Financial Services Regulatory Update – November 2023 Round Up

CBI defers SEAR’s applicability in respect of (I)NEDs

On 16 November 2023, the Central Bank of Ireland (“CBI”) published a feedback statement (here) to its consultation (CP153) on the implementation of the Individual Accountability Framework (“IAF”), along with updated IAF Guidance (here) and draft Regulations (here) relating to the Senior Executive Accountability Regime (“SEAR”), to certification requirements, and to holding companies.

The CBI has already confirmed that the provisions of the Central Bank (Individual Accountability Framework) Act 2023 relating to the conduct standards and enhancements to the fitness and probity (“F&P”) regime will come into application from 29 December 2023.

The feedback statement confirms that SEAR will become generally applicable from 1 July 2024. However, SEAR’s applicability in respect of (independent) non-executive directors (“(I)NEDs”) at in-scope firms has been delayed until 1 July 2025.

More information is available from our recently-published briefing (here), as well as through our IAF hub (here).

CBI publishes second Financial Stability Review of 2023

On 22 November 2023, the CBI published its second financial stability review (here) of 2023.

According to the CBI, the financial stability outlook continues to be shaped by the adjustment of the global economy to higher interest rates. Global inflation has proven persistent, and policy interest rates remain restrictive. Higher long-term interest rates and tighter financial conditions have rendered financial markets vulnerable to disorderly corrections. The global economy is subject to the risk of further inflationary shocks, whilst uncertainty remains about the ultimate magnitude of the effects of tighter monetary policy on the global real economy.

In spite of the global backdrop, the domestic economy has continued to expand, albeit at a slower rate. Downside risks are more immediately visible now, relative to the last review, for example through continued falling commercial real estate prices and early evidence of a slowdown in export flows and corporation tax receipts following years of exceptional growth. The resilience of the household and corporate sectors continues to benefit from the strength of the labour market and low indebtedness, although there are emerging tentative signs of repayment difficulties for some vulnerable borrowers.

Increased bank profitability has continued since the CBI’s last review, strengthening banks’ capacity to invest for the future and bolstering resilience to shocks. The CBI’s macroprudential policy stance aims to maintain resilience at a time when broad, systemic risks have not crystallised. Reflective of this position, the CBI is maintaining the countercyclical capital buffer (“CCyB”) rate at 1.5%, and continues to develop the macroprudential framework for non-bank financial intermediation.

Council of the EU adopts Regulation establishing ESAP

On 27 November 2023, the Council of the EU formally adopted a Regulation (here) establishing a European single access point (“ESAP”) which will provide centralised access to publicly available information of relevance to financial services, capital markets and sustainability. 

The ESAP Regulation awaits publication in the EU’s Official Journal and will enter into force on twentieth day following publication.

The ESAP platform is expected to be available from summer 2027; it will be gradually phased in to allow for robust implementation.

CBI to amend  Minimum Competency Code 2017 to incorporate sustainability knowledge and competence

On 24 November 2023, the CBI published a notice of intention (here) confirming that it intends to recognise sustainability knowledge and competence as part of the Minimum Competency Code 2017, with effect from 1 January 2025.

First, the CBI intends to update the competencies for retail financial products in Appendix 3 of the Code to include competencies relating to sustainability generally for all retail financial products. There will also be additional amendments to incorporate the suitability requirements under the Markets in Financial Instruments Directive II (“MiFID II”) and the Insurance Distribution Directive (“IDD”).

Secondly, the CBI intends to recognise sustainability training for CPD purposes, where such training is directly relevant to a person’s role.

Changes to the Code are being introduced pursuant to the powers set out under section 50 of the Central Bank Reform Act 2010.

CBI issues publications during Climate Finance Week

On 21 November 2023, the CBI issued a number of publications relating to climate change, coinciding with Climate Finance Week:

• First, the CBI’s inaugural climate observatory report (here) provides an update of climate-related financial and non-financial metrics, using a combination of internal and external data sources. It outlines, amongst other data, insights into climate risks for banks, insurers and funds, as well as data to describe national decarbonisation challenges and progress made to date.
• Secondly, the latest edition of the CBI’s Behind the Data publication, “Surveying the Green Lending Landscape to Households and Non-Financial Corporations” (here), outlines the findings of the CBI’s green lending survey, highlighting the manner in which green lending has increased in Ireland in recent years.
• A further Behind the Data publication, “Understanding the Carbon Intensity of Ireland’s Financial Sectors' Securities Holdings” (here), presents initial estimates of carbon intensity within security holdings for the financial sector in Ireland, highlighting potential future vulnerability to transition risk.

