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In response to Covid-19, many regulatory authorities at international, European and local levels have adopted emergency measures to protect financial stability and to enable market actors, such as asset owners and asset managers, to focus their efforts on business continuity. These regulatory initiatives include deferral of regulatory obligations and measures regarding preservation of funds liquidity.
On this website, our regulatory experts provide an overview of the key measures taken at international and EU-level, as well as in several key EU markets.
On 27 March 2020, the Bank of International Settlements (“BIS”) published a press release announcing the deferral of the implementation of the so-called Basel III standards i.e. those standards still outstanding. The deferral aims to increase the operational capacity of banks and supervisors in order to respond to the situation created by Covid-19.
Specifically:
On 3 April 2020, the BIS issued a press release announcing additional measures to alleviate the impact of Covid-19 on the global banking system.
Read here
Of particular interest, the BIS has agreed, together with the International Organisation of Securities Commissions (IOSCO), to extend the deadline by one year for the completion of the final two implementation phases of the margin requirements for non-centrally cleared derivatives.
This one year extension will provide additional operational capacity for firms to respond to the immediate impact of Covid-19 and at the same time, help covered entities act diligently in complying with the requirements by the revised deadline.
The final implementation phase will take place on 1 September 2022, at which point covered entities with an aggregate average notional amount (AANA) of non-centrally cleared derivatives greater than EUR 8 billion will be subject to the requirements. As an intermediate step, from 1 September 2021, covered entities with an AANA of non-centrally cleared derivatives greater than EUR 50 billion will be subject to the requirements.
Read here
On 2 April 2020, the Financial Stability Board (“FSB”) issued a statement on reprioritising its work programme for 2020 in light of Covid-19.
The reprioritisation includes the following elements:
On 15 April 2020, the FSB issued a report on the financial stability implications of, and policy measures taken following the Covid-19 outbreak.
Read here
On 1 July 2020, the FSB issued a statement recognising that the Covid-19 outbreak may have disrupted the global benchmark reform.
Nevertheless, the FSB maintains its view that financial and non-financial sector firms across all jurisdictions should continue their efforts in making wider use of risk-free rates in order to reduce reliance on IBORs where appropriate and in particular to remove remaining dependencies on LIBOR by the end of 2021.
Read here
On 7 September 2020, the FSB announced extensions to the implementation timelines for minimum haircut standards for non-centrally cleared securities financing transactions (SFTs), to ease operational burdens on market participants and authorities, and thereby assist them in focusing on priorities from the impact of COVID-19.
Read here
On 20 March 2020, the European Central Bank (ECB) announced further measures to ensure that its directly supervised banks can continue to fulfil their role to fund households and corporations amid the coronavirus-related economic shock to the global economy.
Read here
On 29 April 2020, the ECB decided to extend the deadlines applicable to the reporting of statistical data by reporting agents such as insurance companies or pension funds.
Read here
On 3 April 2020, in light of the global COVID-19 crisis, the European Commission (EC) extended the deadline for the MiFID II//R and the NFRD consultations by four weeks. As such:
On 11 March 2020, the European Securities and Markets Authority (ESMA) made recommendations to financial market participants in respect of business continuity planning, market disclosure, financial reporting and fund management.
Read here
On 20 March 2020, ESMA decided to extend the response date for all ongoing consultations with a closing date on, or after, 16 March by four weeks.
Read here
On 26 March 2020, ESMA asked National Competent Authorities (NCAs) not to prioritise their supervisory actions towards entities subject to securities financing transactions reporting obligations during the period 13 April to 13 July 2020. ESMA expects trade repositories to be registered sufficiently ahead of the next phase of the reporting regime, i.e. 13 July 2020, for credit institutions, investment firms, CCPs and CSDs and relevant third-country entities to start reporting as of this date. The 13 April 2020 reporting deadline has been postponed to 13 July 2020 due to the covid-19 pandemic.
Read here
On 31 March 2020, ESMA announced that submission of the first quarterly reports to the NCAs was postponed to September 2020.
Read here
On 31 March 2020, ESMA issued a public statement to clarify issues regarding the publication by execution venues and firms of the general best execution reports required under RTS 27 and 28 of MiFID II, in light of the COVID-19 pandemic.
Read here
On 9 April 2020, ESMA published a public statement to promote coordinated action by NCAs in the context of the COVID-19 pandemic. It concerns the obligations of the entities listed below to publish annual and half yearly reports in respect of funds they manage, in relation to reporting periods ending from 31 December 2019 to 30 April 2020.
On 20 March 2020, the European Insurance and Occupational Pensions Authority (EIOPA) published recommendations addressed to competent authorities for the insurance sector regarding the deadline of supervisory reporting and public disclosure (annual reporting – quarterly reporting – Solvency and Financial Condition report) and a Q&A in relation thereto.
Read here
On 2 April 2020, EIOPA issued a public statement urging (re)insurers to suspend all discretionary dividend distributions and share buy-backs. EIOPA considers this essential to ensuring access to and continuity of insurance services, safeguarding the ability of the insurance sector to continue to perform its role as risk transfer mechanism from citizens and businesses and its capacity to mobilise savings and invest them in the real economy.
Read here
On 2 April 2020, EIOPA issued a public statement outlining the impact of Covid-19 on its work programme. Among others, EIOPA mentions the following impacts:
On 17 April 2020, EIOPA issued a public statement on principles to mitigate the impact of Covid-19 on the occupational pensions sector, which is covered by the EU Directive on Institutions for Occupational Retirement Provision (‘IORP II Directive’). The statement aims at harmonising the regulatory principles by which national competent authorities (‘NCAs’) supervise the sector.
