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Key regulatory developments in the EU – Lexology

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European Securities and Markets Authority (ESMA)
September 22, 2022
ESMA responds to European Commission regarding recent developments in energy derivatives markets
ESMA submitted its response to the European Commission (EC) regarding the current level of margins and of excessive volatility in energy derivatives markets. ESMA and the national competent authorities (NCAs) have been focusing and strengthening their respective market monitoring and surveillance activities on the energy derivatives markets in light of the current energy crisis. In its report, ESMA also made several suggestions to counter possible threats to market integrity and market manipulation.
More information is available here.
European Securities and Markets Authority (ESMA)
September 23, 2022
ESMA publishes final guidelines on MiFID II suitability requirements
ESMA published its final guidelines on certain aspects of the MiFID II suitability requirements, which are one of the most important requirements for investor protection in the MiFID framework and which apply to the provision of any type of investment advice and to portfolio management. The main amendments introduced to the MiFID II Delegated Regulation and addressed in ESMA’s guideline include:
The guidelines aim at ensuring a consistent and harmonized application of the requirements on the area of suitability and overall, at achieving the objectives of MiFID II.
More information is available here.
European Securities and Markets Authority (ESMA)
September 27, 2022
ESMA publishes report on the DLT pilot regime
ESMA’s report looks at the distributed ledger technology pilot regime (DLT Pilot)—part of the Digital Finance Package introduced by the EC in 2020. The regulation on a pilot regime for market infrastructures based on the DLT Pilot aims at developing the trading and settlement for DLT financial instruments. It required ESMA to assess whether the RTS developed under MiFIR need to be amended to also be effectively applied to securities issued, traded and recorded on DLT. ESMA has concluded that there is no need to amend the RTS on transparency and data requirements before the DLT Pilot starts applying in March 2023. The report also provides guidance on certain technical elements and makes recommendations on compensatory measures on supervisory data.
More information is available here and here.
European Securities and Markets Authority (ESMA)
September 27, 2022
ESMA publishes statement on inflation’s impact on investment services to retail clients
ESMA’s statement is to remind firms, in the interest of investor protection, to consider inflation and inflation risks when applying the relevant MiFID II requirements. From an investor protection perspective, the growth in inflation poses a risk for retail investors. Therefore, ESMA reminds investment firm of their role in considering inflation and inflation risks, both when manufacturing and distributing investment products and when providing investment services to retail clients.
More information is available here.
European Securities and Markets Authority (ESMA)
October 10, 2022
ESMA announces strategic priorities and work program for next five years
ESMA published its strategy for 2023–2028, setting out its long-term priorities and how it will use its competences and tools to respond to future challenges and developments. In particular, ESMA will focus on strengthening supervision, enhancing retail investor protection, promoting effective markets and financial stability, enabling sustainable finance, and facilitating technological innovation and the effective use of data. In addition, ESMA’s priority work areas for the next year are also set out in its annual work program for 2023, which will focus on sustainability, technological change, and protection of retail investors.
More information is available here and here.
European Securities and Markets Authority (ESMA)
October 11, 2022
ESMA seeks input on implementation of revised SRD2
ESMA published a call for evidence, to gather information from market participants and to determine the status of implementation of the Shareholders Rights Directive (SRD2). As such, ESMA is focusing on the provisions for the rules on shareholder identification, transmission of information and facilitation of the exercise of shareholder rights, as well as on transparency of proxy advisors. The call is particularly addressed to persons and entities directly or indirectly affected by the SRD2, such as investors, issuers, intermediaries etc.
More information is available here.
EBA (European Banking Authority)
September 1, 2022
EBA calls for more proactive engagement between supervisors in anti-money laundering and counter-terrorist financing
The EBA published its second report on the functioning of anti-money laundering (AML) and counter-terrorist financing (CFT) supervisory colleges (These colleges bring together AML/CFT and prudential supervisors that are responsible for the supervision of credit and financial institutions operating on a cross-border basis in at least three EU member states.) The report concludes that while national competent authorities (NCAs) are committed to implementing the AML/CFT framework, they need to do more to ensure continuous cooperation and proactive information exchange within the colleges. The EBA emphasizes that colleges need to be organized in a more risk-sensitive manner, with more frequent meetings and reminds supervisors of the importance to exchange information on an ongoing basis.
