May 2025 Regulatory Roundup

INVESTMENT SERVICES & CAPITAL MARKETS

MIFID and MIFIR 

ESMA publishes technical advice on research provisions under MIFID Delegated Directive

On 8 April 2025, ESMA published a final report setting out its technical advice to the European Commission on the amendments to the research provisions in the context of the Listing Act legislative package.

The Listing Act amended the EU requirements in MIFID II on how payments are made for investment research, enabling joint payments for execution services and research for all issuers, irrespective of the market capitalisation of the issuers covered by the research.

EU firms will be permitted to choose whether to make joint or separate payments for third-party research and execution services.

ESMA’s advice relates to the changes to Article 13 of Commission Delegated Directive (EU) 2017/593, known as the MIFID II Delegated Directive, which sets out the conditions that firms have to meet under the regime that required unbundled payments for research.

ESMA proposes that where an investment firm chooses to use a separate research payment account, most of the existing conditions should continue to apply. Where an investment firm pays jointly for execution services and research, ESMA’s advice is to require those firms to enter into an agreement on joint payments that (i) prevents the investment firm from paying substantially more for the research component than would be the case if the firm paid directly for the research; and (ii) does not impede the firm’s ability to comply with the best execution requirements.

EU member states will have until 4 June 2026 to transpose the Listing Act changes to MIFID II. 

ESMA calls for clarity on the qualification of fractional shares

On 9 April 2025, ESMA published a letter (dated 4 April 2025) to the European Commission on the inconsistent regulation of trading of fractional shares across the EU.

There has been an increase in the significance of fractional shares, which accounted for more than 10% of the total number of transactions reported in 2023-2024. However, shares and fractional shares are not uniformly defined under MIFID and MIFIR, resulting in regulatory inconsistencies across the EU.

ESMA states that while it has already taken action through its 2023 public statement to protect retail investors, uncertainty continues. The inconsistent treatment of fractional shares has the following key effects: (i) it impacts transparency and reporting requirements, (ii) it affects compliance with the MIFID systematic internaliser and share trading obligation rules; and (iii) it impacts the calculation of thresholds for data reporting services providers derogation criteria.

ESMA believes consistent classification would help create a level playing field for firms and support retail participation in this market segment. ESMA suggests it would be beneficial to clarify that fractional shares, which replicate the key characteristics and trading environment of shares, should remain subject to the MIFIR rules for shares.

ESMA finalises rules on firms’ order execution policies under MIFID II

On 10 April 2025, ESMA published the Final Report on the rules explaining how investment firms should establish their order execution policies and assess their effectiveness.

In the draft Regulatory Technical Standards (RTS) ESMA specifies the rules, with the objective to enhance investment firms’ order execution and foster investor protection.

The RTS includes requirements on:

• the establishment of an investment firm’s order execution policy; this includes the classification of financial instruments in which firms execute client orders and the selection of venues for the order execution policy;
• the investment firm’s procedures and criteria to monitor and regularly assess the effectiveness of its order execution arrangements and order execution policy;
• the investment firm’s execution of client orders through own account dealing; and
• how an investment firm should deal with specific client instructions.

The Final Report has been sent to the European Commission and ESMA will provide further advice and technical guidance in this area, if requested by the European Commission.

ESMA delivers rules on the single volume cap, Systematic Internalisers and circuit breakers

On 10 April 2025, ESMA published a final report containing a package of three draft technical standards, as part of the MIFIR Review.

The final report contains technical standards on the: 

1. application of the single volume cap and transparency calculations, delivering a significant contribution to simplification and burden reduction with the phasing-out of daily reporting of transparency data for trading venues and Approved Publication Arrangements (APAs);

2. new qualitative regime for Systematic Internalisers (SIs) harmonising the notification content and clarifying the notification procedure to be followed by investment firms acting as SIs; and

3. rules on circuit breakers and operational resilience for trading venues, streamlining trading venues’ practices in setting circuit breakers and the information to be disclosed to the public. Following the DORA framework, the changes to this RTS will contribute to simplification, providing trading venues with enhanced legal clarity.

