On 2 July 2021, ESMA and the European Banking Authority (EBA) published their revised final joint Guidelines on the assessment of the suitability of members of the management body and key function holders.

The revised Guidelines take into account the amendments introduced by the revised Capital Requirements Directive (CRD V) and the Investment Firms Directive (IFD), and their effect on the assessment of the suitability of members of the management body, particularly with regard to money laundering and financing terrorism risks and gender diversity.

The joint revised Guidelines will apply to Competent Authorities across the EU, as well as to institutions on a solo and consolidated basis from 31 December 2021.

On 2 July 2021, the European Banking Authority (EBA) published its revised Guidelines on sound remuneration policies.

The updated Guidelines take into account the amendments introduced by the fifth Capital Requirements Directive (CRD V) in relation to institutions' sound remuneration policies and, specifically, the requirement that remuneration policies should be gender neutral.

The updated Guidelines also consider supervisory practices and clarify some aspects of retention bonuses and severance pays.

The revised Guidelines will apply from 31 December 2021.

On 2 July 2021, the European Banking Authority (EBA) published its revised Guidelines on internal governance.

The updated Guidelines take into account the amendments introduced by the fifth Capital Requirements Directive (CRD V) and the Investment Firms Directive (IFD) in relation to credit institutions' sound and effective governance arrangements, particularly with regard to gender diversity, money laundering, financing terrorist risk and the management of conflicts of interest.

The final revised Guidelines will apply from 31 December 2021.

On 5 July 2021, the European Banking Authority (EBA) published its final draft regulatory technical standards (RTS) and Implementing Technical Standards (ITS) on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

The draft standards provide a solid framework for:

1. the cooperation in the supervision of investment firm groups through colleges of supervisors; and
2. information exchange for investment firms operating within the EU through branches or the free provision of services.

On 9 July 2021, ESMA has launched a Consultation Paper on the review of the regulatory technical standards - RTS 1 equity and RTS 2 - non-equity transparency - on transparency requirements under the Markets in Financial Instruments Regulation (MiFIR).

The review includes:

• providing more clarity on non-price forming transactions and the reporting of such transactions;
• a recalibration of the regime for commodity derivatives;
• providing further clarity on the reporting fields for post-trade transparency and the reporting of reference data;
• providing clarification on the pre-trade transparency requirements for new types of trading systems, i.e. frequent batch auctions and hybrid systems; and
• increasing the pre- and post-trade large in scale thresholds for the trading of Exchange Traded Funds (ETFs).

Stakeholders are invited to send their comments by 1 October 2021.

On 12 July 2021, ESMA has launched seven public consultations to gather feedback on how to implement its central counterparty (CCP) recovery mandates.

ESMA's recommendations support the development of CCP recovery plans aiming at safeguarding financial soundness of CCPs, without the need for public financial support in crisis situations.

Harmonised CCP recovery measures will also allow central counterparties to continue to provide critical functions in case of a significant deterioration of their financial situation, or when there is a risk of breaching their capital and prudential requirements.

ESMA will consider all comments received by 20 September 2021.

On 13 July 2021, ESMA issued a public statement to remind firms that the receipt of payment for order flow (PFOF) raises significant investor protection concerns.

PFOF (i.e. the practice of brokers receiving payments from third parties for directing client order flow to them as execution venues) causes a clear conflict of interest between the firm and its clients, because it incentivises the firm to choose the third party offering the highest payment, rather than the best possible outcome for its clients when executing their orders.

ESMA requests National Competent Authorities to prioritise this topic in their supervisory activities for 2021 or early 2022.

On 15 July 2021, ESMA issued a Public Statement on the prospectus disclosure and investor protection issues raised by special purpose acquisition companies (SPACs).

As regards prospectus disclosure, the Public Statement sets out ESMA's expectations on how issuers should satisfy the specific disclosure requirements of the Prospectus Regulation, to enhance the comprehensibility and comparability of SPAC prospectuses.

As regards investor protection, the Public Statement highlights ESMA's view that, due to risks relating to dilution, conflicts of interests in relation to sponsors' incentives and the uncertainty as to the identification and evaluation of the target company, SPAC transactions may not be appropriate investments for all investors.

According to the Public Statement, ESMA and national competent authorities will continue to monitor SPAC activity to determine if additional action is necessary.

On 19 July 2021, ESMA launched a consultation on draft guidelines on certain aspects of the MiFID II remuneration requirements (the "Guidelines").

The Guidelines aim to clarify and foster convergence in the implementation of certain aspects of the new MiFID II remuneration requirements, and replace the existing ESMA guidelines on the same topic (issued in 2013).

