financing.

Since 2020, the EBA has been leading, coordinating and monitoring the EU financial sector’s fight against money laundering (ML) and terrorist financing (TF). The new legislative framework marks a significant step forward in the EU’s fight against financial crime, with a harmonised and single AML/CFT rulebook, and the establishment of AMLA, a dedicated EU anti-money laundering authority.

The EBA will retain its AML/CFT powers and mandates until December 2025 to minimise disruption and provide continuity, and it will also continue working closely with AMLA going forward. In particular, after transferring the powers that are specific to AML/CFT to AMLA, the EBA will remain responsible for addressing ML/TF risk across its prudential remit.

Since its inception, the EBA has been working to ensure that financial institutions and their supervisors apply effective AML/CFT controls wherever they operate in the EU, providing a solid foundation for the new regime. The European Commission has asked the EBA to provide its technical advice on important aspects of the future EU AML/CFT framework to ensure that AMLA can begin to operate efficiently and effectively as of its establishment.

Over the course of 2024 and in 2025, the EBA’s priorities in the area of AML/CFT will focus on the following aspects:

• a methodology for selecting financial institutions for direct EU-level AML/CFT supervision;
• a common risk assessment methodology;
• information necessary to carry out customer due diligence;
• criteria to determine the seriousness of a breach of AML/CFT provisions.

The EBA will be providing its advice to the Commission in October 2025.

Throughout the transition phase, the EBA will also support national competent authorities getting ready for AMLA and will coordinate with the European Commission’s AMLA taskforce, which will be responsible for the establishment and initial operations of AMLA.[/vc_column_text][/vc_column][/vc_row][/vc_section][vc_section css=”.vc_custom_1609007282200{margin-bottom: 20px !important;}”][vc_row css=”.vc_custom_1609007241176{padding-right: 15px !important;padding-left: 15px !important;}”][vc_column css=”.vc_custom_1612794217189{margin-bottom: 20px !important;padding-top: 3px !important;padding-right: 20px !important;padding-bottom: 3px !important;padding-left: 20px !important;background-color: #283a66 !important;}”][vc_column_text]

FUNDS

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”9400″ img_size=”full”][vc_column_text]PRIIPS

Council agrees its position on retail investment package

On 7 June 2024, the Council reached an agreement on strengthening the EU’s rules on retail investor protection.

The retail investment package aims to support individual consumers who wish to invest on the EU’s capital markets, by better protecting their investments, providing them with clearer information about investment products and ensuring more transparency and disclosure.

The retail investment package aims to offer retail investors the same level of information, treatment and protection regardless of which investment products, marketing and distribution channels they use. To this end, the package aims to modernise and simplify investor protection rules so that they are coherent across the different sectors and EU laws.

With this agreement, the Council is ready to engage in negotiations with the European Parliament on the final shape of the legislation.

Main changes proposed by the Council

Inducements

In its position paper, the Council decided to remove the proposed ban on ’inducements’ (often referred to as ‘commissions’ or ‘retrocession fees’) received for execution-only sales (where no advice is provided to the investor). A ban is already in place for independent investment advice and portfolio management with limited exceptions.

At the same time, in order to reinforce the prevention of potential conflicts of interest, the Council strengthened the safeguards accompanying all inducements with:

• an inducement test that applies where there is no ban on inducements
• a new uniform test specifying the duty for advisors to act in the best interest of the client
• enhanced transparency and disclosure about what payments are considered as inducements, their costs and their impact on investment returns

In addition, the Council further reinforced the safeguards by introducing ‘overarching principles’ to be respected when paying or receiving inducements. These overarching principles are not part of the inducement test as such, but firms should respect those principles at all times when paying or receiving inducements to or from a third party, and be able to demonstrate this to national competent authorities.

According to these overarching principles, inducements should not incentivise firms to recommend particular products over others, they should not be disproportionate to the value offered and inducements paid to or accepted and retained by entities belonging to the same group should be treated in the same way as others.

Member states that already have inducement bans in place, that would decide to introduce such bans in the future or that apply or would decide to apply stricter requirements in relation to inducements as provided for in EU legislation, would be allowed to do so, according to the Council mandate.

The Council agreed to review the provisions on inducements five years after the entry into force.

Value for Money

The package introduces a new concept of ‘Value for Money’ to ensure that investment products are offered to retail clients only if they offer good value for money.

Under the new rules, manufacturers and distributors would assess whether costs and charges related to a product are justified and proportionate with regard to their performance, other benefits and characteristics, their objectives and, if relevant, their strategy.