The overall objective is to ensure that the rules from the MIFIR Review are applied consistently, with simplification and burden reduction as the guiding principle. 

The final report has been sent to the European Commission, who now has three months to decide whether to endorse the draft technical standards. 

ESMA publishes the annual transparency calculations for non-equity instruments and bond liquidity data

On 30 April 2025, ESMA published the results of the annual transparency calculations for non-equity instruments and new quarterly liquidity assessment of bonds under MIFID II and MIFIR. 

As indicated in ESMA’s public statement of 27 March 2024, the quarterly liquidity assessment of bonds as well as the data for the quarterly systematic internalisers will continue to be published by ESMA.

Annual transparency calculations for non-equity instruments 

The results of the annual transparency calculations for non-equity instruments will apply from 2 June 2025. The calculations include the liquidity assessment and the determination of the pre- and post-trade size specific to the instruments and large in scale thresholds. The transparency requirements based on the results of the annual transparency calculations for non-equity instruments apply from 2 June 2025 until 31 May 2026.

Bonds quarterly liquidity assessment 

ESMA has published the latest quarterly liquidity assessment for bonds available for trading on EU trading venues. For this period, there are currently 1,371 liquid bonds subject to MIFID II transparency requirements. The transparency requirements for bonds deemed liquid will apply from 19 May 2025 to 17 August 2025.  ESMA updates the bond market liquidity assessments quarterly. However, additional data and corrections submitted to ESMA may result in further updates within each quarter, published in the FITRS, which shall be applicable on the day following publication.

Market Data

ESMA report shows increased data use across EU and first effects of reporting burden reduction efforts

On 30 April 2025, ESMA published the fifth edition of its Report on the Quality and Use of Data. The report reveals how the regulatory data collected has been used by authorities in the EU and provides insight on actions taken to ensure data quality.

The report covers datasets from the European Market Infrastructure Regulation (648/2012) (EMIR), the Securities Financing Transactions Regulation ((EU) 2015/2365) (SFTR), the Markets in Financial Instruments Regulation (600/2014) (MIFIR), the Securitisation Regulation (2017/2402/EU), the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) and the Money Market Funds Regulation ((EU) 2017/1131) (MMF Regulation). This edition also expands the scope to include the European Single Electronic Format (ESEF) data and short-selling data.

The document presents concrete cases on data use ranging from market monitoring to supervision, enforcement and policy making. A recent example includes how ESMA reutilises existing data to support reporting burden reduction (i.e. use of MIFIR transaction data to perform the transparency and volume cap calculations).

The report highlights ESMA’s Data Platform and ongoing improvements to data quality frameworks as key advancements in tools and technology for data quality.

In addition, it contains other advances as:

• the data quality developments for datasets as the EMIR REFIT go-live,
• the successful outcome of a newly implemented data quality framework on short-selling data,
• the implementation of first steps in improving the accessibility and use of ESEF data by NCAs.

This edition also gives an overview of the sanctions imposed by the NCAs on reporting obligations, showcasing another tool that can be used as part of their supervisory and enforcement toolkit.

A webinar to present the report in detail will be held on 15 May from 11:00 -12:00 CET. Registration link.

EMIR

ESMA consults on clearing thresholds under EMIR 3

On 8 April 2025, ESMA launched a consultation on the new clearing thresholds under the review of the European Market Infrastructure Regulation (EMIR 3).

The consultation paper is part of ESMA’s mandate to develop Regulatory Technical Standards (RTS) on clearing thresholds, and covers the following areas:

• proposals for a revised set of clearing thresholds,
• considerations for hedging exemptions for non-financial counterparties,
• a trigger mechanism for reviewing the clearing thresholds.

