Wed, Aug 10, 2022

AMF and ESMA Updates - April 2022

ESMA: Update Of Q&As Regarding the Benchmark Regulation, ESMA Guidelines on Environment, Society, Governance (ESG), and Data Reporting Under MiFIR and SFTR

April 1, 2022
The ESMA updated the following Questions and Answers:

  • Regarding the BMR regulation: Q&A 9 (on transitional provisions applicable to third-country benchmarks) has been modified as well as Q&A 10 (regarding ESG factors reflected in the benchmark statement and methodology).
  • Regarding ESMA guidelines on alternative performance measures (APMs), Q&A 19 (regarding application of the APM Guidelines to measures related to ESG matters) and Q&A 20 (regarding labels used by issuers on ESG financial measures) has been amended.

ESMA also updated Q&As relating to data reporting under MiFIR and SFTR.

Read the full article here

ESMA: Data Quality Report Under EMIR and SFTR Regulations

April 1, 2022

ESMA published its second report on data quality. It considers that the quality of data has improved due to its coordinated actions with national competent authorities (NCAs). However, even though the results of this study are positive, ESMA has identified areas where improvements are necessary. In particular, entities that are subject to reporting obligations must submit reports on time or ensure the accuracy of the data.

Read the full article here.

ESMA: Final Report on the Review of the EU Regulation on Short Selling

April 04, 2022

ESMA published its final report on the review of certain provisions of the regulation on short selling. The report proposes to amend the current regulatory framework for the calculation of net short positions, as well as to modify the rules governing the issuance of short- and long-term bans and the prohibition of naked short selling. It also proposes to strengthen ESMA’s intervention powers.

Read the full article here.

ESMA: Response to the Consultation of the European Commission on a Review of EMIR Regulation

April 5, 2022

ESMA published its high-level response to the European Commission’s consultation on a targeted review of EMIR regulation regarding the EU clearing framework. ESMA recommends a series of measures to promote the attractiveness of European markets while reducing the exposure of central counterparties (CCPs) located outside the EU.

Following the consultation with ESMA and other stakeholders, the European Commission must now prepare a proposal to amend the EU central clearing framework.

Read the full article here.

European Commission: Adoption of Technical Standards Under Regulation on Sustainability-Related Disclosure in the Financial Sector

April 6, 2022

The European Commission adopted technical standards for financial sector entities subject to ESG disclosure requirements under the SFDR regulation. They supplement the disclosure requirements already in force under other regulations (AIFMD, UCITS and MiFID II).

These technical standards define the methodology, content and presentation of the information that must be published. From now on, financial sector entities subject to these regulations will have to explain how they manage and reduce the negative impacts of their activities and investments on society and the environment. These new requirements will also facilitate the assessment of the ESG performance of financial products.

These new technical standards are currently being reviewed by the European Parliament and the Council of Europe and are expected to come into force in January 2023, instead of January 2022.

Read the full article here.

AMF: Summary of The SPOT Inspections on Bond Post-Trade Transparency

April 13, 2022

The AMF inspected the practices of five French investment services providers (ISPs) between January 2018 and June 2021. This sample represents 60% of the volumes traded on the bond market through French providers. The inspections focused on the obligations imposed by the MiFID II directive and the MiFIR regulation on post-trade disclosure of executed transactions (including prices and volumes traded), particularly with regards to governance arrangements, data quality and compliance monitoring.

The AMF observed shortcomings in the technical skills of the teams in France and in the application of the requirements imposed by the regulations concerning access to the publication of the transactions concerned, respect of deadlines, data quality and the compliance system. It therefore recommends that ISPs improve their systems and ensure the reliability of data.

Read the full article here.

AMF: Ombudsman’s Annual Report

April 20, 2022

The AMF Ombudsman (Marielle Cohen-Branche) published her annual report on 2021, which shows a significant increase in the number of requests and recommendations issued, mainly due to a strong activity of retail investors in the markets. Cases relating to equity savings plans are the main grounds for dispute. Many cases concern misunderstandings about securities transactions or problems with the execution of stock market orders and fund net asset values.

ACPR-AMF: Assessment of Marketing Practices Related to Online Financial Products

April 21, 2022

The ACPR-AMF Joint Unit conducted a study on the online marketing of financial products and life insurance contracts. The aim was to monitor the online subscription process in compliance with regulatory obligations, and to provide customers with informed consent and a good understanding of the products.