NCAs should monitor closely IORPs’ business continuity and operational risks, liquidity position, funding situation and pro-cyclicality, protection of members and beneficiaries, and communication.
It is worth noting that EIOPA expects that NCAs should be flexible with respect to deadlines for publication of documents and data considered less urgent given the current circumstances as well as in respect of national reporting requirements. The timings for the provision of occupational pension information to EIOPA are extended by two weeks for the information regarding the first quarter of 2020 and by eight weeks for the information regarding annual reporting with reference to the year-end 2019.
Read here.
EIOPA, in close coordination with the European Commission (EC), has decided to deliver its advice to the EC on Solvency II review at end December 2020, to take into account the importance of assessing the impact of the current Covid-19 situation on the Solvency II review.
Read here
On 4 May 2020, the European Supervisory Authorities (ESA) issued joint regulatory technical standards (RTS) to amend the Delegated Regulation on the risk mitigation techniques for non-centrally cleared OTC derivatives (bilateral margining), under the European Markets Infrastructure Regulation (EMIR), to incorporate a one-year deferral of the two implementation phases of the bilateral margining requirements.
Read here
On 6 May 2020, ESMA issued a public statement on the risks for retail investors when trading under the highly uncertain market circumstances due to the Covid-19 pandemic.
As part of the public statement, ESMA also reminds MiFID II investment firms of the key conduct of business obligations under MiFID when providing services to retail investors.
Read here
On 6 May 2020, the European Systemic Risk Board (“ESRB”) published a Recommendation to address financial market liquidity and implications for asset managers and insurers in light of the COVID-19 pandemic.
The Recommendation is designed to enhance preparedness to respond to potential future adverse shocks that could lead to a deterioration in financial market liquidity, resulting in potential adverse implications for financial stability conditions in the Union.
The Recommendation focuses on investment funds with large exposures to corporate debt on the one hand, and on investment funds with large exposures to real estate on the other.
Read here
On 8 May 2020, the European Commission (EC) put forward their proposal to defer by three months due to Covid-19, the reporting deadlines under the EU mandatory disclosure rules regime (DAC6) on reporting certain cross-border arrangements. The proposal is as follows:
The EC also proposes a possibility to further extend the deferral period for a maximum of three additional months. It is also stated that this option would only be invoked if the exceptional circumstances of severe risks for public health caused by the COVID-19 pandemic persist and the EU Member States are forced to implement lockdown measures. The consent of all EU Member States is required in order for the EC’s proposal to be adopted and to enter into force.
Read here
On 14 May 2020, ESMA published a statement supporting the recommendations issued by the General Board of the European Systemic Risk Board (ESRB), which suggests that relevant national competent authorities across the European Union, coordinated by ESMA, undertake focused supervisory engagement with investment funds that have significant exposures to less liquid assets, focusing on corporate debt and real estate.
Read here
On 29 April 2020, the European Commission published a proposal for a temporary derogation to the rules on European Companies (SE) and European Cooperative Societies (SCEs), in particular as regards the organisation of their Annual General Meetings (AGMs). The proposal of the Commission would allow SEs and SCEs to hold their AGMs within 12 months of the end of the financial year, but no later than 31 December 2020. This draft legislative proposal is currently being examined for approval at the European Parliament and the Council.
Read here
On 25 May 2020, the ESRB published a recommendation to EU and national regulators as regards the liquidity risks arising from margin calls in the context of the Covid-19 pandemic.
The Recommendation concerns (i) limiting the effect of cliff effects in relation to the demand for collateral, (ii) CCP stress scenarios under the European Markets Infrastructure Regulation for the assessment of future liquidity needs, and (iii) limiting liquidity constraints related to margin collection.
Read here
On 27 May 2020, the European Commission published an updated version of its work programme, which it was required to revise due to the Covid-19 outbreak. The adoption of several key policy initiatives has been postponed:
On 8 June 2020, the ESRB sent a letter to EIOPA as regards the increased liquidity risk for the insurance sector due to the market shocks that followed the spread of the Covid-19 pandemic.
The ESRB recommends that, in the near term, EIOPA and its members should prioritise improved monitoring of liquidity in the insurance sector, and, in the medium term, to adjust the Solvency II framework accordingly through the ongoing review of this legal framework.
Read here
On 9 June 2020, following the ESRB’s letter, EIOPA issued a public statement in support of the ESRB’s recommendation on enhanced liquidity monitoring in the insurance sector.
Read here
On 11 June 2020, ESMA renewed its decision to temporarily require the holders of net short positions in shares traded on a European Union (EU) regulated market to notify the relevant national competent authority (NCA) if the position exceeds 0.1% of the issued share capital.
Read here
On 11 June 2020, ESMA issued a public statement to clarify the application of the MiFIR open access provisions (OAP) for trading venues (TVs) and central counterparties (CCPs) in light of the recent adverse developments related to COVID-19, with the objective to coordinate national supervisory practices.
Read here
On 22 June 2020, the ECB published a press release indicating that following discussions with the financial industry, the ECB’s Market Infrastructure Board has reviewed the timeline of the T2-T2S consolidation project and has concluded that postponing its go-live by one year, from November 2021 to November 2022, would best accommodate the industry’s preferences.
The decision on a possible extension of the timeline will be taken by the Governing Council of the European Central Bank (ECB) and is expected by the end of July 2020.
Read here
On 28 August 2020, ESMA published a final report on draft regulatory technical standards (RTS) definitively postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) until 1 February 2022.
