Regulatory News Alert
You can find here the latest national, European or international regulatory updates analysed by Deloitte.
ESMA Q&A on MiFID and MiFIR transparency topics – The systematic internaliser (SI) regime
Following the last consultation paper on UCITS share classes published in April 2016, ESMA introduced on 30 January 2017 an Opinion paper on this topic with an applicable framework for UCITS share classes.
On 28 December 2016, the draft Law 7025 implementing Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property has been published in Mémorial A.
Introduction of a notification form, in line with the framework set by Circular CSSF 02/77, on NAV calculation errors and non-compliance with the investment rules.
The CSSF sent out a second Circular Letter to UCITS’ management companies requesting to perform a UCITS Risk Reporting.
On December, 9th 2016, the European Parliament published an informal agreement reached by European Parliament, Council and Commission negotiators on shareholders’ right to vote on directors’ pay.
The European Central Bank (ECB) launched on 12 November a public consultation on a draft guide to fit and proper assessments.
On 21 November 2016, the European Banking Authority (EBA) published additional information on the application of the proportionality principle to the remuneration provisions laid down in the Capital Requirements Directive in response to a request for advice from the European Commission.
Three years on from CRD IV/CRR being finalized, the EU’s banking sector now faces a revised Capital Requirements Directive and Capital Requirements Regulation (CRD V and CRR II), and a host of other legislative amendments (notably on the Bank Recovery and Resolution Directive, BRRD), in a 500+ page package published by the European Commission on 23 November 2016.
On November 4th 2016 the EBA released a discussion paper (DP) setting out possible options for a new prudential regime for investment firms, particularly those that are not deemed “systemic and bank-like”.
New Regulatory technical standards on data to be reported to trade repositories in line with new rules on collateral exchange
On April 2016, the CSSF sent a circular letter to management companies, which requested them to perform a UCITS Risk Reporting with the first reporting on 31 March 2016. This new reporting is composed of eight sections with section I applying to all UCITS and sections II to VIII applying only to UCITS with AuM over €500 million or leverage over 250 percent.
The European Commission has today proposed an extension to the date of application of the Regulation on Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs).
On October 14th 2016, the European Securities and Markets Authority (ESMA) published its Final guidelines on sound remuneration policies under the UCITS Directive and the AIFMD.
Circular CSSF 14/587 anticipated different dimensions of the UCITS V framework.
The text was due to be repealed and replaced by a new CSSF Circular as soon as the EU Commission delegated Regulation (EU) 2016/438 would enter in effect, “in order to adapt its content to the provision of the final Commission Delegated Regulation”.
Following the publication of the CSSF Annual Report 2015, you will find a summary of remarks made by the CSSF with respect to investment management.
On 4 October 2016, the European Commission has endorsed the Commission Delegated Regulation (CDR) with regards to the Regulatory Technical Standards (RTS) for risk mitigation techniques for OTC derivative contracts not cleared by a central counterparty.
On 28 September 2016, the European Banking Authority (EBA) published its final guidelines on remuneration policies and practices related to the sale and provision of retail banking products and services.
On 28 September, the European Banking Authority (EBA) published the final report on the application of the definition of default under Article 178 of the Capital Requirements Regulation (CRR). A separate report was published for the results of the quantitative impact study (QIS).
Following the publication of the CSSF Annual Report 2015, you will find a summary of key attention points for credit institutions, PSFs and the supervision of information systems.
On 29 July 2016, the draft Law 7025 implementing Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property (the Directive) has been published.
Following on from the European Parliament’s Committee on Economic and Monetary Affairs vote to reject PRIIPs KID delegated regulations two weeks ago, the European Parliament plenary session of 14 September 2016 overwhelmingly voted to reject the implementation of PRIIPs legislation.
Following the vote today to adopt the motion to reject the Commission delegated regulation (the level 2 guidelines) as issued on the 30th June 2016 these guidelines will require revision taking into consideration the concerns raised by the ECON.
ECON (the EU Parliament’s Committee on Economic and Monetary Affairs) has drafted a motion for resolution calling for the rejection of the PRIIPs RTS issued on the 30th June 2016, citing what it states as inadequacies in the translation of technical requirements.
