Commission letter on de-prioritisation of financial services level 2

On 6 October 2025, the EU Commission published a letter delivered to the European Supervisory Authorities (ESAs) and the Anti-Money Laundering Authority (AMLA), stating that it is de-prioritising certain “non-essential” Level 2 empowerments related to financial services legislation (following consultation with the European Parliament and Council). The specific empowerments are listed in an annex to the letter.

In EU financial services legislation, “Level 2” refers to the delegated legislation intended to supplement the main “Level 1” legislation on a given topic. The content of Level 2 can vary, for instance specifying detailed technical rules, specific formats for particular disclosures or submissions, or providing further clarity on high-level Level 1 obligations. In each case, the Level 1 will provide for an “empowerment” for such Level 2 to be adopted.

The Commission’s letter notes that 430 empowerments have been included in financial services legislation between 2019 and 2024, and has highlights 115 that it deems “non-essential” to the functioning of the corresponding Level 1 provisions. In taking these forward, the Commission has stated that:

1. it will not adopt “non-essential” Level 2 acts before 1 October 2027; and
2. it will propose (as part of any ongoing amendments of the relevant Level 1 acts) to amend or repeal empowerments for “non-essential” Level 2 acts where there is an obligation to act within a specific deadline.

In the annex, the Commission has broken down the “non-essential” empowerments into three categories, depending on whether the empowerment is a “shall” (i.e. obligation for the Level 2 to be adopted) or a “may” (i.e. option for the Level 2 to be adopted), and whether there is a scheduled adoption date within the Level 1. A summary of the empowerments, organised by base Level 1, is provided at the end of this article.

The Commission has positioned this de-prioritisation as part of a pragmatic approach to simplify financial services regulation as part of its broader simplification agenda – noting that the Level 2 acts could lead to compliance costs and regulatory complexity for stakeholders, while demanding significant resources from the EU co-legislators in scrutinising them.

However, firms that had been expecting the implementation of some of these Level 2 measures may face practical issues as a result of this de-prioritisation, as the Level 1 may not be sufficiently detailed to provide certainty as to how to comply, or the resultant lack of Level 2 changes may lead to inconsistencies between different aspects of financial services obligations. For example, the de-prioritised Level 2 includes mandates introduced under the ESG Ratings Regulation to specify how firms disclosing under the Sustainable Finance Disclosure Regulation (SFDR) benefitting from an exemption under the ESG Ratings Regulation should make those disclosures, taking into account disclosures already required to be made under SFDR. In the absence of this Level 2, it will be unclear how the new disclosures should fit together with existing SFDR disclosures, potentially leading to duplication, and inconsistencies between firms. Similarly, another de-prioritised Level 2 mandate is for an RTS under the Alternative Investment Fund Managers Directive (AIFMD) for determining the requirements for a loan-originating alternative investment fund (AIF) to be open-ended. In the absence of this Level 2, fund managers may face a lack of clarity in adopting open-ended structures, and differing interpretations from different national regulators. Given the new presumption that loan-originating AIFs should be closed-ended, this may present a significant practical obstacle to open-ended loan-originating funds in future.

If you have questions about the impact of this de-prioritisation on you, get in touch with the key contacts listed.

Summary of de-prioritised Level 2

Accounting Directive — 2013/34/EU

• DAs on LSME European Sustainability Reporting Standards — Art. 29c(3), Art. 29c(1).
• DA on sector‑specific ESRS — Art. 29(b)(1)(ii).
• DA on ESRS for certain third‑country undertakings — Art. 40b.
• DA amending first set ESRS — Art. 29b(1), 7th subparagraph.
• DA amending sector‑specific ESRS — Art. 29b(1), 7th subparagraph.
• IA on other metadata/structuring of data for ESAP — Art. 33a(5)(a).
• IA on machine‑readability for certain documents (ESAP) — Art. 33a(5)(c).

AIFMD2/UCITSD6 — (EU) 2024/927

• ITS on procedures for exchange of information between NCAs, ESAs, ESRB and ESCB members — Art. 101(9).
• ITS on procedures for exchange of information between NCAs, ESAs, ESRB and ESCB members — Art. 50(6).
• RTS on open‑ended Loan Originating Funds — Art. 16(2f).

AMLA Regulation — (EU) 2024/1620

• ITS on the format for reporting of information by AMLA to EPPO — Art. 41(2).

