Europe

European Commission Adopts Delegated Regulation Supplementing EuVECA Regulation

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On February 4, the European Commission adopted a Delegated Regulation supplementing the European Venture Capital Funds (“EuVECA“) Regulation (345/2013) with regard to conflicts of interest (C(2019) 664 final).

The Delegated Regulation specifies the types of conflicts of interest, referred to in Article 9 of the EuVECA Regulation, and the steps that managers of EuVECA funds need to take to identify, prevent, manage, monitor and disclose conflicts.

The Delegated Regulation will enter into force 20 days after its publication in the Official Journal of the EU. It will apply six months after its entry into force. The next step is for the Delegated Regulation to be considered by the European Parliament and Council of the EU. Delegated Regulation.

ECB Publishes Decision Revising Format of MIB and Repealing Decision Establishing T2S Board

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On February 4, the Decision (EU) 2019/166 of the European Central Bank (“ECB“) on the Market Infrastructure Board (“MIB“) and repealing Decision ECB/2012/6 on the establishment of the TARGET2-Securities (“T2S“) Board (ECB/2019/3) was published in the Official Journal of the EU (“OJ“). READ MORE →

European Parliament Publishes Erratum to ECON Report on Proposed Regulation on Facilitating Cross-Border Distribution of Collective Investment Funds

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On January 22, the European Parliament published an erratum (A8-0431/2018/err01) to a report of its Economic and Monetary Affairs Committee (“ECON“) on the proposal for a Regulation on facilitating cross-border distribution of collective investment funds (2018/0045(COD)).

It amends Recital 6 and Article 10, as well as inserting new Recitals 7a, 7b and 7c. It explains that these amendments were adopted by ECON but were missing from the text sent for translation. It should be noted that the changes affect all language versions of the report.

The erratum can be found here.

ESMA Updates MiFID II Transitional Transparency Calculations for Electricity Derivatives

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On January 22, the European Securities and Markets Authority (“ESMA“) published an updated version of its transitional transparency calculations (“TTC“) required under the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (600/2014) (“MiFIR“).

The update relates to the TTC for commodity derivatives and affects only electricity derivatives.

Further information is contained in section E10 of ESMA’s frequently asked questions (“FAQ“) (ESMA50-164-677) on the TTC, which explains why the last TTC results for commodity derivatives, published on December 6, 2017, have been modified.

The transparency calculations can be found here and the FAQs, which were published on ESMA’s website, can be found here.

European Parliament to Consider Proposed Regulation and Directive on Cross-Border Distribution of Collective Investment Funds

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On January 24, the European Parliament updated the following procedure files:

  • The procedure file for the proposal for a Directive on the cross-border distribution of collective investment funds (2018/0041(COD)).
  • The procedure file for the proposal for a Regulation on facilitating cross-border distribution of collective investment funds (2018/0045(COD)).

The updated procedure files specify that the Parliament may consider the proposals at its plenary session between April 15-18.

The Parliament’s Economic and Monetary Affairs Committee (“ECON“) voted to adopt draft reports on the proposals on December 4, 2018. It subsequently published the reports on December 7, 2018.

The proposed Regulation envisages a harmonized framework regarding features of the cross-border distribution of funds, in respect of marketing communications and member states’ marketing requirements. The proposed Directive contains alterations to the UCITS Directive (2009/65/EC) and the Alternative Investment Fund Managers Directive (2011/61/EU) (“AIFMD“) relating to pre-marketing and the discontinuation of marketing among other things.

The procedures files can be found here and here. The UCITS Directive can found here and the AIFMD can be found here.

EIOPA Publishes Results of Peer Review Under Solvency II

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On January 25, the European Insurance and Occupational Pensions Authority (“EIOPA“) published the results of its peer review that examined how national competent authorities (“NCAs“) evaluated the propriety of administrative, management or supervisory body (“AMSB“) members and qualifying shareholders between January 2016 and May 2017.

Important areas of risk include:

  • A number of regulatory frameworks are not aligned with the Solvency II framework and NCAs are applying different standards and scope while assessing propriety.
  • Very few NCAs perform continuing assessment of the propriety of qualifying shareholders and AMSB members. Continuing assessment should involve proactive, risk-based and proportionate engagement resulting from the NCAs’ own initiative, as part of its supervisory activities.
  • Some NCAs do not make their supervisory expectations and standards known internally to supervisory staff and externally to insurers.

Insurers are required to be owned and run by persons of integrity and of good repute to ensure sound and proper management under the Solvency II Directive (2009/138/EC).

The results published by EIOPA can be found here.

ECON Reports on Proposed Omnibus Directive and Proposed Regulation Amending ESRB Regulation

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On January 14, the European Parliament’s Economic and Monetary Affairs Committee (“ECON“) published the following reports relating to the European Commission’s legislative proposals to reform the European System of Financial Supervision (“ESFS“):

  • Report on the amended text of the proposed Regulation amending the Regulation that established the European Systemic Risk Board (“ESRB“) (1092/2010) (ESRB Regulation) (2017/0232 (COD)).
  • Report on the amended text of the proposed Omnibus Directive (2017/0231 (COD)).

ECON voted to adopt these reports on January 10, 2018. It has not yet published the text of the adopted report on the proposed Omnibus Regulation (2017/0230 (COD)).

ECA Publishes a Communication on Access to ECB Banking Supervision Documents and Information

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On January 14, the European Court of Auditors (“ECA“) published a communication to the European Parliament on the European Central Bank’s (“ECB“) position on the ECA’s access to audit documents and information relating to its banking supervision role under the single supervisory mechanism (“SSM“). READ MORE →

EIOPA Publishes Call for Evidence on Integration of Sustainability Risks in Solvency II

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On January 17, the European Insurance and Occupational Pensions Authority (“EIOPA“) published a call for evidence on the integration of sustainability risks and factors in the prudential assessment of assets and liabilities for insurers and (re)insurers under the Solvency II Directive (2009/138/EC). The Commission’s initiatives on sustainable finance form part of its broader initiative to establish the capital markets union (“CMU“).

The deadline for responses to the call for evidence is March 8, 2019. EIOPA plans to prepare a draft opinion for consultation during the second half of 2019 for submission to the European Commission in the third quarter of 2019.

The call for evidence relates to the European Commission’s call for advice from EIOPA and ESMA in July 2018, following which EIOPA launched a survey to help it build up a suitable evidence base on the sustainable finance legislative proposals.

EIOPA expects to collect market data to analyze how sustainability risks affect (re)insurers investments, with particular focus on climate change, as well as data on market practices on insurance underwriting. The Commission has asked EIOPA to assess whether Solvency II presents any inherent incentives or disincentives to sustainable investment, including but not limited to investments in unrated bonds and loans, unlisted equity and real estate. National competent authorities will collect information from individual undertakings within their jurisdiction to support EIOPA’s analysis.