The postponement is due to the impact of the COVID-19 pandemic on the implementation of regulatory projects and IT deliveries by Central Securities Depositaries and a wide range of market participants and follows a request from the European Commission (EC).
Read here
On 28 July 2020, ESMA announced that it is working on a proposal to possibly delay the entry into force of the CSDR settlement discipline regime until 1 February 2022. This is due to the impact of the COVID-19 pandemic on the implementation of regulatory projects and IT deliveries by CSDs and came as a request from the European Commission.
Read here
The Governing Council of the ECB has decided to extend the timeline of the T2-T2S consolidation project by one year, following discussions with Europe’s financial community. The project is now scheduled to go live in November 2022. In addition, the Governing Council has approved to start User Testing in December 2021.
The project had already entered an internal software testing phase, known as “Eurosystem acceptance testing”. However, a recent community readiness survey showed that the coronavirus (COVID-19) pandemic and the rescheduling of SWIFT’s global migration of cross‑border payments to ISO 20022 had posed challenges to national financial communities across Europe. In the light of that fact, market participants indicated that they would prefer the go-live date of the T2-T2S consolidation project to be postponed by 12 months.
Read here
On 26 March 2020, the ordinance n°2020-306, adopted pursuant to the Emergency Law, was published in the Journal Officiel. The ordinance provides, inter alia, for the extension of deadlines as regards some contractual arrangements (such as cash financing arrangements).
Read here
On 16 April 2020, the ordinance n° 2020-427 modifying ordinance n° 2020-306, was published in the Journal Officiel. According to this new ordinance parties to the contract remain free to exclude the application of article 4 by written clauses, in particular if they decide to take into account differently the impact of the health crisis on the conditions of execution of the contract. They may also decide to renounce to avail themselves of the provisions of this article.
Read here
On 26 March 2020, the ordinance n° 2020-321, adopted pursuant to the Emergency Law, was published in the Journal Officiel. Amongst others, this ordinance relates to annual general meetings and deliberations of annual general meetings and governing bodies of legal persons. These exceptional measures are intended to apply only during the Covid-19 crisis period.
Read here
On 12 April 2020, the decree n° 2020-418 complementing and detailing the ordinance n° 2020-321 mentioned above was published in the Journal Officiel.
Read here
On 17 March 2020, the Autorité des marchés financiers (AMF) decided to ban the creation or increase of short net positions from 18 March until 16 April 2020.
Read here
On 15 April 2020, the AMF announced the extension of the net short position ban until 18 May 2020.
Read here
On 31 March 2020, the AMF published its Frequently Asked Questions (FAQ) on Covid-19 in order to support fund management companies. In this FAQ, which will be frequently updated, the AMF:
On 3 April 2020, the Autorité de Contrôle Prudentiel et de Résoution (ACPR) issued a recommendation addressed to insurance companies to suspend distribution of dividends, in the context of Covid-19.
Read here
On 18 May 2020, the AMF suspended the ban on the creation or increase of net short positions.
Read here
On 20 March 2020, the Government of Luxembourg enacted, by way of decree, a number of temporary measures. Among these are rules allowing all Luxembourg companies, private or listed, to hold their shareholder or partner meetings (including the annual general meeting) without any participant attending in person. The same rule applies to meetings of management bodies such as boards of directors, boards of managers and supervisory boards.
Read here
On 3 March 2020, the Commission de Surveillance du Secteur Financier (CSSF) published and keeps updated a FAQ on Covid-19 answering the following items inter alia:
The CSSF will update the FAQ if and when needed.
Read here
On 20 March 2020, the CSSF published a communication and an update of its FAQs on the use of the swing pricing and dilution levy mechanisms by Luxembourg regulated UCITS, Part II UCIs and SIFs further to the questions received from industry participants in the context of the financial market developments around Covid-19.
Read here
On 23 March, the CSSF issued a press release in light of the COVID-19 situation as regards regulatory reporting obligations.
Read here
On 25 March, the CSSF issued a press release in light of the COVID-19 situation as regards the submission of long form reports.
Read here
On 9 April 2020, the CSSF issued a weekly questionnaire to investment fund managers (IFMs).
The objective is to provide the CSSF with weekly updates on financial data (total net assets, subscriptions and redemptions) and an update on governance arrangements in relation to the activities performed by IFMs established in Luxembourg or in other European/non-European countries and managing at least one UCITS, AIF and/or any other UCI (not qualifying as AIF).
The first questionnaire, covering the period 13 to 17 April 2020, should be submitted to the CSSF by close of business on 22 April 2020.
Read here
On 9 April 2020, the CSSF issued Circular 20/739 announcing that the CSSF applies the ESMA “Guidelines on the Reporting under Articles 4 and 12 of the securities financing transactions Regulation 2015/2365 (published on 6 January 2020) and has integrated those guidelines into its administrative practice and regulatory approach.
Read here
On 10 April 2020, the CSSF issued Circular 20/740 financial crime and AML/CFT implications during the COVID-19 pandemic.
The purpose of this Circular is to provide guidance to all professionals subject to anti-money laundering and counter-terrorism financing (AML/CFT) supervision of the CSSF in relation to the money laundering and terrorism financing (ML/TF) risks and AML/CFT implications of the COVID-19 pandemic.
Read here
Throughout March and April 2020, the Commissariat aux Assurance (CAA) published inter alia the following in the context of Covid-19:
On 4 May 2020, the CSSF issued Circular 20/742, notifying market participants of the entry into force of:
On 4 May 2020, the CSSF published a Communiqué outlining its approach to AML/CFT supervision in the collective investment fund sector during the Covid-19 outbreak.
