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.
In the wake of a flurry of sustainable finance legislation and regulation enacted over the past several years, the European Securities Market Authority (ESMA) published a supervisory briefing that effectively acts as a high-level checklist of recent and upcoming sustainability compliance obligations. Providing guidance for alternative investment fund (AIF) and Undertakings for Collective Investment in Transferable Securities (UCITS) managers, the briefing offers a checklist for supervisors to promote convergence in regulatory approaches. Topics covered by the supervisory briefing include:
Echoing new fund name and environmental, social, and governance (ESG) fund disclosure requirements (discussed below) proposed by the U.S. Securities and Exchange Commission (SEC), ESMA focuses on both technical consistency and substantive validity of fund disclosures and fund names, with pointed observations regarding specific anti-greenwashing measures.
Mirroring ESMA’s recent supervisory briefing in relation to sustainability requirements for EU funds and fund managers, the SEC published significant complementary proposals in relation to Investment Company Names and Enhanced ESG Disclosures by Investment Advisers and Investment Companies.
The Bank of England published Results of the 2021 Climate Biennial Exploratory Scenario (CBES), which set out to explore the financial risks posed by climate change for the largest UK banks and insurers. As set out in the report, the exercise was designed to:
The report is likely to be of interest to investors, financial institutions, and climate risk vendors in the financial industry. Financial institutions in particular will need to consider the strengths and weaknesses of existing practices in climate risk management and stress testing.
Regulation (EU) 2022/858 of the European Parliament and of the Council of May 30, 2022, on a pilot regime for market infrastructures based on distributed ledger technology (DLT pilot regime) has been published in the Official Journal. The regulation enters into force on the 20th day following publication, with application from March 23, 2034. The DLT Pilot Regime is largely a complement to the Markets in Crypto Assets regulation, providing a regulatory sandbox to promote innovation and development of regulated DLT-based technologies.
The Bank for International Settlements (BIS) has published a new paper on the institutional adoption of cryptocurrencies calling on policymakers to address the uneven regulatory treatment across banks and crypto exchanges, as well as significant data gaps in crypto markets, noting that as banks and asset managers increase exposure to crypto, crypto exchanges remain lightly regulated.
While a broad crypto regulation bill has been introduced in the U.S. Senate more recently, the National Conference of State Legislatures published Cryptocurrency 2022 Legislation, enumerating state-by-state legislative action on crypto, ranging from Uniform Commercial Code (UCC) updates to unclaimed property law and regulation of decentralized autonomous organizations.
Marine Hutinel and Nels Ylitalo contributed to this article.
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