The revised clearing threshold methodology focuses on the activity in over-the-counter (OTC) derivatives not cleared at an authorised or recognised central counterparty (CCP). This approach assesses the risk associated with uncleared activity to determine if entities should be mandated to clear their OTC derivatives. The new methodology aims at ensuring a proportionate clearing obligation regime, focusing on entities with significant OTC derivatives activity and large uncleared positions. 

ESMA’s proposals are as follows:

For aggregate OTC exposure (both cleared and uncleared) – FCs only

• OTC credit derivative contracts – EUR 1 billion (current threshold maintained)
• OTC interest rate derivative contracts – EUR 3 billion (current threshold maintained)

For uncleared positions – FCs and NFCs

• OTC credit derivative contracts – EUR 0.7 billion
• OTC equity derivative contracts – EUR 0.7 billion
• OTC interest rate derivative contracts – EUR 1.8 billion
• OTC foreign exchange derivative contracts – EUR 3 billion
• OTC commodity derivative contracts – EUR 3 billion

The consultation will remain open until 16 June 2025. Based on the feedback received, ESMA will publish a final report and submit the draft technical standards to the European Commission by the end of the year.[/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]

FUND REGULATION

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Market data

Please see section 1 above: MIFID MIFIR / Market Data /”ESMA report shows increased data use across EU and first effects of reporting burden reduction efforts for market data”, covering data sets from the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) and the Money Market Funds Regulation ((EU) 2017/1131) (MMF Regulation).

UCITS and AIFMD

ESMA publishes implementing rules on Liquidity Management Tools for funds

On 15 April 2025, ESMA published its final draft regulatory technical standards (RTS) relating to liquidity management tools (LMTs) under the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS).

The draft RTS will apply to Alternative Investment Fund Managers managing open-ended Alternative Investment Funds (AIFs) and UCITS. The final draft RTS under the AIFMD are detailed in Annex IV of the report, while those under the UCITS Directive are outlined in Annex V. The draft RTS have been submitted to the European Commission for adoption, which has three months to decide whether to adopt them.

ESMA has also published its final guidelines for national competent authorities and fund managers on LMTs of UCITS and open-ended AIFs, providing guidance on how managers should select and calibrate LMTs for liquidity risk management and mitigating financial stability risks.

The guidelines, set out in Annex III of the report, will now be translated into the official EU languages and published on ESMA’s website. National competent authorities and financial market participants must make every effort to comply with the guidelines. Within two months after the date of publication on ESMA’s website, national competent authorities must notify ESMA whether they comply or do not comply, together with their reasons for not complying (if applicable). Financial market participants are not required to report on compliance. The Guidelines will apply upon the application date of the RTS on the characteristics of the LMT’s.

The draft RTS has been submitted to the European Commission for adoption. From the date of submission, the European Commission shall take a decision on whether to adopt the RTS within three months. The European Commission may extend that period by one month.

ESMA will translate the guidelines after the adoption of the draft RTS by the European Commission. Should the European Commission amend the draft RTS in a way that impact the guidelines, ESMA will adjust the guidelines to ensure full consistency between the RTS and the guidelines. Upon publication of the translations on the ESMA website, national competent authorities will have two months to notify ESMA whether they comply or intend to comply with the guidelines.

The guidelines will start applying on the date of entry into force of the RTS. Funds existing before the entry into force the RTS will have twelve months to comply with the guidelines.

ESMA assesses the risks posed by the use of leverage in the fund sector

On 24 April 2025, ESMA published its annual risk assessment of leveraged alternative investment funds (AIFs) and its first analysis on risks in UCITS using the absolute Value-at-Risk (VaR) approach.

Both articles represent ESMA’s work to identify highly leveraged funds in the EU investment sector and assess their potential systemic relevance.

While most EU investment funds make limited use of leverage, a subset of AIFs are substantially leveraged, and a group UCITS using the absolute VaR approach has very high levels of gross leverage.

