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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

What is the DORA Register of Information The Register of Information (“RoI”) under  DORA  (Regulation (EU) 2022/2554), is introduced by  Commission Implementing Regulation (EU) 2024/2956 implementing technical standards with regard to standard templates for the register of information , which is a standardized central database that records all contractual agreements of a financial company with ICT third-party service providers. It contains detailed information about the ICT services utilized, the providers, and the supported business and operational functions. The RoI enables systematic monitoring of dependencies and risks arising from the use of ICT third-party providers and serves to provide this information to the relevant supervisory authorities, as well as it encompasses all ICT services; however, particularly critical or important functions must be listed in more detail. Main Benefits: For financial entities : The RoI assists financial entities to document and monitor all their contractual dependencies related to ICT services.  For the entire financial sector : The RoI allows supervisory authorities to comprehensively monitor the dependencies of financial entities on ICT third-party providers and identify critical or important service providers. It also allows proactive identification of systemic risks and implementation of coordinated preventive measures, ensuring digital resilience across the financial sector. How do you ensure a compliant RoI The creation of a DORA-compliant register of information involves four main steps: Identification of critical and important functions : Determine which operational and business functions are essential for maintaining business operations and meeting regulatory requirements. Documentation of ICT third-party service providers : Identify all providers delivering ICT services, and document the contractual details and dependencies. Documentation of ICT services : Record all ICT services with the identified critical or important functions of financial entities. Consolidation of information : Enter the retrieved information into the unified templates which ensures uniform reporting.  Preparation for reporting of DORA RoI Key Notes for get prepared for RoIs.  Financial entities must submit their RoI as described in the  Implementing Technical Standard on the Register of Information .  The RoI should contain all data as per the Implementing Technical Standards (ITS), as at  31 March 2025 . The ESAs have provided information on how to prepare to report RoI at the following  webpage . The file type financial entities must be using is a ‘plain-csv’ (xBRL OIM-CSV) file in accordance with EBA taxonomy 4.0. Financial entities submitting RoIs must have a  valid LEI code . The ICT third party service providers listed in the RoI will need to have either a  valid LEI code or EU-ID  in order for the files to pass validation, along with meeting the other requirements mentioned above. Upcoming Submission Date According to the ESA decision, the deadline for the first submission of the RoIs to the ESAs is set for  30 April 2025 , hence, the ESAs expect competent authorities to collect the RoIs from the financial entities under their supervision in advance, based on their own timelines.

Introduction In line with its digital strategy, the European Union (EU) is embarking on a journey to regulate Artificial Intelligence (AI) for the betterment of society. Acknowledging AI's transformative potential across sectors such as transportation, financial, health and energy, the EU aims to strike a balance between fostering innovation and safeguarding societal well-being. European Parliament's top priority is to ensure that AI systems deployed in the EU adhere to stringent safety, transparency, and environmental standards. Human oversight is deemed essential to prevent detrimental outcomes, and European Parliament seeks a technology-neutral, uniform definition of AI to guide future regulations. In April 2021, the European Commission proposed the EU's first regulatory framework for AI, setting the stage for a comprehensive approach to AI governance. On March 13, 2024, the European Parliament adopted (first reading) the Artificial Intelligence Act (AI Act). The AI Act is assumed to be the world's first comprehensive horizontal legal framework for AI and is expected to provide EU-wide rules on data quality, transparency, human oversight and accountability. Extraterritorial Scope of Artificial Intelligence (AI) Act The AI Act represents a significant step in EU regulation, extending its reach beyond EU borders to ensure the effective governance of artificial intelligence (AI) within the Union. Unlike typical EU regulations, which primarily affect entities within the Union, the