The Council agreed that the European supervisory authorities ESMA and EIOPA would develop Union supervisory benchmarks. However, instead of mandatory benchmarks integrated in manufacturer’s and distributors’ product governance process, they would be a supervisory tool, developed in a way that helps national competent authorities detect investments products that fail to offer value for money.

Since benchmarks used as supervisory tools would not be directly binding on manufacturers and distributors, the Council also agreed to strengthen their product governance process with a peer group system.

Manufacturers and distributors would compare their investment products to a peer group of other similar investment products in the EU to establish whether the investment product offers value for money.

The comparison would be based on information contained in databases managed by ESMA and EIOPA.

The Council also proposes to allow member states to provide for a possibility for financial products manufacturers or distributors to opt, for the purpose of the market comparison in its value-for-money assessment processes, to compare their products with the relevant Union supervisory benchmark, instead of a peer group.

Finally, the negotiating mandate would also allow those member states whose national competent authorities have developed, before 1 July 2024, national benchmarks on costs and performance to detect outliers, to decide to continue to use those national benchmarks but only in relation to insurance-based investment products.

According to the Council position, the value for money framework would be reviewed seven years after the start of application of the framework.

Next steps

The European Parliament agreed on its negotiating mandate on the regulation amending PRIIPs on 11 April 2024 and on the Omnibus directive on 23 April 2024. This latest agreement paves the way to starting interinstitutional negotiations.

ESAs publish PRIIPS KID consolidated Q&As

On 28 June 2024, the European Supervisory Authorities (EBA, ESMA and EIOPA) issued a consolidated Q&As on the PRIIPs Key information Document (KID).[/vc_column_text][/vc_column][/vc_row][/vc_section][vc_section css=”.vc_custom_1609007282200{margin-bottom: 20px !important;}”][vc_row css=”.vc_custom_1609007241176{padding-right: 15px !important;padding-left: 15px !important;}”][vc_column css=”.vc_custom_1612794217189{margin-bottom: 20px !important;padding-top: 3px !important;padding-right: 20px !important;padding-bottom: 3px !important;padding-left: 20px !important;background-color: #283a66 !important;}”][vc_column_text]

SUSTAINABLE FINANCE

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Greenwashing

ESAs call for enhanced supervision and improved market practice on sustainability-related claims

On 4 June 2024, the ESAs published their Final Reports on Greenwashing in the financial sector:  ESMA report, EBA report and EIOPA report.

ESAs coordinated approach on greenwashing risks

In their respective reports the ESAs reiterate the common high-level understanding of greenwashing as a practice whereby sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may be misleading to consumers, investors, or other market participants. The ESAs stress again that financial market players have a responsibility to provide sustainability information that is fair, clear, and not misleading. 

Each ESA provides a stocktake of the current supervisory response to greenwashing risks under their remit and notes that national competent authorities (NCAs) are already taking steps in the area of supervision of sustainability-related claims. In addition, the ESAs provide a forward-looking view of how sustainability-related supervision can be gradually enhanced in coming years. 

ESMA Final Report 

The supervision of sustainability-related claims has become a priority for NCAs. NCAs and ESMA are taking steps to better monitor and detect greenwashing and to critically scrutinise sustainability-related claims in various sectors. Several Common Supervisory Actions have already been launched, with a view to ensure effective and consistent supervision. At the same time, NCAs still face constraints on their resources, as well as on their access to expertise and to good quality data.

Building on the progress already accomplished, and with the aim to gradually allow supervisors to reach their full potential in this area, ESMA indicates priority actions in order to enable supervisors to better mitigate greenwashing risks:

• NCAs are expected to gradually deepen their critical scrutiny of sustainability-related claims. To achieve this, they are invited to continue increasing human resources and expertise, making investments in supervisory tools such as “SupTech” solutions and further embed greenwashing risks in their respective supervisory work programmes.
• ESMA will continue to support the monitoring of greenwashing risks, the deployment of SupTech tools, and capacity building. In addition, ESMA will prompt Common Supervisory Actions where needed. ESMA may produce additional guidance for market participants and supervisors in high-risk areas of greenwashing.
• The European Commission is invited to reinforce NCAs’ and ESMA’s mandates in certain areas, such as for benchmarks, and make sure all NCAs have the powers to promote retail investors’ financial education. Whenever possible, the Commission should ensure the legislative framework supports NCAs’ access to data.