AMLD — (EU) 2024/1640

• IA on the methodology for the collection of statistics — Art. 9(5).
• ITS on the template for cooperation agreements with third‑country supervisors — Art. 51(4).
• RTS on general conditions for AML/CFT supervisory colleges in the non‑financial sector — Art. 50(13).
• RTS on general conditions for AML/CFT supervisory colleges in the financial sector — Art. 49(14).

AMLR — (EU) 2024/1624

• DA on common additional categories of prominent public functions — Art. 43(3).
• DA on categories of corporate entities with higher risks and lower BO thresholds — Art. 52(2).

Audit Directive — 2006/43/EC

• DA on standards for the limited assurance of sustainability reporting — Art. 26a(3).
• DA on standards for the reasonable assurance of sustainability reporting — Art. 26a(3).
• IA on other metadata/structuring of data for ESAP — Art. 13a(4).

Benchmark Regulation — (EU) 2016/1011

• DA on calculation method thresholds for critical benchmarks — Art. 20(6)(b).
• DA on calculation method thresholds for significant benchmarks — Art. 24(2).

CRD — 2013/36/EU

• ITS on templates for IPU monitoring threshold — Art. 21b(6).
• RTS on minimum information to be provided for assessing QH — Art. 23(6).
• RTS on the definition of exposures to specific market risk which are material… — Art. 77(4).

CRR — (EU) 575/2013

• RTS on specifying the criteria for the use of data inputs in the risk-measurement model — Art. 325bc(6).
• RTS on the conditions and criteria to allow not counting an overshooting — Art. 325bf(10).
• RTS on the categorisation to PF, OF and CF and the determination of IPRE — Art. 147(11)(a),(b).
• RTS on CIU Trading Book — Art. 325j(7).
• RTS on assigning exposures to IRB exposure classes — Art. 147(12).
• RTS on proxy spreads — Art. 383(4)(a)-(c).

CSDR — (EU) 909/2014

• DA concerning measures to further specify the non-banking-type ancillary and banking-type ancillary services — Art. 2(2).
• IA on the review of the implementing act on mandatory buy-in — Art. 7a(14).
• IA on suspension of the buy-in mechanism — Art. 7a(13).
• IA on whether mandatory buy‑in is to be applied for instruments/transactions — Art. 7a(1).
• RTS to specify the buy‑in for settlement fails — Art. 7a(15).
• RTS on credit and liquidity risks in relation to deferred net settlement — Art. 47a(3).
• RTS to determine the additional risk-based capital surcharge — Art. 54(8).

EMIR — (EU) 648/2012

• DA to specify elements ESMA assesses for Comparable Compliance for T2 CCPs — Art. 25a(3).
• DA on central banks exemptions — Art. 1(6).
• DA to identify third countries ineligible for intragroup exemptions — Art. 3(5).
• DA to ensure Annex III infringements list corresponds to requirements — Art. 25o.
• DA to remove the exemption for equity options — Art. 11(3a).
• RTS on CCPs’ risk management for interoperability arrangements — Art. 54(5).
• RTS on the periodic review of clearing thresholds — Art. 10(4a).

ESG Ratings Regulation — (EU) 2024/3005

• DA on equivalence conditions — Art. 10(3).
• ITS to specify form and content of information to be provided to ESAP — Art. 14(8).
• ITS to specify data standards, formats and templates for methodology disclosures to users and rated items — Art. 24(4).
• ITS to specify data standards, formats and templates for methodology disclosures to the public — Art. 23(5).
• RTS on content and information to be disclosed for SFDR ESG ratings — Art. 50.
• RTS on content and information to be disclosed for ESG ratings by financial undertakings not subject to SFDR — Art. 2(3).

EuGBS Regulation — (EU) 2023/2631

• RTS on cooperation between competent authorities — Art. 46(6).
• RTS on cooperation between competent authorities — Art. 46(7).

MAR — (EU) 596/2014

• ITS specifying technical details for exchange of order book data — Art. 25a(6).

MID — 2009/103/EC

• DA on functions, obligations and reimbursement procedures for compensation bodies — Art. 25a(13).
• DA on functions, obligations and reimbursement procedures for compensation bodies — Art. 10a(13).

MiFID — 2014/65/EU

• Revised DA amending Delegated Regulation 2017/565 on position reporting — Art. 58(6).
• Revised DA amending Delegated Regulation 2017/565 on order execution policy, reasonable commercial basis — Art. 27(9).
• DA on market capitalisation thresholds and free float — Art. 51a(7).
• ITS 4 on position reporting in commodity derivatives — Art. 58(5).
• RTS on review of Delegated Regulation 2022/1299 (position management controls for commodity derivatives) — Art. 57(8).

