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CYSEC launches a Common Supervisory Action (‘CSA’) with NCAs on Compliance and Internal Audit Functions 🔔  Regulatory Alert – Cyprus! 🔊  Cyprus UCITS Management Companies and Self-Managed Cyprus / Cyprus Alternative Investment Fund Managers and Self-Managed AIFs 📢  Latest Update – Compliance and Internal Audit Function to take actions! Following the ESMA decision in February 2025 for launching a Common Supervisory Action (CSA) with National Competent Authorities (NCAs) on compliance and internal audit functions of UCITS management companies and Alternative Investment Fund Managers (AIFMs) across the EU, CySEC via its Circular 688 introduced the initiation of its targeted thematic reviews for 2025. ❓ What CyUCITS MCs and CyAIFMs must do : Take all necessary measures to ensure full compliance with their legal and regulatory obligations regarding the compliance and internal audit functions. In this regard, CyUCITS MCs and CyAIFMs should review and, where necessary, enhance their internal control framework, ensuring that these functions are adequately resourced, independent, and effectively integrated into their governance structures, as well as take corrective actions, where deficiencies are identified, in line with the applicable regulatory requirements. ⛔ Why it Matters: Compliance and internal audit functions are designed to ensure that the internal control mechanisms to monitor, identify, measure, and mitigate any possible risks of non-compliance with the applicable rules are in place. Therefore, ensuring that the entities have robust internal controls is crucial to avoid investor detriment and preserve financial stability.

The Transparent and Predictable Working Conditions Law of 2023 (L. 25(I)/2023) introduces significant changes to employment practices in Cyprus (ERGANI) 🔔  Legal / Regulatory Alert – Cyprus! 🔊  Important Update for Employers and HR Professionals! The Transparent and Predictable Working Conditions Law of 2023 (L. 25(I)/2023)  introduced key employment compliance requirements in Cyprus, further amended by L.126(I)/2024 . 📢  Latest Update – ERGANI Deadline Extended! According to the new Decree published on 26.02.2025 (R.A.A. 58/2025), all employers are obliged to register essential employment terms in the in the information system “ERGANI” between January 2, 2025 and May 31, 2025.  This extension allows employers additional time to ensure compliance with the updated legislative obligations. ❓ What Employers Must Do :By the revised deadline , all employers  must register essential employment terms in ERGANI, including: ·       Employer and employee details ·       Job description and work location ·       Employment start date ·       Salary and payment frequency ·       Working hours per day/week ·       Annual leave duration and allocation method ·       Probation period terms and other key employment conditions ⛔ Why it Matters: Electronic recording in ERGANI plays a crucial role in regulating and supervising the labor market, helping combat undeclared work and reinforcing transparency in employment relationships. Non-compliance may result in  administrative fines and legal implications,  making it essential for businesses to act proactively.

Overview of the Retail Investment Strategy (RIS) The  Retail Investment Strategy (RIS)  was initiated by the European Commission following the  Action Plan for the Capital Markets Union (CMU)  adopted in September 2020. The CMU aims to enhance the financing of EU companies but recognizes challenges such as market lack of transparency, fragmentation and insufficient investment by individual investors. Objectives of the RIS Launched in May 2021, the RIS aims to: Increase protection  for individual investors Enhance participation  in the economy's financing Restore  investor confidence  by ensuring informed decision-making Stronger retail investments rules will give citizens the tools they need to make sound investment decisions on the EU’s capital markets at every step of their way. We need to get savings flowing into innovative European companies, including the small and medium-sized enterprises (SMEs) that are the backbone of Europe’s economy and that need to attract more private investment. These rules will contribute to deepening the capital markets union by increasing consumers’ trust in capital markets and channeling private funding into our economy. Vincent Van Peteghem, Belgian Minister of Finance RIS Covering Framework What’s the problem? Key Features of the RIS Legislative Proposal The RIS proposes significant legislative changes, including: Amendments to directives : Adjustments to the Markets in Financial Instruments Directive (MiFID) and Insurance Distribution Directive (IDD) focus on investor protection, reporting, and transparency. Strengthening product governance : A focus on ensuring a favorable quality-price ratio by controlling excessive costs and mandating benchmarks for product performance. Regulating financial incentives : The prohibition of trailer fees for non-advisory services and enhanced transparency regarding commission payments. Improving communication : Standardization of investor information through electronic formats and annual statements detailing costs and performance. Suitability assessments : Stricter evaluations to ensure that products align with investors' risk profiles and preferences. Enhancing financial literacy : Encouraging member states to promote financial education among Retail investors. New client classification:  There are new criteria for Retail investors to opt into professional clients as follows: The criterion with respect to the client portfolio is reduced from €500.000 to €250.000. The criterion with respect to experience has been amended to also cover clients who have ‘undertaken capital market activities'. A new criterion is added with respect to clients with ‘recognised education or training' that supports his/her understanding of the relevant transactions /services and ability to adequately evaluate risks. Impact for financial/investment service providers The RIS is seen as a positive move to bolster Retail investor participation. However, concerns exist regarding potential regulatory burdens and a limited range of products, particularly affecting small investors and SMEs. Financial players express the need for a balanced approach to avoid complicating the investment process or reducing available options for Retail investors. The RIS directly affects various financial actors, including asset managers, insurers, and banks. It addresses products like funds, life insurance, and structured products. Timeframes April 2024 : European Parliament votes on its position. June 2024 : EU Council adopts its position. Q4 2024 : Initiation of negotiations. 2026 : Initial expected date for the RIS implementation, subject to changes based on negotiation duration. Conclusion The Retail Investment Strategy will bring about substantial modifications to current systems and will affect the entire retail investment experience. Additionally, as it addresses client classification, client information, and suitability considerations, there will also be implications for IT systems.