ESMA will continue monitoring greenwashing risks and supervisory progress, including via the ongoing Union Strategic Supervisory Priority on “ESG Disclosures”.

Building on the preliminary regulatory remediation actions identified in the Progress Report, ESMA will publish an Opinion with views on how the EU regulatory framework for sustainable finance could further facilitate the investors’ journey.

Sustainable Finance Disclosure Regulation (SFDR)

ESAs propose improvements to the sustainable finance disclosure regulation

On 18 June 2024, the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published a joint Opinion on the assessment of the Sustainable Finance Disclosure Regulation (SFDR). 

The ESAs call for a coherent sustainable finance framework that caters for both the green transition and enhanced consumer protection, taking into account the lessons learned from the functioning of the SFDR.

The ESAs focus on ways to introduce simple and clear categories for financial products. The simplifications consist of two voluntary product categories, “sustainable” and “transition”, that financial market participants should use to ensure consumers understand the purpose of the products. The rules for the categories should have a clear objective and criteria to reduce greenwashing risks.

The ESAs recommend that the European Commission consider the introduction of a sustainability indicator that would grade financial products such as investment funds, life insurance and pension products.

In addition, the Opinion also covers the following areas:

• appropriate disclosures for products outside the two categories to reduce greenwashing,
• improvements to the definition of sustainable investments,
• simplification to the way disclosures are presented to investors,
• other technical suggestions including on which products should fall under the scope of SFDR and on how to improve disclosures regarding the negative impact of investments on people and the environment, and
• the need for conduct consumer testing before putting forward any policy proposals to review the SFDR, such as to introduce a categorisation system and/or an indicator.

[/vc_column_text][/vc_column][/vc_row][/vc_section][vc_section css=”.vc_custom_1609007282200{margin-bottom: 20px !important;}”][vc_row css=”.vc_custom_1609007241176{padding-right: 15px !important;padding-left: 15px !important;}”][vc_column css=”.vc_custom_1612794217189{margin-bottom: 20px !important;padding-top: 3px !important;padding-right: 20px !important;padding-bottom: 3px !important;padding-left: 20px !important;background-color: #283a66 !important;}”][vc_column_text]

ESMA in 2023

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]ESMA

ESMA 2023 Report – Focus on investor protection, risk monitoring and supervision

On 14 June 2024, ESMA published its Annual Report for 2023. It sets out the key achievements of the authority in the first year of implementing its new 5-year strategy, delivering on the mission of enhancing investor protection and promoting stable and orderly financial markets in the European Union (EU).

ESMA’s key achievements in 2023 

Throughout the year, ESMA actively monitored risks and resilience of financial markets, contributed to completing the single rulebook and supported supervisory convergence notably through extensive work in the digital finance space. 

ESMA states that its key accomplishments during 2023 include:

• Exploring new areas of regulation and working closely with EBA and EIOPA in preparation for the implementation of Digital Operational Resilience Act (DORA).
• Preparing for Markets in Crypto-Assets Regulation (MiCA) implementation and together with the NCAs fostering convergent authorisation and supervision approaches, providing guidance to market participants, conducting consultations on detailed rules, and collaborating with international bodies on crypto-asset regulation.
• Enhancing supervisory convergence through peer reviews on the supervision of central counterparties (CCPs) and central securities depositories (CSDs), identifying areas for improvement and issuing recommendations to ensure consistent supervision across the EU.
• Monitoring retail investment markets and reporting on the costs and performance of retail investment products, highlighting cost reductions and variations across products and Member States, and recommending that investors carefully evaluate costs and diversify investments.
• Enhancing sustainability disclosures through active participation in the development and application of European Sustainability Reporting Standards (ESRS) and in the IOSCO endorsement of the IFRS Sustainability Disclosure Standards. 
• Launching a new data strategy for 2023-2028, aiming to leverage technology and data to improve market supervision and investor protection. The strategy outlines six key objectives to enhance data utilization, reduce reporting burden and promote data-driven supervision.
• Assessing greenwashing through a progress report on greenwashing risks and supervision, setting out a definition of greenwashing agreed with EBA and EIOPA, identifying material risks across the sustainable investment value chain and outlining preliminary remediation actions. 

ESMA states that these achievements reflect ESMA’s commitment to navigating the evolving financial landscape, ensuring effective regulation and supervision

ESMA workplan

ESMA updated overview of planned consultation papers 2024

On 26 June 2024, ESMA updated its overview of planned consultation papers.

