Investment management update - May 2024

Welcome to the latest edition of our investment management update. This publication has been tailored to highlight topical news, cases and changes in the law impacting the investment management sector.
UK
  • On 30 April 2024, the FCA published a Policy Statement (PS24/4) with reforms to the UK’s securitisation regime. The FCA’s final rules sit alongside the Government’s draft Securitisation (Amendment) Regulation 2024 and the PRA’s own Policy Statement. The amendments will be implemented on 1 November 2024.

The Securitisation (Amendment) Regulations 2024

PS24/4: Rules relating to Securitisation | FCA

PS7/24 – Securitisation: General requirements | Bank of England

  • On 25 April 2024, the FCA issued a consultation (CP24/9) on potential updates to the Financial Crime Guide. The FCA is considering changes in relation to sanctions, proliferation financing, transaction monitoring, cryptoassets, the Consumer Duty and minor technical updates. The consultation will close on 27 June 2024. Note that the Government is separately consulting on updating the National Risk Assessment on AML, Counter-Terrorist Financing and Proliferation Financing. A short questionnaire has been issued with a 30 May 2024 deadline.

CP24/9: Financial Crime Guide updates | FCA

Government questionnaire

  • On 25 April 2024, the FCA, PRA and the Bank of England published updates on their approach to AI.

AI Update

The Bank and the PRA’s response to DSIT/HMT: update on our approach to AI | Bank of England

  • On 24 April 2024, the European MiFID Template (EMT 4.2) was updated to reflect the FCA’s recent statement in relation to cost disclosures for listed closed-ended vehicles such as investment trusts.

FinDatEx

  • On 24 April 2024, the FCA published its final anti-greenwashing guidance. The guidance aims to help firms comply with the new rule, the first part of its Sustainability Disclosure Requirements (SDRs), which will take effect on 31 May 2024.

FG24/3: Finalised non‑handbook guidance on the Anti‑Greenwashing Rule

  • Also on 24 April 2024, the FCA issued a consultation on the application of the SDRs to portfolio management businesses. The FCA proposes to apply the regime to portfolios managed on behalf of retail investors. Managers may choose to use the product investment labels, while the naming and marketing rules would apply from 2 December 2024 (along with other in-scope products). Product disclosures would apply from 2 December 2025 for larger firms and 2 December 2026 for smaller firms. The consultation will close on 14 June 2024.

CP24/8: Extending the Sustainability Disclosure Requirements (SDR) regime to Portfolio Management

  • On 23 April 2024, the FCA published a feedback statement (FS24/1) on data asymmetry between big tech companies and financial institutions. The FCA proposes to begin monitoring of the impacts on competition and, if big tech data is deemed valuable, the FCA will consider mechanisms for the sharing of data.

FS24/1: Potential competition impacts from the data asymmetry between Big Tech firms and firms in financial services

  • On 10 April 2024, the FCA published a consultation on payment optionality for investment research. The consultation follows a recommendation by Rachel Kent’s independent review that the MiFID II research unbundling requirements should be removed in the UK. The consultation will close on 5 June 2024.

CP24/7: Payment Optionality for Investment

  • On 3 April 2024, the FCA and the Bank of England jointly published a consultation on the Digital Securities Sandbox. The digital securities covered by the consultation include units in funds, and the focus is on potential regulatory barriers outside of the sandbox. The consultation will close on 29 May 2024.

Digital Securities Sandbox joint Bank of England and FCA consultation paper | Bank of England

Europe ex UK
  • On 29 April 2024, the European Council confirmed a delay to rules on reporting under the Corporate Sustainability Reporting Directive (CSRD). The legislation postpones the adoption of the European Sustainability Reporting Standards (ESRS) for sector-specific reporting and for non-EU jurisdictions. The CSRD began to apply from 2024 and ESRS have already been adopted for non-sector specific reporting. The outstanding ESRS will be delayed for two years, to be adopted by July 2026.

Council adopts directive to delay reporting obligations for certain sectors and third country companies

  • On 24 April 2024, the European Parliament voted to adopt the intensely debated Corporate Sustainability Due Diligence Directive (CSDDD). The legislation would impose obligations on firms to ensure that their supply chains are free from environmental and human rights abuses. The European Council’s vote on the CSDDD was recently postponed, due to some Member States, notably Germany and Italy, worried about the economic implications on their export business. The European Parliament’s approval puts the onus on the European Council to adopt the legislation.

Due diligence: MEPs adopt rules for firms on human rights and environment | News | European Parliament

International
  • On 19 April 2024, the FSB published a consultation on non-banks’ liquidity preparedness for margin and collateral calls. The FSB proposes several liquidity-related measures for non-banks including managers, funds, and institutional investors, such as stress testing and governance structures. The consultation will close on 18 June 2024.

Liquidity Preparedness for Margin and Collateral Calls: Consultation report - Financial Stability Board