AI Act applies to all providers and users of AI systems, irrespective of their location, as long as their outputs are utilized within the EU. Its extraterritorial scope underscores the EU's commitment to upholding its policies, objectives, and internal market integrity in the realm of AI. To enforce compliance from non-EU entities, the AI Act mandates that third-country providers of AI systems appoint an authorized representative within the Union, allowing European authorities to exercise supervisory powers over such entities. How AI Act may affect financial sector The AI Act, a broad-reaching legislation, currently offers limited focus on AI tools within the financial sector. Explicit references within the AI Act relate primarily to credit scoring models and risk assessment tools in insurance. AI systems used for credit evaluation or risk assessment in insurance, critical for individuals' financial access and well-being, are likely to be classified as high-risk due to potential life-altering consequences if improperly designed. However, the European Parliament suggests exempting AI systems detecting fraud in financial services from high-risk classification. In order to avoid redundancy with existing financial regulations, the AI Act directs financial institutions to comply with certain requirements by adhering to financial regulation standards. As the list of high-risk AI systems evolves, institutions should monitor developments closely. With the rise of general-purpose AI in finance, institutions must navigate regulatory landscapes like the Digital Operational Resilience Act (DORA), considering interactions with the AI Act's obligations. Supervisory authorities will integrate AI Act compliance checks into existing financial oversight practices, with the European Central Bank overseeing risk management for credit institutions. Additionally, the AI Act mandates the establishment of the European Artificial Intelligence Office, tasked with harmonizing AI Act implementation and advocating for the AI ecosystem's interests. Risk Based Approach & Bans The EU's AI regulatory framework classifies AI systems based on their potential risks to users. Unacceptable risks, such as cognitive manipulation and biometric identification, are outright banned. Meanwhile, high-risk AI systems, which could compromise safety or fundamental rights, undergo thorough assessment and oversight. Lastly, applications not explicitly banned or listed as high-risk are largely left unregulated. The new rules ban certain AI applications that threaten citizens’ rights, including biometric categorisation systems based on sensitive characteristics and untargeted scraping of facial images from the internet or CCTV footage to create facial recognition databases. Emotion recognition in the workplace, social scoring and AI that manipulates human behaviour or exploits people’s vulnerabilities will also be forbidden Transparency and Accountability Measures Transparency lies at the core of Europe's AI regulation, ensuring users are aware of AI-generated content's nature and origin. Generative AI models, like ChatGPT, must meet transparency requirements and comply with copyright laws. High-impact AI models, such as GPT-4, undergo comprehensive evaluations, with incidents reported to the European Commission to ensure accountability and mitigate systemic risks. Supporting Innovation and SMEs Europe's regulatory framework aims to foster innovation, particularly among startups and small to medium-sized enterprises (SMEs). National authorities are tasked with providing conducive testing environments, enabling these entities to develop and train AI models effectively before market release. Timeline for compliance The AI Act will be phase-in implemented - in particular,  6-months for Member States to phase out prohibited systems.  12-months for general purpose AI governance obligations to become applicable. 24/36-months for all rules of the AI Act for becoming applicable including obligations for high-risk systems defined in corresponding Annexes of the AI Act. Administrative fines The new AI Act introduces significant fines for those breaching its requirements — fines/penalties may reach up to EUR30 million or 6% of companies’ total worldwide annual turnover for the preceding financial year, whichever is higher. Conclusion AI regulatory framework aims balanced approach that fosters innovation while safeguarding societal values and fundamental rights.  By prioritising safety, transparency, and accountability, European legislators aim to cultivate an AI ecosystem that promotes responsible development and utilization of AI technologies. As regulations take effect and evolve over time, European legislators are poised to lead the global conversation on ethical AI governance, paving the way for a digitally progressive and socially responsible future.

