European Commission
Taxonomy Regulation - European Commission announces Taxonomy Complementary Delegated Act - 1 January 2022
The European Commission (the Commission) has announced it is working on a draft text of a Taxonomy Complementary Delegated Act (EU/2021/2139) (the Act) under the Taxonomy Regulation (EU/2020/852) which covers gas and nuclear activities. The Taxonomy Regulation contains a set of technical screening criteria that define which activities contribute to the environmental objectives contained in it, but it does not, currently, cover gas or nuclear activities.
The Commission will also amend the Taxonomy Disclosure Delegated Act (EU/2021/2178) supplementing Article 8 of the Taxonomy Regulation so that investors can identify whether investments include gas or nuclear activities, and it is consulting with the Platform on Sustainable Finance and the Member States Expert Group on Sustainable Finance on the Act.
The Commission intends to adopt the Act in January 2022, after which it will provide it to the European Parliament and the Council of the EU for scrutiny.
Press release
Council of the European Union
DLT - Council publishes final compromise text - 21 December 2021
The Council of the EU has published the final compromise text of the proposed Regulation on a pilot regime for market infrastructure based on distributed ledger technology (DLT) (2020/0267(COD)).
The pilot regime aims to test the development of European infrastructure for the trading, clearing and settlement of DLT-based financial instruments, and (among other things) lays down the conditions for acquiring permission to operate DLT market infrastructure and defines which DLT financial instruments can be traded. It will be in place for three years, after which the European Commission (based on advice from the European Securities and Markets Authority) will report on the costs and benefits of extending, modifying or ending it.
The proposed Regulation will now be formally adopted by the Council and the European Parliament, and will enter into force 20 days after its publication in the Official Journal of the European Union. It will apply nine months after it has entered into force.
Proposal for a Regulation of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology (2020/0267(COD)
Press release
European Securities and Markets Authority
MiFIR - ESMA launches call for evidence on DLT Pilot Regime - 4 January 2022
The European Securities and Markets Authority (ESMA) has launched a Call for Evidence on distributed ledger technology (DLT) in light of the proposed Regulation on a pilot regime for market infrastructure based on DLT (see item above in this section). The Call for Evidence considers whether certain regulatory technical standards (RTS) on transparency and reporting under the Markets in Financial Instruments Regulation (600/2014/EU) (MiFIR) should be amended, including:
- RTS 1 and 2 on equity and non-equity transparency, respectively;
- RTS 3 on double volume cap and provision of data; and
- the RTS on data reporting requirements, including RTS 22 on transaction reporting, RTS 23 on reference data, RTS 24 on order record keeping and RTS 25 on clock synchronisation.
The Call for Evidence also seeks stakeholders’ views on possible effective ways to provide regulators with access to information on: (i) transactions; (ii) financial instruments’ reference data; and (iii) transparency data.
The Call for Evidence closes on 4 March 2022. Should ESMA conclude that RTS amendments are necessary, it will consult on its proposals before submitting the final draft RTS to the European Commission for adoption.
ESMA Call for evidence: DLT Pilot Regime and review of MiFIR regulatory technical standards on transparency and reporting (ESMA70-156-4957)
Website
Press release
Prudential Regulation Authority
Remuneration regime - PRA publishes Policy Statement PS28/21 - 17 December 2021
The PRA has published a Policy Statement (PS28/21) on the identification of material risk takers for the purposes of its remuneration regime. The Policy Statement follows the PRA’s Consultation Paper (CP18/21) on the matter, published in September 2021. In light of the responses received to CP18/21, the PRA has made the following changes to its proposed rules:
- a consequential amendment to the Certification Part of the PRA Rulebook, as a result of the revocation of the Material Risk Taker Regulation ((EU)2021/923); and
- clarification that the threshold referred to in Rule 3.3A(2) of the Remuneration Part of the PRA Rulebook should be calculated on an individual entity basis, rather than at the consolidated level.
The PRA has also published the Instruments making the changes and its updated Supervisory Statements on remuneration (SS2/17) and the Senior Managers and Certification Regime for banks (SS28/15).
