Ashurst Quarterly Debt Capital Markets Update Q4 2023

Welcome to the first edition of the Ashurst Quarterly Debt Capital Markets Update for 2024. In this edition we summarise the key developments in debt capital markets in the last quarter of 2023.
We have a number of different developments to report on in this edition:

• EU Benchmarks Regulation - transition period for third-country benchmarks extended to 31 December 2025.
• European Commission proposes changes to EU Benchmarks Regulation.
• ESMA - disclosures of climate-related matters.
• Repeal of the UK PRIIPs Regulation regime – latest developments.
• EU Green Bond Regulation published.
• Repeal of the UK Prospectus Regulation regime – latest developments.
• Bank of England updates approach to resolution.
• UK Digital Securities Sandbox – effective January 2024.
• UK extends third-country benchmarks transitional regime until end-2030.
• European single access point (ESAP) Regulations published.
• UK Listing Rules reform.

EU Benchmarks Regulation - transition period for third-country benchmarks extended to 31 December 2025

With effect from 26 October 2023 Commission Delegated Regulation ((EU) 2023/2222) has extended the transitional period for third-country benchmarks provided by Article 51(5) of Regulation (EU) 2016/1011 (the EU BMR) to 31 December 2025.

Also on 15 December 2023, ESMA published an updated statement (ESMA80-187-881) on the consequences of Brexit for the ESMA register of benchmark administrators and third country benchmarks under the EU BMR. Due to the extension of the transitional period provided by Article 51(5) of the EU BMR, the change in the ESMA register does not yet have an effect on the ability of EEA-supervised entities to use the benchmarks provided by any third country administrators, including UK ones. The same applies to benchmarks that were included in the ESMA register before 31 December 2020 as a result of recognition or endorsement by the UK. They have been deleted from the ESMA register with effect from 31 December 2020 but the extended EU BMR transitional period (until 31 December 2025) is also applicable to these third country benchmarks.

Note also ESMA's Q&A 9.3 on the EU BMR (ESMA70-145-114) which was also updated on 15 December 2023 and which clarifies that ESMA considers that the meaning of the term “where the benchmark is already used in the Union” in Article 51(5) of the EU BMR is “where the benchmark is already used in the Union on or before 31 December 2025”.

European Commission proposes changes to EU Benchmarks Regulation

On 17 October 2023, the European Commission published its long-awaited legislative proposal to amend the EU BMR. If adopted in its current form, it will (amongst other things):

• considerably reduce the scope of the EU BMR so that it only applies to critical benchmarks, significant benchmarks, Climate Transition Benchmarks (CTBs) and Paris-aligned Benchmarks (PABs), and excludes non-significant benchmarks.
• restrict the provision of EU CTBs and PABs to EU administrators.
• increase the information available on the ESMA benchmarks register, making it a "golden source" of information for in-scope EU entities that want to use a particular benchmark.

For more information, see this Ashurst briefing.

ESMA - disclosures of climate-related matters 

Compilers and users of financial statements are increasingly coming to recognise the growing impact of climate-related factors on conventional financial statements. ESMA has for some time been concerned about the adequacy of financial statements in this regard and this led it to commission and, on 25 October 2023, publish a report entitled "The Heat is On: Disclosures of Climate-Related Matters in the Financial Statements". In a related development, on 22 November 2023, ESMA published three explanatory notes on key aspects of the EU sustainable finance framework:

• the concept of "sustainability" and its use across the EU sustainable finance framework.
• the "do no significant harm" principle.
• the concepts of "estimates" and "equivalent information".

For more information, see this Ashurst briefing.

Repeal of the UK PRIIPs Regulation regime – latest developments

The UK government has announced its intention to repeal the UK PRIIPs Regulation regime and replace it with a new UK-specific retail disclosure regime drawn up by FCA under its new rule making powers. A major step in this process is provided by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023 (FSMA 2023) which revokes the UK PRIIPs Regulation, but only from a day to be appointed by HM Treasury under section 86.

Another major step in this process occurred in November 2023 with the publication by HM Treasury of:

• a policy note describing the new UK retail disclosure framework which will be known as "Consumer Composite Investments" (CCIs) and which will replace the UK PRIIPs Regulation regime.
• a draft Statutory Instrument (the Consumer Composite Investments (Designated Activities) Regulations 2024) which will enable the FCA to make the necessary rules to deliver the new retail disclosure regime to coincide with the repeal of the UK PRIIPs Regulation regime.

The government has set a deadline for comments on the draft Statutory Instrument of 10 January 2024. There will also be a formal FCA consultation on its proposed new rules during 2024. However the new regime will only come into effect, and the UK PRIIPs Regulation regime will only be repealed, once the FCA has published its final rules after the consultation and the rules take effect. This is unlikely to be until the second half of 2024.

EU Green Bond Regulation published

On 30 November 2023 the EU Green Bond Regulation (Regulation (EU) 2023/2631) was published in the Official Journal. The Regulation entered into force on 20 December 2023 and will largely apply from 21 December 2024, except for certain provisions which apply from 20 December 2023 and the equivalence provisions which will apply from 21 June 2026. For more information, see this Ashurst briefing.