Financial Services Regulation and Compliance – Investment Firms May 2022


CBI reminds MiFID companies with branches outside the EU/EEA of the relevant requirements

On May 16, 2022, the Central Bank of Ireland (CCR) has updated its MiFID Investment Firm Requirements and Guidance website (the companies). The CBI reminds companies with branches outside the EU/EEA of the need to consider the following in relation to their operations:

  • ESMA’s MiFID II Supervisory Briefing on the supervision of non-EU branches of EU firms providing investment services and activities (the supervisory briefing)
  • ESMA advice to support prudential convergence in the area of ​​investment firms in the context of the UK’s withdrawal from the EU
  • CBI PCF Requirements

During the surveillance briefing, the CBI expects companies to:

  • demonstrate, on an ongoing basis, that any branch structure complies with the principles set out in the briefing note to supervisors
  • provide the information set out in paragraph 18 of the information note to supervisory authorities when initiating any consultation on this matter with the CBI
  • assessed whether additional risks arise from the use of a branch structure in a third country. In particular, the CBI will consider whether the company proposes to put in place mitigating measures to address these


Delegated Regulation on procedural rules for the imposition of sanctions on providers of data reporting services

On May 24, 2022, Commission Delegated Regulation 2022/803 supplementing the Markets in Financial Instruments Regulation (MiFIR) was published in the Official Journal of the European Union (PLAY). The delegated regulation specifies the procedural rules for the exercise of the power to impose fines or periodic penalty payments by ESMA, with regard to providers of data reporting services. The delegated regulation enters into force and applies on the third day following that of its publication in the OJEU.

ESMA launches four consultations on the CCP resolution regime

On 19 May 2022, ESMA published four consultation papers on its proposed EU CCP guidelines (CCP) resolution scheme. The consultation documents relate to two mandated proposals for guidelines on resolvability assessment by resolution authorities and on the type and content of provisions included in cooperation agreements between Member States and authorities of third countries. The consultation documents also include two non-mandated proposals for guidelines on the summary of the resolution plan to be shared with central counterparties, and on a template for the standard written arrangement referred to in the RTS for resolution colleges . The consultation is open until August 1, 2022. ESMA will consider the comments received from stakeholders with a view to publishing the final reports by the fourth quarter of 2022.

ESMA publishes final report on MiFID II framework on best execution reports by investment firms

On 16 May 2022, ESMA published a final report on the review of the MiFID II framework on best execution reports by investment firms. The final report proposes the following:

  1. Improve the quality of information in MiFID II RTS 28 reports (in particular by proposing to remove a specific reporting obligation for companies on the characteristics of executed orders which has not proven effective under the current reporting framework.
  2. Facilitate the use of MiFID II RTS 28 reports, for example by suggesting that companies be required to publish the quantitative information of the reports in simple CSV format to facilitate access and comparison of this data by end users.

The final report also contains proposals for potential amendments to Article 27(6) of MiFID II. The final report will be shared with the European Commission to contribute to the Commission’s analysis of the adequacy of the MiFID II best execution reporting obligations and any subsequent decision on whether the regime will continue and how it may possibly change. .

ESMA publishes its final reports on the CCP resolution regime

On 12 May 2022, ESMA published six final reports on the CCP resolution regime under the CCP Recovery and Resolution Regulation. The final reports set out proposals for regulatory technical standards (RTSs) on:

  • the content of CCP resolution plans
  • resolution colleges
  • valuation of assets and liabilities of central counterparties in resolution
  • guarantees for customers and indirect customers

Final reports also contain guidelines on:

  • the circumstances under which a central counterparty is deemed to have failed or is likely to fail
  • the methodology for valuing each contract before termination

The final reports on the RTS are submitted to the European Commission, which has three months to decide whether the proposed RTS will be endorsed under a delegated regulation. The final reports on the guidelines will be translated into all official EU languages.

ESMA publishes a report on highly liquid instruments

On 12 May 2022, ESMA published its final report on highly liquid financial instruments for central counterparties (CCP) investment policies within the framework of the European regulation on market infrastructures (EMIR). The report concludes that further work needs to be carried out regarding the extension of the list of eligible financial instruments to certain public entities and potentially covered bonds pending further research. The report also concludes that it would be premature to allow CCPs to invest in money market funds (MMF) given that no category of money market funds currently meets all the conditions defining highly liquid financial instruments. The next revision of the MMF Regulation should assess possible changes to the regulatory framework that could make EU MMFs suitable for CCP investments.

ESMA makes recommendations to improve investor protection

On April 29, 2022, ESMA published its final report on the mandate of the European Commission regarding certain aspects relating to the protection of retail investors. The report presents proposals to maintain a high level of investor protection, while ensuring that retail investors can benefit from the opportunities of digitalisation. Recommendations include the following:

  • require machine-readable informational documents to facilitate the development of publicly available searchable databases
  • address information overload by offering to define what is vital information and using digital techniques such as information overlay
  • the development of a standard European cost and fee information format and the alignment of information provided under MiFID and the PRIIP KID
  • possibility for NCAs and ESMA to require companies to use risk warnings for specific financial instruments
  • address aggressive marketing communications
  • address issues related to deceptive social media marketing campaigns and the use of online engagement practices, such as the use of gamification techniques by companies or third parties

ESMA opposes the amendments proposed by the EC on its draft ITS on insider lists

On May 2, 2022, ESMA published two notices regarding the amendments proposed by the European Commission (THIS) regulatory technical standards (RTS) on liquidity contracts for the SME Growth Market (GM SME) of transmitters and the implementing technical standards (HIS) on insider lists originally adopted by ESMA in October 2020. Regarding the ITS on insider lists, ESMA does not agree with the EC proposal to exempt SME issuers GM of the requirement to create different insider list sections for each inside information and with the removal of personal phone numbers from insider lists. Regarding the RTS on liquidity contracts for SME GM issuers, ESMA agrees with the EC proposals that liquidity providers should publish orders at prices that follow independent commercial interest and would not be required to post buy/sell orders in exceptional circumstances.

Sanctions imposed in response to the crisis in Ukraine

Since February, the EU has 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.