delegated regulations

EC Publishes Draft Delegated Regulations under MiFiD II and IDD on Sustainable Finance

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On January 4, the European Commission published the following draft Delegated Regulations which are designed to ensure insurance distributors and investment firms take environmental, social and governance (“ESG“) issues into account when advising customers:

  • a Delegated Regulation amending Delegated Regulation (EU) 2017/565 as regards to the integration of ESG considerations and preferences into investment advice and portfolio management under the MiFID II Directive (2014/65/EU); and
  • a Delegated Regulation amending Delegated Regulation (EU) 2017/2359 as regards to the integration of ESG considerations and preferences into investment advice for insurance-based investment products (“IBIPs“) under the Insurance Distribution Directive ((EU) 2016/97) (“IDD“).

The draft Delegated Regulations have been produced under Articles 24(13) and 25(8) of the MiFID II Directive, and Article 30(6) of the IDD, respectively. Publication follows a consultation run in May 2018. Although there was generally strong support to enhance the focus on non-financial objectives within the investment process, some stakeholders were reluctant to change their recently-implemented MiFID II or IDD processes. However, the Commission is convinced of the urgency of moving ahead with its sustainable finance proposals. The Commission also believes the proposed timeline for application of the draft Delegated Regulations provides sufficient flexibility as, although each explanatory memorandum states that the draft Delegated Regulations provide for an 18-month transition period, the draft legal texts themselves state that they will apply 12 months after they come into force.

The Commission can only officially adopt the draft Delegated Regulations once the new disclosure provisions for sustainable investments and sustainability risks have been agreed at the EU level. However, in a press release, it advised that publication of the drafts should enable firms to start preparing to take ESG considerations and preferences into account.

The Commission issued a call, in August 2018, for technical advice from EIOPA and ESMA relating to its sustainable finance proposals.

Once adopted by the Commission, the draft Delegated Regulations will enter into force twenty days after publication in the Official Journal of the EU (“OJ“), unless the European Parliament or the Council of the EU objects.

European Commission Adopts Delegated Regulations on RTS Relating to Execution Venues under MiFID II

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On June 8, 2016, the European Commission adopted the following two Delegated Regulations supplementing the MiFID II Directive (2014/65/EU):

  1. A Delegated Regulation (C(2016) 3333 final) in relation to regulatory technical standards (RTS) surrounding the data to be published by execution venues on the quality of execution of transactions, together with an Annex. For financial instruments subject to the trading obligation, each trading venue and systematic internalizer must, under MiFID II, make available to the public, at no cost and on at least an annual basis, data relating to the quality of execution of transactions on that venue.
  2. A Delegated Regulation (C(2016) 3337 final) in relation to RTS for the annual publication by investment firms of information on the identity of execution venues and on the quality of execution, together with an Annex. Investment firms that execute client orders must, under MiFID II, summarize and make available annually, the top five execution venues in terms of trading volumes where they executed client orders in the preceding year, and information on the quality of execution obtained.

It is now for the Council of the EU and the European Parliament to consider the Delegated Regulations. Subject to any objection, they shall enter into force 20 days after their publication in the Official Journal of the EU (OJ).