Financial Services Regulatory Update – December 2024 Round Up

Political agreement on proposals to facilitate data-sharing and reduce regulatory reporting burden

On 18 December 2024, the European Parliament announced via a press release (here) that its Economic and Monetary Affairs Committee (“ECON”) has reached a political agreement with the Council of the EU on the proposal to facilitate data‑sharing and reduce redundant reporting in EU financial services. The agreed targeted amendments to the EU regulatory framework will facilitate information sharing between supervisors, and avoid duplicative data requests to financial market participants. Negotiators from ECON and the Council agreed to enlarge the scope of the proposal, to include the Single Resolution Board (the “SRB”), the EU Anti-Money Laundering Authority (“AMLA”) and the Single Supervisory Mechanism (the “SSM”) (in addition to the European Supervisory Authorities (the “ESAs”) and the European Systemic Risk Board (the “ESRB”) which had already been included in the proposal).

Council of the EU agrees position on FIDA Regulation

On 4 December 2024, the Council of the EU announced (here) that it has agreed its position on the proposed framework for financial data access (to be known as the “FIDA Regulation”). The FIDA Regulation proposes to establish rules on the access, sharing and use of certain categories of customer data in financial services, as well as rules concerning the authorisation and operation of financial information service providers. The Council’s agreement paves the way for the commencement of interinstitutional negotiations between the Council and the European Parliament.

EU Regulation on ESG Rating Activities

On 12 December 2024, the EU Regulation on ESG rating activities was published (here) in the Official Journal of the EU. The new rules aim to strengthen the reliability and comparability of ESG ratings by improving the transparency and integrity of the operations of ESG rating providers, and preventing potential conflicts of interests. Under the new rules, ESG rating providers will need to be authorised and supervised by the European Securities and Markets Authority (“ESMA”), and will need to comply with transparency requirements, in particular with regard to sources of information and methodologies used.

The Regulation entered into force on 2 January 2025. It will apply from 2 July 2026.

EU Omnibus Simplification Package

The European Commission has published a tentative agenda (here) for forthcoming College of Commissioners’ meetings, which suggests that further detail on the so-called “Omnibus Simplification Package” will be made available on 26 February 2025. It is understood, from prior remarks by European Commission President Ursula von der Leyen, that this relates to the possibility that certain ESG reporting obligations – contained in various regimes such as the Corporate Sustainability Reporting Directive (“CSRD”), the Taxonomy Regulation and the Corporate Sustainability Due Diligence Directive (“CS3D”) – could be consolidated in omnibus legislation, in an effort to reduce bureaucratic burden without, according to President von der Leyen, changing the content of the law.

Digitalisation of sustainability disclosures

On 13 December 2024, ESMA launched a consultation (here) on the application of the European Single Electronic Format (“ESEF”) to sustainability reporting.

The consultation paper includes proposals for:

• defining the marking up rules for sustainability reporting with a phased implementation for European Sustainability Reporting Standards (“ESRS”) and the full implementation of disclosures under Article 8 of the Taxonomy Regulation;
• redefining the marking up approach for notes to the International Financial Reporting Standards (“IFRS”) consolidated financial statements; and
• amending the regulatory technical standards (“RTS”) on the European Electronic Access Point.

ESMA’s consultation runs until 31 March 2025. ESMA will consider feedback it receives and expects to publish a final report in Q3 2025, containing final draft RTS, which it will submit to the European Commission for endorsement.

Proposed amendments to regulatory framework for credit union lending

On 11 December 2024, the Central Bank of Ireland (the “CBI”) published the findings (here) of a review of the regulatory framework for credit union lending, and has launched a consultation (here) on proposed changes to the framework. The CBI is proposing a number of targeted material changes to the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, in relation to the following areas: (i) concentration limits for house and business lending; and (ii) lending practices for specific categories of lending. The consultation on the proposed changes runs until 11 February 2025.

EBA consults on draft RTS on changes to IRB approach

On 9 December 2024, the European Banking Authority (the “EBA”) launched a consultation (here) on draft RTS clarifying and enhancing the conditions for assessing material model changes to credit institutions’ internal ratings-based approach (“IRB approach”). The draft RTS aim to enhance the supervisory effectiveness of the approval process for model changes, and align the  standards with changes introduced by the revised Capital Requirements Regulation (“CRR III”).