MiFIR — (EU) 600/2014 (and related MiFIR review items)

• DA on OTC derivatives identifying reference data for transaction reporting — Art. 27(5) (second subparagraph).
• DA on Article 52(15) (new MiFIR DA) — Art. 52(15).
• DA amending the scope of OTC derivatives subject to transparency — Art. 8a(4).
• ITS on SI notification — Art. 15(5).
• RTS 22 — Transaction reporting — Art. 26(9).
• RTS on reporting obligations for CTP — Art. 27ha(2).
• RTS on suitability of management body of data reporting service providers — Art. 27f(5).
• RTS specifying the trading obligation for derivatives (DTO) — Art. 32(1).
• RTS 23 — Reference data reporting — Art. 27(3).
• RTS 24 — Order record keeping — Art. 25(3).

Multiple Vote Share Directive — (EU) 2024/2810

• RTS on a marker for companies with multiple vote share structures — Art. 5(5).

Prospectus Regulation — (EU) 2017/1129

• DA specifying further the conditions for equivalence in Article 29(4) — Art. 29(5).
• DA determining minimum content and template for cooperation arrangements with third‑country supervisors — Art. 30(4).
• ITS on template and layout of summaries, including font requirements — Art. 7(15).
• ITS on template and layout of prospectuses, by prospectus/investor type — Art. 6(8).

SFDR — (EU) 2019/2088

• Revised RTS on transparency of adverse impacts indicators (social, employee, human rights, anti‑corruption/bribery) at entity level — Art. 4(7).
• Revised RTS on transparency of promotion of E/S characteristics and sustainable investments on websites — Art. 10(2).
• Revised RTS on transparency of promotion of E/S characteristics and sustainable investments in periodic reports — Art. 11(4).
• Revised RTS on transparency of sustainable investment for products with a sustainable investment objective — Art. 9(5).
• Revised RTS on taxonomy-aligned investments for products promoting environmental characteristics — Art. 8(4).
• Revised RTS on taxonomy-aligned investments for products with sustainable investment objective — Art. 9(6).
• Revised RTS on transparency of E/S characteristics for products promoting such characteristics — Art. 8(3).
• Revised RTS on the “do no significant harm” principle — Art. 2a(3).
• Revised RTS on transparency of adverse impacts indicators at entity level (climate and other environmental) — Art. 4(6).
• Revised RTS on taxonomy-aligned investments in periodic reports — Art. 11(5).

Solvency II — 2009/138/EC

• DA on USPs — subset of standardised parameters — Art. 111(1)(j).
• DA on USPs — standardised methods — Art. 111(1)(k).
• DA on special purpose vehicles — Art. 211(2).
• DA on groups with CRM — procedures — Art. 241(c).
• DA on groups with CRM — emergency situations — Art. 241(b).
• DA on groups with CRM — criteria — Art. 241(a).
• DA on extension of the recovery period — factors and criteria — Art. 143(1).
• DA on equivalence for third‑country reinsurers — criteria — Art. 172(1).
• DA on equity charge transitional — Art. 308b(13).
• DA on definition of a significant branch — Art. 248(8).
• DA on criteria for the equity index — Art. 111(1)(o).
• DAs on criteria for regional sub‑group supervision — Art. 216(7) and 217(3).
• DA on colleges — identification of group supervisors in case of major difficulties — Art. 247.
• DA on changes in group solvency when various transitionals are used — Art. 308b(17).
• DA on capital add‑on — methodologies — Art. 37(7).
• DA on capital add‑on — circumstances — Art. 37(6).
• DA on PPP — risks related to derivatives — Art. 135(1)(b).
• DA on legal form of the insurance or reinsurance undertaking — Art. 17(3).
• DA on extension of deadlines in exceptional circumstances — Art. 304c.
• DA on equivalence — criteria — Art. 227(3).
• DA on equivalence — criteria — Art. 260(2).
• ITS on method for the prudent deterministic scenario — Art. 86(2a).
• RTS on identification of exceptional sector‑wide shocks — Art. 144c(7).
• RTS on management of sustainability risks, including sustainability risk plans — Art. 44(2c).

Transparency Directive — 2004/109/EC

• DA on general criteria on equivalence for third‑country sustainability reporting — Art. 23(4) (fourth subparagraph).
• DA amending Commission Directive 2007/14 on equivalence of management report requirements — Art. 23(4) (second subparagraph).
• IA on equivalence decision on third‑country sustainability reporting standards — Art. 23(4) (third subparagraph).
• ITS on other metadata/structuring of data for ESAP — Art. 23a(5).