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Regulatory Round-up: August 2021


Welcome to AQMetrics regulatory round-up, a monthly initiative that keeps readers abreast of all the latest regulatory news and events.


After anaction packed July, where ESG, liquidity and new fund types took centre stage, August proved to be somewhat more muted, although there were still some important announcements. The FCA, for instance, announced a new Green FinTech Challenge and Digital Sandbox aimed at addressing sustainable finance and climate challenges.Elsewhere, ESMA published an updated net short position notification when it comes to sovereign debt. The European regulator also published its long awaited guidelines on marketing communications under the new EU Cross-Border Distribution of Funds Regulation on its website. The guidelines are set to apply from February 2022.


FCA – new GreenTech Challenge and Digital Sandbox

19 August – as part of its regulation round-up, the FCA announceda programme of workswill be launched aimed at supporting firms and regulators in overcoming challenges relating to sustainable finance and climate change. The FCA’sdigital sandboxwill be open for applications from 6 September 2021, while theGreen FinTech Challengewill open the same day.There will also be a‘TechSprint’from 18-21 October, which will bring together the regulator and industry actors to explore the use of technology on ESG data and disclosures.


ESMA – ESMA’s finalises guidelines for funds’ marketing communications

2 August – ESMApublishedits long awaited guidelines on marketing communications under the new EU Cross-Border Distributions of Funds Regulation. The new guidelines will apply from February 2022, six months after the publication of the guidelines on the regulators website.The guidelines are set to apply broadly to EU AIFMs and UCITS management companies that are conducting marketing communications with investors or prospective investors in UCITS or AIFs.The guidelines include content and formatting requirements for an extensive range of marketing communications. All marketing communications must be identifiable as such and contain fair, clear, and not misleading information, regardless of the target investors. It remains unclear whether non-EU AIFMs conducting marketing communication with EU-based investors would be required to comply with the guidelines.


ESMA – updated net short position notification thresholds for sovereign issuers

1 August – The European financial regulatorpublishedan updated table of reporting threshold for net short positions on sovereign debt.Under the SSR, ESMA has to publish a list of the thresholds applicable to the sovereign issuers for the purpose of the notification to competent authorities of significant net short position in sovereign debt.According to the guidelines the thresholds are:

  1. 0.1% applicable where the total amount of outstanding issued sovereign debt is between 0 and 500 billion euros;
  2. 0.5% applicable where the total amount of outstanding issued sovereign debt is above 500 billion euros or where there is a liquid futures market for the particular sovereign debt.


European Commission – sustainability risks and sustainability factors to be taken into account by AIFMs and UCITS published in the Official Journal

On 2 August 2021 –Commission Delegated Regulation (EU) 2021/1255andCommission Delegated Directive (EU) 2021/1270on sustainability risks and sustainability factors to be taken into account for AIFMs and UCITS respectively were published in the Official Journal of the European Union.The measures will apply from 1 August 2022.


European Commission – draft report on technical screening criteria for the EU taxonomy

3 August 2021 – the European Commission’s Platform on Sustainable Finance published adraft reporton preliminary recommendations for technical screening criteria for the EU taxonomy.The working document focuses on presenting a set of preliminary priority economic activities and draft recommendations for ‘associated substantial contribution’ and ‘do no significant harm’ technical screening criteria in relation to the four non-climate environmental objectives.The Commission said non-inclusion in the first batch of priority activitiesdoes notimply that the activity will not be considered for inclusion in the EU taxonomy as part of the second batch. Feedback on these reports is open until 24 September 2021.


European Commission – call for advice to EU Supervisory Authorities on retail investor protection

3 August – The European Commission issued a call for advice to ESMA, EIOPA and the European Supervisory Authorities on the protection of retail investors.The Commission hopes that the three organisations can help them in the preparation of a number of legislative proposals aimed at aspects of the retail investment landscape. When it comes to advice from ESMA, the Commission seeks advice on:

  • Addressing and enhancing investor engagement with disclosures through the identification of any significant overlaps, gaps, redundancies and inconsistencies across investor protection legislation that might have a detrimental effect on investors, in addition to those identified as part of the PRIIPS level 2 work.
  • Drawing out the benefits of digital disclosures for consumers
  • Assessing the risks and opportunities presented by new digital tools and channels, and whether the existing regulatory requirements continue to be appropriate given the new risks presented.

The Commission requests ESMA to deliver the report to the Commission by 30 April 2022, and also requests that ESMA consult as widely as possible within the available time frame.