Introduction In today's hyper-connected digital world, instant payments have emerged as the preferred method for conducting financial transactions, offering unprecedented speed, convenience, and accessibility. As the demand for instant payments continues to soar, regulatory bodies worldwide are enacting comprehensive frameworks to ensure the safety, efficiency, and integrity of these systems. In view of the above, the European Council has adopted the Instant Payments Regulation EU 2024/886 in March 2024, aimed at facilitating instant payments in euro for consumers and businesses across the EU and EEA countries. The Regulation seeks to enhance the strategic autonomy of the European economic and financial sector by reducing reliance on third-country institutions. It will enable individuals and companies to transfer money within ten seconds at any time of the day, including outside business hours, and across EU member states. Payment service providers, including banks, will be required to offer instant payment services in euro, with charges not exceeding those for standard credit transfers.  The Regulation will come into force after a transition period, with different timelines for the euro area and non-euro area.  The Rise of Instant Payments Instant payments have transformed the way we transact, enabling individuals and businesses to transfer funds instantaneously, 24/7, 365 days a year. Whether it's splitting a dinner bill with friends or settling invoices with suppliers, instant payments provide unparalleled speed and convenience, driving greater financial inclusion and economic empowerment. Understanding Instant Payments Regulation Instant Payments Regulation encompasses a range of regulatory directives and guidelines aimed at governing the operation and oversight of instant payment systems. Key components of Instant Payments Regulation include: Payment Security:  Establishing robust security measures to safeguard against fraud, cyber threats, and unauthorized access to payment systems. Transaction Transparency:  Promoting transparency in pricing, fees, and terms to enhance consumer confidence and trust in instant payment services. Cross-Border Compatibility:  Facilitating interoperability and cross-border functionality to enable seamless international transactions. Regulatory Compliance:  Setting clear guidelines and reporting requirements to ensure compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations. Navigating the Impact The implementation of Instant Payments Regulation presents both challenges and opportunities for financial institutions and payment service providers: Compliance Deadlines:  Regulatory authorities have set specific deadlines for compliance with Instant Payments Regulation, requiring financial institutions to upgrade their infrastructure, processes, and controls within defined timelines. Investment in Technology:  Compliance with Instant Payments Regulation necessitates significant investments in technology infrastructure, cybersecurity measures, and transaction monitoring systems to meet regulatory standards and enhance operational resilience. Innovation and Competition:  Regulatory clarity and standardized frameworks can stimulate innovation and competition in the instant payments market, fostering the development of new products, services, and business models, including 10-second payment solutions that promise even faster transaction speeds. Enhanced Customer Experience:  Instant Payments Regulation aims to enhance the overall customer experience by simplifying payment processes, reducing transaction costs, and accelerating settlement times. Market Dynamics:  The regulatory landscape for instant payments continues to evolve, influenced by technological advancements, market trends, and geopolitical factors. Financial institutions must stay abreast of regulatory developments and adapt their strategies accordingly to remain competitive. Opportunities Envisioned Innovation Ecosystem:  Compliance with Instant Payments Regulation stimulates an innovation ecosystem, encouraging the development of innovative payment solutions and services. Enhanced Financial Inclusion:  Real-time payments promote financial inclusion, providing underserved populations with access to essential financial services. International Expansion : Cross-border compatibility facilitates international expansion, enabling businesses to tap into new markets and revenue streams. Efficiency Gains:  Streamlined processes and reduced settlement times lead to efficiency gains, enhancing operational productivity and cost-effectiveness. Competitive Advantage:  Institutions that embrace Instant Payments Regulation gain a competitive advantage, positioning themselves as industry leaders in the fast-paced digital landscape. Embracing the Future As Instant Payments Regulation reshapes the global payments landscape, financial institutions and payment service providers must embrace the opportunities it presents while addressing compliance challenges. By prioritizing innovation, collaboration, and customer-centricity, stakeholders can leverage instant payments to drive financial inclusion, economic growth, and digital transformation. Conclusion The advent of Instant Payments Regulation heralds a new era of real-time payments, offering unprecedented opportunities for individuals, businesses, and economies to thrive in the digital age.  Understanding regulatory requirements, meeting compliance deadlines, and embracing innovation, stakeholders can navigate the instant payments revolution with confidence, positioning themselves for success in a rapidly evolving financial ecosystem.