Introduction The European Union (EU) has made significant advancements in modernizing its payment services framework with the introduction of Payment Services Directive 3 (PSD3) and the Payment Services Regulation (PSR). These regulations aim to enhance the existing payment system, promote innovation, and address evolving challenges in the digital payment landscape. Building on the foundations laid by PSD2, PSD3 and PSR seek to strengthen the sector against fraud, enhance transparency, and ensure high consumer protection standards. These reforms are designed to foster a secure, efficient, and innovative payments ecosystem in the EU and beyond. 1. PSD3 and PSR: Building on PSD2 The introduction of PSD2 brought about transformative changes, particularly focusing on security, consumer protection, and the promotion of innovation within payment services. PSD3 and PSR take these efforts a step further, expanding on the foundations of PSD2 by continuing to emphasize consumer protection, transparency, and market efficiency. Key Priorities of PSD3 and PSR: Secure Payment Transactions: Ensuring robust security protocols are in place, especially around Strong Customer Authentication (SCA). Enhanced Customer Rights: Empowering consumers with increased rights and protections, especially in the context of fraud prevention. Innovation Promotion: Facilitating open banking and the use of new financial technologies to offer consumers better services. In addition, APIs (Application Programming Interfaces) play a crucial role in enabling seamless communication and integration between different financial entities. APIs are sets of rules and protocols that allow one software application to interact with another. They act as intermediaries, enabling different systems to exchange data securely and efficiently. PSD3 introduces enhanced provisions for open banking, which require financial institutions to provide secure access to their payment services and accounts via APIs. These APIs are designed to allow third-party providers, such as fintech companies, to securely access customer payment data with consent, fostering innovation and competition in the financial sector. Furthermore, the PSR, as a part of PSD3, lays down the regulatory framework for the provision of payment services, ensuring that APIs are standardized, secure, and accessible. These regulations aim to ensure that consumers benefit from enhanced transparency, better service options, and greater security when engaging in digital payments. 2. Key Enhancements Under PSD3 ·        Enhanced Consumer Protection One of the primary objectives of PSD3 is to bolster consumer protection in the digital payment space. The following measures ensure that consumers can confidently engage in digital transactions, knowing that their rights and personal data are safeguarded: Stricter Strong Customer Authentication (SCA) Requirements: To enhance security and prevent fraud, PSD3 strengthens the requirements for Strong Customer Authentication (SCA), ensuring that online transactions are secured with multi-factor authentication methods. This aligns with the goal of increasing trust in digital payments. Improved Data Protection: PSD3 introduces stricter data protection standards, reinforcing the need for payment service providers (PSPs) to handle consumer information with the utmost care. This is a direct response to growing concerns over privacy and data breaches in the digital space. Comprehensive Risk Management: PSD3 mandates enhanced risk management frameworks for PSPs, which will lead to greater accountability in the event of fraud or security incidents. These frameworks are designed to ensure that payment providers act quickly to address security vulnerabilities, minimizing the risk of financial loss to consumers. ·        Broadened Transaction Coverage PSD3 seeks to create a more inclusive and robust payments framework by expanding the scope of transactions covered under its provisions: Increased Cross-Border Payment Protection: Consumers making cross-border transactions within the EU will benefit from the same level of security and consumer protection as they would for domestic payments. This enhances the overall efficiency and trust in the European payment system, which is key to fostering a single digital market. Digital and Remote Transactions: As digital and remote payments grow, PSD3 ensures that these transaction types are subject to the same regulatory standards as traditional payment methods. This guarantees that both consumers and businesses can rely on secure and transparent payment processes, no matter where they are. ·        Introduction of New Services PSD3 supports innovation in the payments industry by introducing legal recognition of new types of services that enhance consumer experience and reduce costs: Payment Initiation Services (PIS): PIS allow consumers to directly initiate payments from their bank accounts without using traditional card payment systems. This opens the door for more efficient and cost-effective payment solutions, contributing to increased competition among providers. Account Information Services (AIS): These services allow consumers to view aggregated payment account information from multiple banks in one interface. This innovative service not only improves transparency but also empowers consumers to make more informed financial decisions. By encouraging the growth of these services, PSD3 fosters a more competitive and innovative financial ecosystem, driving both efficiency and consumer choice. ·        Addressing Payment Fraud In response to the increasing threat of digital fraud, PSD3 takes significant steps to combat fraud and enhance security in digital payments: Non-Discriminatory Treatment of Third-Party Providers (TPPs): PSD3 ensures that TPPs are treated fairly by Account Servicing Payment Service Providers (ASPSPs), enabling secure access to consumer accounts for services like payment initiation and account aggregation. This ensures that third-party providers can safely operate within the regulatory framework, without compromising the security of consumer data. Enhanced Fraud Detection and Reporting: The new legislation mandates the implementation of more sophisticated fraud detection systems, which will allow PSPs to proactively identify suspicious transactions and minimize fraud risks. This is in line with PSD3's overarching goal of creating a secure payment environment for consumers and businesses and minimize fraud risks in digital payments. 3. The Scope and Impact of PSD3 PSD3 is designed to: Modernize Payment Services: Facilitating secure, faster, and more efficient payment processes across the EU. Enhance Consumer Protection: Ensuring that consumers’ rights are protected in every transaction, and providing clearer avenues for dispute resolution. Foster Innovation: Encouraging the development of new financial products and services, especially in the realm of open banking. •        It is a Full Harmonisation Directive meaning that Member States shall ensure that PSPs do not derogate, to the detriment of PSUs, from the provisions of national law transposing this Directive, except where explicitly provided for therein. It aims to ensure uniformity  and legal certainty across the internal market by eliminating variations . However, PSPs may decide to grant more favourable terms to PSUs. The Directive will take effect around 2026 following an 18-month transition period, during which both businesses and regulators will have time to adapt. 4. Legal Framework and Obligations The current legal framework includes: Directive (EU) 2015/2366 (PSD2), Directive 98/26/EC, and Regulation (EU) No. 910/2014 (e-IDAS). PSD3 will repeal and replace PSD2 and the e-Money Directive (EMD2), consolidating payment services and electronic money regulations into one cohesive framework. Non-bank PSPs will need to reapply for regulatory authorizations under the new PSD3 framework. This will ensure that all providers, regardless of their business model, meet the same high standards of security, compliance, and transparency. 5. e-Money Highlights e-money, or electronic money, continues to evolve as a key component of the digital payments ecosystem. According to the European Central Bank , the main distinction in modern e-money is between hardware-based  and software-based  products. Often, consumers may not even be aware of which form they are using. The new PSD3 unifies the framework of e-money institutions as well as the PIs, to address the issuance and redeemability of e-money, building on the regulatory framework established by the e-Money Directive (EMD2), which will be repealed once the PSD3 comes into effect. These enhanced provisions aim to provide a more secure, transparent, and efficient framework for e-money transactions, ensuring that both consumers and businesses can rely on the safety and accessibility of digital currencies. The integration of e-money within PSD3 also facilitates greater innovation in payment solutions, further expanding the variety of digital financial products available to consumers. 