RTS on derogation under CRR for small trading book businesses

On 6 December 2024, the EBA published a final report (here) containing final draft RTS on the method for identifying the main risk driver of a position and for determining whether a transaction represents a long or a short position under Article 94(10) of the CRR. The RTS are part of the Phase 1 deliverables of the EBA’s roadmap on the implementation of the EU banking package in the area of market risk.

RTS on residual risk add-on exemption for certain hedges under CRR

On 17 December 2024, the EBA published a final report (here) containing draft RTS on the exemption from the residual risk add-on (“RRAO”) own funds requirements for certain type of hedges under Article 325u(4a) of the CRR. The CRR provides for an exemption from the RRAO charge for instruments bearing residual risks that are also taken as hedge instruments bearing residual risks. The RTS contained in the EBA’s final report specify when an instrument qualifies as a hedge that can avail of the exemption. The EBA will submit the final draft RTS to the European Commission for endorsement.

ITS on CRR III supervisory reporting requirements

Implementing Regulation (EU) 2024/3117 (here) laying down implementing technical standards (“ITS”) in respect of the supervisory reporting requirements of institutions under CRR has been published in the Official Journal of the EU, giving effect to new reporting rules introduced by CRR III. The majority of CRR III provisions entered into application on 1 January 2025. Together with the revised Capital Requirements Directive (“CRD VI”), CRR III amends the EU capital requirements regime to give effect to the final aspects of the international Basel III framework.

ECB supervisory priorities for 2025-27 / results of 2024 SREP

On 17 December 2024, the European Central Bank (the “ECB”) published its supervisory priorities (here) for 2025-27. The supervisory priorities for 2025-27 focus on: (i) banks’ resilience to immediate macro-financial threats and severe geopolitical shocks; (ii) the importance of timely remediation of known material shortcomings; and (iii) the need to tackle challenges stemming from digital transformation and new technologies.

In addition, the ECB has published the results (here) of the 2024 supervisory review and evaluation process (“SREP”) for banks supervised by the ECB. According to the ECB, the SREP results for 2024 indicate that ECB-supervised banks have strong capital and liquidity positions, and remain resilient.

EIOPA consults on policy products supplementing the Solvency II Amending Directive

On 4 December 2024, the European Insurance and Occupational Pensions Authority (“EIOPA”) published for consultation a batch of policy products supplementing the Directive amending the Solvency II Directive as regards proportionality, quality of supervision, reporting, long-term guarantee measures, macro-prudential tools, sustainability risks, and group and cross-border supervision (the “Solvency II Amending Directive”). The Solvency II Amending Directive (here) was published in the Official Journal of the EU on 8 January 2025, and is required to be transposed by EU Member States by 29 January 2027, with measures to apply from 30 January 2027.

EIOPA is consulting on the following:

• draft report on biodiversity risk management by insurers (here);
• a proposal for RTS on the management of sustainability risks, including sustainability risk plans (here);
• draft guidelines regarding the notion of diversity for the selection of members of the administrative, management or supervisory body (here);
• revised draft guidelines on undertaking-specific parameters (here);
• revised draft guidelines on market and counterparty risk exposures in the standard formula (here); and
• a proposal for revised ITS on the lists of regional governments and local authorities' exposures who are to be treated as exposures to the central government (here).

EIOPA’s consultations run until 26 February 2025.

EBA publishes final draft technical standards on reporting and disclosures under IFR

On 3 December 2024, the EBA published final draft technical standards (here) on reporting and disclosure requirements for investment firms, pursuant to the Investment Firms Regulation (“IFR”). The IFR provides for certain cases where investment firms have to, or can opt to, apply the rules established for credit institutions to determine the own funds requirements for certain risks. Minor changes to the ITS on reporting by investment firms were required to reflect reforms introduced by CRR III, and related technical standards on supervisory reporting of credit institutions.

ESMA publishes draft technical standards pursuant to MiFID II / MiFIR review

On 16 December 2024, ESMA published a series of final reports containing draft technical standards, which ESMA has been empowered to develop pursuant to the revised Markets in Financial Instruments Regulation and Markets in Financial Instruments Directive (the “MiFIR / MiFID II review”):

• MiFIR review final report: review of RTS 2 on transparency for bonds, structured finance products and emission allowances and RTS on reasonable commercial basis (here);
• MiFIR review final report: technical standards related to consolidated tape providers (“CTPs”) and data reporting service providers (“DRSPs”) (here);
• final report on equity transparency (here); and
• final report on the amendments to certain technical standards for commodity derivatives (here).

