News Update Financial Regulatory

2 February 2021

In this News Update, we discuss the amended Regulation on Sound Remuneration Policy Wft 2017, the consultation on the Act Implementing the Directive on Cross-Border Distribution of investment firms and UCITS, the ECB's new climate change centre, and the AFM's supervision agenda for 2021 and research agenda for 2020-2021. Finally, we highlight some other important financial regulatory publications.

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DNB – Amended Regulation on Sound Remuneration Policy Wft 2017

On 29 December 2020, the amended Regulation on Sound Remuneration Policy Wft 2017 (Regeling beheerst beloningsbeleid Wft 2017, "Rbb 2017") entered into force. These amendments implement the remuneration provisions of the fifth Capital Requirements Directive (Directive (EU) 2019/878), which entered into force on 29 December 2020. This directive amends, among other things, some of the provisions on remuneration policy set out in the fourth Capital Requirements Directive (Directive 2013/36/EU). The amendments address the category of employees to which the remuneration provisions apply, broaden the type of financial instruments in which variable remuneration can be paid, extend the period to defer pay out, and introduce an exemption from certain remuneration provisions. The Netherlands has made use of a Member State option to limit the group of employees that would fall under this option. The Dutch Central Bank (De Nederlandsche Bank, "DNB") received one reaction during the preceding public consultation on the amended Rbb 2017. This did not lead to further adjustments to the Rbb 2017.

If you have any questions about the Rbb 2017 or about remuneration policy in general, or if you need any assistance in this area, please contact us or our Employment & Pensions colleagues.

Ministry of Finance - Consultation on Act Implementing the Directive on Cross-Border Distribution of investment firms and UCITS

On 8 January 2021, the Ministry of Finance launched the consultation on the Act Implementing the Directive on Cross-Border Distribution of investment firms and UCITS ("Implementation Act") with an accompanying explanatory memorandum. The consultation period runs until 14 February 2021. The Implementation Act amends the Financial Supervision Act (Wet op het financieel toezicht, "Wft") to implement Directive (EU) 2019/1160 on cross-border distribution of collective investment undertakings.

This Directive must be implemented in national legislation by 1 August 2021 and applied from 2 August 2021. The main topics of the bill are:

• pre-marketing;
• de-notification;
• the fact that no physical presence is required in the case of a cross-border offering;
• the procedure for notifying the supervisor of changes; and
• the minimum requirements for marketing communications.

ECB – Setting up climate change centre

In view of the increasing impact of climate change on the economy and European Central Bank ("ECB") policy, as well as the need for a more structured approach to strategic planning and coordination, the ECB is setting up a climate change centre. This will bring together the work in different parts of the bank on climate issues. The new section will report to the ECB President, who oversees the ECB’s work on climate change and sustainable finance. It will comprise about ten staff working with existing teams across the bank and will start its work in early 2021. This development emphasises that the ECB’s climate agenda will take centre stage when the ECB is developing new rules and interpreting existing rules, ranging from monetary policy to prudential functions.

We also refer to our News Update of 6 October 2020 on climate change.

AFM – Supervision agenda 2021 and research agenda 2020-2021

On 14 January 2021, the Dutch Authority for the Financial Markets ("AFM") published its supervision agenda for 2021 and its research agenda for 2020-2021. The main developments identified in the supervision agenda are:

• the impact of the coronavirus crisis on the economy, the financial sector, and households;
• geopolitical developments (including Brexit);
• legislative and regulatory developments in the Netherlands and the EU;
• digitising the financial sector; and
• transitioning to a sustainable economy and society.

The AFM has identified priorities for 2021 for financial services:

• combating money laundering and other financial-economic crime;
• sustainable contribution of products and services with major long-term effects;
• organisation and culture of financial enterprises; and
• influential international supervisory position for the AFM on financial services.

The specific priorities for financial supervision of the capital markets are:

• monitoring of robust infrastructure;
• increasing the effectiveness of detection, investigation, and enforcement in market abuse supervision;
• supervision of prospectuses and public offers; and
• operationalising and intensifying supervision of transaction reports and notifications.

The priority for asset management supervision is an adequately functioning chain of asset management parties.

The main topics on the research agenda for the next two years are, amongst others, the interaction between financial markets, regulation, and the real economy; and effectively influencing financial undertakings' behaviour of financial.

Other financial regulatory publications

We have highlighted a selection of other publications by legislatures and regulators for the financial markets and financial supervision in January 2021:

• The ECB published the final guide outlining its supervisory approach to consolidation in the banking sector. The guide will clarify its – calibrated – positive approach to intra-Eurozone mergers between banks, amongst others by recognising badwill. If you have questions on this, please contact us and our Corporate Mergers & Acquisitions colleagues.
• The European Banking Authority ("EBA") launched public consultations on its new Guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate EU parent undertakings as laid down in the Capital Requirements Directive. The EBA also published final draft technical standards to identify investment firms’ risk takers and to specify the instruments used for the purposes of variable remuneration.
• The European Insurance and Occupational Pensions Authority ("EIOPA") published its second paper in a series on the methodological principles of insurance stress testing.
• The European Securities and Markets Authority ("ESMA") issued a public statement to remind investment firms of the MiFID II requirements on the provision of investments services to retail or professional clients by firms not established or situated in the EU (in response to Brexit). After the relatively hard Brexit for financial services beginning at the end of the transitional period on 31 December 2020, there is still a distinct lack of facilities to soften Brexit on the EU and Dutch side in practice. See, for example, the overview (with links to further information) on the DNB website. The ESMA also published two opinions on position limits for commodity derivatives under MiFID II/MIFIR.
• The European Supervisory Authorities, the EBA, the EIOPA and the ESMA, submitted their final Report to the European Commission on the draft Implementing Technical Standards under the Financial Conglomerates Directive on reporting templates for intra-group transactions and risk concentration.