6. Buy Now, Pay Later (BNPL) and Consumer Protection The Buy Now, Pay Later (BNPL) service, which allows consumers to defer payments for purchases, has risen in popularity, especially among younger consumers. However, BNPL services are not classified as a payment service under PSD3, and there is no explicit provision for them in the regulatory text. Nevertheless, a narrow exception may be provided under PSD3 for one-time BNPL transactions that do not involve the use of payment accounts or payment cards. BNPL services are regulated under the Consumer Credit Directive (CCD), specifically Directive (EU) 2023/2225. This Directive sets out stricter regulations for consumer credit agreements, including BNPL services, ensuring that consumers are protected from excessive debt and informed about the terms and conditions of their agreements. Key Features of BNPL under the CCD: Interest-Free Credit: Many BNPL services offer credit with no interest or extra charges, which is particularly attractive to consumers. Consumer Protections: Under the CCD, BNPL providers must ensure clear disclosure of terms, including repayment schedules and fees, to avoid misleading consumers. Exclusions under the CCD: The CCD does not apply to all BNPL schemes. Exclusions include: Deferred Payments Without Third-Party Credit: If a supplier allows a consumer to defer payment without involving a third-party creditor, and the payment is completed within 50 days of delivery, the CCD does not apply. The payment must be interest-free, with only late payment charges allowed. Distance Contracts: For online purchases (distance contracts), the CCD exclusion applies if: No third party is offering or purchasing credit. The payment is due within 14 days of delivery. The purchase price is paid interest-free with limited late payment charges. These exclusions ensure that simple BNPL schemes that do not involve significant credit risks are not subject to the burdens of consumer credit regulation. However, for more complex BNPL services that charge interest or extend payment terms, these services will be fully regulated under the CCD. 7. Fraud Prevention and Open Banking The PSR emphasizes the importance of preventing fraudulent activities, particularly with the rise of open banking. The regulation ensures that: ·        Third-Party Providers (TPPs) and Equal Treatment by Account Servicing Payment Service Providers (ASPSPs). Non-Discriminatory Treatment: Under PSD3, Payment Service Providers (PSPs) must treat Third-Party Providers (TPPs) fairly and equally, regardless of whether the TPP is a bank or a non-bank. This ensures that authorized third-party services can access payment accounts in a secure and standardized manner, fostering competition and innovation. Access to Account Data: TPPs, such as payment initiation services (PIS) and account information services (AIS), can only access account data with explicit consent from consumers. These services must meet stringent security standards to prevent unauthorized access and data breaches. ·        Stronger Authentication and Secure Payment Protocols Personalized Security Credentials: PSD3 places a strong emphasis on ensuring that personalized security credentials (such as passwords, PINs, or biometrics) are safeguarded to prevent fraudulent access. Payment service providers must implement multi-layered security measures to protect consumers' funds and personal data. Fraud Detection Tools: PSD3 requires PSPs to adopt advanced fraud detection systems, such as machine learning algorithms and real-time transaction monitoring, to flag suspicious activity and reduce fraud risks. ·        Liability in Case of Fraud PSPs are liable for financial losses in case of fraud unless there is suspicion of fraud, in which case an investigation may be conducted before issuing a refund. Liability Rules for Fraudulent Transactions: Under the PSR, PSPs are generally liable for losses resulting from fraud, unless there is evidence of consumer negligence (such as sharing security details). In cases where fraud is suspected, PSPs must initiate an investigation to determine responsibility before issuing refunds. Consumer Protection: Consumers are entitled to full reimbursement if unauthorized transactions occur, provided they notify their PSPs promptly. The regulations also provide mechanisms for resolving disputes between consumers and PSPs related to fraudulent transactions. ·        Role of the Digital Services Act (DSA) Fraud Prevention by Online Platforms: In addition to PSD3, the Digital Services Act (DSA) plays a role in regulating online platforms and ensuring they take responsibility for fraud prevention within their ecosystems. This includes ensuring that platforms identify and remove fraudulent listings, prohibit the sale of counterfeit goods, and verify the identity of sellers. Platform Accountability: The DSA holds online platforms accountable for preventing the use of their services to perpetrate fraud. These platforms must implement processes to identify potentially harmful or illegal activity and prevent fraudsters from exploiting their systems. ·        Implications for Consumers and Businesses Consumer Benefits: The enhanced security measures under PSD3 and the DSA are designed to build consumer confidence in digital payments and open banking services. Consumers can be assured that their data and money are better protected from fraud and cyber threats. Business Responsibility: Payment service providers will need to invest in stronger security technologies and fraud detection systems. Additionally, they must ensure their third-party partners (such as fintechs or other TPPs) comply with the stringent regulations to avoid liability for fraudulent activities. Linked EU Framework with Payments   The PSD3 Package is supported by some existing and upcoming legislations that strengthen key areas such as security, cross-border payments, data protection, and digital resilience. Below are some of the most important regulations that align with the objectives of PSD3 and play a crucial role in advancing the EU's digital payment ecosystem: ·        Regulation (EU) No 260/2012 of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009. ·        Regulation (EU) 2021/1230 of 14 July 2021 on cross-border payments in the Union. ·        Regulation (EU) 2015/751 of 29 April 2015 on interchange fees for card-based payment transactions. ·        Directive 98/26/EC of 19 May 1998 on settlement finality in payment and securities settlement systems. ·        Instant Regulation (EU) 2024/886 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 March 2024 amending Regulations (EU) No 260/2012 and (EU) 2021/1230 and Directives 98/26/EC and (EU) 2015/2366 as regards instant credit transfers in euro ·        Regulation (EU) 2023/1114 of 31 May 2023 on markets in crypto-assets. ·        Regulation (EU) 2022/2554 (DORA) of 14 December 2022 on digital operational resilience for the financial sector & Relevant Package. ·        EU AML Package (PSPs are obliged entities in the meaning of EU AML legislation). ·        Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC e-IDAS ·        Regulation (EU) 2024/1183 (e-IDAS 2) of 11 April 2024 amending Regulation (EU) No 910/2014 as regards establishing the European Digital Identity Framework Regulation (EU) 2016/679 of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data. ·        Directive 2019/882 (Accessibility Act) of 17 April 2019 on the accessibility requirements for products and services (relevant for measures to improve access to SCA, which are designed to be consistent with that Dir.). ·        Commission Delegated Regulation (EU) 2018/389 of 27 November 2017 supplementing Directive (EU) 2015/2366 of the European Parliament and of the Council with regard to regulatory technical standards for strong customer authentication and common and secure open standards of communication ·        Proposal for a REGULATION (FIDA) on a framework for Financial Data Access and amending Regulations (EU) No 1093/2010, (EU) No 1094/2010, (EU) No 1095/2010 and (EU) 2022/2554 ·        Regulation (EU) 2024/1689 AI ACT ·        Regulation (EU) 2023/2854 (DATA ACT) of 13 December 2023 on harmonised rules on fair access to and use of data and amending Regulation (EU) 2017/2394 and Directive (EU) 2020/1828   8. Implementation Timeline The final publication of PSD3 and PSR is expected in 2025, with full implementation anticipated around 2026/2027. The regulations will be directly applicable across the EU, with member states required to transpose them into national law. The introduction of new services will help streamline payment processes and foster greater competition within the financial sector.   