On 5 May 2021, ESMA updated its Q&As on the Prospectus Regulation.

The updated Q&A's include three new Q&As providing clarification as to:

1. how the home Member State is determined in relation to global depository receipts over shares;
2. the application of Article 4(1) of the Credit Rating Agency Regulation to credit rating mentioned in prospectuses; and
3. the obligation to produce a supplement when new audited annual financial statements are published by a non-equity issuer.

On 5 May 2021, the Legal Entity Identifier (LEI) Regulatory Oversight Committee (ROC) issued a consultation on revisions to the technical guidance on the harmonisation of critical OTC derivatives data elements (CDE technical guidance).

The ROC proposes corrections that are deemed necessary to facilitate the jurisdictional implementation of the CDE Technical Guidance.

The proposed amendments are introduced to: (i) eliminate factual errors and typos; (ii) align the format specifications with the ISO 20022 standard; and (iii) better clarify the content of the elements by avoiding ambiguities. These amendments are deemed necessary to further improve the standardisation and understanding of the data.

The deadline for comments was the 26^th of May 2021.

On 6 May 2021, ESMA published its updated opinion on ancillary activity calculations under MiFID II. The opinion provides the estimation of the market size of commodity derivatives and emission allowances for 2020.

ESMA has prepared these estimations based on data reported to the ESMA FITRS system, as well as data reported to trade repositories under EMIR.

Market participants under MiFID II are required to measure their own activity against total market sizes in commodity derivatives in order to assess whether they exceed the ancillary activity thresholds in MiFID II and, as a consequence, would have to apply for authorisation as an investment firm.

On 7 May 2021, ESMA updated its public register with the latest set of double volume cap (DVC) data under MiFID II.

The said updates include DVC data and calculations for the period 1 April 2020 to 31 March 2021, as well as updates to already published DVC periods.

As of 7 May 2021, there is a total of 250 instruments suspended.

On 11 May 2021, the European Commission published a consultation paper on a retail investment strategy for the EU.

The EU Commission is looking to understand how the current framework for retail investments can be improved and is seeking to ensure that a legal framework for retail investments is suitably adapted to the profile and needs of consumers, helps to ensure improved market outcomes and enhances their participation in the capital markets.

The deadline for comments was the 3^rd of August 2021.

On 12 May 2021, the European Securities and Markets Authority (ESMA) launched a consultation, inviting comments from market participants on its MiFIDII /MiFIR Annual Review Report under the Commission Delegated Regulation (EU) 2017/583 (RTS 2).

The Consultation Paper provides for the Annual Assessment of the operation of the thresholds for the liquidity determination of bonds and the trade percentiles determining the pre-trade SSTI-threshold (currently subject to a four-stage phase-in regime under RTS 2). Where, based on this assessment, ESMA considers that the thresholds should be adjusted to the next stage, it should submit an amended version of RTS 2 to the Commission.

The deadline for the submission of comments to ESMA was on 11 June 2021.

On 20 May 2021, ESMA published an opinion recommending to the European Commission to permanently lower the threshold to notify net short positions on shares to national competent authorities from 0.2% to 0.1%.

As per ESMA's opinion, considering the continued uncertainty of the current financial market conditions - which do not justify the adoption of emergency measures by ESMA under Article 28 of Short Selling Regulation but require nevertheless the availability of relevant information to promptly identify and react quickly to any threats to orderly markets, markets integrity or financial stability, ESMA proposes to the European Commission to adopt the relevant delegated act as soon as possible.

On 26 May 2021, ESMA published its response to the European Commission's targeted consultation on the functioning of the European Supervisory Authorities (ESAs).

ESMA's relevant recommendations focus on:

• reinforcing ESMA's approach to supervisory convergence;
• considering the merits of EU level direct supervision;
• building ESMA's data capabilities;
• ensuring the single rulebook remains fit-for-purpose; and
• alleviating funding issues.

ESMA's recommendations aim to support the objectives of the Capital Markets Union and further promote and facilitate supervisory convergence across Member States.

On 27 May 2021, the European Commission published for consultation a draft Delegated Act supplementing MiFID II, specifying the criteria for establishing when an activity is considered to be ancillary to the main business of the group (MiFID II Ancillary Activity Exemption).

