Regulatory update February 2022

231/2001

Law 23 December 2021, n. 238. Provisions for the fulfillment of obligations deriving from Italy's membership of the European Union - European Law 2019-2020

• COUNCIL OF MINISTERS

Modification of the sanctioning regulations provided for by Legislative Decree no. 58 (TUF) on market abuse

 

AML

EBA launched "EuReCA", the central EU database for the fight against money laundering and terrorist financing

• EBA

EBA has launched EuReCA - the EU's central database for the fight against money laundering and terrorist financing - a system that contains information about the material weaknesses within individual financial institutions in the EU that the competent authorities have identified

Suspicious operations: new category for operations related to the production of anti-personnel mines, ammunition and submunitions

• UIF

The UIF has integrated the domain of the signage category “003 - Proliferazione armi di distruzione di massa” which becomes “Proliferazione armi di distruzione di massa, mine antipersona, munizioni e submunizioni a grappolo”.

Opinion of the European Central Bank of 30 November 2021 on a proposal for a regulation to extend the traceability obligations to transfers of crypto-assets

• ECB

The ECB welcomes the European Commission's initiative to extend traceability obligations to crypto-assets through the proposed regulation, which is part of the Anti-Money Laundering / Countering Financing of Terrorism, AML / CFT) adopted by the Commission on 20 July 2020.

Decree of 13 January 2022: virtual currency and digital wallet service providers

• MEF

The Decree defines the methods and timing with which service providers relating to the use of virtual currency and digital wallet service providers are required to communicate their operations on the national territory as well as forms of cooperation between the Ministry of Economy and Finance and the police force.

Suspicious Transaction Reports (STR): use cases

• UIF

The document contains general practical information and some concrete examples of drafting the SOS. The cases described, while not constituting an exhaustive review of all the possible operations subject to reporting, provide practical indications of immediate application for the most frequent cases and can constitute a valid aid for understanding how to use the reporting scheme.

 

CARDS & PAYMENTS

PSD2 - Exemption from the fallback solution

• BANK OF ITALY

Update of the forms and instructions relating to the administrative procedure of exemption from the fallback solution, of the form for the exemption from strong customer authentication for corporate payments pursuant to art. 17 of Regulation (EU) 2018/389 and the form of the results of the report on the analysis of operational and security risks in payment services

TIPS: Instant Payments

• BANK OF ITALY

In November 2018, the pan-European platform TIPS (TARGET Instant Payment Settlement) was launched for the real-time settlement of instant payments, i.e. transfers that are settled within a few seconds of the transaction being made. The platform allows you to make an average of 500 payments per second (equal to 43 million transactions per day) and is available 24 hours a day, 365 days a year. This cost, for banks that subscribe to the service, is very low: the tariff structure does not provide for access or account maintenance costs and sets the price for each instant transaction at 0.2 euro cents.

That said, All payment service providers (PSPs) who have joined the SEPA Instant Credit Transfer (SCT-Inst) scheme and who are reachable in TARGET2 must be reachable in TIPS by 25 February 2022

EBA publishes final Guidelines on the limited network exclusion under the Payment Services Directive

• EBA

The final version of the EB guidelines has been published which clarify how national competent authorities should assess whether a network of service providers or a range of goods and services qualify as "restricted" and, therefore, are not subject to the directive. The payment instruments that could benefit from this exclusion are shop cards, fuel cards, public transport cards and meal vouchers. The guidelines aim to address significant inconsistencies on how this exclusion has been applied in the past across the EU, contributing to the single market for payment services in the EU and ensuring transparency for supervisors and customers. The Guidelines introduce provisions and, where relevant, criteria and indicators, aimed at ensuring that the payment instruments that may benefit from the exclusion are used in a limited way, thus reducing the potential risks that may arise for the users of these instruments.

 

ESG

The Bank of Italy strengthens its action on the issues of climate risks and sustainable finance

• BANK OF ITALY

To give further impetus to its action on sustainability issues, the Bank of Italy has decided to set up a Climate Change and Sustainability Committee.

In addition, the Bank of Italy website is enriched with a new section on sustainable finance

Text mining of ESG information in press releases of rating agencies

• ESMA

The ESMA article evaluates the implementation of its guidelines on the disclosure of environmental, social and governance (ESG) factors in the press releases of credit rating agencies (CRAs). ESMA finds that the general level of disclosure has increased since the introduction of the guidelines, but that a high level of divergence among the CRAs means that there is still room for further improvement.