Risk assessment of leveraged AIFs shows that hedge funds display the highest levels of leverage, even though they represent a small part of the EU fund industry. The real estate (RE) funds are under pressure in some jurisdictions due to the combination of declining real estate prices and outflows from some funds, but in general the RE fund sector has been resilient at EU level. The assessment of GBP Liability-Driven Investment (LDI) funds, which gain leveraged exposures to the UK government bond market, shows that imposing limits to the interest rate risk they can take successfully increased the resilience of the sector, and even resulted in a decline of leverage for some funds.

In a new analysis, ESMA reports that UCITS using the absolute VaR approach to manage their risk profile account for around 8% of the UCITS universe. These funds follow a heterogeneous range of investment strategies and can increase their exposures using derivatives. Withing this group, a subset of funds shows risk profiles and characteristics more commonly associated with hedge funds, such as complex derivative exposures with high levels of gross leverage and heightened sensitivity to market conditions. These funds tend to be exposed to risks related to liquidity imbalances and complexity, and some have higher risks than hedge funds. While this subset is small (2% of the UCITS segment), they have a larger volume of assets than EU hedge funds. 

The diversity of strategies and relatively fragmented manager base in the VaR UCITS segment reflects a dynamic market but also underscores the importance of close supervisory attention to ensure risks are properly understood and managed.[/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]

SAVINGS AND INVESTMENT UNION

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Financial market integration

European Commission launches a targeted consultation on obstacles to capital markets integration across the EU

On 15 April 2025, the European Commission published its targeted consultation to gather feedback on obstacles to capital markets integration across the EU. This effort is a key part of rolling out the savings and investments union (SIU) strategy, adopted in March.

Contributions are particularly sought from financial institutions and other markets participants, national supervisors, national ministries, the European Supervisory Authorities, EU institutions, non-governmental organisations, think tanks, consumers, users of financial services and academics. Market participants include operators and users of trading and post-trading infrastructures in the EU, notably trading venues, broker-dealers, issuers, institutional and retail investors, clearing counterparties (CCPs), central securities depositaries, trade repositories, asset managers, investment funds, regardless of where they are domiciled or where they have established their principal place of business.

The objective of this consultation is to gather stakeholder feedback on obstacles to financial market integration across the EU. Currently, various barriers, including those stemming from legal, regulatory, technological, and operational practices, hinder the full integration and efficiency of EU capital markets. Divergences in supervisory practices can also act as a barrier to capital‑market integration, as financial‑market participants operating across borders must manage different requirements across the single market. All of this prevents financial-market participants from benefiting from economies of scale and operational efficiency, ultimately increasing costs and restricting the availability of financial services to businesses and citizens. This consultation seeks to identify and address such barriers to facilitate a more market-driven process for developing and integrating EU capital markets, thereby enhancing financial opportunities and boosting economic competitiveness.

The consultation contains the sections dedicated to

1. Simplification and burden reduction
2. Trading
3. Post-trading
4. Horizontal barriers to trading and post-trading infrastructures
5. Asset management and funds
6. Supervision
7. Horizontal questions on the supervisory framework

The consultation is a crucial step in the implementation of the SIU, with insights that are collected helping shape measures to be presented in a comprehensive package in the fourth quarter of 2025. The deadline for responses is 10 June 2025.

Dedicated channel to report obstacles to market integration

On 24 April 2025, the European Commission launched a dedicated channel for reporting barriers to financial market integration within the EU Single Market.

This initiative, announced in the Savings and Investments Union (SIU) Communication adopted in March, invites market participants, individuals or businesses to provide information on any existing obstacles that affect the functioning of the single market for savings and investments. This includes issues that affect the seamless flow of cross-border capital, reduce the ease of doing business across the EU or impose excessive red tape and complex regulatory settings.

Issues that may be reported include, but are not limited to, market fragmentation, divergent supervisory practices, licensing and freedom of doing business (including discriminatory practices) and overly burdensome or repetitive reporting requirements.

Feedback is invited via a designated email FISMA-SIU-barriers-reporting@ec.europa.eu. 

The Commission will regularly monitor the feedback, which it will use in its ongoing efforts to tackle existing obstacles to financial market integration and free movement of capital, with the ultimate goal of further advancing the SIU. If necessary, the Commission will step up enforcement actions to accelerate the removal of such barriers.