Introduction In recent years, the call for corporate transparency and accountability regarding sustainability has intensified across the globe. One of the most significant developments in this arena is the introduction of the EU Corporate Sustainability Reporting Directive (CSRD), which aims to enhance and standardize sustainability reporting across the European Union. This article explores the implications, benefits, and challenges of the CSRD for businesses and stakeholders. On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. It modernises and strengthens the rules concerning the social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability. Some non-EU companies will also have to report if they generate over EUR 150 million on the EU market. The new rules will ensure that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment and for investors to assess financial risks and opportunities arising from climate change and other sustainability issues. Finally, reporting costs will be reduced for companies over the medium to long term by harmonising the information to be provided. The CSRD also requires assurance on the sustainability information that companies report and will provide for the digital taxonomy of sustainability information. What the EU is doing EU law requires all large companies and all listed companies (except listed micro-enterprises) to disclose information on what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on people and the environment. This helps investors, civil society organisations, consumers and other stakeholders to evaluate the sustainability performance of companies, as part of the European green deal. Understanding the Corporate Sustainability Reporting Directive ( CSRD) The CSRD, adopted by the European Commission in 2021, expands upon the existing Non-Financial Reporting Directive (NFRD). It mandates that a broader range of companies disclose comprehensive sustainability information in their annual reports. The directive applies to all large companies and all companies listed on EU-regulated markets, affecting approximately 50,000 companies compared to the 11,000 covered under the NFRD. Key Features of CSRD Scope and Coverage : The CSRD encompasses all large companies (those meeting two of the three criteria: €40 million in net turnover, €20 million in total assets, or 250 employees) and all listed companies, including SMEs that are listed on EU markets. Standardized Reporting : The directive requires companies to report in accordance with EU sustainability reporting standards, ensuring consistency and comparability of information across sectors and borders. Double Materiality : Companies must assess and report not only how sustainability issues affect their performance but also how their activities impact the environment and society. Digital Accessibility : Reports must be prepared in a digital format, facilitating easier access and analysis by stakeholders, including investors, regulators, and the public. Assurance Requirements : The CSRD introduces a requirement for external assurance of sustainability information, thereby enhancing the credibility of the disclosures. Benefits of CSRD Increased Transparency : By standardizing sustainability reporting, the CSRD fosters greater transparency, enabling stakeholders to make informed decisions based on consistent and comparable data. Enhanced Investor Confidence : Investors are increasingly prioritizing sustainability in their decision-making processes. The CSRD provides them with the necessary information to assess risks and opportunities related to sustainability. Driving Corporate Behavior : The directive encourages companies to adopt more sustainable practices, ultimately contributing to the EU's broader environmental and social goals, including the European Green Deal. Competitive Advantage : Companies that proactively embrace the CSRD can differentiate themselves in the marketplace, showcasing their commitment to sustainability and attracting socially conscious consumers and investors. Challenges of CSRD While the CSRD presents numerous opportunities, it also poses challenges for companies: Implementation Costs : Adapting to the new reporting requirements may require significant investments in data collection, systems, and processes. Complexity of Reporting : Companies may struggle with the double materiality concept and determining which sustainability issues are most relevant to their operations. Capacity Building : Many organizations may need to invest in training and capacity building to ensure their teams understand and can effectively implement the new requirements. CSRD Compliance Timeframes The rules will start applying between 2024 and 2030. If a company has not yet measured its carbon footprint, it will be important to start getting prepared as soon as possible. Reports are due in 2025 for large, listed companies already subject to the NFRD. Reports are due in 2026 for large companies not currently subject to the NFRD that meet the corresponding requirements.  Reports are due in 2027 for listed SMEs and all others that meet the applicable requirements, although SMEs have the option to wait until 2030. Conclusion The EU Corporate Sustainability Reporting Directive marks a pivotal shift in how companies approach sustainability reporting. By fostering greater transparency and accountability, the CSRD not only empowers stakeholders but also drives the broader agenda for sustainable development. As businesses navigate this new landscape, those who embrace the directive's principles will not only comply with regulations but also position themselves as leaders in the sustainable economy. As we look ahead, it is clear that the CSRD is not just a regulatory requirement but an opportunity for companies to rethink their strategies and contribute meaningfully to a sustainable future. The journey towards sustainability is ongoing, and the CSRD is a crucial step in making corporate accountability a reality.