Governance in the real estate sector. ESG and anti-money laundering criteria

• BANK OF ITALY

The Bank of Italy document highlights how in the real estate sector there is an increasing awareness and training action regarding the implementation of precautions and anti-money laundering regulations. The new thrust that comes from the affirmation of the principle of sustainable governance seems to be exploited to give a qualitative leap in terms of adherence to high ethical standards and legality, recovering, among other things, also a now traditional discipline, such as anti-money laundering under the new ESG hat.

Economia giusta e sostenibile: la Commissione stabilisce norme che impongono alle imprese di rispettare i diritti umani e l’ambiente nelle catene del valore mondiali

• EUROPEAN COMMISSION

The European Commission has adopted a proposal for a Directive on the due diligence of companies for sustainability purposes which aims to promote sustainable and responsible behavior by companies. In particular, they should identify and, if necessary, avoid, stop or mitigate the negative effects of their activities on human rights, such as child labor and the exploitation of workers, and on the environment, such as pollution and loss of biodiversity.

 

SERVIZI ASSICURATIVI

EIOPA has published the 2022 supervisory convergence plan

• EIOPA

As part of the practical implementation of the common supervisory culture, EIOPA will, among other priorities, continue to work on proportionality, supervisory assessments of conduct risks, environmental, social and governance (ESG) issues and group supervision.

Calculation of technical provisions and basic own funds

• EUROPEAN COMMISSION

For prudential reasons, it is necessary that insurance and reinsurance undertakings use the same technical information for the calculation of technical provisions and basic own funds, regardless of the date of reporting to the respective competent authorities.

In particular, the Regulation contains the technical information for the calculation of the technical provisions and basic own funds for the reports with reference dates starting from 31 December 2021 until 30 March 2022.

Public consultation on the IAS / IFRS insurance balance sheet FOR changes introduced by IFRS 17 (Insurance contracts)

• IVASS

Update of ISVAP Regulation no. 7/2007 on the IAS / IFRS insurance balance sheet, mainly aimed at acknowledging the changes introduced by IFRS 17 (Insurance contracts)

 

BANKING SERVICES

Circular no. 262 "The bank balance sheet: compilation formats and rules" - 7th update

• BANK OF ITALY

Update of Circular 262 December 2005, n. 262 Bank financial statements: compilation formats and rules - 7th Update of October 29, 2021 - Full reprint

The main changes concern the presentation in the financial statements: i. of some categories of financial assets (sight receivables from banks and central banks and impaired loans acquired and originated), which are represented similarly to what is already provided for in the European harmonized reports (FINREP) and in the recently updated Bank of Italy circulars ii. of intangible assets, for which specific evidence of software that is not an integral part of hardware is required pursuant to IAS 38 iii. detailed information on commission income and expense iv. of the contributions to the resolution fund and to the deposit guarantee schemes, for which separate disclosure is required in the relevant items

Technical standards listing advanced economy countries for own funds requirements for market risk

• EBA

EBA has published its final draft of regulatory technical standards (RTS) on the list of countries with an advanced economy for calculating equity risk according to the standardized alternative approach (FRTB-SA)

In 2022, the ECB requires banks to make a marginal increase in the capital they hold

• ECB

The European Central Bank (ECB) has published the results of the supervisory review and evaluation process (SREP) for 2021. Based on the results of this annual exercise, significant institutions have maintained strong capital and capital positions. liquid assets; in fact, most banks operate with capital levels higher than those defined by the capital requirements and guidelines. Overall, the banks' scores remain broadly stable.

Guidelines on stress tests of deposit guarantee systems

• EBA

Bank of Italy has declared to the European Banking Authority (EBA) the compliance of the Italian provisions with the EBA Guidelines "Guidelines on stress testing of deposit guarantee schemes pursuant to Directive 2014/49 / EU" (EBA / GL / 2021/10).

EBA guidelines on recovery plan indicators

• EBA

Bank of Italy has declared to the European Banking Authority (EBA) that it wishes to comply with the Guidelines on the indicators of the recovery plans (EBA / GL / 2021/11).

