ESMA has published two Opinions regarding the amendments proposed by the European Commission (EC) to the Regulatory Technical Standards (RTS) on liquidity contracts for SME Growth Market (GM) issuers and the Implementing Technical Standards (ITS) on insider lists initially adopted by ESMA in October 2020.
As regards the ITS on insider lists, ESMA disagrees with the EC’s proposal to exempt SME GM issuers from the obligation to create different sections of the insider list for each piece of inside information and with the deletion of personal phone numbers from these insider lists, which would render market abuse investigations more difficult.
ESMA agrees with the two additions proposed by the EC to the RTS on liquidity contracts for SME GM issuers, whereby liquidity providers would have to post orders at prices that follow the independent trading interest and would not be obliged to post buy/sell orders in exceptional circumstances.
The advice will serve as input for developing the Commission’s Retail Investment Strategy.
Taking into account the details provided by the European Commission in January 2021 on their intended approach to this review of the PRIIPs Regulation, the ESAs recommend significant changes to the PRIIPs Regulation and encourage the Commission to consider a broad review of the PRIIPs framework as well as to undertake appropriate consumer testing before formulating proposals for changes. The recommended changes aim to improve the presentation of information provided to consumers and to make it easier for them to compare different products.
The advice addresses all the issues requested by the Commission, including how to better adapt the key information document (KID) to the digital age and whether to extend the scope of the Regulation to other financial products. Additionally, it presents the ESAs’ recommendations on a range of other issues where analysis has shown that changes are needed to achieve optimal outcomes for retail investors. In particular, the ESAs are of the opinion that the KID would prove more useful to retail investors if presented in a much simpler and more user-friendly format.
In more detail, the ESAs recommend:
- harnessing the opportunities of digital disclosure, such as by allowing information to be presented in a “layered” format;
- not extending the scope to additional financial products at this stage, but further specifying the existing scope;
- allowing different approaches for different types of products where this is necessary to ensure the appropriate understanding of retail investors;
- allowing more flexibility on the information provided in the performance section of the KID including the indication of past performance;
- changing the rules for multi-option insurance products to better facilitate comparison between different investments; and
- introducing a new section in the KID to give prominence to sustainable objectives.
The proposed draft RTS aim to:
- facilitate disclosure by the originators of the principal adverse impacts of assets financed by STS securitisations on environmental, social and governance-related factors;
- supplement the single rulebook under the Securitisation Regulation as amended by the Capital Markets Recovery Package (CMRP);
- draw upon the ESAs’ work in respect of sustainability-related disclosures in the financial services under the Sustainable Finance Disclosure Regulation (SFRD).
The consultation will end on 2 July 2022.
The changes reflect the relevant amendments introduced by the new Securitisation Framework, as well as the mappings for three ECAIs that extended their credit assessments to cover securitisations.
The Implementing Regulation is part of the EU Single Rulebook for banking aimed at creating a safe and sound regulatory framework consistently applicable across the European Union (EU).