Additionally, the CBI has published remarks (here), given by CBI Deputy Governor Sharon Donnery, as part of a panel discussion at Climate Finance Week.

Delegated Regulations amending technical screening criteria under EU Taxonomy Regulation

On 21 November 2023, two Delegated Regulations, issued under the EU Taxonomy Regulation, were published in the EU’s Official Journal. The Delegated Regulations establish technical screening criteria under the EU taxonomy for sustainable activities in respect of:

(i) determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or adaptation and for determining whether those activities cause no significant harm to any of the other environmental objectives (Delegated Regulation (EU) 2023/2485 (here)); and

(ii) determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives (Delegated Regulation (EU) 2023/2486 (here)).

Both Delegated Regulations enter into force on the twentieth day following their publication.

EBA publishes templates for collection of climate-related data from banks

On 17 November 2023, the European Banking Authority (“EBA”) published (here) the final templates that will be used to collect climate-related data from EU banks in the context of the one-off “Fit-for-55” climate risk scenario analysis. The templates are accompanied by template guidance, which includes definitions and rules for completing the templates.

Furthermore, the EBA is disclosing the list of banks participating in the exercise.

CBI issues warning on short-term credit agreements

On 14 November 2023, the CBI issued a consumer research bulletin (here) striking a note of caution on short-term consumer credit, specifically buy-now-pay-later (“BNPL”) financial products. According to CBI research, 36% of consumers do not realise that BNPL is a form of credit, whilst many others do not fully understand important features of BNPL such as associated fees or the implications of late repayments.

Reflecting on the CBI’s engagement with relevant credit firms, CBI Director of Policy and Risk Gerry Cross said: “The Central Bank has engaged directly with Ireland’s largest Buy Now, Pay Later firms to ensure the terms and conditions of their products are clear and transparent for customers. Consumers must be informed clearly of all relevant information, so they can make a fully informed decision on whether this product is right for them and the Central Bank continues to monitor these areas.”

Progression of the “daisy chain” proposal

On 17 November 2023, the Council of the EU issued a press release (here) confirming that it has agreed a common position in respect of the so-called “daisy chain” proposal. The proposal (draft text here) is to adopt targeted amendments to the Bank Resolution and Recovery Directive (“BRRD”) and the Single Resolution Mechanism (“SRM”) Regulation as regards certain aspects of the minimum requirement for own funds and eligible liabilities (“MREL”).

On 6 December 2023, the Council of the EU and the European Parliament announced (here) that they have reached a provisional political agreement on the "daisy chain" proposal.

EBA-developed RTS on CRR II requirements

On 21 November 2023, the EBA published (here) its final draft regulatory technical standards (“RTS”) developed in accordance with Article 325az(8)(b) of the Capital Requirements Regulation (“CRR II”), on the assessment methodology under which competent authorities verify institutions’ compliance with the requirements applicable to their internal models under the Fundamental Review of the Trading Book (“FRTB”) rules. The RTS are a key part of the implementation of the EBA’s roadmap on market risk and counterparty credit risk approaches.

Additionally, on 29 November 2023, the EBA launched a public consultation (here) on draft RTS on the conditions for assessing the materiality of extensions and changes to the use of internal models as well as to the subset of the modellable risk factors applicable under FRTB rules. The EBA’s consultation runs until 29 February 2023.

Draft ITS on the mapping of ECAIs’ credit assessments

On 13 November 2023, the Joint Committee of the European Supervisory Authorities (“ESAs”) issued separate reports, in respect of: (i) CRR II (here) and the Solvency II Directive (here).

The reports contain final draft implementing technical standards (“ITS”) on the mapping of external credit institutions’ (“ECAIs’”) credit assessments, which are to be submitted to the European Commission for endorsement.

EBA consults on credit servicers’ handling of complaints

On 9 November 2023, the EBA launched a consultation (here) on draft guidelines that it has formulated in relation to the requirement for credit servicers to establish and maintain effective and transparent procedures for the handling of borrowers’ complaints. 

The EBA’s consultation runs until 9 February 2024.