Read here
On 13 May 2020, the CSSF expanded the scope of its monitoring of the largest investment fund managers, which it had put in place in March 2020. Although not specifically related to the Covid-19 pandemic, the CSSF indicates this monitoring is due to “specific circumstances and risks to which these companies were exposed to because of the prevailing market conditions”.
By expanding the scope of this exercise, more fund managers will now have to notify the CSSF of significant developments and issues.
Specifically, a notification is requirement when:
On 12 May 2020, the Luxembourg Government published a law extending by three months certain deadlines for some financial services firms.
Read here in French
On 24 March 2020, the German Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”) issued a press release outlining its supervisory approach in the context of the Covid-19 crisis.
In the press release, BaFin set out a range of measures in order to ease the burden on financial market participants while ensuring financial stability.
The measures focus on credit institutions, insurers, pension funds, and firms active in the securities services sector.
Read here
By way of example, BaFin will not raise any objections to a temporary passive exceedance of the statutory proportion of real estate held through investment funds of insurance and pension funds subject to the German Investment Regulation (Anlageverordnung).
All specific measures taken by BaFin are listed in a FAQ which will be updated and expanded as the Covid-19 situation develops.
Read here
In March 2020, the Companies Registration Office decided that all annual returns due to be filed by any Company now and up to 30 June 2020 will be deemed to have been filed on time if all elements of the annual return are completed and filed by that date. This will enable businesses and their financial advisers to focus on the more immediate financial challenges facing them at this time. The situation will be kept under review and the date of 30 of June may be extended depending on the situation as it develops.
In March 2020, the Central Bank of Ireland published a page on its website with FAQ’s and a press release on the current situation in Ireland surrounding Covid-19.
Read here
The Central Bank continues to seek real time information about how Irish funds are operating in the current COVID-19 environment in order to seek to fulfil its public mandate role of protecting the interests of investors. They have also confirmed that they will also maintain appropriate regulatory oversight throughout this period.
The Central Bank have noted through updates to industry bodies that there are no Central Bank or legal rules regarding in person voting for contractual or other arrangements and that the ability of a board to hold telephone (or other remotely held) meetings is a matter typically addressed by the entities constitutional documentation.
On 20 April 2020, the Central Bank of Ireland published an update relating to flexibility for remittance of certain returns / reporting including:
On 21 April 2020, the Office of Director of Corporate Enforcement has provided an update to their FAQ section regarding Annual General Meetings
Read here
On 30 April 2020, the Central Bank of Ireland published a letter to Irish Fund Management Companies regarding requirements applicable to securities markets, investment management and investment firms in light of the challenges posed by COVID-19. Furthermore, the Central Bank of Ireland clarified application measures identified by the European Securities and Markets Authority (ESMA) recently.
Read here
On 29 May 2020, the Registrar of Companies has decided to extend the current arrangement in relation to the filing of annual returns. The Registrar had announced in March that all annual returns due to be filed by any Company between 18th March and 30th June 2020 would be deemed to have been filed on time if all elements of the annual return were completed and filed by 30th June. Following a review of the situation, the Registrar has now decided to extend this arrangement for a further period until 31 October 2020.
The Registrar has also decided to extend the arrangement in relation to entities (industrial and provident societies, friendly societies and trade unions) that are required to file with the Registry of Friendly Societies until 31 December 2020.
Filing obligations will be deemed to have been met if all elements of the relevant returns have been submitted by the aforementioned dates. However, entities are encouraged to file as normal during this period if in a position to do so.
Read here
On 26 June 2020 and following the adoption of Council Directive (EU) 2020/876 which allows for the deferral of the exchange dates for DAC2, and the filing and exchange dates for DAC6, as a result of the impact of the COVID-19 pandemic, Revenue can confirm that the deadline for the filing of DAC2 returns in respect of the 2019 reporting period is now deferred until 30 September 2020.
The new deadline of 30 September will also apply for the filing of CRS and FATCA returns in line with what has already been agreed by the Global Forum on Transparency and Exchange of Information for Tax Purposes and by the United States.
Read here (under Exchange of Information)
On 20 March 2020, the Bank of Italy granted extensions (from 60 to 150 days depending on the different topics) to certain reporting obligations in order to enable the banking and financial system to concentrate all its efforts on dealing with the Covid-19 crisis.
The Bank of Italy is also in the process of rescheduling on-site inspections and evaluating whether to allow some flexibility regarding the deadlines for supervisory and central credit register reporting, in coordination with the European supervisory authorities.
Read here in Italian
Read here in English
On 25 March 2020, the CONSOB granted a 60 day extension to certain reporting obligations stated in its Circular 17297/2010 in order to enable the banking and financial system to concentrate all its efforts on dealing with the Covid-19 crisis. In particular: reporting on collective investment management activity, investment and ancillary services, distribution of financial products and annual reporting on organizational structure for AM Companies, SICAVs, SICAFs.
Read here
On 11 March, 20 March and 1 April 2020, in light of the Covid-19 crisis, the Commissione di vigilanza sui fondi pensione (COVIP), Italian regulatory authority for pension schemes, issued three circulars in order to extend specific deadlines. Among others: 2019 balance sheet approval, 2019 communications to clients, “2019 Rendiconto”, “Relazione Responsabile fondo pensione”, regulatory reporting. Furthermore, COVIP will allow pension schemes to organise their general assembly using video-audio conference tools even if not explicitly written in their official documentation.