ESMA has submitted the final reports to the European Commission for endorsement. In accordance with the ESMA Regulation, the European Commission has three months to decide whether or not to adopt the technical standards contained in the reports.

ESMA consults on EU code of conduct for issuer-sponsored research

On 18 December 2024, ESMA launched a consultation (here) on draft RTS for the establishment of an EU code of conduct for issuer-sponsored research, in accordance with provisions introduced to MiFID II by the new Listing Directive (here) (which formed part of the EU Listing Act package). The various components of the Listing Act entered into force on 4 December 2024, and the Directive amending MiFID II is required to be transposed by EU Member States by 5 June 2026, with measures to apply from 6 June 2026.

ESMA’s consultation runs until 18 March 2025. ESMA aims to submit final draft technical standards to the European Commission by 5 December 2025.

ESMA consults on draft RTS on open-ended loan originating AIFs under AIFMD II

On 12 December 2024, ESMA launched a consultation (here) on draft RTS on the requirements with which loan originating alternative investment funds (“AIFs”) must comply to maintain an open-ended structure, pursuant to the rules introduced by the revised Alternative Investment Fund Managers Directive (“AIFMD II”). AIFMD is required to be transposed by EU Member States by 16 April 2026, and shall apply in large part from that date, save for certain provisions which apply from 16 April 2027.

ESMA’s consultation runs until 12 March 2025. ESMA intends to finalise the draft RTS by Q3/Q4 2025.

ESMA publishes Q&As on Guidelines on ESG funds’ names

On 13 December 2024, ESMA published Q&As (here) that provide detail on the practical application of its Guidelines (here) on funds’ names using ESG or sustainability-related terms. In particular, ESMA has chosen to clarify the treatment of green bonds in the light of the entry into application of the EU Green Bond Regulation, which entered into application on 21 December 2024.

ESMA’s guidelines on funds’ names using ESG or sustainability-related terms have applied since 21 November 2024 in relation to managers of new funds. The guidelines apply from 21 May 2025 in respect of funds that existed prior to 21 November 2024.

For more information on ESMA’s guidelines, see our earlier briefing here.

EU Green Bond Regulation: now in application

The EU Green Bond Regulation (here) entered into application on 21 December 2024. The Green Bond Regulation creates a new voluntary “European green bond” or “EuGB” label, which can be used to market environmentally sustainable bonds that align with the EU Taxonomy Regulation. Issuers who choose to market their bonds as “European green bonds” are subject to uniform requirements that aim to harmonise the EU market for green bonds, and ensure that investors can more confidently direct funds towards financial products that align with their sustainability preferences.

EU adopts 15th sanctions package against Russia

On 16 December 2024, the Council of the EU adopted a 15th package of sanctions against Russia (see press release here). The focus of the package is on sanctions circumvention. It includes measures targeting Russia’s shadow fleet, and its military-industrial complex. It also includes measures designed to protect EU companies from litigations with Russia counterparts, and introduces a derogation allowing the release of cash balances held by EU central securities depositories (“CSDs”).

EMIR 3 published in Official Journal

On 4 December 2024, Regulation (EU) 2024/2987 (here) and Directive (EU) 2024/2994 (here), together known as “EMIR 3”, were published in the Official Journal of the EU. EMIR 3 revises the European Market Infrastructure Regulation (“EMIR”), with the stated aims of mitigating excessive exposures to third-country central counterparties, improving the central clearing system in the EU, and making EU central counterparties more efficient and attractive.

EMIR 3 entered into force on 24 December 2024. Most provisions took effect from entry into force, save for certain provisions amending the clearing thresholds, which are expressed to apply from the entry into force of related RTS.

For more information on EMIR 3, see our earlier briefing here.

EBA issues “no action” letter on initial margin model authorisation under EMIR 3

On 17 December 2024, the EBA published a “no action” letter (here) stating that competent authorities should not prioritise any supervisory or enforcement action in relation to the processing of applications for initial margin (“IM”) model authorisation received pursuant to the revised European Market Infrastructure Regulation (i.e. EMIR 3). Competent authorities have been requested to refrain from prioritising the processing of such applications until draft RTS under EMIR 3 on IM model validation, and related guidelines on the authorisation process, come into application.

The EBA's letter outlines the registration process for counterparties in scope of IM model authorisation under EMIR 3, specifying the information that counterparties should include as part of a first application, as well as in subsequent yearly updates.