The table provides an overview of its planned consultations for 2024. These relate to topics including: MICAR, the MIFID/MIFIR review, UCITS, DORA, EMIR and AIFMD. Notable changes since the version published in January include a delay from Q1 to Q3 for the consultation on guidelines on the due diligence requirements under the Securitisation Regulation and a delay from Q1 to Q4 for the consultation on guidelines on internal controls for ESMA supervised entities.

Other consultations anticipated in H2 include (i) technical standards and guidelines on liquidity management tools under AIFMD and UCITS Directive; (ii) guidelines on classification of crypto-assets under MICAR; (iii) RTS on order execution policy under MIFID II/MIFIR; (iv) technical standards under the CSDR; and (v) on the active account requirement under EMIR.[/vc_column_text][/vc_column][/vc_row][/vc_section][vc_section css=”.vc_custom_1609007282200{margin-bottom: 20px !important;}”][vc_row css=”.vc_custom_1609007241176{padding-right: 15px !important;padding-left: 15px !important;}”][vc_column css=”.vc_custom_1612794217189{margin-bottom: 20px !important;padding-top: 3px !important;padding-right: 20px !important;padding-bottom: 3px !important;padding-left: 20px !important;background-color: #283a66 !important;}”][vc_column_text]

CySEC DEVELOPMENTS

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”8217″ img_size=”full” alignment=”center”][vc_column_text]Circular C644: Introduction of CySEC’s Form 165-05 “Prudential Consolidation Information”

On 12 June 2024, CySEC issued Circular C644 to inform CIFs that Form 165-05 has been introduced to collect information from entities within investment firm groups that are subject to prudential consolidation by CySEC. Form 165-05 is addressed to all CIFs falling under the definition of an investment firm group as outlined in Article 4(1)(25) of IFR and subject to prudential consolidation by CySEC under Articles 7 or 8 of the IFR. CIFs are required to submit this Form annually to CySEC via the TRS by 31 May 2024 each year.

Circular C645:  Commission’s review of the investment firms’ prudential framework

On 18 June 2024, CySEC issued Circular C645 to inform AIFMs and UCITS Management Companies that the European Banking Authority and European Securities Markets Authority issued on 03 June 2024 a Discussion Paper on the European Commission’s call for advice on the IFD/ IFR.

AIFMs and UCITS Management Companies may submit their comments on the issues raised in the Discussion Paper by 3 September 2024.

To assess the impact of the possible changes discussed in the Discussion Paper, the EBA launched a data collection exercise, for which participation is voluntary. UCITS Management Companies and AIFMs wishing to participate in the data collection are required to submit the completed templates to CySEC by 19 July  2024 via email to prudential@cysec.gov.cy.

Circular C646: Review of the Investment Firms’ prudential framework and data

On 18 June 2024, CySEC issued Circular C646 to inform CIFs that the European Banking Authority and European Securities Markets Authority issued a Discussion Paper on the European Commission’s call for advice on the IFD/IFR. CIFs may submit their comments on the issues raised in the Discussion Paper by 3 September 2024.

Additionally, to assess the impact of the possible changes discussed in the Discussion Paper, the EBA has launched a data collection exercise, of which participation is voluntary. CIFs wishing to participate in the data collection are required to submit the completed templates to CySEC by 19 July 2024 via email to prudential@cysec.gov.cy.

Circular C647: New section on CySEC’s website regarding Terrorism Financing (TF) / Proliferation Financing (PF)

On 20 June 2024, CySEC issued Circular C647 to draw the attention of the Regulated Entities that section “Terrorism Financing (TF)/Proliferation Financing (PF)” has been added to CySEC’s website. This includes useful information and publications on TF/PF, as well as relevant notifications.

CySEC urges the Regulated Entities to continuously monitor, inter alia, the section “Terrorism Financing (TF)/Proliferation Financing (PF) on CySEC’s website, including the notifications to be sent for useful information and publications on TF/PF, through the RSS Service, ensuring their full compliance with their relevant legal obligations for preventing TF and PF.

Circular C648: Notification of crypto asset services under article 60 of MiCA

On 26 June 2024, CySEC issued Circular C648, to inform Regulated Entities that under the Market in Crypto Assets Regulation, certain financial entities will have the option to provide crypto-asset services in the Union provided that they are authorised under relevant EU law.

In order to understand to what extent firms are planning to notify MiCA services, CySEC requests that Regulated Entities fill out a questionnaire and submit it by Friday 26 July 2024.[/vc_column_text][/vc_column][/vc_row][/vc_section]