Financial regulation
12 Oct 2020 EU Finreg Tracker
It is time to take a look at what is on the regulatory horizon.
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 | |||
| 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. |
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| 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 |
December 2021: Member States must fully implement Directive by this date. | |
| PRUDENTIAL/STRUCTURAL | |||
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SNAPSHOT: Revised Prudential regime for investment firms Ashurst Newsflash: New Prudential Regime for Investment Firms (November 2019) |
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. |
25 December 2019: Proposals come into force. June 2020: Draft ITS on investment firms disclosures expected. June 2021: Most of regime applies. |
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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. |
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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 |
July 2020: ITS on reporting and disclosures of MREL/TLAC expected June 2021: Majority of CRR II provisions to apply. |
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| 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 |
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). |
30 December 2019: ESFS legislation entered into force. 30 June 2021: Date that Omnibus Directive must be transposed into national law. |
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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 |
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. |
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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 | 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 |
January 2020: Regulation and Directive to come into force. July 2022: Directive and Regulation must apply in Member States at the latest |
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| SNAPSHOT: Securitisation Regulation | A Regulation to create a European framework for simple, transparent and standardised securitisation (STS) amending the Capital Requirements Regulation and EMIR | 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 |
2020: Proposal being considered by EU legislators. | |
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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 | |||
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SNAPSHOT: Regime for cross-border distribution of collective investment funds |
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. |
August 2019: Regulation and Directive came into force. August 2021: Member States must transpose Directive by this date. |
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| 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 |
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 |
January 2020: Directive enters into force. May 2022: Directive on consumer protection applies. |
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SNAPSHOT: EU Digital Finance Proposals 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 |
October/November 2020: Crowdfunding Regulation and Crowdfunding Directive to be published in Official Journal 2021: Crowdfunding Regulation to apply |
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Ashurst ESG Ready Online Compliance Tool Ashurst Update: Taxonomy Regulation published in the Official Journal |
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
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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
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May 2022
Directive amending various directives in relation to consumer protection applies
- 2022
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December 2021
Whistleblowing Directive must be implemented in Member States
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August 2021
Directive on cross-border distribution of collective investment funds applies
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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
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January 2021
New rules on credit servicers and purchasers set to apply from 1 January
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March 2021
Majority of provisions of Regulation on sustainable finance disclosures apply
- 2021
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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
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April 2020
Transparency rules apply under the Cross Border Payments Regulation apply
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January 2020
MLD5 has to be implemented by Member States | Directive amending various directives in relation to consumer protection enters into force
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2020
EU Directive on countering money laundering by criminal law must be implemented into national law by member states
- 2020
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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
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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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