European Supervisory Authorities
PRIIPs review - ESAs publish technical advice - 2 May 2022
The European Supervisory Authorities (ESAs), comprising the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA), have published a report (JC 2022 20) (dated 29 April 2022) setting out their technical advice to the European Commission (the Commission) with reference to the Commission’s review of the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation (1286/2014/EU) (PRIIPs Regulation).
The ESAs’ advice addresses all the issues referred to by the Commission in its request of 27 July 2021, including how to better adapt the key information document (KID) to the digital age and whether to extend the scope of the Regulation to other financial products. Additionally, it presents the ESAs’ recommendations on a range of other issues where analysis has shown that changes are needed to achieve optimal outcomes for retail investors. In particular, the ESAs are of the opinion that the KID would prove more useful to retail investors if presented in a much simpler and more user-friendly format.
The ESA’s technical advice will be taken into account in the Commission’s work on developing its Retail Investment Strategy and making appropriate adjustments to the PRIIPs legislative framework.
Call for advice on PRIIPs: ESA advice on the review of the PRIIPs Regulation (JC 2022 20)
Webpage
Press release
Sustainability disclosures for STS securitisations - ESAs publish joint Consultation Paper on draft RTS - 2 May 2022
The European Supervisory Authorities have published a joint Consultation Paper (JC 2022 22) on draft regulatory technical standards (RTS) on the content, methodologies and presentation of the sustainability indicators for simple, transparent and standardised (STS) securitisations.
Under the Capital Markets Recovery Package, the Securitisation Regulation ((EU) 2017/2402) was amended to introduce new optional disclosure provisions for STS securitisations. The draft RTS aim to standardise the type and presentation of the information an originator may opt to disclose about the adverse impacts of assets financed by underlying exposures, on the environment and other sustainability areas. This disclosure is intended to help investors measure and compare the negative impacts on sustainability factors caused by the assets financed by underlying exposures in an STS securitisation.
The deadline for responses is 2 July 2022.
Joint Consultation Paper: STS securitisations-related sustainability disclosures (JC 2022 22)
Webpage
Press release
European Securities and Markets Authority
MMF Regulation - ESMA publishes official translations of Guidelines on stress test scenarios - 4 May 2022
The European Securities and Markets Authority (ESMA) has published a webpage with official translations of its Guidelines on stress test scenarios produced under article 28 of the Money Market Funds Regulation ((EU) 2017/1131) (MMF Regulation).
The Guidelines apply to national competent authorities, MMFs and MMF managers, and establish common reference parameters in relation to scenarios used for the stress tests conducted by MMFs or managers of MMFs.
The Guidelines will apply from 5 July 2022, with the exception of text marked in red, which already applies from the dates specified in articles 44 and 47 of the MMF Regulation.
ESMA Guidelines: On stress test scenarios under the MMF Regulation (ESMA34-49-446)
Webpage
Financial Conduct Authority
Investment platforms costs and charges - FCA publishes findings from review - 4 May 2022
The FCA has published its findings from a review of investment platforms costs and charges, following on from the publication of its Investment Platforms Market Study in 2019.
Focusing on the experience of non-advised consumers the FCA found that, generally, main platform charges and fund charges were well signposted. Activity-based charges (such as telephone trades costs, foreign exchange and interest on cash) were, however, harder for consumers to locate.
The FCA further identifies examples of good and bad practice, and concludes that platforms must provide the following information to consumers before they invest:
- all costs and charges, clearly explained;
- total prices/aggregated costs, expressed both as a cash amount and a percentage, with a breakdown available; and
- illustrations showing the effect of costs on returns.
This information needs to be provided in good time, before the provision of the investment business. The FCA observes that this may present operational challenges in an online environment, where transactions are typically concluded in a short timeframe. The FCA also advises platforms to be aware of its proposed consumer duty.
Webpage
MS17/1: Investment Platforms Market Study webpage