More information is available here.
EBA (European Banking Authority)
September 29, 2022
EBA publishes 2023 work program
The EBA published its annual work program for 2023, which describes the main strategic work areas for the coming year and the related activities and tasks. In 2023, the EBA will be on:
Moreover, EBA will continue to pay particular attention to the European ESG agenda.
More information is available here.
EBA (European Banking Authority)
September 30, 2022
EBA publishes report on first mandatory exercise on full implementation impact of Basel III
The EBA’s first mandatory Basel III monitoring report assesses how the full implementation of Basel III has impacted EU banks in 2028. According to this assessment, full implementation of Basel III would lead to an average increase of 15.0% in the current Tier 1 minimum required capital of EU banks. To comply with the new framework, EU banks would need €1.2 billion of additional Tier 1 capital. The total impact includes the economic impact of the COVID-19 pandemic on participating banks occurring by December 2021. The report also includes a separate annex on the impact of the EU Commission’s proposal for the EU implementation under the Capital Requirements Regulation (CRR3).
More information is available here.
European Supervisory Authorities (ESAs)
September 12, 2022
ESAs warn of rising risks amid a deteriorating economic outlook
The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) issued their joint Autumn 2022 risk report. It notes that the deteriorating economic outlook, high inflation and rising energy prices have increased vulnerabilities across the financial sectors. Additionally, financial institutions also face increased operational challenges associated with heightened cyber risks and the implementation of sanctions against Russia. In the report the ESAs advise national supervisory bodies, financial institutions and market participants to prepare for the challenges ahead.
More information is available here and here.
European Supervisory Authorities (ESAs)
September 30, 2022
ESAs propose disclosures for fossil gas and nuclear energy investments
The ESAs delivered their final report to the European Commission along with draft Regulatory Technical Standards (RTS) regarding the disclosure of financial products’ exposure to investments in fossil gas and nuclear energy activities under the Sustainable Finance Disclosure Regulation (SFDR). In the report, they propose adding specific disclosures to provide transparency about investments in taxonomy-aligned gas and nuclear economic activities. Specifically, they propose adding a yes/no question in the financial product templates of the SFDR Delegated Regulation to identify whether the financial product intends to invest in such activities, which should help investors make informed decisions.
More information is available here and here.
European Central Bank (ECB)
September 1, 2022
ECB appoints five experts to re-evaluate annual supervisory review process
These five banking supervision experts commissioned by the ECB will review the effectiveness and efficiency of the Supervisory Review and Evaluation Process (SREP), which is conducted annually by the ECB as part of European banking supervision. It assesses the risks banks face and checks whether they are equipped to manage those risks properly. The experts will provide input on the functioning of the SREP and conduct an independent external evaluation.
More information is available here.
European Central Bank (ECB)
September 28, 2022
ECB consults on guide for assessing buyers of qualifying holding in banks
The ECB launched a public consultation on its draft guide to qualifying holding procedures. The guide is intended to clarify how the ECB assesses applications to acquire qualifying holdings in banks and should function as a user-friendly manual to explain who is required to undergo a qualifying holding assessment, what documentation is required for the application, and how the ECB assesses such transactions. The publication of the guide also aims to increase transparency for market participants and to provide an applicable legal framework.
More information is available here.
European Commission (EC)
September 13, 2022
EC calls on Slovak insurance supervisor to take measures to ensure compliance with EU law
The EC issued a formal opinion that requires the Slovak Insurance Supervisory Authority, the National Bank of Slovakia (NBS) to fully comply with the Solvency II regime. This opinion follows EIOPA’s recommendation on the breach of Union law. EIOPA has previously collected evidence that a Slovak insurance company, under the supervision of the NBS, has not complied with the Solvency II rules in recent years in relation to technical provisions, capital requirements, investments and system of governance. Therefore, the EC considers that NBS should make additional efforts, in particular to complete the sanctioning procedure against the respective insurance company and to take definitive supervisory measures to ensure compliance with EU legislation.
