Welcome to the first monthly regulatory round-up of 2021. Each month we will be summarising the key announcements and regulatory developments impacting the fund industry.
The past month brought developments on a range of issues, from updated FAQs and guidelines impacting UCITS and AIFMs, to consultations on the Irish Investment Firms Directive, MiFID EMT v3.1 and the future of the UK fund landscape.
Other developments tracked last month, include updates to the UK short selling regime, Italy’s major shareholding disclosure requirements, and CP86.
Continue reading below to find out more about these and many other recent regulatory developments.
EU Updates
ESMA
ESMA Launches Common Supervisory Action with NCAs on the Supervision of Costs and Fees of UCITS
On 6th January 2021, ESMA launched a Common Supervisory Action (CSA) with national competent authorities (NCAs) on the supervision of costs and fees of UCITS across the European Union (EU). The CSA will be conducted during 2021.
The CSA aim is to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework, and the obligation of not charging investors with undue costs.
For further information see our blogs below:
ESMA up the Ante
ESMA recently published a supervisory briefing on the supervision by National Competent Authorities…
ESMA Briefing on Supervision of Costs in UCITS and AIFs
The European Securities and Markets Authority (ESMA) has published a supervisory briefing on…
Updated Compliance Table on Article 37 of the MMF Regulation
On 12th January 2021, ESMA published an updated compliance table on the reporting to Competent Authorities under Article 37 of the MMF Regulation.
The majority of Competent Authorities have reported that they comply, or intend to comply with ESMA’s Guidelines on the reporting to Competent Authorities under Article 37 of the MMF Regulation.
The outstanding NCA is the Greek authority – HCMC have announced that they do not comply, and do not intend to comply with the reporting obligation related to 2019 Stress Test results based on ESMA scenarios. However, HCMC has stated that it intends to comply with parts of the Guidelines by 2022.
ESMA Updates SFTR Q&A’s
On 28th January 2021, ESMA updated its Questions and Answers related to reporting under the Securities Financing Transactions Regulation (SFTR).
The Q&As were updated to clarify:
- Reporting of events that were not duly reported on time;
- Updates to records of outstanding SFTs by the Trade Repositories based on reports made by the counterparties; and
- Operational aspects concerning the reporting by financial counterparties on behalf of small non-financial counterparties pursuant to the Article 4(3) of SFTR.
Updated Compliance Table on Guidelines for Liquidity Stress Testing in UCITS and AIFs
ESMA has published the updated Compliance Table for the Guidelines on liquidity stress testing in UCITS and AIFs. The majority of jurisdictions comply or intend to comply with the guidelines.
Poland’s KNF is the only outstanding NCA and has reported that they will comply by 30 September 2021.
FinDatEx Consults on EMT V3.1
FinDatEx has published EMT V3.1 for public consultation.
EMT V3.1 is a ‘high-level’ interim version which means to answer the demand of distributors and producers to cope with the basic implementation of MiFID ESG/SFDR principles.
V3.0 and V3.1 cannot be merged, but will co-exist until FinDatEx will be able to produce a new version based on relevant legislation.
The final version will be available for public use from 10 March 2021.
International Updates
New Zealand
FMA Releases Review of NZX Technology Issues
On 28th January 2021, the Financial Markets Authority (FMA) published a press release stating that it had found that the stock exchange had failed to meet its licensed market operator obligations due to insufficient technology resources.
Overall, the FMA review found NZX did not have adequate technology capability across its people, processes and platform to comply with market operator obligations and especially in the context of its systemic importance. Additionally, the performance of NZX’s systems did not meet regulatory requirements or expectations for fair, orderly and transparent markets.
This development will particularly impact those conducted their annual UCITS eligible market due diligence requirements, and assessing if the market is sufficiently regulated, operating regulatory, and open to the public.
United Kingdom Updates
Adding and Notifying a New Sub-Fund to an Umbrella Scheme in the TMPR
The Financial Conduct Authority (FCA) has updated its website to explain its proposed process for adding a new sub-fund to an umbrella scheme that will be in the temporary marketing permissions regime (the “TMPR”).
The Collective Investment Schemes (CIS) Regulations create a UK-wide TMPR for Undertakings for the Collective Investment in Transferable Securities (UCITS) funds which were already passporting into the UK before the end of the transition period. The Regulations have extended this regime to new sub-funds.
FCA Publishes list of Regulated Markets
The Financial Conduct Authority (FCA) published the List of third-country markets considered as equivalent to a UK regulated market in accordance with article 2a of UK EMIR.
Click here to see the FCA register for the list of UK regulated markets.
UK funds Regime Review: A Call for Input
HM Treasury has published their “Review of the UK funds regime: a call for input”, seeking comments from stakeholder regarding what reforms should be taken in order to improve the UK fund regime.
The consultation is wide-ranging, covering direct and indirect tax and relevant areas of funds regulation, and includes chapters on:
- The UK’s approach to funds taxation;
- The UK’s approach to funds regulation; and
- Opportunities for wider reform.
Click here for further information on Chapter 3 of the Call of Input and the UK’s approach to fund regulation.
Click here for further information on Chapter 4 of the call for input and the opportunities for wider reform.
Takeover Panel Publishes Revised Takeover Code
The Takeover Panel has published a revised version of the Takeover Code reflecting the amendments made by Instrument 2019/3 (The United Kingdom’s withdrawal from the European Union), Instrument 2020/1 (Document charges) and Instrument 2020/2 (Minor amendments to the Takeover Code).
In addition, Practice Statement No 18 (Cross-Border Mergers) has been withdrawn following the revocation of The Companies (Cross-Border Mergers) Regulations 2007.
The amendments took effect at 11:00pm on 31 December 2020.
FCA Amends Thresholds under UK Short Selling Regulation
On 6th January 2021, the Treasury published the Short Selling (Notification Thresholds) Regulations 2021 No. 5 (the Regulations). The regulation amends the notification threshold under Article 5(2) of the Short Selling Regulation from 0.2% to 0.1% of the issued share capital of an issuer.
This change entered into force on 1 February 2021.
