Legal Updates

It is time to take a look at what is on the regulatory horizon.

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The Ashurst EU Finreg Tracker outlines upcoming EU financial regulatory initiatives, summarising key features of the developments.

The Tracker is not legal advice and does not attempt to capture all developments in the EU financial services regulatory framework.

ashurst snapshotS AND RELATED CONTENT background/Details on UK approach legislative documents   key dates
AML/FINANCIAL CRIME

SNAPSHOT: MLD5

Ashurst briefing: One month away from MLD5 – are you ready for the changes and UK gold-plating? (December 2019)

Updates MLD4, requirements in relation to beneficial ownership

Prevents risks associated with use of virtual currencies
Directive amending MLD4

July 2018: Date MLD5 entered into force.

10 January 2020: MLD5 applied from this date.

SNAPSHOT: Directive on countering money laundering by criminal law

Harmonises the definitions of criminal offences and sanctions related to money laundering across the EU

UK not bound by Directive

Directive on countering money laundering by criminal law 3 December 2020: Directive must be transposed into national law by this date.
SNAPSHOT: Regulation on controls on cash entering or leaving the EU

Follows 2015 evaluation of the Cash Control Regulation (EC) No 1889/2005

Replacement Regulation seeks to update existing Regulation in line with international norms and best practices to counter money laundering and the financing of terrorism

Regulation

December 2018: Regulation entered into force.

June 2021: Regulation applies.

SNAPSHOT: Whistleblowers regime

Measures designed to protect whistleblowers reporting breaches of EU law (in areas such as financial services)

UK will not adopt directive

To be amended by the 2020 Proposed Regulation on Markets in Cryptoassets

Directive

Communication

December 2021: Member States must fully implement Directive by this date.
PRUDENTIAL/STRUCTURAL

SNAPSHOT: Revised Prudential regime for investment firms

Ashurst Newsflash: New Prudential Regime for Investment Firms (November 2019)

Ashurst legal update: The new regime for the regulation of investment firms - Investment Firm Directive/Regulation

Ashurst Newsflash: EBA Opinion on prudential regime for MiFID investment firms – a tale of capital, cash and caps (November 2017)

Aimed at ensuring that investment firms are subject to capital, liquidity and other key prudential requirements that are adapted to their business

UK has set out initial approach in HM Treasury Policy Paper on Prudential standards in the Financial Services Bill and in June 2020 update.

Investment Firms Directive

Investment Firms Regulation

25 December 2019: Proposals come into force.

June 2020: Draft ITS on investment firms disclosures expected.

June 2021: Most of regime applies.

SNAPSHOT: CRD V

Ashurst legal update: EU Banking Package - CRR II and CRD V within sight

Amending CRD IV and CRR in relation to (among others) leverage ratio and the net stable funding ratio, the implementation of the total loss absorbing capacity standard (TLAC) Directive amending CRD IV December 2020: CRD V measures must be adopted by Member States from this date.

SNAPSHOT: CRR II

Ashurst legal update: EU Banking Package - CRR II and CRD V within sight

Regulation amends CRR in relation to leverage ratio, the net stable funding ratio, requirements for market risk, and exposures to collective investment undertakings

UK approach to implementation set out in June 2020 HM Treasury Policy Statement

To be amended by the June 2020 EU Regulation amending EU prudential legislation as regards certain adjustments in response to the COVID-19 pandemic

CRR II

 

July 2020: ITS on reporting and disclosures of MREL/TLAC expected

H2 2020:
RTS on the definition of indirect funding and incentives to redeem eligible liabilities instrument; and RTS on permission to reduce eligible liabilities instruments

June 2021: Majority of CRR II provisions to apply.

Snapshot: European Commission legislative proposal and Communication in response to COVID-19

Series of targeted changes to prudential framework in light of COVID-19 pandemic designed to promote lending

UK has indicated that some of these measures will come into force before the end of the Transition Period and will be implemented in the UK. This includes the SME supporting factor and infrastructure supporting factor

Communication

CRR Quick Fix Regulation

 
27 June 2020: Came into force 
SNAPSHOT: CRR Amendment Regulation

Regulation amending CRR Regulation as regards transitional arrangements for mitigating the impact of the introduction of IFRS 9 on own funds

To be amended by the June 2020 EU Regulation amending EU prudential legislation as regards certain adjustments in response to the COVID-19 pandemic

CRR Amendment Regulation  January 2018: IFRS 9 Regulation entered into force.
SNAPSHOT: Regime for NPLs Package of measures dealing with non-performing loans in the EU

Regulation amending CRR on minimum loss coverage for non-performing measures

Proposal for a directive on credit servicers, credit purchasers and the recovery of collateral

Directive on accelerated extrajudicial collateral enforcement mechanism

April 2019: Regulation on NPLs entered into force.