Implementing Regulation facilitating Solvency II reporting

On 21 November 2023, Implementing Regulation (EU) 2023/2574 (here) was published in the EU’s Official Journal.

The Implementing Regulation lays down technical information for the calculation, by insurers and reinsurers, of technical provisions and basic own funds, in accordance with reporting obligations under the Solvency II Directive, with reference dates from 30 September 2023 until 30 December 2023.

CBI letter on MiFID II compliance among firms engaged in algorithmic trading

The CBI has published a “Dear CEO” letter (here), dated 2 November 2023, outlining the key findings of its thematic review assessing the extent to which investment firms undertaking algorithmic trading activity have incorporated, within their risk management and control frameworks, the organisational requirements relating to the annual self-assessment and validation process, as set out in Delegated Regulation (EU) 2017/589, supplementing MiFID II.

The CBI expects all firms that engage in algorithmic trading activity to undertake the following actions:

• to consider the findings and positive practices noted in the letter and adopt appropriate remedial actions to further develop governance and risk management frameworks that support algorithmic trading activity;
• to ensure appropriate control and oversight arrangements are in place with regard to the annual self-assessment process and the requirements of both Article 9 of MiFID II, and Delegated Regulation (EU) 2017/589 more broadly;
• to consider existing templates for self-assessment against the findings outlined to ensure sufficient detail is being compiled to adequately assess MiFID II compliance; and
• to assess training and development programmes, particularly for existing staff, to ensure there is adequate training provided to ensure continuous professional development.

CBI updates AIF Rulebook and Q&A documentation

On 27 November 2023, the CBI published the latest version of its AIF Rulebook (here), along with updated Q&A documentation on:

(i) the Alternative Investment Fund Managers Directive (“AIFMD”) (49th edition, here); and 
(ii) Undertakings for Collective Investment in Transferable Securities (“UCITS”) (40th edition, here).

CBI issues feedback statement to CP152 on own funds requirements for AIFMs and UCITS ManCos

On 27 November 2023, the CBI published a feedback statement (here) to its consultation (CP152) on own funds requirements for UCITS management companies and alternative investment fund managers (“AIFMs”), authorised for discretionary portfolio management.

In the interest of maintaining a level playing field with investment firms authorised to provide discretionary portfolio management, and subject to own funds requirements under the Investment Firms Regulations (“IFR”), the CBI is proposing to introduce bespoke own funds requirements for UCITS management companies and AIFMs authorised to provide discretionary portfolio management and additional non-core services via CBI regulations.

Following the CBI’s consultation, the modified own funds requirements will generally apply to UCITS ManCos and AIFMs, authorised on or before 27 November 2023, from 27 May 2024. UCITS ManCos and AIFMs authorised after 27 November 2023 will be subject to the new requirements on authorisation.

Along with its feedback statement, the CBI has published a guidance note for AIFMs and UCITS management companies in relation to the minimum capital requirement report (here), and guidance relating to regulatory reporting requirements for: (i) AIFMs (here); and (ii) AIF management companies (here).

CBI consults on inclusion of ELTIF chapter in AIF Rulebook

On 1 November 2023, the CBI launched a consultation (CP155, here) on its proposal to amend the AIF Rulebook to include a new ELTIF chapter. The draft ELTIF chapter, set out in an annex to the consultation paper, contains six sections relating to: (i) ELTIF restrictions; (ii) supervisory requirements; (iii) prospectus requirements; (iv) general operational requirements; (v) annual and half-yearly reports; and (vi) the marketing of ELTIFs to retail investors.

Submissions in respect of the CBI’s consultation can be made until 13 December 2023.

For more information, see our recently-published briefing (here).

CBI consults on macroprudential measures for GBP LDI funds

On 23 November 2023, the CBI launched a consultation (CP157, here) on a proposal to codify and, in certain cases, augment the existing yield buffer measure introduced via a CBI industry letter in November 2022 (see our briefing here). The proposal to codify the yield buffer would be imposed through Article 25 of AIFMD.

The consultation paper outlines a policy proposal to strengthen the steady-state resilience of GBP liability-driven investment (“LDI”) funds.

Submissions in respect of the CBI’s consultation can be made until 18 January 2024.