The Law of 4 August 2016 on disclosure of non-financial and diversity information applicable to some large companies and some groups has been published on Memorial A.
On 14th July 2016, Luxembourg Parliament passed a new law introducing a new type of Luxembourg investment vehicle named the Reserved Alternative Investment Fund (RAIF).
The Luxembourg Law implementing the Audit Market Reform was published on Mémorial A on 28 July 2016.
On 12 July 2016, the European Commission adopted the EU-US Privacy Shield framework with an adequacy decision. By notifying the Member States, the new framework for EU - US personal data transfers enters into force immediately.
The Luxembourg parliament voted on a law regarding the Reserved Alternative Investment Fund (Fonds d’Investissements Alternatifs Réservés - RAIF). This law, along with the law voted yesterday on the modernization of the law of 10 August 1915 on commercial companies as amended (the “Company Law”), both offer an attractive legal framework for different investors looking to structure their investments through Luxembourg.
Modernization and competitiveness of the Luxembourg market
The threats associated with money laundering and terrorist financing are constantly evolving. And the recent terrorist attacks in the European Union and beyond demonstrate the urgent need for a strong coordinated European response and also the need to swiftly adapt current rules on a regular basis.
On June 1st, the European Central Bank (ECB) published the final version of the AnaCredit Regulation on the collection of granular credit and credit risk data as well as the related amending decision on the organisation of preparatory measures for the collection of granular credit data by the European System of Central Banks.
On June 17th, the Council of the EU adopted the text that delays the implementation of MiFID II/MiFIR by one year to 3 January 2018. The Parliament had already adopted the text on 7 June. The final step for the text is to be published in the Official Journal (OJ) which we expect to take place in late June, ahead of the transposition deadline of 3 July 2016.
On 28th September 2015, ESMA delivered a first set of draft regulatory technical standards related to the market abuse regulation and submitted it to the European Commission.
On 10 May 2016 the draft bill 6624 has been voted by the Luxembourg Parliament.
Form for compliance
On May 18th 2016, the CSSF published a form aiming to gather information on existing (pre UCITS V) remuneration practices of companies/entities falling under the UCITS V Regime and to anticipate on possible requests from relevant entities to rely on the proportionality principle in the future.
The Law of 10 May 2016 amending the Law of 11 January 2008 on transparency requirements and the Law of 10 July 2005 on prospectuses has been published on 12 May 2016 in the Luxembourg Official Journal.
European regulators are uncovering non- compliant websites and marketing documents
Contents of marketing materials, such as factsheets and the further information which management companies post on their websites are at the very heart of investor protection frameworks. Ensuring their compliance with EU and local rules constitutes a major piece of the overall compliance program which management companies and fund boards must implement.
The European Securities and Markets Authority (ESMA) has published guidelines on July 2013 on sound remuneration policies under the Alternative Investment Fund Managers Directive.
On May 4th 2016, ESMA published the list of the competent authorities who comply or intend to comply with ESMA's guidelines on sound remuneration policies under the AIFMD.
Following the publication of the final draft RTS on 7 April 2016, the main challenge for asset managers will be the exchange of cost, risk and performance data to support other PRIIP manufacturers in the preparation of product KIDs, in particular for the insurance industry.
On April 26th 2016, the CSSF has issue a new Circular Letter concerning UCITS Risk Reporting applying to all Luxembourg domiciled UCITS.
On April 7, 2016 the European Commission adopted a first set of delegated rules for the new MIFID II framework, in the form of Delegated Directive.
The Chamber of Deputies voted for the draft law 6845 to transpose the Directive 2014/91/UE (“Directive UCITS V”) – which was adopted by the European Union in July 2014.
On 24 March, the long awaited UCITS V Level 2 on depositary regime has been published on the European Official Journal.
The European Securities and Markets Authority (ESMA) published on March 31st 2016 its final guidelines on sound remuneration policies under the UCITS V Directive.
Following the first consultation paper on UCITS share classes in December 2014, ESMA introduced on 6 April 2016 a new consulting paper on this topic with their current thinking regarding a framework for UCITS share classes. This paper states high level principles and new operational principles.