Introduction The MiFIR Review introduces amendments to Article 26 of MiFIR, focusing on the reporting requirements for certain transactions involving derivatives. Specifically, new transactions now fall under the scope of MiFIR reporting as outlined in Article 8a(2) of MiFIR2. ESMA is tasked with updating RTS 22 (Commission Delegated Regulation 2017/590) to include: (i) new fields for reporting the transaction effective date and the reporting entity;  (ii) proposed identifiers and modifications to existing ones that link specific transactions and identify aggregated orders; and  (iii) adjustments to fields to ensure alignment of MiFIR transaction reporting with the EMIR and SFTR reporting frameworks. Furthermore, ESMA aims to enhance the reporting process by putting emphasis on  the identification of transactions involving financial instruments based on distributed ledger technology that are covered under Article 26 of MiFIR; and  modifications to fields that will improve the overall quality and efficiency of reporting. Key Changes and Enhancements Introduction of New Fields Introduce new fields for: (i) capturing the date when the transaction obligation in financial instruments becomes effective;  (ii) identifying the “entity subject to the reporting obligation”;  (iii) an “INTC identifier” for detailing aggregated orders and assigning responsibility to the executing investment firm for generating this identifier consistently; and  (iv) a unique “chain identifier” that links to the sequence of report chains associated with transaction execution, requiring the executing firm to ensure consistent use of this code in transaction reports. For debt instruments, the effective date will be set as the settlement date. For derivatives, it will be defined as the date the contract obligation takes effect, which could be a future date (forward starting). If the contract terms do not specify an effective date, parties must report the transaction execution date (current field 28 “trading date time” of RTS 22). Expand the reporting of the Trading Venue Transaction Identification code to include transactions executed in non-EEA venues to enhance the matching process for reported transaction sides. ESMA proposes that the market-facing firm acting as the seller should be recognized as the primary entity responsible for generating the code for off-venue transactions and for sharing it with the buyer. Alignment with EMIR, SFTR, and International Standards Modify certain field names (e.g., “action type”, “report submitting entity”) and clarify definitions for field names (e.g., “price currency” and “notional currency 1”); split the “underlying index name” field into two: “Indicator of the underlying index” and “Name of the underlying index”. Harmonize the reporting of price-related information and introduce a new article to define the rules for determining the reporting direction under MiFIR and EMIR for various instrument types. Align the MiFIR definition of complex trades with that of EMIR. Add a new field for “package transaction price” to ensure MiFIR reporting aligns with EMIR REFIT requirements and CDE Technical Guidance. Further Enhancements Introduce two new fields for reporting the ISO 24165 Digital Token Identifier for DLT financial instruments and their underlying assets. Expand the order transmission conditions outlined in Article 4 of RTS 22 to include the case where the investment firm acts on its own behalf. Clarify that when a portfolio or fund manager makes an investment decision for a client, field 12 “Decision Maker” specifically notes such cases. Add a new field to Table 2 of Annex I for reporting client categorization as per Article 24 of MiFID II and eligible counterparties under Article 30 of MiFID II. Remove field 63 “Short Selling indicator”. Revise Tables 2 of Annex I and II to:  (i) clarify that field 35 “Net Amount” is required for all instrument types, with “not applicable” as a fallback when information is unavailable;  (ii) specify identification codes for fields 7 “Seller Identification Code” and 16 “buyer identification code” when LEI or natural person ID retrieval isn’t possible;  (iii) ensure field 47 “Underlying ISIN” specifies reporting at each index ISIN level; and  (iv) simplify field 62 to collect only information on the reference price waiver. List of Exempted Transactions Update the list of exempted transactions in Article 2(5) of RTS 22 to:  (i) include disposals of financial instruments mandated by court orders or insolvency administrators in liquidation/bankruptcy procedures;  (ii) narrow the scope of novations listed in Article 2(5)(e). Format for Reporting Change the mandated reporting format in Article 1 of RTS 22 from XML to JSON. Implications for Market Participants The updated MiFIR Reporting will impact all market participants subject to its rules. Key considerations include: Compliance