The deadline for comments/feedback to the draft Delegated Act was on 24^th of June 2021.

On 28 May 2021, ESMA has published its updated Questions and Answers on the following topics:

• MiFID II and MiFIR Investor Protection topics
• CSDR
• UCITS
• AIFMD
• MiFIR data reporting topics
• SFTR reporting
• Sustainability-related disclosures for benchmarks
• EMIR implementation

On 13 April 2021, ESMA updated its statement on the implementation of Legal Entity Identified (LEI) requirements for third-country issuers under the SFTR reporting regime.

The updated LEI statement maintains ESMA position as described in its original statement that was published on 6 January 2020 and provides an extended timeline for the reporting of LEIs of third country issuers of securities used in securities financing transactions until 10 October 2022.

The updated statement also sets out the expectations towards Trade Repositories and counterparties, as well as the relevant supervisory actions to be carried out by authorities.

The Cyprus Securities and Exchange Commission (the "CySEC") wishes with this circular, to inform the Regulated Entities that on the 29 March 2021, the European Securities and Market Authority (ESMA) has published Guidelines on reporting under article 4 and 12 of SFTR (the 'Guidelines').

These guidelines apply to counterparties to SFTs, the trade repositories and CySEC. According to the circular, the Guidelines aim to clarify the following aspects:

1. the reporting start date when it falls on a non-working day;
2. the number of reportable SFTs;
3. the population of reporting fields for different types of SFTs;
4. the approach used to link SFT collateral with SFT loans;
5. the population of reporting fields for margin data; the population of reporting fields for reuse, reinvestment and funding sources data;
6. the generation of feedback by TRs and its subsequent management by counterparties, namely in the case of (i) rejection of reported data and (ii) reconciliations breaks; and
7. the provision of access to data to authorities by TRs.

The European Banking Authority (EBA) launched this public consultation regarding the establishment of a central database on anti-money laundering and countering the financing of terrorism (AML/CFT) in the EU. This database will be a key tool for the EBA's recently enhanced mandate to lead, coordinate and monitor AML/CFT efforts in the European Union. The consultation ran until 17 June 2021.

Through its nine FATF-Style Regional Bodies (FSRBs), the Financial Action Task Force (FATF) brings together a global network of 205 jurisdictions that have each committed at the highest political level, to implementing the FATF Recommendations. This table provides an up-to-date overview of the ratings that assessed countries obtained for effectiveness and technical compliance (last updated on 19 May 2021). These should be read in conjunction with the detailed mutual evaluation reports, which are available on this website.

To assist countries in the process of identifying, assessing and understanding the risk to its financial system, the Financial Action Task Force (FATF)has developed a guidance which explains the general principles and stages of a risk assessment. The practices described in these guidance documents serve as examples and are not specific actions that a country must take.

The European Banking Authority (EBA) launched a public consultation on its new Guidelines that set out how prudential supervisors, AML/CFT supervisors and financial intelligence units (FIUs) should cooperate and exchange information in relation to AML/CFT, in line with provisions laid down in the Capital Requirements Directive (CRD). This consultation ran until 27 August 2021.

The FCA has provided/reminded firms within the TPR that they need to remain compliant with their regulations emphasising on the following:

• Ensure firms cease to onboard clients from the UK and cease the promotion of their services and products within the UK, unless they are part of the TPR.
• Firms currently in the TPR, may continue to serve their UK clients, provided that they continue to abide by their previous passporting requirements and remain compliant with the MiFID II and FCA rules on client communications.
• Firms must ensure they train their account managers and sales teams on the methods and way they communicate with clients and prospective clients.
• Firms intending to onboard UK clients must do so with the establishment of a branch in the UK.
• Firms with branches in the UK, must ensure that UK clients are only serviced by the branch and not the offshore firm.
• Firms in the TPR can continue to offer their services to UK clients, however, must ensure they are either:

1. Preparing their authorisation documents for when they receive their landing slots.

2. Prepare to wind down the UK operations if they do not intend to continue to offer their services to UK clients.