The European Commission notes that this channel is not a formal complaint submission mechanism and stakeholders should not expect to receive an individual reply or feedback from the European Commission.[/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]Sustainable Finance

ESMA consults on rules for external reviewers of European Green Bonds

On 7 April 2025, ESMA published its Consultation Paper on the remaining Regulatory Technical Standards (RTS) for external reviewers under the European Green Bonds Regulation.

The RTS relate to the following aspects of the external reviewer regime:

• appropriateness, adequacy and effectiveness of systems, resources and procedures;
• authority, resources, expertise and access to relevant information of the compliance function;
• soundness of administrative and accounting procedures, internal control mechanisms and effectiveness of information systems controls;
• quality and reliability of sources of the information used for external reviews;
• information, form and content of applications for recognition; and
• notification of material changes in the information provided at registration.

ESMA considers that these technical standards will enhance the robustness and transparency of external reviews of European Green Bonds and in turn boost investors’ confidence that their capital is genuinely driving the green transition.

The first consultation on RTS for external reviewers under the European Green Bonds Regulation took place in 2024.

ESMA will consider the feedback received to the consultation by 30 May 2025 and expects to publish a Final Report and submit the draft RTS to the European Commission for adoption by 21 December 2025 at the latest. The technical standards will also be subject to non-objection by the European Parliament and Council. 

Trends Risks and Vulnerabilities Risk Analysis Article – Fund names: ESG-related changes and their impact on investment flows

On 10 April 2025, ESMA published an article: Trends Risks and Vulnerabilities Risk Analysis Article – Fund names: ESG-related changes and their impact on investment flows.

Fund names are most likely the first piece of information investors encounter about a fund and are thus a crucial signal of the fund’s strategy and aims. However, when fund names do not accurately reflect the underlying investments or actual investment strategy, they can undermine their signalling function and mislead investors.

Building on a previous ESMA study on EU fund names, this article explores whether the simple decision of fund managers incorporating environmental, social, governance or sustainability-related (ESG) terms into their funds’ names leads to additional investor interest. If so, this may incentivise potential greenwashing behaviour, undermine investor trust and hinder efforts to promote sustainability within EU financial markets.

This work forms part of ESMA’s and national authorities’ risk assessment framework of investment funds, which also aims to protect retail investors and support the greening of the financial system.

In the first part of the article, ESMA analyses the evolution of ESG names among EU-domiciled investment funds since 2009, including both UCITS and alternative investment funds (AIFs). The results show that the proportion of funds with ESG-related names increased significantly from less than 3% before 2015 to about 9% by mid-2024. This was primarily driven by UCITS funds, for which the proportion of funds with ESG-related names accounted for 15% by mid-2024. The terminology also evolved from a wide range of unique terms to more standardised terms such as ‘ESG’, now representing over 40% of all ESG-related words added post-2021 by UCITS and AIFs.

In the second part, ESMA examines the impact of adding an ESG name on investor flows. The results indicate that adding an ESG term can significantly boost fund inflows, especially in the immediate quarter following the name change, with a sustained positive impact in subsequent quarters. However, the impact varies depending on the specific ESG terms used, with environmental-related terms showing the most substantial effect on inflows, highlighting the importance of ensuring that name changes are reflected in portfolio investments.

These findings demonstrate the strong financial incentives for fund managers to consider adding ESG terms to the names of funds. They highlight the importance of the ESMA Guidelines to help protect investors by ensuring that, when a fund name includes ESG language, its portfolio investments are aligned with investors’ ESG preferences. Preserving investor trust in green investment products is key to ensure that the financial system continues to support the transition to a more sustainable economy.

ESMA conducts risk analyses such as these with a view to ensuring its overall risk assessment framework and monitoring activities are up to date with developments in EU financial markets. In this respect, ESMA expects to incorporate the indicators developed in the present analysis and continue to monitor fund market trends and the impact of the Guidelines on EU funds.