More information is available here.
European Insurance and Occupational Pensions Authority (EIOPA)
September 6, 2022
EIOPA tracks progress on Solvency II data quality
EIOPA published its report on data quality in Solvency II reporting, which also takes stock of the improvements in data quality achieved in recent years. EIOPA—together with national competent authorities (NCAs)—has continuously worked on assessing and improving the quality of supervisory insurance reporting data. In particular, the report shows that the automated data quality processing solutions and advances analytic tools have been effective in improving the data quality. The report also describes the intensive and wide use of Solvency II data by EIOPA for analysis, statistics, impact assessments, supporting NCAs, technical advice and various other publications.
More information is available here.
European Insurance and Occupational Pensions Authority (EIOPA)
September 22, 2022
EIOPA publishes supervisory statement on exclusions related to systemic events
EIOPA published a supervisory statement on exclusions in insurance products related to risks arising from systemic events, such as pandemics, natural disasters or major cyber-attacks. As such events are becoming increasingly common, there is also a risk that insurance products covering these events may become unaffordable or unavailable, or even explicitly exclude such events in the future. EIOPA’s supervisory statement aims to promote supervisory convergence in evaluating the treatment of exclusions as part of product design and the drafting of policy conditions. Therefore, policyholder interests should continue to be considered when products are developed or revised.
More information is available here.
European Insurance and Occupational Pensions Authority (EIOPA)
September 22, 2022
EIOPA publishes supervisory statement on the management of non-affirmative cyber exposures
EIOPA also published a supervisory statement on the management of non-affirmative cyber risks, which aims to promote supervisory convergence in the way national competent authorities (NCAs) approach the market in relation to cyber risks. EIOPA recommends that NCAs pay closer attention to how insurance undertakings evaluate the terms of their existing insurance products that cover cybercrime. In particular, undertakings should focus their attention on traditional war and terrorism exclusions that may not address the digital aspects of modern warfare, leading to uncertainty and ambiguity in coverage.
More information is available here.
European Insurance and Occupational Pensions Authority (EIOPA)
September 30, 2022
EIOPA sets out strategy for 2023–2026
EIOPA’s strategy for 2023–2026 focuses on strengthening the resilience and sustainability of the insurance and pension sectors and aims to ensure strong and consistent protection of consumer interests across the EU. As a result, EIOPA has identified strategic priorities to focus on, including sustainable finance, digital transformation and financial stability. To achieve its goals, EIOPA plans to continue to collaborate and consult with its Board of Supervisors as well as with different stakeholders.
More information is available here.
European Insurance and Occupational Pensions Authority (EIOPA)
October 4, 2022
EIOPA warning to banks and issuers: Bancassurance needs better value for money
Insurers and banks must address consumer protection issues related to the sale of credit protection insurance (CPI) products, warns EIOPA. While the authority recognizes the various benefits of CPI products, it has also uncovered significant risks to consumers. In light of this finding, EIOPA is issuing a warning and urging insurers and banks acting as insurance distributors to take action or risk facing regulatory actions. Insurers and banks should ensure that credit protection insurance products are offered to consumers at a fair price. Therefore, all insurers and banks acting as insurance distributors should fully comply with the Insurance Distribution Directive (IDD).
More information is available here.
European Insurance and Occupational Pensions Authority (EIOPA)
October 12, 2022
EIOPA evaluates progress on supervising the propriety of (re)insurers’ administrative, management and supervisory body members and qualifying shareholders
EIOPA published a follow-up report to the 2019 peer review on the propriety assessment of members of administrative, management and supervisory bodies (AMSB) and qualifying shareholders across the EEA. The report mainly assesses how national competent authorities (NCAs) have implemented the measures recommended in the original peer review. EIOPA found that oversight of the adequacy review of AMSB members and qualifying shareholders has improved over the past two years. While 16 NCAs have already fully implemented the actions recommended to them, EIOPA encourages those NCAs that have not yet fully implemented the recommended actions to consider the examples identified as inspiration for developing their national supervisory practices.
More information is available here and here.
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Directive 2009/138/EC – Solvency II Directive
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.