Financial Services Regulation and Compliance – Investment Firms September 2022


Statistical publication – Statistics on special purpose entities Q2 2022

On September 8, 2022, the CBI issued a statistical statement regarding special purpose entities. The CBI collects this comprehensive information on Irish resident special purpose entities engaged in securitization activities. The data details inventory and transactions on a quarterly basis, with information on the scale, composition, geographic and sector exposures of vehicle assets and liabilities. An attached press release details key findings from the most recent quarterly data. These data are transmitted to the Central Bureau of Statistics (CSOs) and the ECB to feed balance of payments and national accounts statistics for Ireland and the euro area. The data also feeds into the shadow banking measure based on Financial Stability Board definitions.


Public statement to investment firms on the impact of inflation in connection with investment services to retail clients

On September 27, 2022, the European Securities and Markets Authority (ESMA) issued a statement reminding companies to consider inflation and inflation risk when applying the relevant MiFID II requirements in the interest of investor protection.

ESMA noted that rising interest rates and rising inflation have an impact on households in daily life and in their investment decisions. The authority issued the statement to remind firms of the relevant MiFID II requirements as it believes that investment firms can play a role in addressing inflation and inflation risk, both when manufacturing and distributing investment products and when providing investment services to retail clients.

ESMA and national competent authorities will continue to closely monitor financial markets and their participants in the interest of safeguarding the stability of the EU financial system by enhancing investor protection and promoting stable and orderly financial markets.

ESMA publishes report on pilot DLT scheme

On September 27, 2022, ESMA published its report on the Distributed Ledger Technology pilot scheme (DLT pilot). In the report, ESMA provides guidance on certain technical elements and makes recommendations on compensatory measures on prudential data to ensure consistent application by DLT market infrastructures from the start of the regime.

The report sets out ESMA’s proposed way forward and includes feedback received following a call for submissions launched in January and a workshop held in March 2022. ESMA concludes that it is not necessary to modify the RTS on transparency and data reporting requirements before the start of the DLT pilot project. application in March 2023.

Final Report – Guidance on Certain Aspects of MiFID II Matching Requirements

On September 23, 2022, ESMA published its final report on guidance on certain aspects of the MiFID II suitability requirements. The suitability assessment is one of the most important requirements for investor protection under MiFID. It applies to the provision of all types of investment advice, whether independent or not, and to portfolio management.

The main changes introduced in the MIFID II delegated regulation and reflected in the guidelines on the topic of sustainability are:

  • Information to customers on sustainability preferences – companies will need to help customers understand the concept of sustainability preferences and clearly explain the difference between products with and without sustainability features and avoiding technical language.
  • Collecting information from customers on sustainability preferences – companies will need to collect information from customers about their preferences with regard to different types of sustainable investment products and the extent to which they wish to invest in these products .
  • Assessment of sustainability preferences – once the company has identified a suitable product range for the customer, in accordance with criteria of knowledge and experience, financial situation and other investment objectives, the company must identify the product(s) that meet the customer’s sustainability preferences.
  • Organizational requirements – companies must provide staff with appropriate training on sustainability topics and maintain appropriate records of all customer sustainability preferences, if any, and any updates to those preferences.

ESMA conducted a public consultation on these guidelines to gather the views of relevant stakeholders. The final report includes a feedback statement summarizing the responses received and outlining the changes and clarifications introduced in the final guidelines to reflect comments received during this consultation. The guidelines will now be translated into official EU languages ​​and published on the ESMA website. National competent authorities must notify ESMA whether they comply or intend to comply with the guidelines within two months of their publication.

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.