ESMA issues guidelines on the enforcement of sustainability information

On 29 April 2025, ESMA published official translations of the guidelines, on the enforcement of sustainability information under the Transparency Directive.

The guidelines are based on Article 28d of the Transparency Directive and aim to establish consistent and effective supervisory practices for all competent authorities to ensure that sustainability information provided by issuers, who have securities admitted to trading on a regulated market and who are required to publish sustainability information under the Accounting Directive, comply with the requirements of Article 24(4) of the Transparency Directive. The guidelines cover, among other things: (i) the objective of enforcement; (ii) ensuring an effective enforcement process; (iii) sustainability information prepared under equivalent third country sustainability reporting requirements; (iv) enforcers maintaining adequate independence from all stakeholders; and (v) the choice of enforcement actions.

The guidelines shall apply to the enforcement of sustainability information published from 1 January.

Competent authorities must notify ESMA within two months whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the guidelines, along with their reasons for not complying.

ESMA consults on rules for ESG Rating Providers

On 2 May 2025, ESMA published a Consultation Paper on draft Regulatory Technical Standards (RTS) under the ESG Rating Regulation.

The draft RTS cover the following aspects that apply to ESG rating providers:

• The information that should be provided in the applications for authorisation and recognition.
• The measures and safeguards that should be put in place to mitigate risks of conflicts of interest within ESG rating providers who carry out activities other than the provision of ESG ratings.
• The information that they should disclose to the public, rated items and issuers of rated items, as well as users of ESG ratings.

ESMA will consider the feedback received to the consultation by 20 June 2025 and expects to publish a Final Report and submit the draft RTS to the European Commission for adoption in October 2025.   

ESMA particularly encourages entities that intend to apply for registration as ESG Rating Providers, as well as financial market participants, users of ESG ratings or rated entities, to participate in the consultation.

Omnibus Directive

Omnibus I ‘stop-the-clock’ directive published in Official Journal of the EU

On 16 April 2025, Directive (EU) 2025/794, amending the EU Corporate Sustainability Reporting Directive (CSRD) and EU Corporate Sustainability Due Diligence Directive (CSDDD), was published in the Official Journal of the EU, implementing the “stop-the-clock” proposal discussed under the EU Omnibus I package.  

The Directive entered into force on 17 April. Member states must transpose the Directive by 31 December.

The Directive postpones:

• by two years, application of CSRD reporting requirements to large companies that have not yet started reporting and SMEs. These entities will now have to report in 2028 and 2029, respectively, for financial years starting on or after 1 January 2027 and 1 January 2028 (as applicable); and
• by one year, the transposition deadline and first phase of application of certain due diligence provisions under CSDDD. EU Member States will now have until 26 July 2027 to transpose CSDDD and the first companies will not have to apply the first phase of measures until 26 July 2028.

The proposal is part of the ‘Omnibus I’ package adopted by the Commission at the end of February, which aims to simplify EU sustainability-related legislation.[/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]

MiCA

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]ESMA updates its Q&As

On 11 April 2025, ESMA updated its Q&As on Markets in Crypto-Assets Regulation (MiCA) as follows:

• Registered AIFM and MICA (ESMA_QA_2397)
• Autotrading (ESMA_QA_2463)

ESMA issues supervisory guidelines to prevent market abuse under MiCA

On 29 April 2025, ESMA published guidelines on supervisory practices to prevent and detect market abuse under the Market in Crypto Assets Regulation (MiCA).

Based on ESMA’s experience under Market Abuse Regulation (MAR), the guidelines intended for National Competent Authorities (NCAs) include general principles for effective supervision and specific practices for detecting and preventing market abuse in crypto assets. They consider the unique features of crypto trading, such as its cross-border nature and the intensive use of social media.

The guidelines set out general principles requiring supervisory activity to be risk-based and proportionate, and set the objective for NCAs to build a common supervisory culture specific for crypto assets through an open dialogue with the industry and interactions with other NCAs.