December 2020: European Commission originally wanted Member States to have adopted provisions to transpose Directive by this date, with a view to majority of provisions applying from 1 January 2021.

SNAPSHOT: ESFS reform

Reforming the European System of Financial Supervision to promoting ESMA as the single European capital markets legislator

Amendments to MiFID II and Prospectus Regulation

Strengthening the role of the EBA in relation to AML

UK will revoke certain parts of Omnibus Regulation (see Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020).

UK will revoke Regulation amending the ESRB Regulation in entirety (see Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020).

Omnibus Regulation

Omnibus Directive

Regulation amending the ESRB Regulation

30 December 2019: ESFS legislation entered into force.

30 June 2021: Date that Omnibus Directive must be transposed into national law.

SNAPSHOT: BRRD II

Ashurst legal update: EU Banking Package - CRR II and CRD V within sight

Amending BRRD I to implement TLAC and other amendments to BRRD

UK Government has outlined how BRRD II will be implemented in June 2020 Policy Statement

Directive amending the BRRD relating to loss-absorbing and recapitalisation capacity

Directive amending BRRD relating to the ranking of unsecured debt instruments in insolvency hierarchy (Insolvency Hierarchy Directive)

June 2019: BRRD entered into force.

28 December 2020: BRRD II must be transposed into national law

SNAPSHOT: SRM II

SRM II amends MREL provisions in SRM I to match those under BRRD II

Applicable to member states in the EU Banking Union (i.e. not UK)

Regulation amending the SRM Regulation relating to loss-absorbing and recapitalisation capacity

2019: SRM II came into force.

28 December 2020: SRM II applies.

SNAPSHOT: Proposal for a regulation on sovereign bond-backed securities (SBBS)

Proposal aimed at regulating euro-denominated debt securities (SBBS), created by private entities and backed by a pre-determined pool of bonds issued by euro-area national governments

Proposed SBBS Regulation

Opinion of the European Economic and Social Committee

2020: Proposal being considered by EU legislators.
SNAPSHOT: EU Covered Bonds Regime

Amends CRR in relation to exposures in the form of covered bonds

Introduces European Covered Bonds label

Regulation

Directive

January 2020: Regulation and Directive to come into force.

July 2022: Directive and Regulation must apply in Member States at the latest 
SNAPSHOT: Securitisation Regulation A Regulation to create a European framework for simple, transparent and standardised securitisation (STS) amending the Capital Requirements Regulation and EMIR

Securitisation Regulation

CRR Amendment Regulation

January 2019: Securitisation Regulation and CRR Amendment Regulation applied.
SNAPSHOT: EDIS (European Deposit Insurance)

Applicable to member states in the EU Banking Union (i.e. not UK)

EDIS aims to reduce vulnerability of bank depositors (below €100 000) to large local shocks

Proposed EDIS Regulation

2020: Proposal being considered by EU legislators.

SNAPSHOT: EMIR Refit Regulation

Ashurst update: EMIR: Refit finally arrived - all change please

Legislative proposal amending EMIR following review was introduced in May 2017 Regulation amending European Market Infrastructure Regulation June 2019: EMIR Refit Regulation came into force.
 FUNDS

SNAPSHOT: Regime for cross-border distribution of collective investment funds

Ashurst update: Fund marketing, reverse solicitation and Brexit: regulating non-regulated activities. A warning shot of things to come...

Ashurst Briefing: Amazing Ideas For Marketing Disasters (AIFMD) Marketing AIFs might get more nonsensical (March 2018)

Initiative is part of Capital Markets Union and seeks to eliminate regulatory barriers to the cross-border distribution of funds

Cross-Border Regulation to be revoked in the UK via the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020.

Directive amending UCITS and AIFMD

Regulation on facilitating cross-border distribution

August 2019: Regulation and Directive came into force.

August 2021: Member States must transpose Directive by this date.

SNAPSHOT: Second Shareholders Directive (2017/828)

Provisions to assist companies in identifying their shareholders.

Provisions relating to transparency of engagement policies of institutional investors and asset managers, as well as their investment strategies

Second Shareholders Directive 10 June 2019: SRD II applied from this date.
 PAYMENTS
SNAPSHOT: Regulation for cheaper euro transfers and fairer currency conversions

Aligns cross-border euro transaction with domestic national currency transactions

Aims to reduce the cost of all intra-EU payments in euro

European Commission and FCA have both issued statements indicating a flexible approach to currency conversion transparency requirements coming into force in April 2020.