9. Conclusion PSD3 and PSR represent a crucial evolution of the EU’s payment services framework, aiming to enhance security, consumer protection, and innovation. By building upon the foundational principles established by PSD2, these regulations seek to address emerging challenges in the digital era, promoting a safer, more competitive, and efficient payments ecosystem in the EU. In tandem with the Consumer Credit Directive (CCD), which regulates Buy Now, Pay Later (BNPL) schemes, these new rules create a balanced regulatory environment that supports both consumer rights and the growth of innovative financial products. As digital payments continue to evolve, PSD3 and PSR will play an essential role in shaping the future of payments in the EU.   Sources : (1) Proposal  for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on payment services and electronic money services in the Internal Market amending Directive 98/26/EC and repealing Directives 2015/2366/EU and 2009/110/EC https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023PC0366&qid=1690276986711   (2) Proposal  for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on payment services in the internal market and amending Regulation (EU) No 1093/2010 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023PC0367   (3) Opinion  of the European Economic and Social Committee - C/2024/1594 Opinion of the European Economic and Social Committee on a) Proposal for a Regulation of the European Parliament and of the Council on a framework for Financial Data Access and amending Regulations (EU) No 1093/2010, (EU) No 1094/2010, (EU) No 1095/2010 and (EU) 2022/2554 (COM(2023) 360 final — 2023/0205 (COD)) a) Proposal for a Directive of the European Parliament and of the Council on payment services and electronic money services in the Internal Market amending Directive 98/26/EC and repealing Directives 2015/2366/EU and 2009/110/EC (COM(2023) 366 final — 2023/0209 (COD)) and b) Proposal for a Regulation of the European Parliament and of the Council on payment services in the internal market and amending Regulation (EU) No 1093/2010 (COM(2023) 367 final — 2023/0210 (COD)) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=eesc%3AEESC-2023-03611   (4) COMMUNICATION  FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on a Retail Payments Strategy for the EU, COM(2020) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2020:592:FIN     (5) EBA report on payment fraud, ECB - (August 2024, EBA/ECB REPORT, 2024) https://www.ecb.europa.eu/press/intro/publications/pdf/ecb.ebaecb202408.en.pdf?6043824ff2dd70f0d9d9b6be2af2c4dc

Introduction In today’s interconnected business environment, fostering a culture of transparency and accountability has never been more critical. The European Union's Directive 2019/1937 on whistleblowing represents a significant step forward in protecting those who dare to speak up against wrongdoing. Implemented on December 16, 2019, this Directive provides a comprehensive framework for the protection of whistleblowers across EU member states, ensuring they can report breaches of EU law without fear of retaliation. To whom Does it Apply Directive 2019/1937 applies broadly across both the public and private sectors within the EU. Specifically, it affects: Private Sector:  All companies with 50 or more employees must comply. Additionally, all businesses involved in financial services, regardless of size, are covered. Public Sector:  All public entities, including state and regional administrations, municipalities with more than 10,000 inhabitants, and other bodies governed by public law, are included under this Directive. Type of Violations  The Directive sets out a comprehensive list of violations that can be reported, covering areas critical to public interest and the functioning of the internal market. These include: Public Procurement Financial Services, Products, and Markets Prevention of Money Laundering and Terrorist Financing Product Safety and Compliance Transport Safety Environmental Protection Radiation Protection and Nuclear Safety Food and Feed Safety, Animal Health and Welfare Public Health Consumer Protection Protection of Privacy and Personal Data, and Security of Network and Information Systems Competition Law Violations Whistle-blower - who can be Directive 2019/1937 provides protections to a broad range of individuals who might gain information about breaches in a work-related context. This includes: Employees:  Both current and former employees of an organisation, including self-employed status employees. Volunteers and Trainees:  Individuals working without payment or on training schemes. Contractors and Suppliers : Individuals and entities providing services, goods, or executing works. Shareholders and Persons Belonging to the Administrative, Management, or Supervisory Bodies : Including non-executive members. Job Applicants:  Individuals who acquired information during the recruitment process or other pre-contractual negotiations. Key Provisions of Directive 2019/1937 The Directive establishes several important requirements that organisations must adhere to: Reporting Channels:  Organisations with 50 or more employees are required to establish internal reporting channels that are secure and confidential. Public sector entities must also comply with these requirements. Whistleblowers can report violations through internal channels, external channels (to competent authorities), or publicly under specific conditions. Safeguards Against Retaliation:  The Directive mandates robust protections against retaliation for whistleblowers. This includes legal protection from dismissal, demotion, and other forms of workplace retaliation. Additionally, the Directive provides for support measures, such as access to legal aid and comprehensive information on reporting procedures. Follow-up Obligations:  Organisations are required to diligently follow up on reports, providing feedback to the whistleblower within a reasonable timeframe (usually three months). This ensures that whistleblowers are kept informed about the status and outcome of their reports. The Impact on Organisations The implementation of Directive 2019/1937 necessitates significant changes for many organisations, including but not limited to: Enhanced Compliance Requirements:  Organisations need to develop or upgrade their whistleblowing policies and procedures to comply with the Directive. This includes setting up secure reporting channels and ensuring that employees are aware of these channels and protections. Training and Awareness:  Companies must invest in training programs to educate employees about the importance of whistleblowing, the reporting procedures, and the protections available to them. Creating a culture of openness where employees feel safe to report misconduct is essential. Legal and Operational Readiness:  Legal teams must be prepared to handle whistleblower reports, ensuring that investigations are conducted thoroughly and discreetly. Operational adjustments may also be necessary to protect whistleblowers from retaliation effectively. Benefits of Compliance Adhering to the Directive not only helps organisations avoid legal repercussions but also brings several strategic advantages: Enhanced Reputation:  Demonstrating a commitment to transparency and ethical behaviour can significantly enhance an organisation’s reputation. Stakeholders, including customers, investors, and partners, are more likely to trust and engage with companies that prioritise integrity. Risk Mitigation:  Effective whistleblowing systems can help organisations identify and address issues before they escalate into major problems, thus mitigating legal, financial, and reputational risks. Employee Morale and Trust:  Protecting whistleblowers and fostering an environment where employees feel safe to report wrongdoing can boost morale and trust within the organisation. Employees are more likely to be engaged and loyal when they believe their concerns will be taken seriously. Conclusion Directive 2019/1937 marks as an important milestone in the journey towards greater corporate accountability and integrity within the EU. By protecting those who have the courage to report misconduct, the Directive not only safeguards the public interest but also helps build a business environment where ethical behaviour is the norm. Organisations that embrace these changes do not only ensure compliance but also cultivate a culture of trust and transparency that can drive long-term success. Therefore, it is crucial for organisations to view whistleblowing not as a threat, but as a vital component of a robust corporate governance framework.