The guidelines aim to support consistent and efficient supervisory practices among NCAs, ensuring a common supervisory culture for crypto assets.

The Guidelines will be translated into all EU languages and published on ESMA’s website and will start applying three months after that date. However, ESMA recommends that NCAs already start implementing the principles included in the guidelines whilst waiting for the translations.[/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]

ESAs

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]ESAs publish Joint Annual Report for 2024

On 16 April 2025, the Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published its 2024 Annual Report, which provides an overview of the joint ESAs work completed during the past year 2024.

The ESAs continued to explore and monitor potential emerging risks for financial markets participants and the financial system.

The main areas of cross-sectoral focus in 2024 were joint risk assessments, sustainable finance, operational risk and digital resilience, consumer protection, financial innovation, securitisation, financial conglomerates and the European Single Access Point (ESAP). Among the Joint Committee’s main deliverables were policy products for the implementation of the Digital Operational Resilience Act (DORA) as well as ongoing work related to the Sustainable Finance Disclosure Regulation (SFDR).[/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 C697: EU Sanctions Helpdesk

On 7 April 2025, CySEC issued Circular C697 to inform Regulated Entities of the official launch of the EU Sanctions Helpdesk, a new support service established to assist European small and medium-sized enterprises (SMEs) in complying with EU and UN restrictive measures.

The EU Sanctions Helpdesk acts as a one-stop-shop, offering free, personalised support to SMEs conducting sanctions due diligence checks. It operates through a dedicated website featuring: ccountry-specific guidance, sanctions-related information, events and training opportunities, compliance tips, lessons learned etc.

The Helpdesk aims to strengthen sanctions compliance and reduce the risk of SMEs missing lawful business opportunities due to legal uncertainty.

CySEC considers this new tool/service to be of great support to the Regulated Entities, as also indicated by the dedicated factsheet, therefore encourages them to explore partnership opportunities and to adopt its usage as a good practice.

Circular C700: Digital Operational Resilience Act – Reporting Obligations (a) Incident Reporting (b) Register of Information

On 8 April 2025, CySEC issued Circular C700, to inform Regulated Entities of the main reporting requirements under the Digital Operational Resilience Act (the “DORA”), which are:

1. Incident Reporting:
   1. Mandatory reporting for Major ICT-related incidents: Under Article 19(1) of DORA, Regulated Entities must report major ICT-related incidents to CySEC. Regulated Entities are required to prepare three sequential reports:

1. Initial report: within four hours from the classification of the ICT-related incident and no later than 24 hours from the moment the Regulated Entity became aware of the ICT-related incident.
2. Intermediate report: within 72 hours from the submission of the initial report.

• Final report: Within one month after either the submission of the intermediate report, or where applicable, after the latest updated intermediate report.

1. 1. Voluntary notification for significant cyber threats; Under Article 19(2) of DORA, Regulated Entities may, on a voluntary basis, notify significant cyber threats to CySEC when they deem the threat to be of relevance to the financial system, service users or clients. Regulated Entities must classify cyber threats as significant based on:
2. The criticality of the services at risk.
3. The Financial Entity’s transactions and operations
4. The number and/or relevance of clients or financial counterparts targeted; and
5. The geographical spread of the areas at risk.

Details and instructions on incident reporting can be found within part A of the Circular.

1. Register of Information

Under Article 28(3) of DORA, Regulated Entities must maintain and update at entity level, and at consolidated level, a register of information in relation to all contractual arrangements on the use of ICT services provided by ICT third-party service providers.

Regulated Entities must report at least yearly to CySEC the number of new arrangements on the use of ICT services, the categories of ICT third-party service providers, the type of contractual arrangements and the ICT services and functions which are being provided.

Furthermore, Regulated Entities must fill in the Register of Information Form and submit it to CySEC on an annual basis, by 28 February each year, with the reference date being 31 December of the preceding year.

For the first submission, the deadline for submission is Wednesday, 30 April 2025, with reference date being 31 March 2025.