The Consultation Paper builds on the text of the 2013 guidelines, and also:

• takes into account new requirements under MiFID II;
• provides additional details on some aspects that were already covered under ESMA's 2013 guidelines; and
• incorporates the results of supervisory activities conducted by national competent authorities on the topic.

ESMA will consider all comments received by 19 October 2021 and expects to publish a final report, and final guidelines by the end of Q1 2022.

On 19 July 2021, ESMA published its third report on the use of sanctions and measures by National Competent Authorities (NCAs) under the Markets in Financial Instruments Directive (MiFID II).

NCAs submit data on the use of sanctions to ESMA, which forms the basis of the annual aggregated report. As per ESMA's third report, NCAs activity in this area increased in 2020 compared to 2018 and 2019, both in terms of the total number of sanctions and measures and the amount of fines.

On 20 July 2021, ESMA updated its Questions and Answers on the following topics:

• AIFMD
• UCITS
• MiFIR data reporting
• Prospectus
• BMR

On 20 July 2021, ESMA published a joint Annual Report on Prospectus Activity and Sanctions for 2020.

As per the Annual Report, the number of prospectus approvals across the European Economic Area dropped by almost 5% compared to 2019, which appears to indicate that the Covid-19 crisis did not have the anticipated impact on approvals.

Moreover, only Belgium's Financial Services and Markets Authority (FSMA) and Norway's Finanstilsynet imposed prospectus related sanctions in 2020, with the majority imposed by the FSMA.

These reports provide information about trends in the prospectus area, which are available here.

On 21 July 2021, ESMA published the results of the 2020 Common Supervisory Action (CSA) on MiFID II suitability requirements.

The 2020 CSA has shown that firms overall comply with key elements of the suitability requirements that were already regulated under MiFID I, such as the understanding of products and clients and their processes and procedures to ensure the suitability of investments.

Nevertheless, shortcomings and areas of improvement have emerged about some of the new requirements introduced by MiFID II, such as the requirement to consider the cost and complexity of equivalent products, the costs and benefits of switching investments and suitability reports.

Based on the results of the CSA, ESMA will update in 2021/2022 its guidelines on suitability to address, where needed, some areas where a lack of convergence has emerged or/and to further clarify some of the new MiFID II requirements.

In addition, based on the results of the CSA, NCAs will undertake follow-up actions on individual cases, where needed, in order to ensure that regulatory breaches as well as other shortcomings or weaknesses identified are remedied.

On 28 July 2021, ESMA published the MiFID II/MiFIR Annual Review Report under Commission Delegated Regulation (EU) 2017/583 (RTS 2).

ESMA proposes to the European Commission to move to stage three of the phase-in for the transparency requirements, for both:

• the average daily number of trades threshold used for the quarterly liquidity assessment of bonds, and
• the pre-trade size specific to the instrument threshold for bonds.

In order for the move to stage three to take effect, the European Commission has to endorse the amended regulatory technical standards. Following such endorsement, they are then subject to a non-objection procedure by the European Parliament and the Council.

On 30 July 2021, ESMA made available the first consolidated tape provider (CTP) data.

As per the requirements of Articles 10 and 21 of Regulation (EU) No 600/2014 (MiFIR), the data made public by a CTP shall represent at least 80% of both the total number of transactions and the total volume of transactions in the relevant asset class published in the Union by all Approved Publication Arrangements (APAs), and of all trading venues during the assessment period.

In order to support CTPs in their compliance with their respective MiFIR obligations, ESMA published, on a voluntary and best effort basis, the total number of transactions and the total volume of transactions for the asset classes of bonds, emission allowances and emission allowance derivatives.

The CTP data will be updated on a biannual basis, by 1 February and 1 August of each year.

On 30 July 2021, ESMA made available new data for bonds subject to the pre- and post-trade requirements of MiFID II and MiFIR.

It is noted that ESMA updates the bond market liquidity assessments quarterly, while additional data and corrections submitted to ESMA may result in further updates within each quarter, published in ESMA's Financial Instruments Transparency System (FITRS), which shall be applicable the day following publication.

The full list of assessed bonds are available through FITRS in the XML files with publication date from 30 July 2021 (see here) and through the Register web interface (see here).

On 30 July 2021, ESMA published data for the systematic internaliser quarterly calculations for equity, equity-like instruments, bonds and for other non-equity instruments under MiFID II and MiFIR.

The data is published on a voluntary basis and covers the total number of trades and total volume over the period January to June 2021 for the purpose of the systematic internaliser (SI) calculations under MiFID II.

The SI test is performed by 15 August 2021.

This report identifies emerging and available technology-based solutions. New technologies can improve the speed, quality and efficiency of measures to combat ML/TF. The report highlights the necessary conditions, policies and practices that need to be in place to successfully use these technologies to improve the efficiency and effectiveness of AML/CFT. The report also examines the obstacles that could stand in the way of successful implementation of new technology.