The EBA / GL / 2021/11 guidelines repeal and replace the guidelines on the minimum list of qualitative and quantitative indicators of the recovery plans (EBA / GL / 2015/02) of 6 May 2015 with effect from 14.02.2022

Basel III Monitoring Report

• BASEL COMMITTEE

This Report presents the results of the Basel Committee's latest Basel III monitoring exercise, based on data from 30 June 2021

For the sample of banks in Group 1, risk-based capital ratios remained broadly stable, but leverage ratios decreased compared to the previous period.

Annual assessment of banks’ internal approaches for the calculation of capital requirements

• EBA

EBA published, on February 22, 2022, its reports on the annual benchmarking exercises for credit and market risk. These aim to monitor the consistency of risk-weighted assets (RWAs) in all EU institutions authorized to use internal methods for calculating capital requirements. This year's Market Risk Report provides an in-depth analysis of the impact of the COVID-19 pandemic. For most participating banks, the results confirm low dispersion in initial market valuation (IMV) and greater dispersion in VaR communications.

Circular 285/2013

• BANK OF ITALY

Circular no. 285 of 17 December 2013 “Supervisory provisions for banks” - 38th update - Amendments to the regulations on bank capital reserves; introduction of the capital buffer for systemic risk and macroprudential measures based on the characteristics of customers or loans

Circular 288/2015

• BANK OF ITALY

Circular no. 288 of 3 April 2015 “Supervisory provisions for financial intermediaries” - 5th update - Introduction of macroprudential measures based on the characteristics of customers or loans.

In particular has been added the Title IV bis "Measures based on the characteristics of customers or loans", containing the discipline on borrower-based macroprudential instruments.

 

INVESTMENT SERVICES

Simple, Transparent and Standardised (STS) Register

• ESMA

ESMA launched the simple, transparent and standardized register (STS) for the notification of securitisations under the Securitization Regulation.

Risks deriving from digitalisation in retail distribution

• IOSCO

The Board of IOSCO (International Organization of Securities Commissions), an international standard setter for the regulation of financial markets, has submitted a report for consultation to assist its members in adapting regulatory and enforcement approaches to the challenges posed by the growing use of digitalisation for the marketing and distribution of financial services and products to retail investors. The consultation will end on March 17, 2022.

Call for evidence on ESG ratings

• ESMA

ESMA has launched a "call for evidence" with the aim of collecting information on the market structure of ESG rating providers in the European Union (EU).

Liquidity concerns for AIF

• ESMA

ESMA has released its fourth annual statistical report on the alternative investment funds (AIF) industry highlighting liquidity concerns for alternative investment funds

Revocations by the CONSOB

• CONSOB

CONSOB revoked the following Communications:

the. Communication n. 9019104 of 2 March 2009, concerning "The intermediary's duty to behave fairly and transparently when distributing illiquid financial products";

1. Communication n. 0097996 of 22 December 2014, concerning "Communication on the distribution of complex financial products to retail customers".

ESAs recommend actions to ensure the EU’s Regulatory and supervisory framework remains fit-for-purpose in the digital age

• ESA

EBA, ESMA and EIOPA have published a joint report in response to the request for an opinion by the European Commission on digital finance in which they formulate their proposals on the subject

ESMA launches a common supervisory action with NCAS on MIFID II costs and charges

• ESMA

ESMA is initiating a joint supervisory action (CSA) with the competent national authorities (NCA) on the application of the rules on disclosure of the costs and charges of MiFID II in the European Union (EU). The CSA will be conducted during 2022.

Sustainable Finance Roadmap 2022-2024

• ESMA

ESMA has published its Sustainable Finance Roadmap 2022-2024, identifying the three priorities for its work on sustainable finance:

the. Tackle greenwashing and promote transparency;

1. build the capacities of the competent national authorities (NCAs) and ESMA in the field of sustainable finance;

iii. monitor, evaluate and analyze markets and ESG risks.

Amendments to the Issuers' Regulation

• CONSOB

CONSOB has launched a public consultation on the proposed amendments to the Issuers' Regulation to adapt it to the following European acts: i. Directive (EU) 2019/1160 and Regulation (EU) 2019/1156 on the cross-border distribution of investment funds (“CBDF Directive and Regulation” or “CBDF Package”);

1. Regulation (EU) 2019/2088 concerning the disclosure on sustainability in the financial services sector ("Regulation SFDR") and Regulation (EU) 2020/852 concerning the establishment of a framework that favors sustainable investments and amending the Regulation ( EU) 2019/2088 ("Taxonomy Regulation"), with particular reference to the pre-contractual information provided for in the offer documentation relating to UCIs.

