EU View Bulletin - January 2025

We are delighted to share with you the latest EU View Bulletin. Here you will find information about the latest intel we have gathered across the EU including the EEA jurisdictions and the UK together with any country specific changes to the EU View guidelines. As with everything we do, the output is best when we get continuous feedback - so as per usual - do let us know what we can do to enhance EU View.

NEW: CRD6 coming to EU View from February 2025

EU View will cover information on the lead up to the CRD6 implementation and the impact on your business. The following will be available to those of you who are EU View subscribers:

• Monthly CRD6 EU bulletins covering key topics, latest developments and implementation across the Member States;
• Quick reference guide for each EU View jurisdiction with an overview of the progress of implementation of the key provisions, including Article 21c;
• Updated EU View guidelines and XBTech to reflect the impact of CRD6 on licensing and the provision of core banking services, such as lending.

This will be included as part of the EU View subscription package with no additional cost. If you would like to find out more please contact EUView@simmons-simmons.com.

Changes to EU View Guidelines:

• Czech Republic: It is an established position that, when the services of lending, factoring and invoice discounting are provided by an EEA banking entity, the activities should be covered by passporting arrangements. It has now been clarified that the licensing requirement also applies to non-EEA banking entities.

• Ireland: A clarificatory change was made to note that a non-EU/EEA entity can avoid triggering the licensing requirements by not being a lender of record, but this applies only to the activity of arranging loans.

• Poland: Lending offered or provided on a cross-border basis should not trigger a licensing requirement in Polandwhere the entity is not a credit institution/bank and/or the activities are not carried out with deposit-taking or taking other repayable funds from the public. A note has now been added that the activity of deposit-taking, or taking other repayable funds from the public, does not necessarily need to be carried out "in Poland" to trigger a licensing requirement in Poland (as it may have been previously interpreted).

Latest intel on EU27+3EEA developments: 

• NPL Directive: Following the implementation of the Directive (EU) 2021/2167 of the European Parliament and of the Council of 24 November 2021 on credit servicers and credit purchasers which was due to be transposed into national laws by 29 December 2023, the NPL has been effective from 30 December 2023 in Croatia, Denmark, France, Greece and Ireland, from 01 January 2024 in Germany and Sweden, from 24 February 2024 in Slovenia, from 01 May 2024 in Czech Republic, from 06 June 2024 in Romania, from 01 June 2024 in Slovak Republic, from 12 July 2024 in Latvia, from 14 July 2024 in Estonia, from 24 July 2024 in Luxembourg, from 30 July 2024 in Malta, from 01 August 2024 in Lithuania, from 14 August 2024 in Italy and most recently, from 08 November 2024 in Cyprus.

The Directive has not yet been fully implemented in Austria, Belgium, Finland, Hungary, Iceland, Liechtenstein, Netherlands, Norway, Poland, Portugal and Spain.

• EMIR3 - EMIR3 and the Amending Directive have entered into force on 24 December 2024. EMIR3 will apply from that date, subject to certain provisions which will not apply until the date of entry into force of certain technical standards. Member states are expected to transpose the Amending Directive by 25 June 2026.

  • The key reforms under the legislative proposal include provisions on the obligation for financial and non-financial counterparties to have an active account with an EU CCP, to increase clearing in the EU and to reduce the EU reliance on third country CCPs, and to

  • amend the calculation of clearing threshold to distinguish between transactions cleared by an EU CCP or a recognised third country CCP;

  • simplify procedures for authorisation and recognition of CCPs, extension of activities and services; and to

  • amend rules governing CCPs participation, margin, and collateral requirements.

Please see our article here for the top 10 things you need to know about EMIR3.

• EU MiFID Financial Services - Reverse Solicitation : On 30 January 2024, ESMA published a consultation" (the "Consultation") on the draft guidelines for reverse solicitation under the Markets in Crypto Assets Regulation (MiCA). This Consultation closed on 29 April 2024. The guidance provided in the Consultation was perceived by market participants to be stricter than the reverse solicitation regime under MiFID II, raising concerns about the EU regulators' restrictive approach towards reverse solicitation across financial services.

• On 17 December 2024, ESMA published the Final Report, which clarified that while Article 61 of MiCA and Article 42 of MiFID II share many similarities, the Final Report focuses solely on providing guidance for the MiCA reverse solicitation regime. Any additional guidance or clarification needed for the MiFID II reverse solicitation regime will be addressed by ESMA separately, if necessary.