Costs:  While increased transparency and risk mitigation enhance market stability, they may lead to higher compliance costs, particularly for smaller entities. Operational Adjustments:  Firms will need to revise their internal systems and processes to comply with the new reporting standards and clearing obligations, potentially requiring investments in new or upgraded technologies. Preparing for Revised MiFIR Reporting To effectively transition to the revamped RTS 22 MiFIR Reporting, market participants should undertake the following steps: Stay Informed:  Stay informed about the latest developments and interpretive guidance. Conduct Impact Assessments:  Analyze how these changes will affect your business, from compliance obligations to operational workflows. Identify gaps and devise a plan to address them. Invest in Technology:  Utilize advanced technology solutions to automate reporting processes, enhance data accuracy, and improve risk management capabilities. This will facilitate compliance and promote operational efficiency. Timeline ESMA will review feedback received during this consultation in Q4 2024, with plans to publish a final report and submit the revised draft technical standards to the European Commission for endorsement in Q1 2025. The revised RTS 22 will come into force 12-18 months post its adoption by the European Parliament; hence, towards the end of H1 2026. Conclusion As the implementation of the revised MiFIR Reporting advances, it is crucial for market participants to remain informed and prepared for this evolving regulatory landscape. Embracing these changes, investing in necessary resources, and positioning your organization for success will be key in the adapting derivatives market.

Digital Operational Resilience Act (DORA) is a comprehensive regulatory framework designed to bolster the financial sector's resilience against ICT-related disruptions and cyber threats. It mandates stringent risk management, incident reporting, and operational resilience measures. As financial institutions across Europe gear up for the forthcoming DORA, the EU has announced a series of dry run exercises to ensure readiness and compliance. These preparatory steps are crucial for firms aiming to align with the stringent requirements and enhance their operational resilience in the face of digital threats. On 31 May 2024, the European Supervisory Authorities ( ESAs )  published  templates, technical documents and tools for the dry run exercise on the reporting of registers of information in the context DORA. All participating financial entities are expected to submit the required information to their competent authorities between 1 July and 30 August 2024. Key Dates to Remember July 1, 2024:  The first round of dry run exercises will commence. This phase will focus on testing the incident reporting protocols and the robustness of ICT risk management frameworks. October 15, 2024:  Financial institutions must submit their preliminary compliance reports. These reports will provide a detailed analysis of their current state of preparedness and highlight any areas requiring improvement. January 1, 2025:  The second dry run phase will begin, emphasizing the testing of business continuity plans and the effectiveness of disaster recovery mechanisms. Why Participate in the Dry Run Engaging in these dry runs is crucial for financial institutions. They provide a controlled environment to identify potential vulnerabilities and ensure that compliance measures are robust and effective. Moreover, these exercises offer valuable insights into the operational readiness of firms, allowing them to refine their strategies ahead of the full implementation deadline in January 2025. ESAs Views The European Banking Authority (EBA), European Securities and Markets Authority (ESMA), and European Insurance and Occupational Pensions Authority (EIOPA) have all emphasized the importance of these dry runs. In recent publications, these authorities have highlighted the necessity of proactive engagement: EBA:  EBA underscored the importance of rigorous incident reporting and the need for financial institutions to adopt a holistic approach to ICT risk management. ESMA:   ESMA's guidelines stress the significance of these dry runs in ensuring that firms' business continuity plans are not only compliant but also effective in real-world scenarios. EIOPA:   EIOPA has pointed out that the dry runs will help in assessing the resilience of insurance and pension sectors, ensuring they can withstand and quickly recover from ICT-related disruptions . Conclusion The DORA EU dry runs are a pivotal step towards achieving full compliance and enhancing the digital operational resilience of the financial sector. Financial institutions should mark their calendars and actively participate in these exercises to ensure they are well-prepared for the regulatory changes ahead