Council of the EU publishes text of AIFMD II proposal

The Council of the EU has published a note (here), dated 6 November 2023, setting out the final compromise text of the proposal for a Directive amending AIFMD and the UCITS Directive, as regards delegation arrangements, liquidity risk management, supervisory reporting, the provision of depository and custody services, and loan origination by AIFs, reflecting the political agreement previously reached by the Council of the EU and the European Parliament (here).

The legislative text awaits formal adoption by the EU institutions, in accordance with the usual EU legislative process.

For more information, see our earlier briefing on AIFMD II (here).

ITS on disclosures by competent authorities under IFD

On 20 November 2023, Implementing Regulation (EU) 2023/2526 (here), containing amending ITS in respect of the content lists of the information on individual data to be disclosed by competent authorities, was published in the EU’s Official Journal.

The Implementing Regulation enters into force on the twentieth day following that of its publication.

CBI issues fine in first EMIR-related enforcement action

On 28 November 2023, the CBI announced (here) that it has reprimanded and fined an authorised UCITS, for a breach of reporting obligations under Article 9(1) of the European Market Infrastructure Regulation (“EMIR”). The UCITS had failed to comply with its obligation under Article 9(1) of EMIR to ensure that details of 200,640 derivatives trades entered into between January 2018 and May 2020 in respect of one of its sub-funds were reported to a registered trade repository no later than the working day following their conclusion.

The CBI fine amounted to €192,500, taking into account the application of a settlement discount of 30%. This is the CBI’s first enforcement action under the European Union (European Markets Infrastructure) Regulations 2014 (which were made for the purpose of giving full effect to EMIR).

As a result of changes to EMIR that took effect from 18 June 2020 (see further here), the relevant management company to a UCITS or an AIF now has responsibility and legal liability for the timely and accurate reporting of the details of “OTC derivatives contracts” (within the meaning of EMIR) to which the relevant fund is counterparty and ensuring the correctness of the reports. However, the relevant UCITS or AIF remains responsible and legally liable for reporting details of derivative contracts executed on its behalf on an EU regulated market or a third country market that is treated for EMIR purposes as equivalent to an EU regulated market.

For more information on the CBI's enforcement action, see our recently-published briefing (here).

Delegated Regulation extending temporary measures under EMIR

On 28 November 2023, the European Commission adopted a Delegated Regulation (here), together with an Annex (here), amending the RTS laid down under Delegated Regulation (EU) 153/2013 relating to temporary emergency measures regarding CCP collateral requirements under EMIR.

The modifications are temporary and will expire six months after the entry into application of the Delegated Regulation.

Trade associations publish letter on bilateral margining exemption for equity options under EMIR

On 10 November 2023, the International Swaps and Derivatives Association (“ISDA”), together with several other trade associations, published a joint letter (here) to the ESAs in respect of the treatment of equity options in the context of the ongoing EMIR amendment process.

The trade association letter relates to the current temporary exemption from margin requirements for single-stock equity options or index options, as set out in RTS on the risk mitigation techniques for OTC derivative contracts not cleared by a CCP. The exemption has been repeatedly extended; it is now set to expire on 4 January 2024.

The trade associations request that the ESAs, ahead of 4 January 2024, either:

(i) publish guidance to national competent authorities to exercise their supervisory powers in relation to margin requirements in a proportionate and risk-based manner with respect to equity options between 4 January 2024 and the entry into force of EMIR 3; or
(ii) extend the temporary exemption provided in the bilateral margin RTS until entry into force of EMIR 3. The amended RTS would need to enter into force before 4 January 2024, or be accompanied by a supervisory statement to bridge the gap between 4 January 2024 and entry into force of the RTS.

For more information on the EMIR amendment process, and the EMIR 3 proposal, see our briefing (here).

CBI consults on approach to innovation engagement

On 8 November 2023, the CBI launched a consultation (CP156, here) on its approach to innovation engagement with the financial services industry, which incorporates, amongst other forums for engagement, the CBI’s Innovation Hub (see our briefing here). 

The CBI’s consultation will run until 8 February 2024.

ESMA to amend USSPs to focus more closely on ICT risk management

On 9 November 2023, ESMA announced (here) that it will amend the Union Strategic Supervisory Priorities (“USSPs”) to focus more closely on cyber risk and digital resilience.

