Financial Services Regulation and Compliance – Investment Firms February 2022


Entry into force of changes to reporting requirements for investment firms

On 21 February 2022, the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) (Amendment) Regulations 2022 (the regulations) entered service.

The Regulations amend the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms Regulations). Reporting requirements have been updated to align with the classification of investment firms under the Investment Firms Regulations effective September 2021.


ESMA publishes a prudential information note on the use of tied agents under MiFID II

On February 2, 2022, ESMA published a prudential information note to ensure convergence in the EU in the supervision of companies using tied agents, in particular those based outside the EU.

The prudential information note presents ESMA and the national competent authorities (CNA) a common understanding of the supervision of companies using tied agents to provide investment services and/or activities. ESMA’s monitoring of the activities of UK market participants in the EU has shown that such a briefing will contribute to the development of a convergent supervisory culture in the EU. It will also promote better investor protection.

The publication details the prudential expectations in the following cases:

  • when companies appoint tied agents
  • when businesses use tied agents in their day-to-day business

The content of the supervision briefing is not subject to any “comply or explain” mechanism for the CNAs and it is not binding.

EBA publishes opinion on European Commission changes to final RTS for capital requirements of investment firms based on fixed overheads

On 11 February 2022, the EBA issued its opinion on the amendments made by the European Commission to the final regulatory technical standards (RTS) for capital requirements of investment firms based on fixed overhead. On 16 December 2020, the EBA presented 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. By its letter of 29 November 2021, the European Commission informed the EBA of its intention to approve the draft RTS with modifications and submitted to the EBA an amended version of the draft RTS with its envisaged modifications.

The EBA considered that the amendments made by the European Commission were of a substantial nature and therefore warranted a formal opinion as set out in Article 10 of the EBA Regulation. Although substantial, the EBA agrees with the proposed changes, believing that they strike a good balance between the flexibility and risk sensitivity required for the calculation of the fixed overhead requirement and the need of a harmonized regulatory framework.

The substantive change relates to investment firms that are market makers and targets the costs that would be incurred by the firm in the context of a liquidation. The non-substantial change involved several editorial changes intended to facilitate the reading of the draft RTS and which follow the wording proposed by the EBA.

ESMA publishes its final reports on the CCP recovery regime

On January 31, 2022, ESMA published its final reports on central counterparties (CCP), in accordance with the Regulation on the recovery and resolution of central counterparties (CCPRRR).

The seven final reports relate to proposals for regulatory technical standards (RTS) on the method for calculating and maintaining 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 reward mechanism non-defaulting clearing members. It also covers guidelines on the consistent application of triggers for the use of early intervention measures, CCP recovery plan indicators and scenarios, and dividend restrictions in the event of a material event. just a flaw.

ESMA has submitted the final reports on the RTS to the European Commission, which now has three months to decide whether or not to approve the proposed standards under a delegated regulation. ESMA has submitted the guidelines for translation and once translated into all official EU languages.

Sanctions imposed in response to the crisis in Ukraine

During February, the EU imposed a number of sanctions in response to the crisis in Ukraine. As the crisis develops and sanctions continue to evolve, the CBI publishes details of new restrictive measures/sanctions that are adopted in this regard, along with any associated EU/UN guidance, on their dedicated website. Web page.