On 22 March 2016, the Chambre des Députés published draft Law 6969 ("the draft Law") implementing: Directive 2014/56/EU and Regulation (EU) No 537/2014.
On 17 March 2016, the Law of 15 March 2016 on OTC derivatives, central counterparties and trade repositories has been published in Memorial A.
Following the publication of the Consultation Paper in June 2015, the European Supervisory Authorities (EBA, EIOPA, ESMA - ESAs) published the 8th of March, 2016 their final draft Regulatory Technical Standards (RTS) on margin requirements for non-centrally cleared OTC derivatives under the European Market Infrastructure Regulation (EMIR).
In its press release 16/10 the CSSF clarified its position on practical issues in relation to the implementation of the UCITS V regime and depositary aspects in relation to Part II UCIs.
On 23 February 2016, the Luxembourg Parliament voted the Draft Law 6846 on OTC derivatives, central counterparties and trade repositories (Draft Law). A request to waive the second vote was introduced.
In its meeting of February 10th 2016, the College of Commissioners officially announced its final position concerning the delayed coming into force of the revised Markets in Financial Instruments Directive (“MiFID II / MiFIR”).
Since the Court of Justice of the EU nullified the EU-US Safe Harbor Framework on 6 October 2015, the European Commission and the US Department of Commerce have worked to establish a new legal framework to govern transfers of personal data from the EU to the US.
On 23 December 2015, the Securities Financing Transaction Regulation (SFTR) was published in the EU Official Journal.
On 29 December 2015, the Commission de Surveillance du Secteur Financier (“CSSF”) issued CSSF Circular 15/633 on financial information to be provided on a quarterly basis by investment fund managers and their branches.
On 24 December 2015, the Law of 18 December 2015 on resolution, recovery and liquidation measures of credit institutions and some investment firms, on deposit guarantee schemes and on indemnification of investors has been published on Luxembourg official journal.
The new Luxembourg law published in Memorial A on 28 December 2015 (the Law) implements a new EU requirement to report on payments made to governments by certain groups active in the extractive industry, and various amendments related to the individual and consolidated annual accounts. The main change affects the presentation of the profit and loss account that will be presented as a list from 2016 onwards.
As from 1 January 2016, the Countercyclical Capital Buffer (CCyB) enters into force for credit institutions subject to the Capital Requirements Directive IV (CRD IV).
As per CSSF Regulation No15-04, the CCyB rate applicable to relevant exposures located in Luxembourg is set to 0.0%. Further guidance on the calculation of the overall CCyB rate (including exposures outside Luxembourg) is provided in CSSF Regulation No15-01.
On December the 2nd 2015, ESMA published an update on their Q&A (last update was dated from July 2015)
The clearing obligation in the EU will enter into force following the publication of a Regulation (EU) 2015/2205 (the “Regulation”) supplementing the European Markets Infrastructure Regulation (“EMIR”).
On 27 November, the Luxembourg Government adopted a new draft law, for the purpose of creating a new type of alternative investment fund in Luxembourg: the Reserved Alternative Investment Fund (RAIF) (Fonds d’Investissements Alternatifs Réservés).
On 17 November 2015, the European Securities and Markets Authority (ESMA) released a note suggesting a potential delay in the implementation of certain provisions of MiFID II / MiFIR.
Following the publication of PRIIPs Regulation (EU) 1286/2014 on 9 December 2014, the European Supervisory Authorities (ESAs) have been mandated to draft Regulatory Technical Standards (RTS) on the content and presentation of the related KIDs.
The European Commission welcomes the adoption by the European Parliament of the Regulation on Transparency of Securities Financing Transactions (known as SFTR).
On October 21, the CSSF published the circular 15/621 amending the circular 14/593 on supervisory reporting. The amending circular specifies the different deadlines of applicability of the new FinREP reporting on individual basis.
The Court of Justice of the European Union (CJEU) has ruled on October 6, 2015 that the EU-US Safe Harbor Framework for transferring personal data from the EU to the US is invalid.