MiCA: now fully applicable

The Markets in Crypto-Assets Regulation (“MiCA”) became applicable to providers of crypto-asset services from 30 December 2024, and is now fully applicable across the EU.

Entities wishing to provide crypto-asset services in Ireland are now required to apply to the CBI for authorisation as a “Crypto-Asset Service Provider” (“CASP”). A transitional period applies in Ireland until 30 December 2025; entities that provided crypto-asset services as “Virtual Asset Service Providers” (“VASPs”) (in line with the previous domestic regulatory regime) may continue to do so until 30 December 2025, or until they are granted or refused an authorisation pursuant to Article 63 of MiCA (whichever is sooner).

In the light of the full entry into application of MiCA, the CBI has published documentation (e.g. here and here) detailing supervisory and authorisation expectations for entities seeking authorisation as a CASP, together with guidance on the MiCA key facts document (here).  Firms seeking authorisation as a CASP must demonstrate to the CBI that they can meet the applicable regulatory obligations and the CBI’s supervisory expectations, both at the point of authorisation and post authorisation.

For more information, see our “Ireland as a Location for Crypto Asset Service Providers 2024” briefing (here).

MiCA: publication of policy products

In the light of MiCA’s entry into full application on 30 December 2024, a number of policy products have been progressed at the EU level:

Delegated Acts supplementing MiCA

On 3 December 2024, Implementing Regulation (EU) 2024/2984 (here) was published in the Official Journal of the EU. The Implementing Regulation contains ITS supplementing MiCA with regard to the forms, formats and templates for crypto-asset white papers. The Implementing Regulation entered into application on 23 December 2024.

The European Commission has adopted various Delegated Regulations containing RTS supplementing MiCA:

• Delegated Regulation laying down RTS specifying the data necessary for the classification of crypto-asset white papers and the practical arrangements to ensure that such data is machine-readable (here);
• Delegated Regulation laying down RTS specifying the minimum content of the governance arrangements on the remuneration policy of issuers of significant asset-referenced tokens (“ARTs”) or of e-money tokens (“EMTs”) (here);
• Delegated Regulation laying down RTS specifying the procedure and timeframe for an issuer of ARTs or of EMTs to adjust the amount of its own funds (here);
• Delegated Regulation laying down RTS specifying adjustment of own funds requirement and minimum features of stress testing programmes of issuers of ARTs or of EMTs (here);
• Delegated Regulation laying down RTS specifying the content, methodologies and presentation of information in respect of sustainability indicators in relation to adverse impacts on the climate and other environment‐related adverse impacts (here);
• Delegated Regulation laying down RTS specifying the detailed content of information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in an issuer of an ART (here); and
• Delegated Regulation laying down RTS specifying the detailed content of information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in a CASP (here).

In addition, on 17 December 2024, ESMA published a final report (here) containing draft RTS specifying certain requirements relating to the detection and prevention of market abuse under MiCA.

Guidelines

On 4 December 2024, the EBA and ESMA published on their websites, in all official EU languages, joint guidelines (here) on suitability assessments under MiCA. The guidelines pertain to suitability assessments in relation to: (i) members of the management body of issuers of ARTs and of CASPs; and (ii) shareholders and members, whether direct or indirect, with qualifying holdings in issuers of ARTs, and in CASPs. The guidelines apply from 4 February 2025. By this date, competent authorities to whom the guidelines apply must notify the EBA or ESMA as to whether they: (i) comply; (ii) do not comply, but intend to comply; or (iii) do not comply and do not intend to comply with the guidelines.

On 10 December 2024, the ESAs published joint guidelines (here) intended to facilitate consistency in the regulatory classification of crypto-assets under MiCA. The guidelines include a standardised test to promote a common approach to classification, as well as templates market participants should use when communicating to supervisors the regulatory classification of a crypto-asset. The guidelines will apply from three months after their publication on the ESAs’ websites in all official EU languages.

In addition, ESMA has published final reports containing:

• draft guidelines on reverse solicitation under MiCA (here);
• draft guidelines on the conditions and criteria for the qualification of crypto-assets as “financial instruments” (here);
• draft guidelines specifying EU standards on the maintenance of systems and security access protocols for offerors and persons seeking admission to trading of crypto-assets other than ARTs and EMTs (here);
• draft guidelines specifying certain MiCA investor protection requirements (here); and
• draft guidelines on templates to assist competent authorities in performing their supervisory duties regarding issuers' compliance under Titles III and IV of MiCA (here).