Regulation on cross border payments for cheaper euro transfers and fairer currency conversions 15 December 2019: The majority of its provisions applied from this date.
MISCELLANEOUS
SNAPSHOT: MiFID Quick Fix Targeted changes to client information and product governance requirements

Part of capital markets recovery package in response to COVID-19
Draft directive amending MiFID II

Draft delegated directive
2020: Proposals being reviewed by EU legislators
SNAPSHOT: SME Growth Markets Amendments to Market Abuse Directive and MiFID

SME Growth Market Regulation

Delegated Regulation amending MIFID in relation to SME growth markets

31 December 2019: SME Growth Market Regulation enters into force.

October 2019: Delegated Regulation amending MiFID applied.

SNAPSHOT: Consumer Credit - New Deal for Consumers package

Package aimed at strengthening the enforcement of EU consumer protection rules

Amends Unfair Contract Terms Directive and Unfair Commercial Practices Directive

Communication: A new deal for consumers

Directive amending various directives in relation to consumer protection

Proposed Directive on collective interests of consumers

January 2020: Directive enters into force.

May 2022: Directive on consumer protection applies.

SNAPSHOT: EU Digital Finance Proposals

SNAPSHOT: FinTech

Ashurst update: Thinking FinTech: Europe launches FinTech Action Plan and Roadmap

Ashurst update: European Commission papers on digital finance

Programme to develop greater FinTech adoption, convergence and collaboration

Action Plan

Regulation on crowd funding

October/November 2020: Crowdfunding Regulation and Crowdfunding Directive to be published in Official Journal

2021: Crowdfunding Regulation to apply

Ashurst ESG Ready Online Compliance Tool

Ashurst Update: Taxonomy Regulation published in the Official Journal 

SNAPSHOT: Sustainable finance

Ashurst Briefing: Consultation on requirements for ESG sustainability disclosures: flaws highlighted in European ESG proposals? (April 2020)

Proposals designed to promote sustainable finance by integrating Environmental, Social and Governance (ESG) considerations into investment

Articles 4(6) and (7), 8(3), 9(5), 10(2), 11(4) and 13(2) of Regulation (EU) 2019/2088 of the sustainability‐related disclosures will be revoked by UK via the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020

Regulation for a framework to facilitate sustainable investment

Regulation on disclosures relating to sustainable investments and sustainability risks

Proposed Delegated Regulation supplementing MiFID II Directive

December 2019: Regulation on sustainable finance disclosures enters into force.

July 2020: Taxonomy Regulation entered into force

March 2021: Majority of provisions of Regulation on Sustainable Finance Disclosure will apply.

January 2022: Certain provisions in Taxonomy Regulation apply

Key legislative initiatives – background

Finreg Tracker Timeline

  • January 2024

    Provisions concerning public disclosure in relation to MREL should be applied from this date

  • 2024
  • June 2022

    ESG reporting requirements for large institutions under CRR

  • May 2022

    Directive amending various directives in relation to consumer protection applies

  • 2022
  • December 2021

    Whistleblowing Directive must be implemented in Member States

  • August 2021

    Directive on cross-border distribution of collective investment funds applies

  • June 2021

    Regulation on controls on cash entering or leaving the EU applies | Majority of CRR II provisions expected to apply from 28 June | Majority of CRR provisions apply | Majority of provisions in relation to new EU prudential rules for investment firms apply

  • January 2021

    New rules on credit servicers and purchasers set to apply from 1 January

  • March 2021

    Majority of provisions of Regulation on sustainable finance disclosures apply

  • 2021
  • December 2020

    SRM II Regulation will apply from this date | BRRD II provisions and majority of CRD V to be transposed | Deadline of December 27 for systemically important EU investment firms to apply for authorisation as credit institutions

  • April 2020

    Transparency rules apply under the Cross Border Payments Regulation apply

  • January 2020

    MLD5 has to be implemented by Member States | Directive amending various directives in relation to consumer protection enters into force

  • 2020

    EU Directive on countering money laundering by criminal law must be implemented into national law by member states

  • 2020
  • December 2019

    The majority of provisions in relation to updated Regulation on cross border payments for cheaper euro transfers and fairer currency conversions apply from 15 December | Enhanced price equality rule applies under the revamped Cross-Border Payments Regulation

  • November–December 2019

    ESFS legislative proposals adopted by Council of the European Union. Publication in the Official Journal of EU legislative proposals on consumer protection; EU Regulation on sustainable finance disclosures; EU legislation on new prudential regime for investment firms and EU SME growth markets' Regulation

  • 2019
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The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying it to specific issues or transactions.

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