Central Bank of Ireland publishes Markets Update No 6 of 2023

On 3 July 2023, the Central Bank of Ireland (the Central Bank) published Issue No 6 2023 of its regular Markets Update, in which it sets out alerts of interest to Irish regulated firms and other market participants.

For our summaries of the previous issues, please see the right-hand column of this page.

After a gap since the last Markets Update in early April, the new Update contains an unusually large number of items, so our summaries below are briefer than normal.

We have identified the following as being of particular interest:

Central Bank publications

• ESMA MiFID Remuneration Guidelines

On 3 April 2023, ESMA's Guidelines on certain aspects of the MiFID II remuneration requirements were formally published, taking effect from 3 October 2023.

The Central Bank has confirmed to ESMA that it complies with the Guidelines.

• ESMA MiFID II suitability Guidelines

On 3 April 2023, ESMA's Guidelines on certain aspects of the MiFID II suitability requirements were also formally published - these, too, take effect from 3 October 2023.

Again, the Central Bank has confirmed to ESMA that it complies with the Guidelines.

For our summary of ESMA's Final Report, see here

• QIAIF Application / Post Authorisation Application Form update

The Central Bank has updated the confirmation required in its online;

• QIAIF Application Form; and

• QIAIF Post Authorisation Form.

• The Central Bank's comments on the Individual Accountability Framework

Two key speeches, given by the Central Bank's

• Deputy Governor, Derville Rowland on 17 April 2023; and

• Director of Financial Regulation, Policy & Risk, Gerry Cross on 1 June 2023.

set out the Central Bank's views on its new Individual Accountability Framework (IAF).

For our summary of the Central Bank's CP153 (March 2023) on the IAF see here.

ESMA publications

• ESMA updates its MiFID product governance guidelines

On 27 March 2023, ESMA published its Final Report, "Guidelines on MiFID II product governance requirements".

The Guidelines will next be formally published on the ESMA website, translated into the official languages of the EU. They will take effect two months after publication.

For our summary of the ESMA consultation which led to the Final Report, see here.

• ESMA updates its Q&As

On 31 March 2023, ESMA published updates to its Q&As on a number of Regulations , including:

• Benchmarks Regulation;

• EMIR; and

• MiFID II and MiFIR transparency topics.

On 26 May 2023, ESMA also updated its Q&As on:

• the application of the AIFMD (For our summary of this update, see here.)

(Note: the AIFMD Q&As were further updated on 14 June 2023 - for our summary, see here.)

• ESAs consult on extending and simplifying sustainability disclosures under the SFDR

On 12 April 2023, the ESAs published a joint consultation paper, proposing significant amendments to the Principal Adverse Impact (PAI) and financial product disclosure requirements under the SFDR

The consultation period closed on 4 July 2023. The ESAs are expected to submit their final advice to the European Commission in October 2023.

For our high level summary of the consultation paper, see here.

For our detailed client note on the proposed amendments, see here

• ESMA Opinion on preventing undue costs in funds

On 11 May 2023, ESMA published an Opinion, addressed to the European Commission, suggesting amendments to clarify provisions under the UCITS Directive and the AIFMD on the notion of "undue costs".

ESMA's recommendations were largely followed in the Commission's subsequent legislative proposal to amend (among other things) the UCITS Directive and the AIFMD - this formed part of the Commission's package of measures under its Retail Investment Strategy, published on 24 May 2023.

For our summary of the ESMA Opinion, see here.

For our summary of the Commission's legislative proposal, see here

• ESMA consults on Level 2 measures for European Long-term Investment Funds (ELTIFs)

On 23 May 2023, (not 29 April as indicated in the Markets Update) ESMA published a consultation paper, setting out proposed Level 2 RTS under the revised ELTIF Regulation (ELTF 2.0).

The consultation period closes on 24 August 2023 and final rules are expected to be in place by 10 January 2024, when ELTIF 2.0 is due to apply.

For our summary of ESMA's consultation paper, see here.

For our summary of the changes made to the ELTIF Regulation under ELTIF 2.0, see here.

• ESAs progress reports on the prevention of greenwashing

On 31 May 2023, the EBA, ESMA and EIOPA separately published progress reports on the prevention of greenwashing.

The reports put forward a common high-level understanding of greenwashing applicable to market participants in each ESA's area and drew on responses to their joint Call for Evidence (CfE) of November 2022.

Each ESA will publish a final report by the end of May 2024.

For our summary of the ESAs' CfE, see here.

• MMF stress tests -- ESMA analysis of fund reporting

On 6 June 2023, ESMA published an analysis of the results of its Money Market Funds (MMFs) stress tests.

The report concludes that the results generally indicate that the industry shows good resilience to most market factors but highlights 'the relative proximity of the LVNAV 20 bps threshold'.

ESMA is in the process of reviewing the methodology of the stress testing Guidelines in light of the results and recently consulted on aspects of the Guidelines.

ESMA aims to include revised methodology in the MMF stress test Guidelines in 2023.

• ESMA report on ETF Guidelines peer review

On 6 June 2023, ESMA published  a follow-up report to its 2018 peer review on the Guidelines on ETFs and other UCITS issues.

The Report found that NCAs have strengthened their supervisory practices but highlights that concerns remain in relation to the level of costs for some UCITS using Efficient Portfolio Management techniques.

The supervisory work carried out by the Central Bank (and other regulators) was assessed in relation to the attribution of revenues and costs derived from securities lending activities by UCITS.

For our summary of the ESMA report, see here

• ESMA consults on integrating sustainability factors in suitability and product governance

On 16 June 2023, ESMA published a Call for Evidence (CfE) following revisions to the MiFID II Delegated Regulations on the integration of sustainability factors into (a) certain organisational requirements and (b) product governance obligations.

 The CfE seeks views on firms' approaches to (among other things):

• explaining sustainable finance concepts to clients;

• collecting clients' sustainability preferences and considering them as part of clients' suitability assessments;

• assessing suitability in respect of the sustainability preferences; and

• specifying sustainability-related objectives for products as part of target market assessments.

The CfE closes on 15 September 2023

ESMA notes that the CfE is not intended as a new consultation on the content of its revised suitability or product governance guidelines.