DORA: now fully applicable

On 4 December 2024, the ESAs issued a statement (see our briefing here) on the entry into application of the Digital Operational Resilience Act (“DORA”). DORA came into full application on 17 January 2025.

DORA introduces comprehensive rules on digital operational resilience for in-scope financial entities and ICT third-party service providers. More information on reporting under DORA (in respect of major ICT-related incidents and significant cyber threats) can be found on the CBI’s webpage.

For more information on new DORA requirements, see our recent briefings here and here.

Relatedly, on 16 December 2024, the European Commission adopted a Delegated Regulation (here) supplementing DORA with regard to RTS specifying the criteria for determining the composition of the joint examination team to ensure a balanced participation of staff members from the ESAs and from the relevant national competent authorities, their designation, tasks, and working arrangements. If neither the Council of the EU nor the European Parliament object to the Delegated Regulation, it will be published in the Official Journal of the EU and enter into force twenty days later.

EBA consults on proposed criteria for the appointment of a central contact point by CASPs

On 4 December 2024, the EBA launched a consultation (here) on draft RTS specifying the criteria according to which CASPs should appoint a central contact point to ensure compliance with anti-money laundering and countering the financing of terrorism (“AML/CFT”) obligations of a host Member State.

The scope of the EU’s AML/CFT framework was extended to CASPs by the recast revised Wire Transfer Regulation (the “recast revised WTR”), which entered into application on 30 December 2024.

The EBA’s consultation runs until 4 February 2025.

EPC payment scheme rulebooks for 2025

The European Payments Council (“EPC”) has published the five 2025 EPC payment scheme rulebooks (here), together with related implementation guidelines (here). The 2025 EPC payment scheme rulebooks will enter into force on 5 October 2025. The exceptional October entry into force date has been chosen in the light of the entry into force of the Instant Payments Regulation (“IPR”).

Provisional agreement on proposal to amend BMR

On 12 December 2024, the Council of the EU and the European Parliament reached a provisional agreement (see here) on the proposal to amend the Benchmark Regulation (“BMR”).

The proposal concerns the scope of the rules for benchmarks, the use in the EU of benchmarks provided by administrators located in a third country, and certain reporting requirements. The proposal aims to reduce the regulatory burden on smaller benchmark administrators defined as non-significant in the EU, by removing them from the scope of current rules. The Council and Parliament agreed that only those benchmarks defined as “critical” or “significant”, EU Paris-aligned benchmarks, EU climate transition benchmarks, and certain commodity benchmarks should remain under the scope of the BMR.

The provisional agreement now awaits formal confirmation and adoption. Once formally adopted, the final text will be published in the Official Journal of the EU, and will apply from 1 January 2026.

ESMA consults on technical advice regarding changes introduced by EU Listing Act

On 12 December 2024, ESMA launched a consultation (here) to gather stakeholder feedback on changes to the Market Abuse Regulation (“MAR”) and MiFID II, introduced by the EU Listing Act package. In line with the objectives of the EU Listing Act, ESMA will deliver technical advice to the European Commission, by 30 April 2025, aimed at ensuring that the EU’s regulatory framework promotes better access to public capital markets for EU companies, especially for SMEs.

ESMA’s consultation runs until 13 February 2025.

Selected Consultations, Discussion Papers, Speeches and Reports Published

EBA – Report on National Competent Authorities’ Approaches to the Supervision of Banks with respect to AML/CFT (here)

ECB – Progress Report on the Preparation Phase of a Digital Euro (here)

EIOPA – Financial Stability Report: December 2024 (here)

EIOPA – Results of Insurance Stress Test 2024 (here)

EIOPA – Work Programme 2025-27 (here)

ESAs – Key Findings from the 2024 ESAs’ Dry Run Exercise (in relation to assessing DORA preparedness) (here)

ESMA – Feedback Statement: criteria to assess CTP applicants (here)

ESMA – Supervisory Briefing on Central Counterparty’s Ongoing Monitoring of Operational Capacity of Clearing Members under Article 37(2) of EMIR (here)

EU Platform on Sustainable Finance – Categorisation of Products under the Sustainable Finance Disclosure Regulation (“SFDR”): proposal of the Platform on Sustainable Finance (here)

International Swaps and Derivatives Association (“ISDA”) – ISDA in Review (incorporating link to updated ISDA OTC Derivatives Compliance Calendar): December 2024 (here)

ISDA – ISDA Quarterly: January 2025 (here)

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