The changes to the Remuneration Part of the PRA Rulebook (Appendices 1, 2 and 3) took effect on 30 December 2021, and are required to be implemented by firms from the first performance year which starts after that date. The changes to the Certification Part of the PRA Rulebook will take effect on 1 March 2022 (Appendices 1 and 4).
PRA Policy Statement: Remuneration: Identification of material risk takers (PS28/21)
Webpage
Financial Conduct Authority
Remuneration regime - FCA responds to PRA PS28/21 - 17 December 2021
Following the publication of PRA Policy Statement (PS28/21) on the identification of material risk takers (MRTs) in December 2021, the FCA has announced its intention to consult on changes to clarify its approach to identifying MRTs for firms subject to its Dual-regulated firms Remuneration Code (SYSC 19D) in 2022.
The FCA explains that the changes introduced by PS28/21, which took effect on 30 December 2021, mean there will be minor divergences between FCA and PRA requirements over the intervening period. In any areas of inconsistency, the FCA considers that firms operating in compliance with the approach in PS28/21 will also be operating in compliance with its own requirements on MRT identification.
Webpage
PS28/21
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Climate-related disclosures - FCA publishes two Policy Statements - 17 December 2021
The FCA has published two Policy Statements on enhancing climate-related disclosures by standard listed companies (PS21/23); and by asset managers, life insurers and FCA-regulated pension providers (PS21/24). The Policy Statements follow the FCA’s Consultation Papers on the matter (CP21/17 and CP21/18), published in June 2021.
In PS21/23, the FCA is proceeding with the policy as consulted on, but with a change to the scope of issuers that are subject to the new Listing Rule requirements and the addition of a guidance provision on transition plan disclosures. The new Listing Rule requirements (LR 14.3.27.R) will apply for accounting periods beginning on or after 1 January 2022 and are set out in the Listing Rules (Disclosure of Climate-related Financial Information) (No 2) Instrument 2021, contained in Appendix 1 of PS21/23.
In PS21/24, the FCA confirms that it is introducing a new ESG Sourcebook to the FCA Handbook containing rules and guidance for asset managers and certain FCA-regulated asset owners to make disclosures consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). The rules will apply to the largest in-scope firms (34 asset management and 12 asset owner firms) from 1 January 2022 and to smaller firms (a further 140 asset management and 34 asset owner firms) from 1 January 2023. These firms represent £12.1 trillion in assets under management and administration in the UK, capturing 98% of both the UK asset management market and holdings by UK asset owners. Appendix 1 sets out the Disclosure of Climate-Related Financial Information (Asset Manager and Asset Owner) Instrument 2021 (FCA 2021/62), which contains the new ESG Sourcebook.
The first financial reports subject to the new rules in PS21/23 and PS21/24 will be published in early 2023.
FCA Policy Statement: Enhancing climate-related disclosures by standard listed companies (PS21/23)
FCA Policy Statement: Enhancing climate-related disclosures by asset managers, life insurers and FCA-regulated pension providers (PS21/24)
Press release
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COVID-19 - FCA statement on further extending flexibility on 10% depreciation notifications – 21 December 2021
The FCA has published a statement on further extending temporary measures, in place since March 2020, on the requirement for firms to issue 10% depreciation notifications to investors (COBS 16A.4.3 UK). The measures were put in place initially to help firms support consumers during market volatility linked to COVID-19 and the Brexit transitional period.
In March 2021, the FCA announced that it would maintain the temporary measures while HM Treasury carried out policy work on the future of the requirement as part of its Wholesale Markets Review (WMR). Findings from the WMR have indicated support for removing or amending the requirement. As a result, the FCA is extending the temporary measures for firms for a further 12 months (until 31 December 2022) while HM Treasury and/or FCA conclude their policy work on the future of this requirement.
During this period, the FCA will not take action for breach of COBS 16A.4.3 UK for services offered to retail investors provided that a firm has met certain specified requirements. For services offered to professional investors, the FCA will not take action for breach of COBS 16A.4.3 UK, provided that firms have allowed professional clients to opt-in to receiving notifications.
FCA: Statement: 10% depreciation notifications: further extension of temporary measures for firms