Official COVIP communications link below:
ITA - https://www.covip.it/wp-content/uploads/COVIP-1096-COVID_19_Circolare.pdf
ITA - https://www.covip.it/wp-content/uploads/COVID_19_Circolare_ANIA_revfinale.pdf
ITA - https://www.covip.it/wp-content/uploads/EPP_Circ_1577_01042020.pdf
On 3 April 2020, the Italian Inland Revenue Agency published Circular letter n. 8 which clarifies measures recently adopted through Law Decree 17 March 2020, n. 18 to mitigate the impacts of the Covid-19 emergency. In particular, the Inland Revenue has confirmed that it is possible to extend to 15 June 2020 the validity of Certificates of residence (COR) issued by foreign tax authorities and which expired on 31 March 2020.
This applies whenever it has been ascertained that due to the declared Covid-19 emergency in his tax residence state, a foreign investor has been unable to obtain a renewed Certificate of Residence
Read here
On 14 April 2020, following ESMA’s public statement on “Actions to mitigate the impact of COVID-19 on the deadlines for the publication of periodic reports by fund managers” of 9 April 2020, CONSOB and Bank of Italy issued a joint communication on the topic addressed to investment funds. ESMA’s expectation is that NCA do not prioritize supervision action referred to this topic.
Italian regulatory authorities reported that, for the moment, Italian asset managers have reported no particular issues or postponement requests.
CONSOB and Bank of Italy expect that AMs will fulfil investors’ information needs in due time in accordance with Italian regulation, putting in place all possible organizational efforts.
Read here (in Italian)
On 18 May 2020, CONSOD suspended the ban on the creation or increase of net short positions with effect as from 19 May 2020.
Read here
On 20 March 2020, the Spanish Government issued Royal Decree (RD-Ley 8/2020) related to economic measures. The Royal Decree includes new limitations on foreign investments and changes in the corporate governance of issued companies, how shareholder meetings are held during 2020 and extensions to the deadlines for annual audited financial statements, intermediate management statements and semi-annual financial statements
Read here
On 31 March 2020, the Spanish Government issued Royal Decree (RD-Ley 11/2020) related to social and economic measures that complement and maintain all the provisions already included in RD- Ley 8/2020. Among others:
Throughout March 2020, given market volatility, the Spanish regulator Comisión Nacional del Mercado de Valores (“CNMV”) communicated guidelines on a ban on short selling and the creation or increase of net short positions on shares.
On 13 March 2020 - CNMV temporarily prohibited short selling in 69 listed companies. CNMV communicated the decision to ban short sales during the day’s trading session for all liquid shares admitted to trading on the Spanish stock exchanges whose price fell by more than 10% on 12 March and on all illiquid shares (in accordance to Delegated Regulation 918/2012) whose price fell by more than 20%.
On 16 March 2020 - In light of the extreme market volatility seen recently in Spain due to the impact of the COovid-19 virus on financial markets, on 16 March 2020, the CNMV decided to prohibit the short selling of, and the increase of existing short positions, on all Spanish securities and financial instruments for a period of one month. This ban came into place at the start of trading on 17 March and will end on 17 April 2020, but could be extended for a period of three months depending on market and social conditions, as contemplated within article 24 of EU regulation 236/2012. This ban is applicable to trades traded on the BME and MAB, the trading venues over which the CNMV has regulatory control. Any equity trades, or those related to stock indices (cash trades, derivatives traded on organized markets or traded OTC) which create a net short position, or increase a pre-existing short position, albeit intraday, are subject to the ban.
Read here
On 22 March 2020 - Q&A published by CNMV on short selling ban on the creation and increase of net short positions (update to communication made on 16 March 2020).
Read here
On 27 March 2020 - CNMV made further comments in regards to information to be provided by asset managers as consequence of Covid-19 and in response to the Q&A issued by Inverco.
Read here
On 15 April 2020, CNMV extended for a further month the temporary ban on the creation or increase of net short positions in listed shares.
The extension of the ban takes effect from 18 April and shall remain in force until 18 May, both dates included, and may be in turn extended for renewable periods not exceeding three months if the circumstances justifying it continue, in accordance with Article 24 of Regulation (EU) 236/2012, or be lifted at any time without the period expiring, if deemed necessary.
Read hereOn 17 April 2020, CNMV published the updated Q&A related to the temporary ban of 16 March 2020 on the creation and increase of net short positions related to shares admitted to trading on trading venues for which the CNMV is the competent authority.
Read here in SpanishOn 24 March 2020, T2S stated that T2S will temporarily move the start of Night Time Settlement from 8:00pm CET to 9:00pm CET until further notice. The change is mostly aimed at minimising the impacts due to the current exceptional market conditions and volumes.
On 30 March 2020, T2S announced that the move would remain in place until 06 April 2020.
On 24 March 2020, T2S stated that T2S will temporarily move the start of Night Time Settlement from 8:00pm CET to 9:00pm CET until further notice. The change is mostly aimed at minimising the impacts due to the current exceptional market conditions and volumes.
On 30 March 2020, T2S announced that the move would remain in place until 6 April 2020.
18 May 2020, CNMV has decided not to renew the current prohibition to create or increase net short positions.
Read here in English
Read here in Spanish
On 23 May 2020, the Spanish Government adopted Royal Decree 537/2020 in relation to the extension of the state of alarm and the resumption of the calculation of administrative deadlines and proceedings since 1 June, of those established in the pension and collective investment regulation.
Read here in Spanish
On 6 April 2020, the Financial Conduct Authority (FCA) announced temporary relief to the regulatory deadlines for publishing funds’ half-yearly and annual reports and accounts because of the impact of Covid-19.
