Laws and Regulations

The European Securities and Markets Authority recognises the asset management industry is under pressure to meet green investing rules and is preparing more detailed guidance shortly because it believes it is ultimately worthwhile work. “In a few weeks time you will be getting more guidance from the ESAs on various topics related to the SFDR,” an official said in Luxembourg.

Europe’s asset management industry on Wednesday threw its backing behind a legislative proposal to give asset managers a bigger say in the application of liquidity management tools, or LMTs, at times of market stress. The managers, not the supervisors, should be responsible for deciding on the use of such tools,  the proposal says.

A case study of how EU and UK financial sector regulations will diverge is in the shifting rules around the Key Investor Document (KID), part of the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation. There will be no big-bang moment, but the details are about to begin to change gradually. And influential voices are calling for more divergence. 

The European Union’s top financial supervisory bodies have told the European Commission to move towards a clearer and more effective framework for informing retail clients about costs and potential risks their run with investments, and told it to better integrate sustainability objectives into requirements for informing consumers.

The European Union needs to establish a single supervisory body for financial markets in order to boost the development of market finance towards creating a true single European financial market and turning the widely-discussed Capital Markets Union plans into reality. “We should not hide away from some unpleasant truths,” said Yves Mersch, former ECB board member. 

Antwerp-based asset manager Merit Capital will lose its Belgian brokerage licence, according to a judgement by Belgium’s Council of State published on 26 April. Merit Capital has been struggling for years with its governance model and profitability. Having its license revoked casts a cloud over its arrangement with Frankfurt-based Renell Bank, which announced in October it had agreed to acquire Merit subject to conditions.

Funds exposed to the Ukraine war have new liquidity management options following the recent publication of the CSSF’s guidance. To understand more about how the market is adapting , particularly during the current annual reporting season, we spoke to Nicolas Hennebert, partner and investment management leader audit & assurance at Deloitte Luxembourg.

With its DLT white paper released in January, supervisor CSSF has triggered a broad industry debate on the use blockchain technology to adopt virtual assets, and about public versus private blockchains. The discussion is seen as positive, and, according to one industry expert, could pave the way “for mass adoption of asset tokenisation”.

“It is not five minutes to twelve, but one minute to twelve,” said Detlef van Vuuren, one of the Dutch scientists who collaborated on the latest report by the UN climate agency, the IPCC. 

According to the report, presented on Monday, countries have to invest three to six times more than currently agreed in measures to reduce greenhouse gases. If that does not happen, the climate goals will be far out of reach. That is this week’s alarming message from the United Nations. 

Luxembourg’s financial supervisor, releasing its eagerly anticipated guidance for investment funds exposed to Russia, has outlined a range of segregation options to handle stranded assets in Russia. Funds also were reminded to assess if they are potentially in breach of sanctions against Russia and Belarus.