EU supervisors aim to place greater emphasis on reinforcing firms’ ICT risk management through close monitoring and supervisory actions, and building new supervisory capacity and expertise. The aim is to keep pace with market and technological developments, and to closely monitor potential contagion effects of attacks and disruptions across markets and firms.

The new USSP will come into force in 2025, coinciding with the coming into application of the Digital Operational Resilience Act (“DORA”).

EU Directive on financial services contracts concluded at a distance

On 24 November 2023, the Council of the EU published the text of the proposed Directive (here) on financial services contracts concluded at a distance.

The Directive repeals the existing legislation from 2002 and introduces new provisions for financial services contracts concluded at a distance as an additional chapter of the Consumer Rights Directive (“CRD”). It simplifies the legislative framework; certain articles of the CRD will now also apply in relation to financial services sold at a distance.

The Directive has already been adopted by the EU institutions; it awaits publication in the Official Journal, whereupon it will enter into force on the twentieth day following publication.

European Commission consults on delegated acts under DORA

On 16 November 2023, the European Commission published, for consultation (here), two draft delegated acts under DORA.

The draft delegated acts supplement DORA in relation to:
(i) the criteria for the designation of ICT third-party service providers as critical for financial entities (“CTPPs”); and
(ii) the amount of the oversight fees to be charged by the lead overseer to CTPPs and the way in which those fees are to be paid.

The feedback period runs until 14 December 2023.

Ireland’s bid to host new EU Anti-Money Laundering Authority

On 15 November 2023, the Minister for Finance Michael McGrath, along with the Minister of State for Financial Services Jennifer Carroll MacNeill, published (here) Ireland’s application to host the new EU Anti-Money Laundering Authority (the “AMLA”).

The AMLA will be a significant EU institution, tasked with supervision of compliance with anti-money laundering and countering financing of terrorism (“AML/CFT”) rules and standards. The AMLA will supervise entities in the financial services sector in the first instance, but eventually also in the non-financial sector. The institution is due to be established in 2024, although it is not expected to be fully operational until 2026/2027.

Ireland is one of nine EU Member States to have submitted an application to the European Commission to host the new authority. The Irish Government has also published a promotional brochure (here) in respect of its bid.

RTS on central EU AML/CFT database

On 9 November 2023, the European Commission adopted a Delegated Regulation (here) containing RTS relating to the establishment of EuReCa, a central EU database for AML/CFT purposes. The RTS specify detail regarding the materiality of weaknesses, the collection of information, and the analysis and dissemination of information.

EBA consults on draft guidelines to prevent the abuse of funds and crypto-asset transfers for ML/TF purposes

On 24 November 2023, the EBA launched a public consultation (here) on draft guidelines on preventing the abuse of funds and certain crypto-assets transfers for money laundering and terrorist financing (“ML/TF”) purposes.

The “travel rule” guidelines specify the steps that payment service providers (“PSPs”), intermediary PSPs (“IPSPs”), crypto-asset service providers (“CASPs”) and intermediary CASPs (“ICASPs”) should take to detect missing or incomplete information accompanying transfers of funds or crypto-assets. The guidelines also detail the procedures providers should put in place to manage a transfer of funds or of crypto-assets lacking the required information.

The EBA’s consultation will run until 26 February 2024.

ECB updates retail payments strategy

On 22 November 2023, the European Central Bank (“ECB”) published a document (here) outlining the Eurosystem’s updated retail payments strategy, for 2024 and beyond.

Strengthening the European payments market through the creation of a pan-European solution for retail payments at the point of interaction (“POI”) and the enhancement of the Single Euro Payments Area (“SEPA”) remain at the heart of the Eurosystem’s efforts to improve retail payments in the euro area.

Political agreement on instant payments proposal

On 7 November 2023, the Council of the EU and the European Parliament announced via press release (here) that they have reached a political agreement on the instant payments proposal, which would amend the SEPA Regulation, adding specific provisions facilitating instant credit transfers in euro.

According to the press release, the proposal seeks to increase the uptake of instant credit transfers in euro, by ensuring that payments are affordable, universally available and reliable, and by removing friction in the processing of payments. Key provisions would include:

• an obligation on EU PSPs, already offering credit transfers in euro, to offer an “instant” version;
• an obligation on PSPs to ensure that the price charged for instant payments in euro does not exceed the price charged for ordinary, non-instant credit transfers in euro;
• an obligation on PSPs to verify the match between the bank account number (IBAN) and the name of the beneficiary provided by the payer in order to alert the payer of a possible mistake or fraud before the payment is made; and
• a procedure whereby PSPs would verify, at least daily, their clients against EU sanctions lists, rather than screening all transactions on an individual basis, to remove friction in the processing of transfers, whilst preserving the effectiveness of EU restrictive measures.

