With the help of compliance software Ruler, Charco & Dique closely monitors the developments in financial laws and regulations. Then, we determine the impact of the changes and translate the developments into the daily practice of our clients.
Which developments should you take into account? Every quarter, we provide a structured overview of the regulatory changes and their consequences for financial institutions in our Regulatory Updates. In this blog, we list a number of focus areas for Q3 2022.
Integration of sustainability risks and factors into MiFID II
On August 2, 2021, Delegated Regulation 2021/1253 on the integration of sustainability risks and factors into MiFID II was published in the EU Official Journal. This Delegated Regulation entails the following adjustments:
- Investment firms that manage assets and/or provide investment advice must assess their clients’ ESG preferences and must include these preferences in the selection process of the investment products they include in asset management and/or investment advice. Ex-post reporting must also be provided to the client explaining how the management or advice provided aligns with (among other things) the client’s ESG preferences;
- Investment firms must integrate ESG considerations into their processes, systems and controls;
- Investment firms must integrate sustainability risks into their risk management; and
- ESG considerations should be included in the identification of conflicts of interest, the integration of ESG considerations should not lead to “mis-selling”.
The Delegated Regulation is directly applicable in the Netherlands on August 2, 2022.
Amendment to RTS to increase clearing threshold for commodity derivatives under EMIR
On 3 June 2022, ESMA published draft Regulatory Technical Standards (RTS) that propose to increase the clearing threshold for commodity derivatives under EMIR from €3 billion to €4 billion. In fact, the proposal made by ESMA in June 2022 involves no more than amending Article 11(e) of Delegated Regulation 149/2013. The EC now needs to convert the draft RTS into a delegated regulation. It is expected that the regulation will enter into force in the second half of 2022.
Adaptation of delegated regulation to PRIIPS regulation
Delegated Regulation 2021/2268 makes amendments to Delegated Regulation 2017/653, which addresses the content of the Essential Information Document (EID) under the PRIIPS Regulation. The amendment addresses issues identified by stakeholders and regulators since the implementation of the EID in 2018. In addition, the amendments should ensure that the rules can be applied to UCITS and AIFMD investment vehicles offered to retail investors, as an EID will be required for these products from January 1, 2023.
The regulation was originally scheduled to come into force on July 1, 2022, but has been postponed to January 1, 2023 via Delegated Regulation 2022/975. Financial organizations that offer products for which an EID is or will become mandatory must have an EID that meets all (new) requirements by January 1, 2023.
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