The main changes concern:

The regulation on local facilities, i.e. the structures that must be made available to investors in Italy in the event of the marketing in our country of units or shares of EU UCITS and in the case of marketing in Italy, to retail investors and non-EU investors. identified professionals;

1. The discipline on the cessation of marketing. The proposed amendments concern the cases of cessation of marketing: in an EU state other than Italy, of FIA shares or units by Italian managers; in Italy, of units or shares of EU UCITS, of reserved AIFs by EU AIFMs, and of Italian and EU AIFs marketed to retail investors by EU AIFMs;
   
   
2. The regulations on the pre-marketing of reserved AIFs. It is proposed to provide for a new article governing the pre-marketing of reserved AIFs with reference to the case in which an Italian manager carries out the pre-marketing in Italy or in another EU country;
   
   
3. The regulation on marketing communications as CONSOB no longer has the regulatory mandate to regulate the criteria on the basis of which advertising relating to an offer to the public of open-end UCI units or shares (UCITS and AIFs) is to be carried out, being in this regard the discipline provided by the CBDF Regulation is directly applicable.

RTS for own funds requirements for investment firms

• EBA

On December 16, 2020, the EBA presented the final draft of the RTS which specifies the methodology for calculating the requirements of fixed overheads.

The Commission proposal contains an amendment to the original version which allows investment firms acting as market makers to benefit from the principle of deduction of trading fees even when these are not directly passed on to clients.

ESMA warns consumers of risk of significant market corrections

• ESMA

ESMA released its first 2022 Trends, Risks and Vulnerabilities (TRV) report on February 15, 2022, and continues to see high risks for institutional and retail investors of further, possibly significant, corrections in its outlook for 2022. market.

ESMA opinion on the review of the Money Market Fund Regulation

• ESMA

ESMA has published an opinion containing proposals to reform the regulatory framework for EU money market funds (MMFs) under the Money Market Funds Regulation (MMFR). The proposed reforms derive from lessons learned from the significant liquidity difficulties encountered by money market funds during the initial outbreak of the COVID-19 pandemic in March 2020. ESMA's opinion includes the following key policy measures aimed at improving the resilience of MMFs:

• Addressing threshold effects for constant net asset value money market funds (CNAV), by removing the possibility of using amortized costs for low volatility NAV (LVNAV) money market funds and decoupling regulatory thresholds from suspensions, deletions and redemption fees for LVNAV / CNAV money market funds.
• Address liquidity issues by ensuring the mandatory availability of at least one liquidity management tool for all money market funds, by changing the daily liquid assets / weekly liquid assets ratios, as well as the pool of eligible assets.

Amendments to the Intermediaries Regulation

• CONSOB

CONSOB, on February 17, 2022, published the document for consultation entitled "Amendments to the Intermediaries Regulation in relation to the national adaptation to Directive (EU) 2021/338 which modifies MIFID II in the context of the capital markets recovery package, delegated acts for the implementation of MIFID II, UCITS and IDD regulations on sustainable finance, as well as Directive (EU) 2019/2034 amending MIFID II on reverse solicitation - further amendments

Consultation on options to enhance the suitability and appropriateness assessments

• EUROPEAN COMMISSION

The European Commission has launched a public consultation to supplement the 2021 one on investor protection rules

Overview of the asset management industry

• EUROPEAN FINANCIAL MANAGEMENT ASSOCIATION (EFAMA)

The EFAMA Asset Management in Europe report provides an overview of the European asset management sector, focusing on the countries where assets are managed. This provides a different perspective than most other EFAMA reports such as the Fact Book, Monthly Fact Sheets or Quarterly Statistical Releases, which analyze market trends for European investment funds from the perspective of the countries where the funds are domiciled or Property.

 

ICT, TECHNOLOGY AND CYBERSECURITY

ESAs publish thematic repository on financial education and digitalisation initiatives

• ESA

The three European supervisory authorities (EBA, ESMA and EIOPA) published on 31 January 2022 a common thematic repository on financial education and digitalization initiatives of the competent national authorities (NCAs), with a specific focus on cybersecurity, scams and fraud. The repository contains 127 national initiatives that provide consumers with useful information on how to improve their financial literacy.