• EU Listing Act :The EU Listing Act package became effective in Member States on 04 December 2024. The Act introduces significant changes to the Prospectus Regulation, the Market Abuse Regulation, and MiFID II. Some measures will take effect 15 or 18 months after publication to allow time for the creation of guidelines or level 2 measures. Please see our article here for the key implications.

Latest intel on UK developments:

UK Temporary Marketing Permissions Regime (TMPR) / OFR: The TMPR has been extended until 31 December 2026.This expiry date is in line with the arrangements made under the UK's Overseas Funds Regime (OFR) for EEA UCITS. As you may already be aware, the OFR allows certain investment funds (i.e. EEA UCITS) established outside the UK to be promoted in the UK, including to retail clients, subject to recognition. Please see here the recent document the FCA has published on its approach to recognition of funds under the OFR.

UK PRIIPs Regulation: On 21 November 2024, the Consumer Composite Investments (Designated Activities) Regulations 2024 (SI 2024/1198) were published together with an explanatory memorandum. The Regulations set out the legislative basis for the new UK retail disclosure framework for consumer composite investments (CCIs) and replace existing law set out in the UK PRIIPs Regulation and related legislation.

The aim is to ensure flexibility for firms to tailor their disclosure to enhance retail investor understanding. Among others, the following key changes are included in the Regulations while UCITS will continue to remain exempt from the regime until 31 December 2026:

(i) CCIs and excluded products are defined,

(ii) regulated activities in relation to CCIs are specified - in particular manufacturing, advising, offering and selling a CCI to a UK retail investor

(iii) the financial promotion exemption for PRIIPs KIDs is removed without a similar exemption being included for CCI disclosures - as explained in the explanatory note, provision of information required by the new CCI rules may constitute a financial promotion.

Note also, under The Packaged Retail and Insurance-based Investment Products (Retail Disclosure) (Amendment) Regulations 2024, closed-ended UK-listed investment funds are excluded from disclosure requirements in the UK PRIIPS Regulation and MiFID Org Regulation, but the FCA reminds firms that they remain within the wider regulatory perimeter and are subject to the consumer duty and the requirement to communicate in a manner that is fair, clear and not misleading.

• Consultations on Enforcement Investigations : A consultation paper CP24/2 Our Enforcement Guide and publicising enforcement investigations - a new approach was published by the UK FCA on 27 February 2024 proposing to give details of enforcement investigations against firms and individuals before the cases are finished, regardless of their conclusion. This raised many concerns of the market players and has been discussed on various platforms including at the parliamentary level. The FCA in its revised Regulatory Initiatives Grid advised that it aims to reach the final decision in Q1 2025.

• UK- Switzerland Berne Financial Services Agreement (Berne Agreement): As previously tracked, the Berne Agreement signed between the HM Treasury and the Federal Department of the Swiss Confederation will enhance the cross-border market access of financial services (including asset and portfolio management, banking and lending services, financial market infrastructures and investment services) between the UK and Switzerland by ensuring mutual recognition of the respective domestic regulatory and supervisory frameworks. The parties’ aim is to complete implementation as soon as possible, by the end of 2025 at the latest, and for the Berne Agreement to enter into force shortly afterwards.

• UK- Gibraltar passporting-like regime: Since Brexit, specified categories of UK and Gibraltar based entities have continued to access the Gibraltar and UK financial services markets via temporary arrangements, i.e. the passporting-like-regime between UK and Gibraltar, while a long-term framework is established. In November 2024, the UK HM Treasury has extended these temporary arrangements for a further 12 months until 31 December 2025. The expectation is that the temporary arrangements will be repealed when the permanent arrangements of the Gibraltar Authorisation Regime (GAR) are in force. Please see here for further information.

• UK- China Economic and Financial Dialogue: HMT has recently published a press release, outcomes document and factsheet following discussions held between the UK and China as part of the UK-China Economic and Financial Dialogue held in Beijing. UK and China have, among other things, committed to further their financial services relationship aimed at financial reform, financial market development, financial regulatory co-operation and opening up access to the Chinese market to UK firms.

Finally, in addition to this bulletin, there is also a wealth of additional information on the Brexit pages on our website. As always, please feel free to reach out if you have specific queries we can assist with.