Read here
The FCA will not implement rules for wealth managers and advisors that require reporting a 10% drop in the value of retail investors’ portfolios, granting supervisory flexibility for six months, until the end of September.
Read here
The FCA has set out its general guidance and rules regarding its expectations of firms in the light of the Covid-19 crisis.
Read here
The FCA is reviewing the possibility of delaying or postponing activity which is not critical to protecting consumers and market integrity in the short-term. This will allow firms to focus on supporting their customers during this difficult period.
This includes extending the closing date for responses to open consultation papers and calls for input until 1 October 2020 and rescheduling most other planned work.
For a full list covering Asset & Wealth Management, Insurance, Pensions and more see the FCA’s website here
On 15 April 2020, the FCA published its CEO letter to insurance firms with specific focus on Business Interruption.
Read here
On 17 April 2020, the FCA has updated their expectations on financial resilience for FCA solo-regulated firms:
Read here
The Investment Association (IA) is supporting members via dedicated Covid-19 expert pages, which includes useful information pertaining to multiple business areas, from HR to fund liquidity for example.
Read here
Her Majesty's Revenue and Customs (HMRC) published a statement recognising that due to Covid 19, financial institutions may not be able to meet the Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA), reporting deadline of 31 May 2020 for the 2019 reports. In these unprecedented circumstances, HMRC accepts that any financial institution that files a return late because of Covid 19 difficulties will have a reasonable excuse (and so will not be liable to any penalties for that delay) provided the report is made without unreasonable delay after they are resolved.
HMRC issued an statement recognising the challenges taxpayers and intermediaries face in implementing DAC6 because of Covid 19 and the unprecedented measures introduced to tackle it. Under the current DAC 6 regulations the first reports for arrangements since 1 July are due to be sent to HMRC by 31 July 2020, and by 31 August for pre-existing arrangements (25 June 2018 to 30 June 2020). Where reports are made late, no penalties are due where there is a reasonable excuse for the delay and reports are made without unreasonable delay once that excuse has ceased.
Read here
On 26 June 2020, the Bank of England published a statement by the Prudential Regulation Authority (‘PRA’) as regards regulatory reporting and disclosure amendments. In the PRA’s previous statement 'COVID-19 regulatory reporting and disclosure amendments' published on Thursday 2 April 2020, the PRA set out that it would accept delayed submission of certain regulatory returns with deadlines on or before Sunday 31 May 2020. That statement noted the PRA would consider in due course the treatment of those returns with a deadline of June onwards.
Going forward, the PRA will therefore, in general, expect on time submission for future regulatory reporting. Firms experiencing difficulty with timely submission should contact their usual supervisor to discuss.
Read here
On 30 June 2020, the FCA issued a press release stating that the deadline for solo-regulated firms to have undertaken the first assessment of the fitness and propriety of their Certified Persons has been delayed from 9 December 2020 until 31 March 2021.
Read here
On 30 June, the FCA issued a press release noting that firms may need longer periods of temporary arrangements if, for example, an Approved Person is absent because of coronavirus, or if recruitment to replace an Approved Person has been delayed due to the pandemic. In relation to this the FCA have also published their expectations on the Senior Managers & Certification Regime (SM&CR) for solo regulated firms and for dual-regulated firms with the Prudential Regulation Authority (PRA).
Read here
On 30 June 2020, the Bank of England published a statement by the PRA indicating that from 27 June 2020, amendments to the Capital Requirements Regulation (CRR) - the CRR ‘Quick Fix’ - applied that respond to the Covid-19 pandemic. In accordance with the European Union (Withdrawal Agreement) Act, the CRR ‘Quick Fix’ applies directly to PRA-regulated firms.
This statement sets out the PRA’s initial views on certain measures included in the package.
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On 16 April 2020, APRA announced an extension in relation to CPS 234 Information Security and third party service provider arrangements with APRA regulated entities. The commencement date was set at 1 July 2020, an extension to 1 January 2021 may now be sought by the APRA regulated entity, on a case by case basis. The APRA regulated entities seeking the extension are required to meet certain conditions in their application such as, the details as to the nature of the third party arrangements and how the entity is monitoring the risks within this arrangement.
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Phased in initial margin requirements – APRA announced on 16 April 2020 the extension in relation to meeting the margining requirements for all non-centrally cleared derivatives.
This implementation was based on a phased in approach. The announcement provides an extension of 12 months, that being, implementation on 1 September 2020 extends to 1 September 2021; 1 September 2021 extends to 1 September 2022. This is in line with the Basel Committee on Banking Supervision and the International Organisation of Securities Commissions.
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Portfolio Holdings Disclosure reporting requires most Registerable Superannuation Entities to publish fund holdings on their website. This reporting requirement was to commence on 31 December 2020 with first reporting 3 months thereafter.
On 16 April 2020 ASIC announced the deferral of the first reporting date for portfolio holdings disclosure. A revised reporting date has not yet been advised.
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In November 2019 ASIC released modifications to Regulatory Guide 97 in relation to how fees and costs were to be disclosed. The new disclosure requirements were to commence for Product Disclosure Documents issued on or after 30 September 2020 and Periodic Statements on or after 1 July 2021.
ASIC on the 14 April 2020 released a statement advising they are now considering changes to these arrangements for Product Disclosure Statements that come into effect on 30 September 2020.
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11 June 2020 – ASIC announced amendments to transitional arrangements for Product Disclosure Statements in relation to RG97-Disclosing fees and costs in PDSs and periodic statements. Product Disclosure Statements given on or after 30 September 2022 must now comply with the new disclosure regime by this date.
