A new set of rules - part of an update to the EU’s Mifid 2 directive - took effect in Luxembourg on Tuesday that will set out how banks and asset managers are required to handle their investment products in terms of Environmental, Social and Governance.
Luxembourg’s financial supervisor CSSF, in a press release, said it wanted to remind supervised entities that from 22 November a grand-ducal regulation applies that requires taking into account sustainability factors when specifying the target markets for the financial instruments and structured deposits they manufacture and/or distribute.
The rules relate to the protection of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits. They complement the previous update to the Mifid 2 regime introduced on 2 August which requires firms to assess client preferences in terms of sustainability.
CSSF noted that the European Securities and Markets Authority, Esma, is currently finalising the update of its “Guidelines on MiFID II product governance requirements” in order to take into consideration these amendments. “These guidelines will provide firms with further guidance on the application of the new requirements,” CSSF said.
In a separate announcement, CSSF said that Esma has recently published a guidance document that provides further clarification on sustainability-related disclosures.