European: The EBA has published final guidelines for the assessment on whether the conditions set out in the investment firms regulations are being met by Member States. ECON seeks to amend the rules relating to retail investors, inducements and disclosures. ESMA has reviewed the supervisory actions aimed at enhancing the quality of data reported under EMIR and published a report analysing the EU securities financing transactions markets.
EBA publishes final guidelines on the application of the group capital test for investment firm groups
On 11 April 2024, the European Banking Authority (EBA) published its final guidelines on the application of the group capital test for investment firm groups (the guidelines).
The guidelines acknowledge that the group capital test, set out under Article 8 of the Investment Firms Regulation (EU) 2019/2033 (IFR), has been implemented inconsistently across Member States and there is a lack of clarity around the conditions required to fulfil the criteria set out in the IFR.
These EBA guidelines intend to set objective thresholds and criteria for competent authorities to consider for the purpose of assessing whether the conditions set out in IFR for obtaining the derogation are met. They also introduce an element of flexibility in certain circumstances due to the diversity in group structures and investment firms in the market.
ECON publishes report on the omnibus amending Directive
On 2 April 2024, the European Parliament’s Economic and Monetary Affairs Committee (ECON) published a report on the proposed omnibus amending Directive which will revise the rules relating to retail investors, inducements and disclosures (among others) set out in Directives (EU) 2009/65/EC (UCITS), 2009/138/EC (Solvency II), 2011/61/EU (AIFMD), 2014/65/EU (MiFID II) and (EU) 2016/97 (Insurance Distribution).
The report sets out the amended text of the Directive with the Parliament’s amendments highlighted. The amending Directive forms part of the European Commission’s new package of measures to increase consumer participation in capital markets. This is part of the Commission’s Retail Investment Strategy which aims to empower retail investors to make investment decisions that are aligned with their needs and preferences and ensuring that they receive fair treatment and protection.
ESMA shows improvement in EU regulators’ supervisory practices regarding EMIR data quality
On 11 April 2024, the European Securities and Markets Authority (ESMA) published its follow-up peer review report to the 2019 peer review into supervisory actions aimed at enhancing the quality of data reported under European Markets Infrastructure Regulation (EMIR).
The peer review assessed 5 national competent authorities (NCAs) as well as ESMA in its role as supervisor of trade repositories (TRs). The report shows that supervisory practices improved significantly following the findings and recommendations of the 2019 review.
ESMA publishes first overview of EU securities financing transactions markets
On 9 April 2024, ESMA published its first market report (the report) on EU Securities Financing Transactions (SFTs). The report provides a comprehensive market-level view of the EU repo market, and its primary objective is to contribute to ESMA’s supervisory and systemic risk assessment work.
The report sets out that the total outstanding exposure of SFTs in September 2023 was €9.8tn. Repos accounted for 68% of this total, with securities lending comprising 23%, buy-sell back 8% and margin lending comprising 1%.
The report also sets out that banks are the major participants in repo markets with 52% of repo amounts, and mainly located in several EEA jurisdictions. The report also sets out findings in relation to cross-border linkages, clearing and settlement, repo collateral use and repo haircuts.
The five NCAs reported that alongside ESMA’s EU wide approach, they also took measures at national level such as rolling out data quality dashboards, undertaking more granular data quality checks and using EMIR data as part of day-to-day supervision.
The NCAs will continue to use the appropriate tools to drive up standards and checking entities’ compliance with their regulatory and reporting requirements.
For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team.
Date published: 21 May 2024