ECON reports on payment services reform proposals

The European Parliament’s Economic and Monetary Affairs Committee (“ECON”) has published the following reports, dated 13 November 2023, regarding:

(i)    the proposal for a Regulation on payment services in the EU’s internal market (the “PSR proposal”) (ECON report here); and
(ii)   the proposal for a Directive on payment services in the EU’s internal market (the “PSD3 proposal”) (ECON report here).

According to the European Commission, its reform package aims to:

• combat and mitigate payment fraud, enabling payment service providers to share fraud-related information between themselves, increasing consumer awareness, strengthening customer authentication rules, extending the refund rights of consumers who fall victim to fraud, and ensuring a system for checking alignment of payees' IBAN numbers with their account names is mandatory for all credit transfers;
• address types of fraud such as spoofing or social engineering fraud, where consent to authorise a transaction is ostensibly given by a consumer, but that consent was obtained through manipulative techniques by fraudsters, for example, by using a fraudulent phone number or email address;
• improve consumer rights, in cases for example where funds are temporarily blocked, improve transparency on account statements, and provide more transparent information on ATM charges;
• further level the playing field between banks and non-banks, in particular by allowing non-bank PSPs access to all EU payment systems, with appropriate safeguards in place, and securing the right of those service providers' to have a bank account;
• improve the functioning of open banking, by removing remaining obstacles to providing open banking services and improving customers' control over their payment data, enabling new services to enter the market;
• improve the availability of cash in shops and via ATMs, by allowing retailers to provide cash services to customers without requiring a purchase and clarifying the rules for independent ATM operators; and
• strengthen harmonisation and enforcement, by enacting most payment rules in a directly applicable regulation and reinforcing provisions on implementation and penalties.

Council of the EU adopts revised CSDR

On 27 November 2023, the Council of the EU formally adopted a Regulation (here) amending the Central Securities Depositories Regulation (“CSDR”). The adopted Regulation updates the CSDR, which established a set of common requirements for central securities depositories (“CSDs”) operating securities settlement systems across the EU.

The adopted Regulation seeks to reduce the financial and regulatory burden on CSDs, improve their cross-border operability, and address financial stability concerns.

The Regulation awaits publication in the EU’s Official Journal and will enter into force on twentieth day following publication.

ECON endorses reform proposals relating to EU clearing markets

On 28 November 2023, ECON announced (here) that is has adopted new rules reforming EU clearing markets and mitigating excessive exposures to third-country CCPs.

Key aspects of the reform proposals include:

• an enhanced role for ESMA as a direct supervisor of EU CCPs, as well as a requirement that authorised third-country CCPs annually report to ESMA as regards the scope of their clearing activity;
• a requirement that financial counterparties or non-financial counterparties subject to the clearing obligation should hold at least one active account at an EU CCP, through which they regularly clear "systematically important" products; this active account requirement (“AAR”) has previously been criticised by a number of trade associations, including by ISDA (see industry letter here);
• streamlined regulatory procedures that aim to reduce the burden on competent authorities and increase the capacity of CCPs to implement changes to their offerings without altering their risk profiles; and
• additional transparency requirements for CCPs.

European Commission consults on OTC derivatives identifier for public transparency purposes

On 29 November 2023, the European Commission published a targeted consultation (here) relating to the replacement of the public identifier of over-the-counter (“OTC”) derivatives in the EU.

The target audience of the consultation are participants in the in-scope OTC derivatives value-chain. This comprises: (i) companies that use interest rate and credit derivatives to hedge interest rate and credit risk that arises in the course of their business; (ii) investment firms and asset managers that use interest rate and credit derivatives to hedge investment portfolios; (iii) investment firms that act as counterparties to the two aforementioned categories; (iv) investment firms that invest in interest rate or credit derivatives; and (v) trading venues that offer trading in interest rate and credit derivatives, trade reconciliation service providers as well as CCPs that clear interest rate and credit derivatives.