The Basel III framework has been transposed in the European legislation through the Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.
The AIFMD which entered into force on 22 July 2013, has introduced the EU marketing passport for EU domiciled Alternative Investment Fund Managers (“AIFM”) managing and marketing EU domiciled Alternative Investment Funds (“AIF”), whereas non-EU domiciled AIFMs remain subject to the national placement regimes (“NPPRs”) of each Member State where the AIFs are marketed.
The European Securities and Markets Authority (ESMA) has launched a consultation on proposed guidelines on sound remuneration policies under the UCITS V Directive, which will affect retail investment fund managers.
Following the publication of the CSSF 2014 Annual Report, you will find a summary of regulatory key points for credit institutions and PSFs.
On 16 April 2015, the CSSF published Circular 15/611 (the circular) on managing the risks related to the outsourcing of systems that allow the compilation, distribution and consultation of management board/strategic documents (the systems).
On 20 April 2015, the Council of the European Union has adopted its position on the rules aimed at preventing the use of the financial system for the purpose of money laundering or terrorist financing.
On 20 February 2015, the CSSF published CSSF Circular 15/605 on conditions for the disclosure of unencumbered assets applicable to Luxembourg credit institutions publishing Pillar III report, active in collateralised transactions (repurchase agreements, derivatives, securitisations, covered bonds and financing transactions with Central Bank).
Change of deadline for compliance with CSSF Circular 14/587 and subsequent amendments to this Circular.
Draft Law 6660, implementing CRD IV, introduces a sub-category of investment firms in the Law on the financial sector, the "investment firm CRR", which falls within the scope of CRR and ITS on Supervisory Reporting.
On 15 January 2015, the CSSF published the CSSF Circular 15/602 on documents to be submitted on an annual basis adressed to all credit institutions. The purpose of this circular is to provide new rules and deadlines concerning the various documents to be submitted annually.
On February 9, 2015, the CSSF issued Circular 15/603 titled “Security of Internet payments”, which seeks to implement the EBA Guidelines EBA/GL/2014/12 into the Luxembourg regulatory framework.
The CSSF issued on 13 January 2015 the Circular 15/601 implementing a specific notification process to follow in the situation where the variable component of Identified Staff’s total remuneration would exceed the 1:1 ratio.
On 9 January 2015, the CSSF published Regulation N°14-02 relating to the determination of distributable results and reserves of credit institutions when using the fair value method for the statutory annual accounts (Mémorial A – N°4). This regulation is applicable from the period ended 31 December 2014.
As you may be aware, many AIFMs must submit prudential reports to their national competent authorities in January 2015 in accordance with Article 24 of the AIFM Directive and annex IV of the associated Delegated Regulation.
“ESMA has identified diverging national practices as to the types of share class that are permitted, ranging from very simple share classes (e.g. with different levels of fees) to much more sophisticated share classes (e.g. with potentially different investment strategies). Therefore, ESMA sees merit in developing a common understanding of what constitutes a share class of UCITS and of the ways in which share classes may differ from each other.
On 19 December, the CSSF published the Circular 14/599 amending the accounting treatment of lump-sum and AGDL provisions. Whilst these provisions were maintained according to FinREP instructions as at 01/01/2008, the new harmonised European reporting and the EU CRR Regulation 575/2013 require a recycling, in respect of IFRS accounting rules.
CSSF Circular 14/597, published on 25 November, introduces a new Chapter in Part III of the CSSF Circular 12/552, related to sound risk management to be implemented and performed on assets encumbrance.
On 15 November 2014, the Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (“The Directive”) has been published in the Official Journal of the European Union.
The European Central Bank published yesterday the results of the Comprehensive Assessment conducted on the 130 most important banks of the Euro zone. This assessment was required prior to the effective entry into force of the SSM on 4 November 2014.
On 10 October 10 2014, the European commission published a regulation under the delegated act that lays down rules to specify in detail the liquidity coverage requirement provided for in Article 412(1) of Regulation (EU) No. 575/2013 (i.e. CRR).
On 1st October 2014, ESMA published its Final draft technical standards on the Clearing Obligation – Interest Rate OTC Derivatives.