Financial Services SpeedRead - Germany: 27 March 2024 edition

Welcome to the latest edition of the Germany specific Financial Services SpeedRead, a collection of bite-sized updates designed to help you keep on top of key regulatory developments in financial services over the preceding fortnight.  Please get in touch if you want to explore any of the topics covered in this fortnight's edition of Financial Services SpeedRead in more detail.

Financial Markets 

1. Official Journal of the European Union: Legislation: Directive and Regulation to improve MiFID II and MiFIR market data access and transparency published in Official Journal 

On 8 March 2024, the following were published in the Official Journal of the EU: 

• Directive (EU) 2024/790 amending the MiFID II Directive (2014/65/EU) (the MiFID Amending Directive); and
• Regulation (EU) 2024/791 amending the Markets in Financial Instruments Regulation (600/2014) as regards enhancing data transparency (MiFIR) (the MiFIR Amending Regulation).

The MiFID Amending Directive and MiFIR Amending Regulation introduce changes to the MiFID II and MiFIR regime in order to improve access to market data and transparency. In particular the amending legislation:

• introduces an EU-wide consolidated tape, mandating contribution of market data to consolidated tape providers for both equity and non-equity instruments traded in the EU by trading venues and approved publication arrangements as close to real time as technically possible; and
• prohibits payment for order flow, such that financial intermediaries will be required to select the trading venue or counterparty for a transaction solely on the basis of achieving best execution for their clients.

The amending legislation will enter into force on 28 March 2024 (20 days after their publication in the Official Journal). The MiFIR Amending Regulation will then apply immediately, whilst member states will have until 29 September 2025 to transpose the MiFID Amending Directive to their local laws. Banking and Prudential

2. Single Resolution Board: Consultation: Minimum Bail-In Data Template

On 13 March 2024, the Single Resolution Board (SRB) published a public consultation on the adoption of the Minimum Bail-in Data Template (MBDT). 

The minimum bail-in data points were updated in June 2022, requiring banks to self-assess themselves to ensure they have adequate management information systems to identify and produce the requisite data points within 24 hours. The SRB is considering adopting the MBDT to implement the bail-in data set instructions and explanatory note, by enhancing definitions and providing a template and guidance to ensure structured and standardised data collection across banks under the SRB's remit. 

The consultation aims to gather stakeholders' views on the following:

• content of the MBDT documentation;
• data point model and format; and
• data collection process.

The consultation closes on 8 May 2024, and can be responded to via the SRB's survey.

Funds Management

3. ESMA: Guidelines: Stress test scenarios under the MFF Regulation

On 6 March 2024, the European Securities and Markets Authority (ESMA) published the official translation (including in English) of the guidelines on stress test scenarios under the Money Market Fund (MMF) Regulation (Regulation (EU) 2017/1131). 

The objective of the guidelines is to ensure common, uniform and consistent application of the provisions of Article 28 of the MMF Regulation. The guidelines establish common reference parameters of the stress test scenarios to be included in the stress tests conducted by MMFs or managers of MMFs, considering the following factors specified in Article 28(1) of the MMF Regulation:

• hypothetical changes in the level of liquidity of the assets held in the portfolio of the MMF;
• hypothetical changes in the level of credit risk of the assets held in the portfolio of the MMF, including credit events and rating events;
• hypothetical movements of the interest rates and exchange rates;
• hypothetical levels of redemption;
• hypothetical widening or narrowing of spreads among indexes to which interest rates of portfolio securities are tied; and
• hypothetical macro systemic shocks affecting the wider economy.

The guidelines will apply from 6 May 2024, with the exception of the parts in red which will apply from the dates specified in Articles 44 and 47 of the MMF Regulation. The guidelines will then be updated at least every year to take into account the latest market developments. 

Senior Managers and Governance

No new entries. 

Financial Crime

No new entries. 

Retail Services

4. ESMA: Q&A: Consolidated Q&As on the PRIIPs Key Information Document

On 15 March 2024, ESMA published an updated version of their consolidated Q&A on the PRIIPs Key Information Document (KID). ESMA has made clarifications in a number of areas, including, but not limited to:

• the term "PRIIPs open to subscription";
• the difference between a "benchmark" and a "proxy" within the meaning of the Commission Delegated Regulation (EU) 2021/2268;
• whether an artificially created “synthetic” proxy could be considered an appropriate proxy in accordance with the PRIIPs RTS Annex II and Annex IV;
• whether currency risk described by Risk Element C is applicable to investment funds; and
• whether a KID should disclose cost information and scenario information about one year and half the recommended holding period, in case the investors may not be allowed to exit a PRIIP before the end of the recommended holding period.

Payments

5. BaFin: Publication: Comparison Website Reporting Regulation comes into force

On 15 March 2024, the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) published that the Comparison Website Reporting Regulation (Vergleichswebsitemeldeverordnung, VglWebMV) came into force on 2 March 2024. 

The VglWebMV was issued by BaFin in accordance with the provisions of the Payment Accounts Act (Zahlungskontengesetz, ZKG) to supplement the planned amendments to Section 16 et seq. ZKG. The amendments of the ZKG are based on Article 26 of the German Future Financing Act, which implements Article 7 of the Payment Accounts Directive (Directive 2014/92/EU) on comparison websites.

The VglWebMV specifies 

• the comparison criteria and
• the data to be reported to BaFin by the payment service providers on the comparison criteria. 

The data is to be reported via BaFin's reporting and publication platform (Melde- und Veröffentlichungsplattform, MVP). The reporting obligation applies to payment service providers, in particular to CRR credit institutions, that offer payment accounts for consumers. 

Payment service providers must report for the first time for the period of 1 to 30 September 2024.

Digital Services and Fintech

6. EBA: Consultation Paper: Draft Guidelines on redemption plans under Articles 47 and 55 of Regulation (EU) 2023/1114

On 8 March 2024, the European Banking Authority (EBA) published a consultation paper on the Guidelines for the plans to orderly redeem asset-referenced tokens (ARTs) or e-money tokens in the event an issuer fails to fulfil their obligations under the Markets in Crypto Assets Regulation (MiCAR).

The draft Guidelines lay down the framework for issuers of ARTs when drawing up their redemption plan, as well as for competent authorities when assessing such plans. The draft Guidelines also:

• emphasise the principle of proportionality and the elements necessary to consider to ensure appropriate detail in the redemption plan;
• clarify the broad principles which govern the redemption plan, including the equitable treatment of token holders;
• outline the steps that are to be taken for the orderly and timely implementation of the plan;
• consider the case of pooled issuance (i.e. where the same token is issued by multiple issuers) and detail the governance requirements relating to the same; and
• outline the Triggers for the activation of the redemption plan by the competent authority and the cooperation with the prudential and resolution authorities.

The deadline for feedback is 10 June 2024, and the Guidelines will come into force two months after the publication of the translations in all official languages.

ESG

No new entries. 

Other

No new entries.