AMF and ESMA Updates—November 2022

France Invest: Publication of KID Guidance

November 9, 2022

France Invest published its updated guide on the Key Information Document (KID) for Alternative Investment Funds (AIF) for PE in relation to the Regulation (EU) No. 1286/2014 (the PRIIPs Regulation).

Read the article here.

AMF: The AMF Report on European Taxonomy Alignment

November 9, 2022

AMF presented the new obligations of listed companies under the European taxonomy regulation and its analysis of the first reports of 27 companies.

Read the article here.

AMF: The AMF updates its guidance to facilitate implementation of the Delegated Regulation of the SFDR

November 10, 2022

The AMF amended its general regulations in the light of the entry into force of Sustainable Finance Disclosure Regulation (SFDR) Level on January 1, 2023. The AMF also reemphasized that some deteriorations or extra-financial changes that are considered significant require a notification to the unitholders because they may result in a change in fund classification under SFDR or discontinuation of consideration of the principal adverse impacts (PAI).

Read the article here.

ESMA: ESMA Updates Q&A on PRIIPs KIDs

November 14, 2022

On November 14, 2022, ESMA published an updated version of the Q&A concerning Regulation (EU) No. 1286/2014 (the PRIIPs Regulation) and its Delegated Acts. This document includes Q&As that relate to both the rules originally included in Commission Delegated Regulation (EU) 2017/653 of March 8, 2017, and the amendments introduced in Commission Delegated Regulation (EU) 2021/2268. Thus, this Q&A includes new Level 3 PRIIP regulatory updates related to the EU PRIIPs Regulatory Technical Standards 2.0. The details and clarifications in relation to all new requirements for the KID in the context of UCITS and AIFs include:

• Additional information about the “What is this product?” section disclosure requirements for funds
• Detailed explanations for the calculation requirements of Synthetic Risk Indicator and performance scenario in relation to funds’ historical data, as well as usage of benchmarks and proxies 
• Clarifications on the monthly calculation basis and publication requirements for “previous performance scenario calculation”
• Extensive details on the past performance requirements, introduced by the new Annex VIII
• Clarifications on the application of the new requirements in the context of insurance products
• Presentation of costs (performance fees)
• How to describe a product (actively/passively managed, benchmark, Exchange Traded Funds)
• The market risk assessment (absolute return and flexible funds)

For derivative manufacturers like structured products and over the counter product manufacturers, an important note is made in relation to the new “autocall” disclosure format in the context of calculation of scenario returns and costs.

A performance scenario table example for contracts for difference is provided, which may be of interest also in the context of other derivative-based products providing leverage.

Read the article here.

ESAs: Q&A on the SFDR

November 17, 2022

The European Supervisory Authorities (“ESAs”) the European Banking Authority (“EBA”), the European Insurance Occupational Pensions Authority (“EIOPA”) and the European Securities & Markets Authority (“ESMA”) have published a Q&A document on the SFDR Delegated Regulation. It is a comprehensive document with several sections:

• Current value of all investments in PAI and taxonomy-aligned disclosures
• PAI disclosures
• Financial product disclosures
• Multi-option products
• Taxonomy-aligned investment disclosures
• Financial advisors and execution-only Financial Market Participants

This document clarifies, among other issues:

• PAI and taxonomy alignment calculations and examples
• Disclosures required under Article 4 SFDR
• Some sections will be removed from the SFDR template
• The designated index (Article 9 SFDR)
• The metric to be used for financial undertakings with several activities in the taxonomy alignment disclosures
• Guidance on when pre-contractual and periodic taxonomy alignment disclosures apply
• Guidance on financial product disclosures under Article 8 regarding the extent to which “sustainable investments with an environmental objective are aligned to the EU Taxonomy”

Read the article here.

ESMA: Consultation on Rules for Passporting

November 18, 2022

ESMA launched a consultation to revise MiFID II RTS. The proposed changes cover the information that investment firms are required to provide at the passporting stage:

• The language(s) for which the investment firm has the necessary arrangements to deal with complaints 
• In which member states the firm will actively use its passport
• The categories of clients targeted
• The investment firm’s internal organization in relation to the cross-border activities of the firm

The final report to be published by the end of 2023.

Read the article here.

ESMA: Consultation on Guidelines for the Use of ESG in Fund Names

November 18, 2022

This consultation seeks the views of stakeholders on the use of ESG or sustainability-related terms in funds’ names. A key aspect of the proposed guidelines is the introduction of quantitative thresholds for the minimum proportion of investments sufficient to support the ESG or sustainability-related terms in funds’ names.

Read the article here.

ESMA: Annual Report on MAR Administrative and Criminal Sanctions

November 18, 2022

ESMA published its annual report on Market Abuse Regulation (MAR) administrative and criminal sanctions. Although the number of administrative sanctions and measures under MAR significantly decreased, the number of financial penalties significantly increased.

Read the article here.

AMF: The AMF Adds to Its Doctrine on Liquidity Management Tools

November 24, 2022

Following the amendment of its general rules on liquidity gates, the AMF has updated several of its instructions, notably those about communications when implementing redemption gates, as well as documentation and communication when managers opt not to implement a redemption gate mechanism.

The AMF sets out in its doctrine the methods of recourse for funds implementing swing pricing mechanisms or anti-dilution levies. These requirements do not concern closed AIFs, listed index funds (ETFs), dedicated AIFs and money market funds.

Read the article here.

ESMA: CSDR and MAR Q&A Update

November 25, 2022

ESMA updated its Corporate Sustainability Reporting Directive (CSRD) and MAR Q&A. Regarding MAR, ESMA states that investment firms providing direct electronic access (DEA) with respect to their DEA clients’ trading activity are obliged to detect and report market abuse under Article 16(2) subject to MAR Article 16.

Read the article here.

EU Council: Approval of the CSRD

November 28, 2022

The Council of the EU approved the CSRD, which will require companies to produce a comprehensive report on how their business model affects their sustainability and on how external sustainability factors influence their activities. First reports must be produced in 2025 for the year 2024. The sustainability report will be part of the management report and subject to reasonable assurance.

Read the article here.