Key insights from recent developments for a smoother journey in 2024_CM
Listing Act
On 7 December 2022, the European Commission submitted a package of measures known as the “Listing Act” (the Act), aiming at making public markets more attractive for EU companies by facilitating access to capital for small and medium-sized companies (SMEs). On the one hand, the Act put forward several amendments to Regulation (EU) 2017/1129 of the European Parliament and of the Council (the Prospectus Regulation), Regulation No 596/2014 of the European Parliament and of the Council (the Market Abuse Regulation or MAR), as well as limited amendments to Regulation No 600/2014 of the European Parliament and of the Council (the Markets in Financial Instruments Regulation or MiFIR). On the other hand, the Act also introduces two additional proposals: (i) a directive, amending Directive 2014/65/EU of the European Parliament and of the Council (the Markets in Financial Instruments Directive or MiFID II) and repealing Directive 2001/34/EC of the European Parliament and of the Council11 (the Listing Directive), which harmonises and clarifies the listing requirements, and increases the low level of investment research on SMEs; and (ii) a directive harmonising rules on multiplevote share structures. On 24 October 2023, MEPs on the European Parliament Committee on Economic and Monetary Affairs (ECON) adopted their position for the forthcoming interinstitutional negotiations (“trilogues”). We will stay vigilant in tracking the latest developments on this matter and will provide you with timely updates as needed.
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DORA
On 27 December 2022, Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on the digital operational resilience of the financial sector and amending Regulations (EC) 1060/2009, (EU) 648/2012, (EU) 600/2014, (EU) 909/2014 and (EU) 2016/1011 (DORA) was published in the Official Journal of the European Union together with Directive (EU) 2022/2556 of the European Union and of the Council of 14 December 2022 amending Directives 2009/65/EC, 2009/138/EC 2011/61/EU, 2013/36/EU, 2014/59/EU, 2014/65/EU, (EU) 2015/2366 and (EU) 2016/2341 regarding digital operational resilience of the financial sector (DORA Directive). DORA and DORA Directive entered into force on 16 January 2023 and will apply as from 17 January 2025. DORA aims at achieving a high level of common digital operational resilience by establishing standard requirements for network security and information systems that are the support structure for the business processes of financial entities and applies, among others, to investment firms, pension funds, crypto-asset service providers, crowdfunding service providers, information and communication technology (ICT) third-party service providers and most alternative investment fund managers (AIFMs) and management companies. On one side, DORA provides several new obligations in relation to governance and organisation, ICT risk management framework and ICT-related incident reporting, digital operational resilience testing, ICT third-party risk management and information sharing. On the other side, DORA Directive aims at bringing existing directives, such as 2013/36/EU (CRD IV), (EU) 2015/2366 (PSD2), 2014/59/EU (BRRD), 2009/138/EC (Solvency II), (EU) 2016/2341 (IORP 2), 2009/65/EC (UCITS), MIFID II and 2011/61/EU (AIFM) in accordance with DORA. On 4 August 2023, bill of law 8291 was submitted to the Luxembourg Parliament with a view to operationally implement DORA and transpose DORA Directive in Luxembourg, by notably (i) amending existing laws relating to the financial sector to take DORA into account; (ii) giving the Commission de Surveillance du Secteur Financier (CSSF) and the Commissariat aux Assurances supervisory and investigative powers to ensure the application of DORA; and (iii) introducing administrative sanctions in cases of non-compliance with DORA. Our team will keep monitoring the legislative process.
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ATAD III
On 17 January 2023, the European Parliament approved almost by unanimity the proposal for a Council directive laying down rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011/16/EU (ATAD III) with certain amendments proposed by its Committee on Economic and Monetary Affairs (ECON Committee) on 9 December 2022. Nevertheless, during the Swedish Presidency of the Council, Member States have encountered challenges in reaching a consensus on certain critical elements of the proposals. These include (i) determining the suitable indicators of substance, (ii) defining the tax implications of being labeled a shell entity, and (iii) specifying the information that taxpayers must report and exchange among Member States. At this stage, the date of adoption of the proposal remains uncertain and its final configuration is yet to be determined. Therefore, the dates for implementation of the proposal in domestic law from 30 June 2023 and application of the national provisions from 1 January 2024 are postponed. We are closely monitoring the progress of these developments.
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EMIR Refit Reporting Technical Standards
On 1 December 2023, the Commission de Surveillance du Secteur Financier (CSSF) issued Circular 23/846 to inform that it will, in its capacity as competent authority, apply the Guidelines of ESMA on reporting under the European Market Infrastructure Regulation (EMIR) published on 23 October 2023, which have hence been integrated into the CSSF’s administrative practice and regulatory approach. These Guidelines will apply as from 29 April 2024 in the context of the EMIR Refit Reporting Technical Standards and shall provide clarifications on (i) the transition to reporting under the new rules; (ii) the number of reportable derivatives; (iii) the exemption from intragroup derivatives reporting; (iv) the delegation of reporting and allocation of responsibility for reporting; (v) the reporting logic and the population of reporting fields; (vi) the reporting of different types of derivatives; (vii) ensuring data quality by the counterparties and the TRs; (viii) the construction of the Trade State Report and reconciliation of derivatives by the TRs; and (ix) data access.
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Sustainable reporting for STS Securitisation
On 25 May 2023, the Joint Committee of the ESAs published a Final Report on draft Regulatory Technical Standards (Final RTS Report) as regards the disclosure requirements in terms of sustainability indicators regarding the adverse impacts of the assets financed by the underlying assets exposures for simple, transparent and standardised (STS) securitisations on climate and other environmental, social and governance (ESG) related adverse impacts in line with arts. 22 (6) and 26d (6) of Regulation (EU) 2017/2402 (SECR). The Final RTS Report applies only to STS securitisations and on balance-sheet securitisations, where the underlying exposures are residential loans, auto loans or leases, and aims to allow originators to disclose the main adverse impacts of STS securitisations and balance-sheet securitisations using reporting that is closely aligned with the Regulation (EU) 2017/2088 (SFDR), while also contributing to the fulfilment of ESG reporting requirements by investors. It is worth mentioning that the Final RTS Report creates a voluntary regime allowing originators to discharge their obligation by disclosing the information in accordance with the first subpara. of arts. 22 (4) and 26d (4) of SECR. However, if the originators select to opt-in, then it is mandatory to proceed with the respective disclosures, meaning the disclosure of one social or governance-related factor, and one environmental or climate-related factor. In terms of frequency, the information should be disclosed on a quarterly basis, pursuant to article 7 (1) of SECR. The draft regulation on the regulatory technical standards is still under discussion and there is no clear information on when and if it will be adopted in 2024.
For full text of draft RTS, please click here.
New AML Package
On 19 April 2023, the European Parliament approved the entry into interinstitutional negotiations (so-called “trilogues”) with respect to three of the four legislative proposals that form part of the 2021 AML Package, namely (i) a regulation establishing an EU anti-money laundering and counter-terrorist financing authority (AMLAR); (ii) a regulation focusing on customer due diligence aspects (the AMLR); and (iii) a sixth directive on anti-money laundering and counter-terrorist financing (the AMLD 6). Significant advancements have been noted in the development of the AMLR and the AMLD 6. However, disputes regarding the AMLAR are reportedly impeding the overall progress. While no text has been published yet, the EU institutions seem to have reached a provisional agreement on AMLAR. A conclusive vote on the entire package by both the Parliament and Council may potentially be delayed until early 2024.
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