Introduction In 2021, the European Commission introduced four legislative acts with a view to ensure harmonisation, strengthen the Capital Markets Union regime, as well as streamline the access to financial and sustainability-related information. In particular, the following legislations were adopted: The European Long-Term Investment Funds regulation (ELTIF), which aims at channeling long-term financing to listed or unlisted small and medium-sized enterprises (SMEs) as well as long-term infrastructure projects in various sectors The revision of the Alternative Investment Fund Managers Directive (AIFMD), which introduced targeted amendments to make the alternative investment fund market more efficient and integrated The revision of the Financial Instruments Markets Regulation (MiFIR), to further improve market transparency The European Single Access Point package (ESAP) What is European Single Access Point ( ESAP)? The European Single Access Point (ESAP) is a centralized platform designed to provide public access to a wide array of financial and sustainability-related data on European companies and investment products. This initiative is part of the broader European Commission’s Capital Markets Union (CMU) Action Plan, which aims to create a more integrated and efficient European capital market. Key Objectives of ESAP Enhanced Transparency : ESAP aims to consolidate data from various sources into a single, easily accessible platform. This will include financial statements, management reports, sustainability disclosures, and more, thereby providing a comprehensive view of companies' performances and sustainability efforts. Improved Accessibility : By providing a one-stop-shop for financial data, ESAP will reduce the fragmentation of information across different jurisdictions and regulatory frameworks. This will make it easier for investors, analysts, and other stakeholders to access and compare data across the EU. Fostering Integration : ESAP will facilitate the integration of financial markets by harmonizing data reporting standards and practices across member states. This is expected to boost cross-border investments and economic cooperation within the EU. Supporting Sustainable Finance : ESAP will play a crucial role in the EU’s sustainable finance strategy by ensuring that sustainability-related information is readily available. This will help investors make informed decisions and support the transition to a greener economy Functionalities of the ESAP A web portal featuring a user-friendly interface that accommodates the access needs of individuals with disabilities, offering information in all official EU languages. A search function available in all official EU languages. An information viewer tool. A machine translation service for the retrieved information. A download service that supports downloading large volumes of data. A notification service to inform users of new updates on ESAP. Display of information submitted voluntarily. Benefits of ESAP For Investors: Comprehensive Data Access : Investors will benefit from a more comprehensive and accessible data repository, enabling better investment decisions. Market Transparency:  Enhanced transparency will reduce information asymmetry, contributing to more efficient market functioning. For Entities: Simplified Reporting:  Companies will have a streamlined reporting process with standardized requirements, reducing the administrative burden. Visibility and Trust:  Increased visibility of sustainability efforts and financial health can enhance trust and attract more investment. For Regulators: Efficient Monitoring:  ESAP will provide regulators with better tools for monitoring and enforcing compliance with financial and sustainability reporting standards. Policy Making:  The availability of standardized data will support evidence-based policymaking and regulatory adjustments. Implementation and Challenges The implementation of ESAP will require significant coordination among EU member states, regulators, and stakeholders - Key challenges include but not limited: Data Standardization : Harmonizing data reporting standards across different jurisdictions. Technological Infrastructure:  Developing a robust and secure technological infrastructure to support the platform. Stakeholder Collaboration : Ensuring active collaboration among companies, investors, and regulators to provide and utilize the data effectively. Timeframes The ESAP platform is expected to be available from Q2 2027, where the collection of publication of information by the relevant Collection Entities (i.e. regulatory authorities), it will be gradually phased in from January 2026 to 2030, in order to allow for a robust implementation. Conclusion The European Single Access Point represents a significant step towards a more integrated, transparent, and efficient European financial market. By centralizing access to crucial financial and sustainability-related information, ESAP will not only empower investors and companies but also support the broader objectives of economic integration and sustainable growth within the EU. As the initiative progresses, it will be essential for all stakeholders to engage actively and collaboratively to realize the full potential of ESAP. The future of financial data access in Europe is on the horizon, and with ESAP, we are set to embark on a journey towards a more transparent, accessible, and sustainable financial ecosystem.

On 12 February 2014, the European Market Infrastructure Regulation ("EMIR") Reporting took place for both over-the-counter ("OTC") and exchange-traded ("ETD") derivative contracts, as defined in Section C of Annex I of MiFID II. All such derivatives are subject to reporting requirements, irrespective of parties involved into the derivative transactions. Overall, all derivative transactions, including conclusion, termination and modification shall be reported to the European Securities and Markets Authority ("ESMA") approved Trade Repositories ("TRs") within the following working date post the execution of the derivative transaction.  ESMA, as part of its mandate, has conducted a Regulatory Fitness and Performance Programme ("ReFIT") assessment on the area of EMIR, a long-lasting harmonization effort in collaboration with global regulators for improving the quality of data around EMIR derivatives reporting. Following the ReFIT assessment, ESMA concluded that necessary amendments shall be made, in order to further address all the regulatory transparency issues as well as the continuous rising of compliance costs. In this respect, both Regulatory Technical Standards ("RTS") and the Implementing Technical Standards ("ITS") have been issued in October 2022 in the Official Journal of the European Union, introducing a 18-month implementation period, leading to the enforcement date of April 29th, 2024. The EMIR ReFIT Chronicle What the new EMIR ReFIT aims to achieve Achieve a global harmonization on reporting standards. Alignment amongst TRs, via the introduction of the ISO 20022 message format for reporting, reconciling and accessing of TR data. Introduction of a new process for exchanging UTIs and performance of reconciliation amongst TRs. The introduction of a unified process for UPI under ANNA DSB, a centralised harbor for UPIs, aiming to eliminate to the extent possible any misalignments as well as the number of reportable fields in the near future. What the EMIR ReFIT key changes … Significant increase of reportable fields – in particular, the total number of reportable fields will be increased from 129 to 203. A grace period of 6 months for entities to update their outstanding derivatives to the new reporting format is provided, ending on 29 October 2024. New reporting mechanisms via XML schemas utilising ISO 20022 standards, abolishing the existing CSV reporting mechanism. The new reporting format will allow an easier porting between TRs within Europe. Introduction of a unified process of UPI utilisation. Provision by TRs to reporting entities of end-of-day information in order to provide support in terms of enhancing the quality of the EMIR reportable data. Introduction of enhanced reconciliation checks between TRs. From 29 April 2024 onwards, 85 reportable fields will be subject to reconciliation checks, which will be increased by 66 additional fields, merely related to valuation fields, two years after the “go-live” date. Financial Counterparties ("FCs") are required to established internal procedures and arrangements so as to ensure that in cases where an Non-Financial Counterparty ("NFC-") decides to stop performing its EMIR reporting on its own and hence delegated this responsibility to the FC, the latter would be in a position to start reporting on behalf of the NFC- within 10 working days from the NFC- notification date. Conclusion Upcoming EMIR ReFIT developments shall not be underestimated and concerned entities shall ensure that internal and external arrangements are properly and timely implemented with minimum interruption on their day-to-day operations by 29 April 2024.  Useful Links https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%   3AOJ.L.2022.262.01.0001.01.ENG&toc=OJ%3AL%3A2022%3A262%3ATOC https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2022.262.01.0068.01.ENG&toc=OJ%3AL%3A2022%3A262%3ATOC https://www.esma.europa.eu/press-news/esma-news/esma-publishes-guidelines-and-technical-documentation-reporting-under-emir