This report examines commercially available or emerging technologies that facilitate advanced AML/CFT analytics within regulated entities. Technological advances in recent years allow financial institutions to analyse large amounts of structured and unstructured data more efficiently and identify patterns and trends more effectively. It also looks at technologies that allow collaborative analytics between financial institutions, while respecting national and international data privacy and protection legal frameworks.

Data pooling and collaborative analytics can help financial institutions better understand, assess and mitigate ML/TF.

The FATF has completed a second 12-month review of the implementation of its revised Standards on virtual assets and virtual asset service providers (VASPs).

The FATF will:

• focus on implementing the current FATF Standards on virtual assets and VASPs, including through finalising the revised FATF Guidance on virtual assets and VASPs by November 2021;
• accelerate the implementation of the travel rule; and
• monitor the virtual asset and VASP sector, but not further revise the FATF Standards at this point in time (except to make a technical amendment regarding proliferation financing).

The European Banking Authority (EBA) published a final draft regulatory technical standards (RTS) and Implementing Technical Standards (ITS) on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms. These draft standards, developed in consultation with the European Securities and Markets Authority (ESMA), provide a solid framework for (i) cooperation in the supervision of investment firm groups through colleges of supervisors and (ii) for information exchange for investment firms operating within the EU through branches or the free provision of services. These draft standards are part of the phase 2 mandates of the EBA roadmap on investment firms, and aim at improving cooperation and information exchanges between the supervisors of investment firms.

The European Commission presented an ambitious package of legislative proposals to strengthen the rules. It is part of the Commission's commitment to protect EU citizens and the EU's financial system from ML/TF. The aim is to improve the detection of suspicious transactions and activities, and close loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system.

The package mainly includes the following:

• frequently asked questions
• four (4) legislative proposals:
  • A new EU AML Authority (AMLA), which it will be the central authority coordinating national authorities to ensure the private sector correctly and consistently applies EU rules.
  • New regulation on AML/CFT, which includes the setting up of an EU-wide limit of €10,000 to large cash payments.
  • 6th Directive on AML/CFT (AMLD 6) for replace the existing Directive 2015/849/EU
  • Revision of the 2015 Regulation on Transfers of Funds, which will make it possible to trace transfers of crypto-assets.
• Impact assessment accompanying the package

The European Commission adopted a legislative proposal amending Directive (EU) 2019/1153 as regards access of competent authorities to centralised bank account registries through the single access point, the BAR single access point.

This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

All Member States are invited to reply by 2 November 2021 at the latest to the online questionnaire available on the following webpage:

https://ec.europa.eu/info/publications/finance-consultations-2021-anti-money-launderingpublic-private-partnerships_en

Please note that in order to ensure a fair and transparent consultation process only responses received through the online questionnaire will be taken into account and included in the report summarising the responses.

The European Banking Authority (EBA) published the results of its 2021 EU-wide stress test, which involved 50 banks from 15 EU and EEA countries, covering 70% of the EU banking sector assets. This exercise allows to assess, in a consistent way, the resilience of EU banks over a three-year horizon under both a baseline and an adverse scenario, which is characterised by severe shocks taking into account the impact of the pandemic. The individual bank results promote market discipline and are an input into the supervisory decision-making process.

On 15 July 2021, ESMA has launched a Consultation Paper on the review of its Guidelines on delayed disclosure of inside information under the Market Abuse Regulation (MAR) in relation to its interaction with prudential supervision.

The Consultation Paper proposes to amend current MAR Guidelines by:

• clarifying that in case of redemptions, reductions and repurchases of own funds, pending the prudential supervisor's authorisation, the institution has a legitimate interest to delay disclosure of inside information until authorisation is granted;
• clarifying that in case of draft SREP decisions and related preliminary information, the institution has a legitimate interest in delaying disclosure of inside information until that information becomes final; and
• add a separate section clarifying that Pillar 2 Capital Requirements and Pillar 2 Capital Guidance contained in the Supervisory Review and Evaluation Process under the Capital Requirements Regulation and Directive package, are likely to meet the definition of inside information under MAR and would therefore need to be disclosed as soon as possible, once final.

ESMA considered the responses received by 27 August 2021 and expects to publish a final report including its amended MAR Guidelines by the end of 2021.

The FCA has released their Fees and Levies for 2021/22 which apply to all FCA authorised firms.

To calculate your fees, the FCA has provided a fees calculator which can be found here for your convenience.

Paying the required fees will be required upon receiving the invoice from the regulator. Invoices have already started making their ways to the firms, and the fees need to be paid within 30 days from the date the firm was invoiced.

Note: All fees and levies apply to firms who are part of the TPR as well as already authorised firms.