The Register of Information Form should be submitted via CySEC’s XBRL Portal ONLY. Once the Template is completed, it should be zipped and submitted, through the “Create filing”.

Circular C701: The European Banking Authority (EBA) amends the Guidelines EBA/GL/2019/04 on ICT and security risk management (EBA/GL/2025/02)

On 9 April 2025, CySEC issued Circular C701 to bring to the attention of the Cyprus Investment Firms that the EBA published on February 11, 2025, the amendment of the EBA Guidelines on ICT and security risk management (EBA/GL/2025/02).

 According to the amendment of the EBA Guidelines on ICT and security risk management (EBA/GL/2025/02), the scope of application of EBA/GL/2019/04 is deleted and therefore EBA/GL/2019/04 no longer applies to Investment Firms.

 Given the above developments, CySEC’s Circulars C571 and C609 are hereby withdrawn.

 Kindly refer to the Circular for more information on the subject matter.

Circular C702: Shortening of the standard securities settlement cycle in the European Union

On 9 April 2025, CySEC issued Circular C702 to inform Regulated Entities about the European Commission’s recent proposal to shorten the standard securities settlement cycle in the European Union from T+2 to T+1.

Based on ESMA’s Final Report on the matter, the Commission has proposed a targeted amendment to Regulation (EU) No 909/2014 (CSDR), which would reduce the settlement period for transactions in transferable securities — such as shares and bonds traded on EU venues — from two business days to one. The proposed implementation date is 11 October 2027, allowing sufficient time for preparation and testing.

CySEC highlights that the move to T+1 aims to:

• Improve settlement efficiency and resilience in EU capital markets,
• Align the EU with global market trends and avoid fragmentation, and
• Enhance the competitiveness of EU post-trade services.

The proposal will now be reviewed by the European Parliament and Council. It will enter into force following adoption by the co-legislators and publication in the EU Official Journal.

Transitioning to T+1 will require:

• Amendments to the CSDR and the settlement discipline framework,
• Legal certainty and enhancements in post-trade processes, and
• System-wide efforts to improve harmonisation, standardisation, and modernisation.

To manage the complexity of the shift, a dedicated governance structure has been established comprising:

• The T+1 Coordination Committee,
• The T+1 Industry Committee, and
• Several specialised workstreams, operating under the Industry Committee’s guidance.

CySEC encourages Regulated Entities to follow ongoing developments via the official websites of the European Commission and ESMA, and to begin internal planning for the upcoming transition.

Circular C703: Obligations of Cyprus Investment Fund Managers (‘CyIFMs’) regarding their websites and marketing communications

On 11 April 2025, CySEC issued Circular C703 to remind Regulated Entities (i.e. Cyprus Investment Fund Managers as defined in the Circular) of their obligations in relation to website compliance, following CySEC’s observations of inconsistencies in website content, insufficient disclosures, and non-compliance with the relevant regulatory requirements. In addition, the Circular sets out CySEC’s expectations and outlines further compliance measures aimed at improving transparency and safeguarding investors.

This Circular emphasises that obligations may vary depending on several factors, including the investor group the Entity targets and addresses key regulatory requirements that Entities must comply with to ensure website compliance, such as website maintenance, disclosure obligations and marketing communication compliance. Please refer to Section B of the Circular for more information.

In addition, CySEC expects Regulated Entities to implement the suggested actions and measures outlined in Section C of the Circular to align with their regulatory obligations including, among others, website review and updates, third-party website oversight, direct accessibility of documents etc.

Finally, CySEC obliges Entities to notify CySEC of any new or updated website details and to take immediate action to assess their website content and marketing communications. Moreover, it is stressed out that the required actions shall be implemented by the end of May 2025, and to ensure compliance with the relevant obligations CySEC will perform periodic reviews.

For any clarifications, Regulated Entities may send an email to the address supervision.uci@cysec.gov.cy.[/vc_column_text][/vc_column][/vc_row][/vc_section]