MiFID framework reform is continuously evolving since 2007, introducing a significant number of notable developments – starting from Market in Financial Instruments Directive in 2004, moving to the Directive 2014/65/EU of 2018, with MiFID III being already on the horizon of the revamped regulatory era. The rationale & key objectives of the revamping MiFIR/MiFID III On 25 November 2021, the European Commission has published both the legislative proposals amending Regulation (EU) No 600/2014 on markets in financial instruments (“MiFIR”) [1] , as well as amending Directive 2014/65/EU on markets in financial instruments (“MiFID II”) [2] . Both proposals aim to exert a higher degree of transparency and the availability of market data (including ending of RTS 27 [3]  reports), achieve a more uniform level-playing field between execution venues, establish and implement a new process relating to the selection of consolidated tape providers for EU trade data, update the EU share and derivative trading obligations, prohibit payments in relation to clients’ order flow towards execution venues, ensuring in such a way that EU markets in financial instruments infrastructure remains internationally competitive. Quick Fixing at MiFID II in 2022, not sufficed though Quick fixing on MiFID II took place during 2022, where the European legislator, in response to the COVID-19 pandemic and in order to alleviate the administrative burden on MiFID II firms, introduced and adopted the EU Directive 2021/338, via which introduced, amongst others, the following: changes in information and transparency related requirements were introduced (e.g. abolishment of the obligation to provide information to professional clients and eligible counterparties about costs and associated charges, periodic reporting requirements regarding the execution of client orders were postponed (RTS 27 reporting), criteria for ancillary investment activities were introduced, and electronic method of communication has become the default method for investment firms in communicating with their clients. However, European legislators and market participants did not seek quick fixing rules as sufficient in revamping MiFID framework after 5 plus years of its implementation. What is changing … Some of the key propositions of the European legislators, are as follows: Design and implementation of a centralized database (consolidated tape), for both equity and equity-like financial instruments traded throughout the European Union across all trading venues, in an effort to improve overall price transparency across EU trading venues. Prohibition on payments on firms for forwarding client orders to third parties for execution. Abolishment of RTS27 periodic reporting for both trading venues and systematic internalisers. Changes in relation to systematic internalisers framework - systematic internalisers will be (i) required to publish firm quotes that are a minimum of twice the standard market size, (ii) prohibited from utilising payment order flow to retail clients as well as (iii) aligned with the reporting rules applicable to trading venues. Alignment of the trading obligation under MiFIR and clearing obligations under EMIR for derivative contracts. Introduction of new clock synchronisation rules for trading venues, systematic internalisers, as well as APA/ARM and CTP providers. ESMA would be required to propose amendments on transaction reporting and financial instrument reference data reporting system. Introduction of sanctions for infringements of certain MiFIR II provisions. Overall, the upcoming MiFIR II / MiFID III legislative package could be seen as a complete overhaul of MiFID framework in the same way as was the case for MiFIR / MiFID II, since the upcoming changes are considered as notable and essential.  It is obvious that the MiFID framework will see additional revisions in future ...  Enforcement timeframe Following the agreement on the proposed changes by the European legislators, MiFIR II/ MiFID III adoption by the European Parliament seems to take place towards the end of 2023 - Q1 2024. Once adopted, both the revised MiFIR II and MiFID III legislative documentation will be published in the Official Journal of the European Union.  Consequently, whilst MiFIR II would become applicable by its publication in the Official Journal, MiFID III would need to be transposed into national law by each Member State, which is expected to take place within 2025. [1]   https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021PC0727 [2]   https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021PC0726 [3]   https://eur-lex.europa.eu/legal-content/EN/TXT/uri=CELEX%3A32017R0575

The financial industry is continuously evolving, driven by regulatory changes aimed at enhancing transparency, stability, and consumer protection. One such regulation making waves in the banking sector is the Digital Operational Resilience Act (DORA). DORA represents a significant shift in how financial institutions manage and mitigate operational risks in an increasingly digitalized world. What is DORA The Digital Operational Resilience Act (DORA) is a legislative proposal introduced by the European Commission to strengthen the operational resilience of the financial sector in the European Union (EU). DORA aims to address the challenges posed by digitalization and technological advancements by establishing harmonized rules and standards for operational resilience across the financial industry. What are the Key Components of DORA Operational Resilience Requirements:  DORA sets out comprehensive requirements for financial institutions to ensure the resilience of their operational processes, systems, and services. This includes measures to prevent, detect, respond to, and recover from operational incidents, such as cyberattacks, IT failures, and other disruptions. Digital Operational Resilience Testing:  DORA mandates regular testing and assessment of digital operational resilience capabilities by financial institutions. This involves conducting scenario-based exercises, stress testing, and simulation exercises to evaluate the effectiveness of risk management processes and contingency plans. Incident Reporting and Cooperation:  DORA introduces enhanced incident reporting obligations for financial institutions, requiring timely notification of significant operational incidents to competent authorities. It also emphasizes the importance of cooperation and information-sharing among authorities, firms, and other stakeholders to address cross-border operational risks effectively. Third-Party Service Providers:  DORA extends operational resilience requirements to third-party service providers, such as cloud service providers and fintech firms, that play a crucial role in supporting the operations of financial institutions. It imposes obligations on financial institutions to ensure the resilience of outsourced services and maintain oversight of third-party risk. Implications & Opportunities for Financial Institutions Compliance Challenges: Enhanced Requirements:  DORA introduces stringent requirements for operational resilience, spanning prevention, detection, response, and recovery from operational incidents. Financial institutions will need to invest in robust risk management processes, cybersecurity measures, and contingency plans to comply with these requirements. Resource Allocation:  Compliance with DORA may require significant resources, including financial investments, personnel training, and technology upgrades. Institutions will need to allocate resources effectively to ensure compliance while balancing other strategic priorities. Regulatory Scrutiny: Increased Reporting Obligations:  DORA mandates timely reporting of significant operational incidents to competent authorities, requiring financial institutions to establish robust incident reporting mechanisms. This heightened reporting obligation may lead to increased regulatory scrutiny and oversight. Supervisory Reviews:  Supervisory authorities are likely to conduct more frequent and thorough reviews of financial institutions' operational resilience frameworks to assess compliance with DORA requirements. Institutions will need to demonstrate adherence to regulatory standards through comprehensive documentation and evidence of effective risk management practices. Operational Resilience Enhancement: Opportunity for Improvement:  While DORA presents compliance challenges, it also provides an opportunity for financial institutions to strengthen their operational resilience capabilities. By adopting a proactive approach to risk management and investing in resilience-building measures, institutions can enhance their ability to withstand and recover from operational disruptions. Investment in Technology:  DORA may drive increased investment in technology infrastructure, cybersecurity solutions, and digital transformation initiatives. Financial institutions that leverage innovative technologies to enhance operational resilience may gain a competitive advantage in the market. Competitive Advantage: Differentiation : Institutions that demonstrate strong operational resilience and effective risk management practices may differentiate themselves in the market and enhance trust and confidence among customers, investors, and other stakeholders. Market Positioning:  Compliance with DORA can serve as a market differentiator, signaling to stakeholders that an institution prioritizes operational resilience and is committed to maintaining high standards of risk management and governance. Collaboration and Information Sharing: Industry Collaboration:  DORA emphasizes the importance of cooperation and information-sharing among financial institutions, supervisory authorities, and other stakeholders to address cross-border operational risks effectively. Institutions that actively participate in industry-wide initiatives and collaborative efforts may strengthen their resilience posture and mitigate systemic risks. Conclusion DORA represents a landmark regulatory initiative aimed at strengthening the operational resilience of the financial sector in the digital age. While compliance with DORA poses challenges for financial institutions, it also presents opportunities to enhance resilience, improve risk management practices, and drive innovation.  By embracing DORA and adopting a proactive approach to operational resilience, financial institutions can navigate the evolving regulatory landscape and position themselves for long-term success in an increasingly digitalized world.