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24 June 2020 APRA announced additional data collection requirements for their ongoing assessment during the COVID-19 pandemic. Registerable Superannuation Entities are required to meet 2 additional reporting requirements, that being both monthly and quarterly . Reporting will extend to cover items such as liquidity, early release demographics advice and operational resilience.
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FMA/NZX – On 19 March (updated 3 April) the FMA issued regulatory relief, via a class exemption, allowing entities and schemes impacted by COVID-19 an additional two months to produce their audited financial statements. The NZX announced the same relief for listed issuers.
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FMA – On 26 March the Government announced a delay to the start of the new regime under the Financial Services Legislation Amendment Act from June 29, 2020 to early 2021. The current Financial Advisers Act 2008 continues to apply until then.
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FMA – On 27 March the Council of Financial Regulators confirmed that financial services are considered ‘essential services’ under NZ’s Alert Level 4. This includes all financial institutions that are essential to ensure continued operation of the financial system (including custodians and administrators).
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24 April 2020: In view of the unprecedented volatility noted in overseas crude oil futures markets, SFC views that it is important that the Managers remain vigilant to respond to extreme market circumstances so that the ETFs can be managed in the best interests of investors (including the forthcoming local public holidays when overseas markets will remain open).
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25 March 2020: To address recent market volatility and uncertainty in local and international markets relating to COVID-19 outbreak, the SFC added section 3 to the FAQ on Post Authorization Compliance Issue of SFC Unit Trust and Mutual Funds.
Under question 1 of section 3, fund managers may increase the swing factor beyond the maximum level that has been set out in the funds’ offering documents as a temporary measure, without SFC’s prior approval subject to certain conditions. In question 2 provides the cases where an SFC-authorized fund can apply swing pricing even if it has not been disclosed.
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Note: Questions 1 and 2 under Section 3 have been added.
27 March 2020: In view of the volatility in local and international markets related to the COVID-19 outbreak, the SFC issued a circular to managers, trustees and custodians of SFC-authorized fund. The SFC reiterated their obligations to properly manage the liquidity of funds and ensure fair treatment of investors in light of the current market situation.
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1 April 2020: In view of the potential operational difficulties faced by applicants during the COVID-19 outbreak, the SFC updated the FAQ to implement the following temporary relief measures to alleviate the administrative burden in respect of new fund applications.
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Note: Question 3 under Section 3 has been added.
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Note: Question 14 has been added.
The Government of India (GOI) published revisions in the present Foreign Direct Investment (FDI) policy for curbing opportunistic takeovers/acquisitions of Indian companies due to the current Covid-19 pandemic and notified amendment of consolidated FDI Policy, 2017.
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The Ministry of Finance (MoF) and the Securities and Exchange Board of India (SEBI) clarified that Mauritius is eligible country for the purposes of eligibility criteria for Category I Foreign Portfolio Investors (FPIs) registration.
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FPI Regulations have been amended to provide that FPI applicants from a non-FATF member country can also qualify for a Category I registration provided such a country is notified by the Indian Government for this purpose or the Indian Government enters into an agreement or treaty with such country.
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In light of the recent events pursuant to Covid-19, it was decided by SEBI to grant relaxations in a situation where Foreign Portfolio Investors (FPIs) are not in a position to send original and/or certified documents as specified in Operational guidelines for FPIs and Designated Depository Participants (DDPs) issued under SEBI (FPI) Regulations, 2019.
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In order to minimise Covid-19 risks and to ensure that market participants maintain adequate checks and supervisory controls while optimising thin resources along with ensuring safety of personnel, it was decided by RBI to revise trading hours for various markets till further notice.
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SEBI and AMFI decided to revised cut-offs timings for subscription and redemption in mutual fund schemes for a temporary period till 30 April 2020.
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The Reserve Bank of India (RBI) governor via press release announced various measures taken to tackle Covid-19
The SEC has extended due dates for several filing and other requirements affecting 1940 Act registered funds and registered advisers in orders for situations where the fund or adviser is unable to meet the filing deadlines due to circumstances related to covid-19. Notification must be made to the SEC staff via email of the intention to rely on any of the extensions to filing requirements and certain other disclosures must be made on the fund/adviser website.
In addition, the SEC takes the position that it would not provide a basis for an SEC enforcement action if a registered fund does not deliver to investors the current fund prospectus where the prospectus is not able to be timely delivered because of circumstances related to covid-19 and delivery was due between March 13 and June 30, provided that the sale of shares to the investor was not an initial purchase by the investor of shares of the registered fund, and provided the prospectus is delivered to investors as soon as practicable, but not later than 45 days after the date originally required. Notification must be made to the SEC staff via email at IM-EmergencyRelief@sec.gov of the intention to rely on this order.
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The CFTC staff has provided no-action relief to commodity pool operators (CPOs) for CPO-PQR filings due to challenges caused by covid-19. Small and Mid-Sized CPOs have until May 15, 2020 to submit their annual filings for 2019 while Large CPOs have until July 15, 2020 to submit their filings for Q1 2020.
The SEC’s Division of Investment Management announced that it will extend the EDGAR filing window on April 29, 2020, from 5:30 p.m. to 10:00 p.m. Eastern Daylight Time for registered investment company and business development company filings to mitigate potential filing delays associated with COVID-19.
Filings submitted after 5:30 pm would normally be considered filed on the next business day. Filings submitted after 5:30 pm on April 29 will automatically have the filing date adjusted to April 29. The extension of the filing window was designed to accommodate December 31 fiscal year end funds filing their annual registration statement update. The announcement notes the extension is for one day only.