This study revealed numerous breaches of the regulations in force regarding consent and information provided to customers. The authorities remind that entities that are subject to the obligations introduced by the MiFID II and IDD must comply with them and encourage the adoption of good practices, such as ensuring that pre-contractual information is fully read and understood by customers.

Read the full article here.

European Commission: Update of Its Q&A on EU Sanctions in the Context of the Russian-Ukrainian Crisis

April 22, 2022

The European Commission updated its Q&A concerning the measures that came into force on April 12, 2022 to ban fund subscriptions by Russian or Belarusian nationals.

EU economic sanctions notably require that Russian and Belarusian investors covered by the ban must be excluded from every fund before exposure to a new euro-denominated security (including in the form of crypto assets). In practice, asset management companies could provide for a statement in the fund prospectus indicating that the funds are no longer open for subscription by Russian or Belarusian investors affected by the ban, as well as information to the distributors and the fund’s clearinghouses.

Asset managers must also review the impact of these measures on the liabilities of funds, collective investments schemes and discretionary portfolio management services on their clients and all individuals and entities that they already have business with.

Q&A on investment funds in the context of the Russian-Ukrainian crisis as of April 14, 2022

Q&A on sales of securities in the context of the Russian-Ukrainian crisis as of April 14, 2022

Read the full article here.

Enforcement Committee of the AMF: EUR 150,000 Fine Against a Financial Investment Advisor (Conseiller En Investissement) and Its Manager for Breaching Their Professional Obligations

April 26, 2022

The Enforcement Committee of the AMF issued a reprimand and a fine of EUR 150,000 to a financial investment adviser (FIA) for offering 12 clients subscriptions to two AIFs that were not authorized in France. The sanction also covers the breach of professional obligations regarding AML/CFT between 2016 and 2020 (absence of an AML/CFT procedure, failure to declare a TRACFIN correspondent, and shortcomings in the collection of information on clients). Finally, the manager was banned from practicing in the asset management sector for five years and fined EUR 50,000.

Through this decision, the AMF reaffirms its strict interpretation of reverse solicitation, in accordance with DOC 2014-04. There can be no reverse solicitation if (i) clients have used standard templates provided by the FIA prior to subscription, (ii) they receive advertising emails prior to subscription, or (iii) clients do not specify the name of the financial instruments.

Read the full article here.

AMF: Fees and Contributions For 2022

April 28, 2022

The AMF published its guide to the fixed fees and contributions payable to the AMF as of January 1, 2022. It sets out the fees and contributions payable by asset managers, service providers, issuers and shareholders, as well as payment conditions.

This guide was updated following the new Finance Act for 2022. Asset management companies must now take into account assets managed under delegation when calculating the contributions due. The date for reporting to the AMF has been extended to July 31, 2022.

Read the full article here.

AFG: Guide on Disclosure of New Gender Equality Requirements (Rixain Law)

April 28, 2022

The AFG published its guide on the gender equality objective in asset management companies in response to the law of December 24, 2021 aimed at accelerating economic and professional equality, known as the Rixain law. It introduces new obligations for management companies, codified in Article L. 533-22-2-4 of the Code Monétaire et Financier. With immediate effect, management companies must define “a target [to be updated annually] for the balanced representation of women and men among the teams, bodies and managers responsible for making investment decisions.” Asset management companies must also report their gender equality objectives in the Article 29 LEC report.

As a reminder, the Article 29 LEC report must be published by asset management companies annually, within six months of the end of the financial year.

Read the full article here.

ESMA: Recommendations to Improve Retail Investor Protection

April 29, 2022

ESMA advises the European Commission on certain aspects of retail investor protection. ESMA issued technical recommendations to enable retail investors to benefit from online opportunities while ensuring a high level of protection. The report covers three main areas: information to be provided to investors, information to be published online, and digital tools and channels. In particular, it proposes the development of a EU standard format for disclosing costs and fees, the alignment of MiFID and PRIIPs disclosures, amendments to the applicable regulation to better regulate marketing campaigns, and the publication of “vital information” for clients.

Financial Services Compliance and Regulation

End-to-end governance, advisory and monitorship solutions to detect, mitigate, drive efficiencies and remediate operational, legal, compliance and regulatory risk.