Introduction In the ever-evolving landscape of financial markets, the concept of T+1 settlement has gained significant traction, particularly in Europe. T+1 settlement refers to the shortened timeframe between the execution of a trade and the settlement of the transaction, reducing it from the traditional T+2 (trade date plus two days) settlement cycle to just one day. This transition holds the promise of various benefits for market participants, but it also presents its fair share of challenges. ESMA “Call for evidence” The European Securities and Markets Authority (ESMA) issued a "Call for Evidence" regarding the settlement cycle for securities in the European Union. This call aimed to gather information and stakeholders' views on the potential benefits and challenges associated with shortening the settlement cycle from T+2 to T+1 or even same-day settlement. Overall, the ESMA Call for Evidence likely provided a comprehensive overview of the potential benefits and challenges associated with shortening the settlement cycle in Europe, aiming to gather input from stakeholders to inform future policy decisions and regulatory initiatives in this area. Benefits Reduced Counterparty Risk:  With transactions settling faster, the exposure to counterparty risk diminishes, enhancing overall market stability. This reduction in risk can lead to improved investor confidence and potentially lower costs associated with risk management. Liquidity Enhancement:  Shortening the settlement cycle frees up capital and liquidity sooner, enabling investors to deploy these resources more efficiently. This liquidity enhancement can foster increased trading activity and improve market liquidity overall. Operational Efficiency : T+1 settlement necessitates more streamlined and efficient post-trade processes. Market participants are compelled to adopt robust infrastructure and automated systems, leading to lower operational costs and fewer errors in transaction processing. Alignment with Global Standards:  Many international markets have already migrated to T+1 or even same-day settlement cycles. By adopting T+1 settlement, European markets can harmonize their practices with global standards, facilitating cross-border trading and enhancing market integration. Challenges Infrastructure Readiness:  Transitioning to T+1 settlement requires significant upgrades to market infrastructure, including trading platforms, clearing systems, and settlement processes. Ensuring the readiness of such infrastructure poses a considerable challenge, especially for smaller market participants with limited resources. Cost Implications:  While T+1 settlement offers long-term cost savings through enhanced efficiency, the initial implementation costs can be substantial. Market participants must invest in upgrading their technology and operational capabilities, which could strain budgets, particularly for smaller firms. Operational Risks:  The compressed settlement timeframe leaves little room for error in trade processing. Any operational glitches or delays can have more significant consequences, potentially leading to failed trades or financial losses. Market participants need to strengthen their operational resilience to mitigate such risks effectively. Regulatory Compliance:  Regulatory frameworks must adapt to accommodate the shift to T+1 settlement. Regulatory bodies need to ensure that market participants comply with the new settlement cycle while maintaining market integrity and investor protection. Navigating these regulatory changes poses a complex challenge for market stakeholders. Conclusion T+1 settlement holds immense potential to transform European financial markets by enhancing efficiency, reducing risk, and aligning with global standards. However, realizing these benefits requires concerted efforts from market participants, regulators, and infrastructure providers to overcome the challenges posed by the transition. While the journey towards T+1 settlement may be fraught with obstacles, the end goal of a more resilient, liquid, and integrated market ecosystem makes it a worthy endeavor. By addressing the challenges head-on and capitalizing on the benefits, European financial markets can pave the way for a more dynamic and competitive future.

The Data Act: Enhancing Data Accessibility and Sharing In today’s digital era, the flow of data is crucial to driving innovation, enhancing services, and creating economic value. As businesses and consumers increasingly rely on data, the regulatory landscape is evolving to ensure that data is managed and used responsibly. Among the forefront of these regulatory advancements are the Data Act and the Financial Data Access Regulation (FIDA). These frameworks are designed to shape the future of data accessibility, security, and utilization in the financial sector. The Data Act is a legislative initiative by the European Union aimed at unlocking the potential of data by facilitating its access and sharing across sectors. It builds on the foundations of the General Data Protection Regulation (GDPR) and other data-related laws, seeking to promote a fair data economy. Key Objectives of the Data Act Data Portability and Interoperability:  The Act mandates that data should be easily portable and interoperable across different systems and services. This means businesses and consumers can transfer their data seamlessly, promoting competition and innovation. Data Sharing Obligations:  It requires certain data holders to make data available to public sector bodies and other organizations under specific conditions, particularly in situations of public interest or during emergencies like pandemics. Fairness in Data Contracts:  The Data Act aims to prevent the abuse of power by dominant players in data-related contracts, ensuring fairer terms for smaller businesses and startups.  What are the Benefits of the EU Data Act? The Data Act aims to eliminate barriers to data access for both private and public sector organizations. It does this while preserving incentives for data creation by ensuring that those who generate data maintain balanced control over it. This approach encourages continued investment in data generation, as creators are assured their contributions are recognized and protected. Overall, the EU Data Act seeks to establish a more transparent, fair, and secure digital landscape. By enhancing data accessibility and fostering equitable data sharing practices, the Act benefits both individuals and businesses. For individuals, it means greater control over their personal data and increased trust in how their data is used. For businesses, it translates to new opportunities for innovation and collaboration, driving economic growth within the European Union. Through these measures, the Data Act aims to cultivate a vibrant digital economy that encourages innovation and supports economic progress across member states. Timeframe 2023: Introduction of the Data Act proposal by the European Commission. 2024-2025: The EU Data Act entered into force on 11 January 2024, and it will become applicable in September 2025. However, phase-in will be followed on: The obligation resulting from Article 3 (1) on business-to-business data access by design shall apply to connected products and the services post  12 September 2026 . Provisions of Chapter IV relation to contracts concluded on or before 12 September 2025 will apply as from  12 September 2027  as long as they are: of indefinite duration; or due to expire at least 10 years from 11 January 2024. Financial Data Access Regulation (FIDA): Transforming Financial Data Landscape The Financial Data Access Regulation (FIDA) is a critical component of the broader Data Act, specifically targeting the financial services sector. It aims to democratize access to financial data, fostering an environment where innovation can thrive while maintaining robust consumer protection. Key Elements of FIDA Consumer Empowerment:  FIDA empowers consumers by giving them greater control over their financial data. It ensures that consumers can easily access their financial information and share it with third-party providers of their choice, enhancing their ability to benefit from innovative financial products and services. Security and Privacy:  The regulation underscores the importance of security and privacy in financial data sharing. It establishes stringent requirements for data protection, ensuring that financial institutions and third-party providers adhere to high standards of cybersecurity. Market Competition:  By facilitating easier access to financial data, FIDA promotes competition in the financial services market. This is expected to lower costs, improve service quality, and drive innovation as new entrants can compete more effectively with established players. Implications for Businesses and Consumers The Data Act and FIDA represent significant steps towards a more open and dynamic data economy. For businesses, these regulations offer opportunities to innovate and create new value propositions. Companies that embrace data portability and interoperability can develop new services, optimize operations, and enhance customer experiences. For consumers, these regulations provide greater transparency and control over personal data. They can choose from a wider range of financial services tailored to their needs and preferences, driving a more personalized and efficient financial ecosystem. Preparing for the Future As we move towards a data-driven future, businesses must stay ahead of the curve by understanding and preparing for these regulatory changes. Here are a few steps to consider: Evaluate Data Management Practices:  Ensure your data management practices align with the requirements of the Data Act and FIDA. This includes implementing robust data protection measures and ensuring data interoperability. Invest in Technology:  Adopt technologies that facilitate secure data sharing and interoperability. This includes leveraging APIs, data encryption, and blockchain technology to enhance data security and transparency. Engage with Stakeholders:  Collaborate with industry stakeholders, including regulators, to stay informed about regulatory developments and contribute to shaping the future data landscape. Educate and Train Staff:  Equip your team with the knowledge and skills needed to navigate the evolving data regulations. Regular training and awareness programs can help ensure compliance and foster a culture of data responsibility. Timeframe 2023: FIDA proposed alongside the Data Act by the European Commission. 2024-2025: Legislative process, with discussions and approvals from the European Parliament and Council. 2026: Initial implementation phase, allowing financial institutions and third-party providers to prepare for compliance. 2027: Full enforcement of FIDA, with all provisions becoming mandatory for relevant stakeholders. Conclusion The Data Act and Financial Data Access Regulation (FIDA) are paving the way for a more inclusive and innovative data economy. By embracing these regulatory changes, businesses can unlock new opportunities, drive growth, and build trust with consumers. As we stand at the cusp of this transformative era, it’s imperative for organizations to adapt, innovate, and lead in the evolving landscape of data accessibility and financial services.

