Structured products bulletin: Q3 2023

Welcome to our structured products bulletin for Q3, 2023, where we round up key legal and regulatory developments in the structured products space over the previous quarter.

For those in the UK, notable developments include the anticipated enactment of the Public Offers and Admissions to Trading Regulations 2023, and HM Treasury's response to the PRIIPs and UK Retail Disclosure consultation, which leads to a new UK retail disclosure regime.

In the EU, we cover the Retail Investment Package, with the ECON publishing draft reports on amendments to key directives and regulations, and an extension of the transition period for third-country benchmarks under the Benchmark Regulation.

EU

Retail Investment Package

ECON report on the proposed Retail Investment Package

On 9 October 2023, the Commission for Economic Policy (ECON) published two draft reports on the proposed Retail Invest Package: the first relating to the proposed omnibus directive (which will amend various EU legislation, including MiFID II, AIFMD and UCITS), and the second on the proposed regulation amending PRIIPs (which will modernise the PRIIPs key information document). The reports set out a range of amendments to the draft legislation, reflecting ECON's position.

The draft reports will be discussed within ECON and voted on in due course. The broader legislative process in relation to the Retail Investment Package is uncertain, given the European Parliamentary elections in June 2024.

MiFID II

Revised MiFID product governance guidelines become effective

On 3 August 2023, ESMA published the official translations for the revised guidelines on the product governance requirements under MiFID II. The guidelines have been applicable since 3 October 2023, being two months from the date of their publication on ESMA's website in all EU official languages.

The guidelines replace the previous version of the guidelines (effective since January 2018). The guidelines were revised to take account of recent regulatory and supervisory developments. A report on the revised guidelines was published by ESMA in March 2023.

Benchmark Regulation

EU Commission extends the transition period for third country benchmarks

On 14 July 2023, the European Commission adopted a delegated act, extending the transition period by two years, from 31 December 2023 to 31 December 2025, for the use of third-country benchmarks by EU supervised entities under the Benchmark Regulation. An extension was deemed necessary to prevent potential disruptions, competitive disadvantages, and risks to financial stability in the EU market, that could have arisen if the previous deadline was not revised.

EU

Prospectus Regulation

Revised regulations and engagement paper responses

On 11 July 2023, HM Treasury published a revised and "near-final" version of the forthcoming Public Offers and Admissions to Trading Regulations 2023, which is expected to be enacted in Q4 2023. The revised regulations were accompanied by a policy note, explaining the changes from the prior draft.

The deadline for responding to the FCA's engagement papers in relation to the new Public Offers and Admissions to Trading regime passed on 29 September 2023 -- notable respondents include UKSPA and ICMA. The FCA is expected to provide feedback on the key points raised in the near future, and will then work to develop specific rule proposals for consultation in 2024.

PRIIPs

HM Treasury response on PRIIPS and UK Retail Disclosure

On 11 July 2023, HM Treasury published its response to the consultation paper 'PRIIPS and UK Retail Disclosure', which ran from December 2022 to March 2023. Amongst other things, the response:

• Provides a summary of the feedback received to the consultation paper, together with HM Treasury's decisions in light of stakeholders' comments;

• Confirms the Government's intention to remove all firm-facing retail disclosure requirements currently in the PRIIPs Regulation; and

• Gives more detail on the Government's plans for a new UK retail disclosure regime and what steps now need to be taken in order to deliver this.

The Government intend to publish a draft statutory instrument by 2024 to enable the FCA to deliver the new retail disclosure regime, following the repeal of the UK PRIIPs Regulation (and related secondary legislation).

The FCA will publish a consultation paper seeking feedback on its draft rules for the new retail disclosure regime, building on the principles discussed in previous consultation and discussion papers.