The consultation covers two issues:
(i) what is the most suitable unique product identifier to be used for compliance with the transparency requirements applicable to in-scope OTC derivatives; and
(ii) whether there any “additional identifying reference data” to be considered in addition to the unique product identifier.

The European Commission’s consultation runs until 9 January 2024.

EBA extends AML/CFT guidelines to supervisors of CASPs

On 27 November 2023, the EBA announced (here) that it has extended its risk-based AML/CFT supervision guidelines (here) to AML/CFT supervisors of CASPs.

The guidelines outline clear expectations in relation to the steps supervisors should take to identify and manage ML/TF risks in the context of the crypto-asset sector.

EBA consults on third batch of policy products under MiCA

On 8 November 2023, the EBA launched several consultations on draft guidelines and draft technical standards developed in relation to the Markets in Crypto-Assets (“MiCA”) Regulation:

• draft RTS specifying the methodology to be applied by issuers of asset-referenced tokens (“ARTs”) and of e-money tokens (“EMTs”) denominated in a non-EU currency for reporting transactions associated to uses of these tokens as a means of exchange (here) and draft ITS on related reporting requirements (here);
• draft RTS on supervisory colleges (here);
• draft RTS to specify the adjustment of own funds requirements and stress testing of issuers of ARTs and of EMTs subject to the requirements (here);
• draft RTS to specify the procedure and timeframe to adjust its own funds requirements for issuers of significant ARTs or of EMTs (here);
• draft RTS to further specify the liquidity requirements of the reserve of assets (here);
• draft RTS to specify the highly liquid financial instruments with minimal market risk, credit risk and concentration risk (here);
• draft RTS to specify the minimum contents of the liquidity management policy and procedures (here);
• draft guidelines on recovery plans (here); and
• draft guidelines on liquidity stress testing (here).

The consultations all run until 8 February 2024.

Agreement in respect of sharing crypto-related information

On 10 November 2023, the Department of Finance issued a statement (here) welcoming Ireland’s signature of a joint statement which commits to commencing into domestic law, by 2027, the crypto-asset reporting framework (“CARF”) developed by the OECD.

CARF is an international standard for the automatic exchange of crypto-related information between tax authorities; it is being delivered within the EU through an amendment to Directive 2011/16/EU on administrative cooperation in the field of taxation.

Selected Consultations, Discussion Papers, Speeches and Reports Published

Basel Committee on Banking Supervision (“BCBS”) – Consultation on disclosure of climate-related financial risk (here) (consultation runs until 29 February 2024)

CBI – “Implementing DORA” (remarks by Gerry Cross, CBI Director of Financial Regulation) (here)

EBA – EBA Statement in the Context of COP28 (here)

ECB – Financial Stability Outlook (November 2023) (here)

ECB – Financial Stability Review (November 2023) (here)

ESMA – Concept of Estimates across the EU Sustainable Finance Framework (here)

ESMA – Concepts of Sustainable Investments and Environmentally Sustainable Activities in the EU Sustainable Finance Framework (here)

ESMA – “Do No Significant Harm” – Definitions and Criteria across the EU Sustainable Finance Framework (here)

ESMA – “Innovation with Protection: the next steps on the MiCA journey” (remarks by Verena Ross, ESMA Chair) (here)

ESMA – “The Role of Asset Management: channelling capital into financial markets preserving financial stability and sustainability aims” (remarks by Verena Ross, ESMA Chair) (here)

Insurance Europe – The Power of Reinsurance: supporting the resilience of societies through an open and well-regulated reinsurance market (here)

International Association of Insurance Supervisors (“IAIS”) –  A call to action: the role of insurance supervisors in addressing natural catastrophe protection gaps (here)

IAIS – Updated IAIS Policy for Stakeholder Engagement (here)

International Capital Market Association (“ICMA”) – Guidance Handbook (relating to the green, social, sustainability and sustainability-linked (“GSSS”) bond market) (updated November 2023) (here)

International Organization of Securities Commissions (“IOSCO”) – Policy Recommendations for Crypto and Digital Asset Markets: Final Report (here)

ISDA – ISDA in Review: November 2023 (here)

Network for Greening the Financial System (“NGFS”) – NGFS Scenarios for Central Banks and Supervisors (here)

Single Resolution Board (“SRB”) – SRB Work Programme 2024 (here)

UK Finance – The Impact of AI on Financial Services (here)

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