Introduction The European Market Infrastructure Regulation (EMIR) has been a cornerstone of financial stability in the derivatives market since its inception. As the financial landscape evolves, so too does the regulatory framework. The European Commission published its proposals for a package of amendments at both EMIR Regulation [1] and the Directive [2] – known as  EMIR 3.0  - relating to the European Market Infrastructure Regulation (EMIR) (Regulation (EU) No 648/2012) in December 2022.  The proposals entered the EU’s ordinary legislative procedure and, in December 2023, where on 7 February 2024, the Council and the Parliament announced that provisional political agreement had been reached. What is EMIR 3 EMIR 3 represents the third phase of the EMIR regulatory framework, building upon the foundations laid by EMIR 1 (2012) and EMIR 2 (2019). The primary goal of EMIR has always been to increase transparency, reduce systemic risk, and ensure the stability of the over-the-counter (OTC) derivatives market. EMIR 3.0 continues this mission but introduces several new elements to address emerging challenges and inefficiencies identified in previous iterations. Key Changes and Enhancements EMIR 3.0 introduces a new concept of an active account requirement, aiming to reduce reliance on Tier 2 CCPs and increase clearing of certain derivatives trades in the EU. The active account requirement would apply to (i) euro or polish zloty denominated interest rate derivatives; and (ii) euro denominated short-term interest rate derivatives. FCs, as well as NFCs above the clearing thresholds (NFC+s), will need to have at least one operational active account open at an EU authorised CCP and, if they meet certain criteria, may need to clear at least a representative number of transactions at such CCP. EMIR 3.0 removes the need for an equivalence decision and instead there is a simpler framework, namely that the third country must not be on a list of jurisdictions for which an exemption cannot be granted.  For NFC+s whose intragroup trades are exempt from the reporting obligation, their EU parent entities will assume the responsibility to report the net aggregate derivative positions of such NFC+s to their National Competent Authority (NCA) on a weekly basis. Additional transparency requirements for CCPs, including the disclosure of fees charged to clients, the reporting on clearing activity at third country CCPs as well as the sharing of information to ESMA on the average clearing activity at EU CCPs will be introduced. Permanent exemption from regulatory margin requirements for non-centrally cleared single-stock equity options and equity index options. Amendment of the NFC clearing threshold methodology so that it is determined by reference only to trades that are centrally cleared with an EU authorised or recognised CCP, with the hedging exemption continuing to be determined by reference to risk reduction effects at group level. Penalties According to EMIR 3.0, NCAs can impose penalties of up to 3% of the average daily turnover in the prior year on counterparties that do not comply with the operational active account requirement.  In addition, NCAs can impose periodic penalties of up to 1% of the average daily turnover for the prior year on entities subject to the reporting obligation where the details reported repeatedly contain manifest errors. Implications for Market Participants The introduction of EMIR 3.0 will have significant implications for all market participants, including financial institutions, corporates, and service providers. Here are a few key areas to consider: Compliance Costs:  While the enhanced transparency and risk mitigation measures are beneficial for market stability, they may increase compliance costs, particularly for smaller entities. Operational Adjustments : Firms will need to update their internal systems and processes to meet the new reporting standards and clearing obligations. This might involve investing in new technologies or enhancing existing ones. Strategic Considerations:  Market participants should reassess their derivatives strategies to align with the revised regulatory landscape. This could include re-evaluating which products to trade, optimizing collateral management, and enhancing risk management frameworks. Preparing for EMIR 3.0 Even it may be considered as too early, in order to effectively navigate the transition to EMIR 3.0, market participants should: Stay Informed:  Regularly monitor updates from regulatory bodies such as ESMA and engage with industry forums to stay abreast of the latest developments and interpretive guidance. Conduct Impact Assessments:  Proactively evaluate how the changes will affect your business, from compliance requirements to operational workflows. Identify any gaps and develop a plan to address them. Timeline Based on the current progress and estimates, it is anticipated that EMIR 3.0 will come into effect some time in Q4 of 2024. EMIR 3.0 will enter into force on the twentieth day following its publication in the Official Journal of the European Union, with most provisions expressed to apply from its entry into force. However, several provisions, including the active account requirement and the new clearing thresholds, require the European Securities and Markets Authority (ESMA) to put in place regulatory technical standards so the precise detail in relation to those provisions will not be known until the relevant ESMA technical standards are in force, which may be sometime later in 2025. Conclusion EMIR 3.0 marks a significant evolution in the regulatory framework governing the derivatives market.  By enhancing transparency, refining risk mitigation, and simplifying procedures for smaller entities, EMIR 3.0 aims to foster a more resilient financial system. Market participants must proactively adapt to these changes to ensure compliance and capitalise on the opportunities presented by a more robust regulatory environment. As the implementation of EMIR 3.0 progresses, staying informed and prepared will be crucial for navigating this new regulatory landscape. Embrace the change, invest in the necessary resources, and position your organization for success in the evolving derivatives market. [1]  https://www.europarl.europa.eu/doceo/document/TA-9-2024-0348_EN.pdf [2]  https://www.europarl.europa.eu/doceo/document/TA-9-2024-0349_EN.pdf