Financial Services Regulation and Compliance – Investment Firms March 2022


Central Bank of Ireland and IOSCO report on behavioral issues in the retail market

On March 21, 2022, the International Organization of Securities Commissions (IOSCO) Task Force on Conduct in the Retail Market (RMCTF), co-chaired by the Central Bank of Ireland and the Australian Securities & Investments Commission, has released a report on behavioral issues in the retail market.

The report provides a clear picture of changing global retail investor trends and their implications for market conduct. The report also examines authorities’ approaches to disclosure and investor education. The report examines the reasons behind the regulatory and business implications of the rise in gamification, self-directed trading, and the influence of social media on retail investor behavior.


Final Report on Guidelines on Certain Aspects of MiFID II Remuneration Requirements

On March 31, 2022, the European Securities and Markets Authority (ESMA) published its final report: Guidelines on Certain Aspects of MiFID II Remuneration Requirements (the report). The report summarizes the responses to the July 2021 consultation paper. The objective of the report is to improve clarity and foster convergence in the implementation of certain aspects of the new MiFID II remuneration requirements, replacing the guidelines existing ESMA guidelines on the same subject, published in 2013. The report is based on the text of the 2013 guidelines, which have been substantially confirmed (although clarified and refined where necessary). In addition, it takes into account the new requirements of MiFID II and the results of supervisory activities carried out by national competent authorities (CNA) on the subject. The guidelines in Annex IV of the report will be translated into the official EU languages ​​and published on the EMSA website

ESMA proposes changes on revised transparency requirements under MiFIR

On March 28, 2022, ESMA proposed targeted changes to some of its regulatory technical standards (RTS 1 and RTS 2) which specify the regulations on markets in financial instruments (MiFIR) transparency requirements for own funds and other items, respectively. These amendments aim to clarify, improve and simplify the transparency regime for capital and non-capital instruments. The examination of RTS 1 and RTS 2 is carried out in two stages:

  1. Final report including a first set of proposed changes to address issues that have received broad stakeholder support and/or are considered important in the context of establishing a consolidated tape provider (TPC), and
  2. A second review focused on the necessary changes to RTS 1 and 2 as a result of the MiFIR review and also included analysis of proposals included in the consultation document published in July 2021 but not covered in this final report.

The EC will review the reports submitted by ESMA to decide whether or not to approve the proposed amendments to the RTS.

Keynote speech by Natasha Cazenave at the ICI Investment Management 2022 conference – Key Priorities for the Asset Management Industry in 2022: Sustainable Finance and Systemic Risk (ESMA34-466-282)

On March 24, 2022, Natasha Cazenave, Executive Director of the European Securities and Markets Authority (ESMA), delivered a keynote address at the ICI 2022 Investment Management Conference.

In his speech, Cazenave highlighted two of the main challenges that ESMA will face this year and in the future. First, to develop a framework for the asset management industry to contribute positively to the climate transition. Second, to strengthen the resilience of investment funds to market, credit and liquidity shocks.

Cazenave welcomed the efforts made by market players to comply with the detailed rules contained in the “implementing measures” of the European regulation on information on sustainable finance (SFDR) which will apply from 1 January 2023. Cazenave noted that ESMA, EBA and EIOPA are also preparing the revision of the indicators of the main negative impacts in order to ensure that the indicators remain relevant in the light major environmental and scientific developments.

ESMA has issued guidelines on liquidity stress testing and actively monitors liquidity risks within open-end funds.

ESMA has published its assessment and recommendations on the proposed EC MiFIR review

On March 15, 2022, ESMA published its assessment of the main elements of the EC’s proposed MiFIR review. The assessment focused on setting up the Consolidated Tape Provider (TPC), but also includes elements such as share and other share transparency, disclosure of information, and order flow payment.

With regard to the CTP, ESMA recommended that the co-legislators allow more time for the CTP selection process to take place, separate the selection procedure from the authorization process, instruct ESMA to prepare standards regulatory techniques on market data to be included by a CTP instead of an EC delegated act and to extend the deadline for triggering the assessment for ESMA to be the fallback to the CTP.

ESMA also recommended the simplification of the non-equity deferral regime, ensuring a fair game deposited across the Union, the addition of an autonomous suspension mechanism for the derivatives trading obligation and replacing the concept of “traded on a trading venue” to avoid gaps in reporting and disclosures on transparency. The MiFIR revision proposal is currently being negotiated by the European Parliament and the Council.

Commission Delegated Regulation (EU) …/… of 11.3.2022 supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards on information to the public on the policy of investment by investment firms (C (2022) 1413 final)

On 11 March 2022, the EC published the Commission Delegated Regulation supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards on the disclosure of investment policy by investment firms investment (the delegated regulation).

The Delegated Regulation specifies the uniform publication formats and associated instructions for the investment policy requirements of investment firms referred to in Article 52(1) of the FRR. The information required includes information on the proportion of voting rights attached to shares held directly or indirectly by investment firms, information on their voting behavior, an explanation of votes and the ratio of proposals issued and approved, information on the use of proxies by consulting firms and information on their voting guidelines. The Delegated Regulation will enter into force on the twentieth day following that of its publication in the Official Journal of the EU.

Sanctions imposed in response to the crisis in Ukraine

During February and March, 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.