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Regulatory Update: February 2021


By FactSet Insight  |  February 10, 2021

Each month, FactSet's Regulatory team offers a rundown of the most important developments in compliance and regulatory news. Read on to see which stories dominated the conversation last month.


U.S./EU Memorandum of Understanding

The European Securities and Markets Authority (ESMA) and the U.S. Commodity Futures Trading Commission (CFTC) signed a new Memorandum of Understanding (MOU) regarding cooperation and the exchange of information related to certain registered derivatives clearing organizations established in the U.S. that are central counterparties recognized by ESMA under the European Market Infrastructure Regulation (EMIR).

United States


President Biden announced new nominations and changes to the chairs of American watchdogs and authorities. These nominations must be confirmed by the U.S. Senate.

  • Gary Gensler has been nominated as the next chairman of the Securities and Exchange Commission (SEC)
  • Janet Yellen has been confirmed as U.S. Treasury Secretary
  • Rostin Behnam is serving as acting chairman of the CFTC until a new chair is nominated and confirmed
  • Rohit Chopra has been nominated to lead the Consumer Financial Protection Bureau (CFPB)

The SEC Approves NYSE’s Direct Listing Plan

In late December 2020, the SEC knocked down a major barrier for private companies looking to submit an initial public offering (IPO) through its approval of the New York Stock Exchange’s direct listing plan, which allows private companies to raise capital in a direct listing for the first time and sell shares directly to investors. Read FactSet’s Insight article here.

European Union

ESMA to Investigate UCITS Fees

ESMA just launched a common supervisory action (CSA) with the European national competent authorities (NCAs) on the supervision of costs and fees of UCITS (Undertakings for the Collective Investment of Transferable Securities) funds across the EU. The CSA aims to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS regulatory framework and the obligation of not charging investors with undue costs.

Insurance Stress Testing

The European Insurance and Occupational Pensions Authority (EIOPA) just published a paper on the methodological principles of insurance stress testing focusing on the liquidity component.



The Green Finance Industry Taskforce (GFIT), convened by the Monetary Authority of Singapore (MAS), issued a proposed taxonomy and consultation paper for Singapore-based financial institutions to identify activities that can be considered green or transitioning towards green, analogous to the EU taxonomy.

  • Feedback is welcomed by March 11, 2021
  • The GFIT also proposed a handbook on implementing environmental risk management for asset managers, banks, and insurers

BIS Launches Second Green Bond Fund for Central Banks

The Bank for International Settlements (BIS) has launched a euro-denominated fund for green bond investments by central banks. This new fund follows the introduction of the first BIS green bond fund in September 2019 (denominated in U.S. dollars) and takes part in an initiative to help central banks incorporate environmental sustainability objectives in the management of their own reserves and capital through sizeable investments in environmentally friendly projects. The European Central Bank (ECB) has already announced that it will invest in this new green bond fund.

ESG/SFDR - ESMA’s Letter to the EU Commission

On January 7, ESMA sent a letter to the EU commission regarding the Sustainable Finance Disclosure Regulation (SFDR), identifying priority questions that would benefit from urgent clarifications. These clarifications concern:

  • The application of SFDR to non-EU Alternative Investment Fund Managers (AIFMs) and registered AIFMs
  • The meaning of “promotion” in the context of products promoting environmental or social characteristics
  • The application of Article 9 of SFDR
  • The application of SFDR product rules to portfolios and dedicated funds

ESMA Calls for Legislative Action on ESG Ratings and Assessment Tools

In a letter dated January 29, ESMA highlighted that while the demand for ESG ratings and ESG assessment tools has grown substantially, the provision of such data products lacks relevant standards emphasizing, for example, the lack of correlation across suppliers. This letter might well be a prelude to future regulation in this space.

In Brief

  • ESMA has updated its Questions and Answers related to reporting under the Securities Financing Transactions Regulation (SFTR)
  • EIOPA just launched a public consultation on open insurance, focused on access to and sharing of insurance-related data. The consultation will be open until April 28, 2021.
  • The European Banking Authority (EBA) will launch its 2021 EU-wide stress test exercise with the publication of the macroeconomic scenarios on January 29, 2021. The results of the exercise are expected by July 31, 2021.
  • European Supervisory Authorities (ESAs) have commenced a consultation to amend the allocation of credit assessments of external credit assessment institutions to an objective scale of credit quality steps, similar, in effect, to past changes of the External Credit Assessment Institutions (ECAI) ratings mappings

Marine Hutinel and Nels Ylitalo contributed to this article.

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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.