The European Commission (EC) has adopted a package of measures related to the Capital Markets Union. The package includes legislative proposals to establish a European Single Access Point (ESAP), to review the European Long-Term Investment Funds (ELTIFs) Regulation, to review the Alternative Investment Fund Managers Directive (AIFMD), and to review the Markets in Financial Instruments Regulation (MiFIR). EC also published questions and answers (Q&A), factsheets, and impact assessments related to the proposals. EC has put forward a communication to provide an overview of the proposals and set out the actions it will take in 2022. These actions include a proposal on listing rules, an open finance framework, an initiative on corporate insolvency, and a financial literacy framework. EC will propose, by the third quarter of 2022, an initiative to harmonize targeted aspects of the corporate insolvency framework and procedures.
Proposal to Establish ESAP
EC is proposing a regulation to set up a European Single Access Point (ESAP) that will be established by the European Securities and Markets Authority (ESMA). The ESAP will offer a single access point for public financial and sustainability-related information about European Union (EU) companies and EU investment products. It will include the sustainability-related information published by companies to support the objectives of the European Green Deal. The ESAP will make investment opportunities more visible to both EU and international investors and will make funding more accessible for EU companies, especially smaller ones and those located in smaller capital markets. As a common data space, the ESAP is a cornerstone of the Digital Strategy and the Digital Finance Strategy of EU. A phased-in approach will ensure that the ESAP becomes operational from 2024. As per the proposal, the ESAP has three main components:
- Access to data: Determining how the information will be collected from private entities, such as issuers of securities, funds, auditors, banks, insurance companies, or intermediaries. For this, the ESAP will build on existing channels. Depending on the type of information, entities will be required to file the information only once with a collection body, which can be an existing repository or an existing authority (a national competent authority in the financial services area or a European Supervisory Authority). Each collection body will then make the information fully available to the ESAP.
- Data infrastructure: ESMA will design the necessary infrastructure, possibly building on cloud or other technologies. For example, the ESAP will offer automated translation services and search tools.
- Data availability: Barriers to the use and re-use of data will be removed. The information will be available for free, including for downloads. Data will not generally be subject to any conditions for use or re-use. For any situations where conditions are required, they will be based on permissible open standard licenses. Open formats will be used to enable data extraction, with an increasing amount of information made machine-readable in the long-run.
Proposal to review the AIFMD
EC is proposing targeted amendments to the AIFMD framework to make the alternative investment funds’ market even more efficient and integrated. The amendments will make it easier for EU companies to access finance by harmonizing the regulatory framework for funds that issue loans to companies. The key elements of the review include the following:
- The proposal introduces common minimal rules regarding direct lending by alternative investment funds to companies. These rules will allow loan-originating funds to operate cross-border and ensure that they can be an alternative source of funding for companies, in addition to bank lending. The proposed rules will address potential risks related to this type of lending.
- The proposal aims to improve access to relevant data collection for both national and EU authorities and remove inefficient reporting duplications.
- The legislative proposal harmonizes the set of liquidity management tools to better facilitate liquidity risk management by managers of open-ended alternative investment funds, in line with recommendations by the European Systemic Risk Board (ESRB) and the ESMA.
- The proposal provides improved clarity on the rules on delegation and ensures that fund managers adhere to high standards applicable across the EU when they make use of delegation.
Keywords: Europe, EU, Banking, Securities, ESAP, AIFMD, Capital Markets Union, Q&A, Disclosures, Sustainable Finance, European Green Deal, Digital Finance Strategy, Loan Origination, Lending, Reporting, ESG, Open Finance, ESMA, EC
Previous ArticleHKMA Updated Supervisory Policy on Share Margin Financing
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
The Australian Prudential Regulation Authority (APRA) granted license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.
EU published, in the Official Journal of the European Union, a corrigendum to the Delegated Regulation 2015/35, which supplements Solvency II Directive (2009/138/EC).
The European Banking Authority (EBA) published an Opinion on the scale and impact of de-risking in European Union and the steps that competent authorities should take to tackle unwarranted de-risking.
The French Financial Markets Authority (AMF) published its 2022 work priorities, along with the supervisory priorities for 2022.
The U.S. Department of the Treasury issued a determination on a request for an exemption, by RBC US Group Holdings LLC, from certain requirements of the rule implementing the qualified financial contracts (QFC) recordkeeping requirements under the Dodd-Frank Act.
The Financial Conduct Authority (FCA) announced that publication of 24 LIBOR settings has ended and that, going forward, the 6 most widely used sterling and Japanese yen settings will be published using a changed methodology.
The People’s Bank of China (PBC) formulated the recently issued Fintech Development Plan (2022 to 2025) under the Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives through the Year 2035.