European Regulators Propose Sweeping Changes to Sustainable Investment Disclosure Rules
The European Supervisory Authorities (ESAs) have published their final report on the draft Regulatory Technical Standards (RTS) for the Sustainable Finance Disclosure Regulation (SFDR), aiming to enhance transparency in sustainable investing.
Improving Transparency
The ESAs’ proposals aim to improve the way financial institutions disclose the potential negative impacts of their investment decisions on the environment and society. The changes include:
- New product disclosures regarding “greenhouse gas emissions reduction” targets
- Simplified templates for pre-contractual and periodic disclosure of financial products
- Technical adjustments to address issues such as derivatives, sustainable investments, and financial products with underlying investment options
Next Steps
The European Commission will review the draft RTS over the next three months before deciding whether to endorse it. The changes are expected to be implemented independently of a comprehensive assessment of SFDR announced by the European Commission in September.
Central Bank of Ireland Takes Enforcement Action Against Investment Fund
The Central Bank of Ireland (CBI) has taken enforcement action against GlobalReach Multi-Strategy ICAV, fining the fund €275,000 for failing to report 200,640 derivative trades between January 2018 and May 2020. This is the first monetary penalty imposed on an investment fund by the CBI.
Regulatory Developments in Ireland
Macroprudential Policy for Investment Funds
The CBI has launched a discussion paper on its approach to macroprudental policy for investment funds, seeking feedback on issues such as systemic risk, regulatory framework, and macroprudential tools. The consultation paper closes on November 15.
Innovation Engagement in Financial Services
A separate consultation paper outlines the CBI’s plans to enhance its engagement initiatives with industry players, including deepening its understanding of innovation and better informing its regulatory approach.
Capital Requirements for AIFMs and UCITS Management Companies
The CBI has updated the capital requirements for AIFMs and UCITS Management Companies, introducing new sections on additional capital requirements and internal capital adequacy assessment. The changes will not apply to firms authorized before November 27 until May 27 next year.
Financial Conduct Authority Consults on Overseas Funds Regime
The Financial Conduct Authority (FCA) has published a consultation paper on implementing the Overseas Funds Regime, which aims to authorize investment funds based outside the UK to access UK investors. The new regime will replace the Temporary Marketing Permissions Regulations, which expire in December 2025.
PRIIPs KID Filing Requirements
The CBI has updated its UCITS Q&As and AIFMD Q&As documents, confirming that UCITS and AIFs required to produce PRIIPS KIDs should submit them through the CBI portal from January 1, 2024.