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The IRS issued Notice 2020-23 expanding the federal tax filing and payment relief for certain tax form filings and payment obligations that are due between April 1 and July 15 to July 15, 2020.
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On March 25, 2020, the SEC issued an amended order under the 1940 Act which provides 1940 Act registered funds and business development companies (BDCs), and their investment advisers (Advisers) and principal underwriters, relief from 1940 Act requirements that the following agreements, plans, and arrangements be approved by the company’s board of directors by an in-person vote if necessary due to circumstances related to Covid-19:
Conditions include:
The relief extends until August 15.
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The SEC staff has issued no-action relief under Section 17(a) of the 1940 Act to affiliates of open-end funds, other than ETFs and money market funds, to allow them to purchase debt securities from the funds. The relief is subject to conditions, including that the price must be the security’s fair market value, provided that this price is not materially different from the value indicated by a reliable third-party pricing service, and that the fund must publicly disclose the purchase on its website and inform the SEC staff. In addition, if the purchaser thereafter sells the security for a higher price, it must promptly pay the difference to the fund, unless the purchaser is a bank or bank affiliate and this condition would conflict with Sections 23A and 23B of the Federal Reserve Act. The relief will be in effect until further notice from the staff.
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The SEC staff of the Division of Investment Management issued a no-action letter to the Investment Company Institute (ICI) in light of COVID-19, which stated that, on a temporary basis, they would not recommend enforcement action to the SEC for “affiliated purchases” of money market fund securities The relief is subject to the following conditions: 1. The purchase price of all affiliated purchases must be at fair market value. 2. All affiliated purchases must comply with Rule 17a-9 under the 1940 Act, except to the extent such purchase would conflict with banking regulations or an exemption issued by the Federal Reserve on March 17, 2020. Relief will be effective until further notice from SEC staff.
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The SEC has issued an order providing additional flexibility for open-end funds to engage in interfund lending even without their own interfund lending exemptive order.
To preserve liquidity for money market funds, the Federal Reserve Board has announced a Money Market Mutual Fund Liquidity Facility (MMLF) that is intended to assist money market funds in meeting demands for redemptions. Under this facility, the Federal Reserve Bank of Boston will lend to depository institutions and bank holding companies, taking as collateral assets purchased by the borrower from prime money market funds (i) concurrently with the borrowing or (ii) or on or after March 18, but before the opening of the facility. The facility is similar to the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility that operated from late 2008 to early 2010 but will purchase a broader range of assets. The facility will be available until September 30, unless extended.
See fact sheet here
On April 9, 2020, the Federal Reserve further clarified and updated the terms for the new 2020 Term Asset-Backed Securities Loan Facility (TALF 2020) which will permit US companies to borrow using certain assets as collateral. The revised term sheet has materially updated the following provisions:
(i) the eligible borrower definition, (ii) the eligible collateral, (iii) pricing, (iv) collateral valuation, and (v) the conflict of interest provisions. The program will be available through the end of 2020.
See revised term sheet here
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was enacted into law on March 27 has authorized the Treasury to make temporary guarantees of money market funds through year-end 2020. This is similar to the guarantees used in 2008 under the Emergency Economic Stabilization Act of 2008.
On March 25, SIFMA sent a letter to the SEC’s Division of Trading and Markets requesting regulatory relief consideration for a list of issues raised by industry participants. The topics addressed are:
On April 2, the SEC issued a statement regarding paper filings, wet signatures and notarization. The conditions regarding electronic submissions of paper documents and signatures include:
Rule 206(4)-2 (the “Custody Rule”) of the Advisers Act, requires an SEC registered investment adviser (an “RIA”) who inadvertently receives securities from a client to return the securities to the sender within three or five business days (depending on the type of asset) to avoid being deemed to have custody of such client assets under the Custody Rule. Acknowledging that an RIA’s personnel may be unable to access mail or deliveries at an office location due to the implementation of the firm’s business continuity plan in response to the coronavirus, the staff of the SEC’s Division of Investment Management revised Question II.1 of its Custody Rule frequently asked questions (“Custody Rule FAQ”) to indicate that, in such circumstances, the Division would not consider the RIA to have received client assets at that office location until firm personnel are able to access the mail or deliveries at that location.
The Custody Rule FAQ is available here
In the new Question VII.4 of its Custody Rule FAQ, the SEC Division of Investment Management indicated that it would not recommend enforcement action against an RIA who cannot maintain physical certificates of privately issued securities with a qualified custodian as required under the Custody Rule because the qualified custodian is not accepting physical certificates due to circumstances related to the coronavirus.
The relief is conditioned on satisfaction of the following requirements:
The Custody Rule FAQ is available here
On 30 March 2020, the Government of Brazil published Provisional Measure No. 931 authorizing joint-stock companies, limited companies and cooperatives, whose fiscal year ends between 31 December 2019 and 31 March 2020 (inclusive), to hold their annual general meetings (AGMs) within seven months from the end of its fiscal year (as per law, such meetings must be held within four months from the end of the fiscal year-end). The provisional measure also authorizes shareholders to vote remotely in AGMs for all types of companies. It should be noted that the Securities and Exchange Commission (CVM) already allows shareholders of publicly held companies to vote remotely in AGMs. Further, the provisional measure established that the AGM must be held, preferably, at the company’s premises or, due to force majeure, in a different location within the same municipality. However, the CVM may authorize exceptions to such requirement and even allow AGMs to be held virtually. Effective for 120 days. Within this period, it must be approved by the Brazilian Congress and convert into Law to remain effective.
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